San Diego Rules and Economic Development Committee Meeting - July 24, 2013

The Committee on Rules and Economic Development met on Wednesday, July 24, 2013, at 9:00 a.m. in Council Committee Room, City Administration Building. Chair Sherri Lightner presided, with Councilmembers Kevin Faulconer, Mark Kersey, and David Alvarez present; Councilmember Marti Emerald was absent. The meeting covered four agenda items: the impact of recent state legislation on the San Diego Enterprise Zone program, the City's hiring and recruitment processes, ministerial amendments to the Ethics Ordinance, and the quarterly performance report on the 2013 Youth Employment Initiative (Connect2Careers).

Consent Calendar

• Approval of the Record of Action Items from July 10, 2013, was approved by unanimous consent.

Public Comments & Testimony

• Robert McNamara (District Three) spoke during non-agenda public comment, suggesting that committee agendas should include previews and reporting of past committee actions.
• During the hiring item, Robert McNamara expressed support for predictive recruiting, particularly for public safety, and suggested exploring provisional hiring practices used in other jurisdictions.
• Jeff Jordan, representing a police officer standpoint, expressed concern about the length of time for police applicant responses, noting that only 3 out of 100 applicants become sworn officers, and that the city loses candidates to other departments due to delays. He also raised concerns about unfilled grant-funded positions, including those for rape kit processing.

Discussion Items

Item 1: Impact of State Legislation on the San Diego Enterprise Zone Program (Informational)

• Sid Voracara, Business Development Specialist from the Governor's Office of Business and Economic Development (GO-Biz), presented on new state bills (SB 90 and AB 93) that redirect approximately $750 million annually from the enterprise zone program to three new incentives: a sales tax exemption on manufacturing equipment (starting July 1, 2014), a hiring credit for high-unemployment/poverty census tracts, and the California Competes Fund. The hiring credit is for 35% of wages above $12/hour and up to $28/hour, with retail excluded unless small businesses (under $2 million gross receipts). The California Competes Fund will allocate $30 million in FY 2013-14, increasing to $200 million in year three.
• Lydia Moreno, Community Development Coordinator for the City's Economic Growth Services, reported that the City is winding down the Enterprise Zone program, with outreach to businesses and workshops. Since 2006, the regional zone has hired over 40,000 employees, assisted over 2,000 companies, and resulted in over $6 million in investment and 2,500 jobs impacted.
• Councilmember Kersey expressed concern about the loss of local control, noting that San Diego administered the program well, and that new programs should have been additive rather than replacing the existing one. He cited the example of SoyTech, a solar manufacturer that chose San Diego partly due to the Enterprise Zone.
• Councilmember Lightner expressed optimism about the new programs benefiting high-tech R&D and improving transparency. She requested that GO-Biz provide dates and locations of public hearings on the Investment Incentive Funds, possible economic impacts, and more information on pilot areas. She also asked the City Attorney to reassess the City's ability to use a sales tax incentive for local businesses.
• Councilmember Faulconer noted that the Enterprise Zone was one of the few economic incentives the City had, and asked for an overall economic impact estimate for the new bills.
• Action: Informational only; no action taken. Committee requested periodic updates from GO-Biz and the City's Economic Growth Services, and specifically asked for the next update to include public hearing dates, economic impacts, and pilot area outreach details.

