REPORT TO COUNCIL
SUBJECT
Title
Review and Consider Adoption of the Economic Development Strategic Plan
Report
BACKGROUND
In 2019, Economic Development staff began developing an Economic Development Strategic Plan (EDSP) to strengthen and expand services to the business community and keep the City competitive in retaining and attracting businesses. The four primary goals of the EDSP to support these efforts include:
• Identifying strategies and actions designed to support existing businesses;
• Defining strategic actions to market Sunnyvale as an attractive place to shop and do business;
• Engaging in place-making to enhance quality of life to retain and attract new businesses and
employees; and
• Acknowledging the importance of fiscal sustainability that include strategies to expand the
City’s revenue base to fund services and future investments.
Staff collected data to better understand the needs of the business community and Identify ways to enhance business services. This included a high-touch business engagement effort with key stakeholder groups to solicit feedback on support needs and identifying opportunities and concerns. Staff used email surveys to broaden the reach for feedback, and researched best practices and strategies of similar-sized cities and local and national economic development polices. These efforts identified initiatives that enhance business services and maintain sustainable City growth.
Staff targeted April 2020 to present the draft EDSP to Council; however, due to the pandemic, staff pivoted and launched emergency service programs to support businesses. Staff created the Sunnyvale Cares program to provide grants to nearly 200 small business and 15 non-profits to help sustain operations and an outdoor dining program to provide a streamlined permit issuance process at no-cost to help restaurants stay afloat and operate safely. Staff also launched the Shop Sunnyvale online marketing initiative to encourage local shopping to support the City’s small businesses.
As the City moved through the pandemic recovery phase, staff reinitiated work on the EDSP and provided an update and early accomplishments at the Council Strategic Workshop in January 2023. These accomplishments included the hiring of an Economic Development Manager to lead the effort in formalizing the EDSP.
Staff re-engaged key stakeholder groups and business organizations to revisit the EDSP’s initial strategic priorities and provide feedback based on lessons learned through the pandemic. Staff presented an update on the EDSP at the Council Strategic Workshop in January 2024, outlining modified strategic priorities informed by public input. The priorities were ranked by stakeholders as the priorities that would meet the needs of businesses in today’s market and provide flexibility to shift focus on the changing needs of businesses.
EXISTING POLICY
Council Policy 5.1.4 Incentives to Attract and Retain Businesses
General Plan: Chapter 2 Community Vision
General Plan: Chapter 3 Land Use and Transportation
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” with the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
DISCUSSION
Economic Development staff are responsible for executing and managing the City’s economic development programs and serving as liaison between the City and the business community. One area of focus is providing development support to businesses and developers through the development review process, from the pre-development due diligence phase to site selection through the entitlement and permitting process to grand opening. In addition, staff connects businesses to various programs and resources.
While Economic Development staff serves as the primary point of contact in providing business-related services, it is a Citywide effort that all City departments are involved with in carrying out and contributing to economic development through their day-to-day work. With developers and tenants coming in at different stages of expansion, the City is able to provide services and address issues at various levels through a successful interdepartmental approach.
Economic Development staff leads and serves as the City’s subject-matter experts on key economic initiatives. For the past year, staff has focused their efforts on the coordination of the EDSP to formalize the plan and prepare it for Council adoption. The EDSP strategic priorities were developed in collaboration with key stakeholder groups including hotels, car dealerships, large companies, small businesses, general contractors and brokers as well as business organizations including Sunnyvale Downtown Association (SDA), Sunnyvale Chamber of Commerce (SCC) and Moffett Park Business Group through roundtable feedback discussions and one-on-one meetings.
The EDSP strategic priorities include the ability to adapt to market changes post-pandemic, and continued business retention efforts in light of pandemic impacts. It is also important to be cognizant of changes related to the present-day work conditions such as the on-going effects of remote work. Stakeholders asked that staff consider the importance of providing flexibility in prioritizing focus areas due to new and evolving laws and policies. Additionally, defining Economic Development staff’s role on development projects was also a factor for consideration to ensure economic success.
At the January 25, 2024 Council Strategic Workshop, Council placed supporting tech start-up businesses and home-based businesses as a top priority. Council expressed strong support to reinstitute the Tech Expo to provide emerging technology start-up businesses an opportunity to gain exposure and showcase their products as well as connecting major companies with start-ups businesses for support and mentorship to achieve success. To reduce barriers to entry, Council recommended translating business outreach materials and documents in various languages based on language needs. Council also recommended pursuing neighborhood-serving retail businesses in the north side of Sunnyvale to provide retail goods and services to the neighborhood.
Based on stakeholder feedback, staff is recommending the following four strategic priorities of the EDSP to serve as the guiding principles in carrying out the City’s economic development efforts:
1. Prioritize Key Regional Issues that Drive/Support Economic Development
This will provide the flexibility necessary to re-prioritize and shift focus on new State and local laws and policies as well as major shifts in the market that impact the business community. Two top issues that were identified by stakeholders included the need for additional housing options as well as transportation connectivity from major business hubs to public transportation and first- and last-mile transportation options. These issues should be monitored, evaluated and supported to attract and retain workforce talent while meeting the economic development goals of the City.