Item 2: City's Hiring and Recruitment Processes

• Lisa Byrne, Fiscal and Policy Analyst with the Office of the Independent Budget Analyst (IBA), presented report 13-30 on civil service hiring. She noted that approximately 95% of City positions are classified. Average timeframes for hiring steps have declined in some areas, e.g., from 84 to 64 days for promotions. Recent improvements include predictive recruiting, electronic application review, and automatic rejection for incomplete applications. The IBA recommended that the committee further review the Personnel Department's needs and consider position increases for mid-year budget adjustments.
• Hadi Degani, Personnel Director, presented additional suggestions, including a one-stop shop for background/medical processing, an outstation program to place personnel analysts in departments, and a consultant to optimize the NeoGov system. He noted that the department has 60 employees and hired 969 new employees in FY 2013.
• Police Chief Shelley Zimmerman highlighted challenges: the department may lose 900 officers (half the force) over the next four years, and the city lost 51 candidates to other departments last fiscal year. She supported sharing background check information to avoid duplication.
• Councilmember Faulconer emphasized the need to hire the best people in the shortest time, and pressed for benchmarks. He noted that the City Auditor's office is conducting an audit expected by November 2013.
• Councilmember Alvarez asked about the appeals process impact on hiring timelines. Joan Dawson, Deputy City Attorney, clarified that the current practice of exhausting appeals before promulgating eligible lists is a longstanding policy, and changing it could involve a meet-and-confer issue.
• Motion: Councilmember Faulconer moved, seconded by Chair Lightner, to request that the Personnel Director provide additional follow-up and analysis on civil service rules and a consultant for NeoGov; that the IBA work with the committee consultant to request hiring departments submit suggestions for process improvements by August 21, 2013, vet those suggestions, and provide information on how the appeals process impacts hiring timelines. The motion also requested that the fall discussion include whether any position increases should be recommended for mid-year budget adjustments. The committee also requested that the Personnel Director explore provisional hiring and expanding temporary employee pools, and that the IBA interview recent hires and review civilian hiring practices of the military in San Diego.
• Vote: 4-0 (Lightner, Faulconer, Kersey, Alvarez aye; Emerald absent).

Item 3: Ethics Commission Ministerial Amendments

• Stacey Fulhorst, Executive Director of the San Diego Ethics Commission, presented amendments to the Ethics Ordinance and Council Policy 000-04 to update state law references and reflect current training practices. Changes include adopting state laws by reference so updates are automatic, and increasing the initial training deadline from 60 to 90 days, and eliminating the March 31 retraining deadline in favor of a two-year cycle.
• Motion: Councilmember Faulconer moved, seconded by Councilmember Alvarez, to forward the staff recommendation to the City Council.
• Vote: 4-0 (Lightner, Faulconer, Kersey, Alvarez aye; Emerald absent).

Item 4: Quarterly Performance Report on Connect2Careers (C2C) Youth Employment Initiative (Informational)

• Peter Calstrom, President and CEO of the San Diego Workforce Partnership, reported that the $200,000 city investment has leveraged an additional $300,000 from the Walmart Foundation and the Aspen Institute, for a total of $500,000. As of the meeting, 177 youth had been hired (approaching the goal of 200), with almost 400 applicants. Over 600 youth received work readiness training, and over 1,000 employers were reached. The May 30 Job Summit resulted in 20+ jobs, including one for a young man named Miguel.
• Marlene Taylor, Vice Chair of the Workforce Investment Board and owner of Taylor Trim & Supply, praised the program for making the hiring process effortless and emphasized the value of the intern.
• Alexa Forness, C2C intern at Taylor Trim & Supply, described her experience working as a contracts administrative assistant and gaining exposure to multiple departments.
• Councilmember Lightner noted that the $200,000 did not pay salaries; private companies cover wages. She expressed excitement about the program's success and sustainability planning.
• Councilmember Kersey noted that Council District 5 had the highest participation (18% of interns).
• Councilmember Alvarez thanked the employers and suggested recognizing them for their investment.
• Action: Informational only; no action taken.

Key Outcomes

• Item 1: No formal action; committee requested updates and a City Attorney review of local sales tax incentives.
• Item 2: Motion passed 4-0 directing the Personnel Director and IBA to conduct further analysis and report back in the fall, with specific requests for changes to hiring processes.
• Item 3: Motion passed 4-0 to forward Ethics Commission amendments to the City Council.
• Item 4: Informational only; no action taken, but strong support for continuation and expansion of the youth employment program.