2. Strengthen and Expand Program Capacity & Assist with Development Review Process
Considerations for economic development resources should continually be evaluated to provide adequate levels of service as the need for business support services increase and shift due to changing business conditions and new economic development initiatives. Economic development staff plays an active role in shepherding new projects through the development review process in collaboration with the Community Development Department (CDD) to help maintain the City’s timeliness and responsiveness through the entitlement and permitting process to provide a development-friendly process to major companies and small businesses alike.
In addition to these efforts, staff will develop an annual work plan aligning staffing and resources to support the EDSP, hold ongoing meetings with stakeholders and industry leaders to foster a collaborative approach on issues and interests, and enhance survey methods during the development review process to analyze these metrics as part of evaluating staff services and capacity.
3. Support Small- and Medium-Sized Non-Retail Businesses
Businesses with 50 employees or less make up 98% of Sunnyvale’s business profile, which underscores the importance of supporting the City’s small- and medium-sized businesses. A major initiative is preserving zoning designations and preventing the conversion of sites that support flex, industrial and service commercial uses particularly in The Woods, Oakmead and Evelyn districts that house and foster a high concentration of these types of businesses. In addition, Sunnyvale can serve as a major hub for emerging technology start-ups as the “Heart of Silicon Valley.” Programs such as Sunnyvale’s Tech Expo will be instrumental in helping promote and support tech start-ups. There is also a great opportunity for corporation to mentor and support new small tech businesses through meet up events which staff can help encourage and facilitate.
4. Enhance and Maintain Retail Vibrancy
Despite the challenges the market presented since the start of the pandemic, over 1,500 new retail businesses opened between January 2020 to January 2024.To enhance and maintain the retail vibrancy in Sunnyvale, staff will continue to play an active role in the establishment of the Historic Murphy Avenue pedestrian mall and proactively promote site opportunities with brokers and property representatives to attract new businesses and enhance retail areas including Downtown, El Camino Real and Moffett Park. Staff will continue actively marketing Sunnyvale as a desirable place to expand at industry events and continue supporting both regular and special event programming with the SDA and SCC to promote the quality of life in Sunnyvale.
Staff will monitor retail trends, economic data, and demographic profiles such as the growing number of the younger generation as well as other stand out population factors to carry out a targeted approach in retail recruitment. Staff will also place efforts on attracting neighborhood serving businesses and track retail gaps to focus business attraction to help meet retail needs.
As one of staff’s economic development core services, business retention efforts will remain a top priority to preserve the vitality and health of retail businesses. With over 80 long-standing businesses that have operated for over 30 years in Sunnyvale, it is vital for the City to support its small retailers who add to the uniqueness of Sunnyvale’s retail offerings and celebrates the diversity of the City’s business profile.
In partnership with other city departments such as Community Development and Public Works, Economic Development staff has successfully achieved several early accomplishments to support the goals of the EDSP, including:
• Historic Murphy Avenue Mall
• Adoption of the Moffett Park Specific Plan
• Negotiating successful Development Agreements with developers
• Working with SDA and SCC on several Downtown events to promote Sunnyvale
Staff’s ongoing efforts related to the EDSP strategic priorities include monitoring and engaging in housing and transportation activities, preserving land uses to help retain affordable flex and industrial spaces, providing a high level of assistance through the pre-entitlement, permitting and grand opening phases, and identifying and promoting site opportunities in partnership with property representatives as well as at industry events.
In addition to these ongoing efforts to strengthen the City’s local economy, staff recommends the following Strategic Priority Actions to carry out from 2024 to 2026 as part of the implementation of the EDSP:
|
2024 |
• Continue Tech Expo to support start-up businesses • Create an annual work plan to support EDSP • Hold quarterly meetings with stakeholders/industry leaders • Murphy Avenue Pedestrian Mall implementation |
|
2025 |
• Coordinate an Economic Development event to present new developments to the business community • Survey businesses during the Development Review Process • Increase involvement with regional organizations (e.g., Urban Land Institute) |
|
2026 |
• Review/evaluate existing home-based requirements to encourage start-ups and small businesses • Formalize City program for innovative and emerging technologies • Review and evaluate commercial zoning when major market shifts to remain competitive |
|
Timeline TBD (based on need and progress of initiatives) |
• Explore ways to expand inventory of affordable commercial space in ground floor space in mixed-use developments • Monitor and support the formation of the Transportation Management Association in Moffett Park |
FISCAL IMPACT
Although adoption of the EDSP does not have an immediate financial impact, it is expected that implementation may require additional resources and may be brought forward as programs and projects take shape.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City's official-notice bulletin board outside City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
ALTERNATIVES
1. Adopt the Economic Development Strategic Plan
2. Adopt the Economic Development Strategic Plan with modifications
3. Do not adopt the Economic Development Strategic Plan
4. Other Council Action
RECOMMENDATION
Recommendation
Alternative 1: Adopt the Economic Development Strategic Plan.
Approval of the EDSP provides a framework to inform and guide continued work to support and actively promote the City’s economic development efforts.
Staff
Prepared by: Christine L. Velasquez, Economic Development Manager
Reviewed by: Connie Verceles, Deputy City Manager
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Kent Steffens, City Manager
ATTACHMENTS
1. Economic Development Strategic Plan