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Home My WebLink About8.3 SmallBusinessRetention CITY CLERK File # om[Q]-[5]O] AGENDA STATEMENT CITY COUNCIL MEETING DATE: November 16,2004 SUBJECT: Status Report on Small Business Retention Plan Report Prepared by: Christopher L. Foss Economic Development Director ATTACHMENTS: RECOMMENDATION: ¥ FINANCIAL STATEMENT: 1. City Council Minutes - April 2002 Receive report and consider Objective II E-7 complete. None. DESCRIPTION: One of the FY 2004-05 goals for the City's Economic Development effort included the assignment to "develop a plan to attract and retain independently owned businesses in new projects as well as the downtown area of Dublin and investigate opportunity zones" (Objective II-E-7) Background: The City of Dublin is a community that has pursued planned economic growth. The City's transformation since its incorporation in 1982 has included a building boom that has added over $1 billion in commercial and residential construction to the community in the past 10+ years. This success, along with visionary planning throughout the City, has contributed to an unprecedented period of retail, office, and residential absorption that has strengthened the City's reputation. The City of Dublin presently has a diverse business mix that contributes significantly to a healthy local economy. The City is home to such companies as Sybase, Micro Dental, Calpine, Simpson Manufacturing, and many others. Yet despite the success, concerns have been expressed about the availability of opportunities to small businesses in the newly constructed retail areas throughout the City. These concerns were crystallized in the City Council-directed Goal II-E-7 (see Attachment 1). With that direction, Staff began research into this issue. Staff first attempted to define "small business." According to the U.S. Small Business Administration, the Small Business Act of 1953 considers a small business as one that is "independently owned and operated and is not dominant in its field of operation." The U.S. Small Business Administration has established a size standard for most industries in the economy. The most common size standards are as follows: · 500 employees for most manufacturing and mining industries · 100 employees for all wholesale trade industries · $6 million for most retail and service industries · $28.5 million for most general & heavy construction industries ------------------------------------------------------------------------------------------------------------- COPIES TO: ITEM NO. 8.:' HI cc-forms/agdastmt.doc lac t1 ~ · $12 million for all special trade contractors · $0.75 million for most agricultural industries About one-fourth of industries have a size standard that is different from these levels. They vary from $0.75 million to $28.5 million for size standards based on average annual revenues and from 100 to 1500 employees for size standards based on number of employees. According to the U.S. Small Business Administration, the following facts apply to small business: · There were approximately 22.9 million small businesses in the U.S. in 2002. · There were an estimated 550,100 new employer businesses in 2002 -- a 0.9 percent increase over the previous year. · Small Business provides approximately 75 percent of the net new jobs added to the economy. · Small Businesses represent 99.7 percent of all employers. · Small Businesses employ 50.1 percent of the private work force. · Small Businesses provide 40.9 percent of private sales in the country. · Small Businesses accounted for 39.1 percent of jobs in high technology sectors in 2001. · Small Businesses accounted for 52 percent of private sector output in 1999. · Small Businesses represent 97 percent of all U.S. exporters. Staff also checked with the National Federation of Independent Businesses (NFIB), the largest advocacy organization representing small and independent businesses throughout the country to attempt to determine if any successful small business retention programs had been established that could be used and/or modified for use in Dublin. The NFIB did not have any information on such programs, but the NFIB Education Foundation, through the Gallup Organization, did perform a survey in 2003 to determine level of contact between small businesses and government. The findings were very interesting: · Over the last 3 years, only 1 % extensively explored public assistance for their business and another 18% made at least one inquiry. 80% made no contact on this matter whatsoever. · 5% indicated that they had some form of financial assistance (loan, loan guarantee, bond, grant from some level of government in the past 3 years). · Small business owners are considerably more likely to see the demanding or negative face of government than the collaborative or positive side. · 78% have not attempted in the last 3 years to find information government houses or produces that is of direct commercial value. Using the definition of the SBA, the majority of Dublin's business population is considered a "small business" despite their contributions to the community in terms of jobs, sales taxes, etc. - It is also important to make the distinction between a national or regional franchise business operation and a small business. For example, many national or regional franchise business operations (McDonald's, Wendy's, Togo's, Subway, etc.) in Dublin are owned by an individual or small group of individuals, not corporately. Although it may be difficult for a small business to develop a new facility in the City of Dublin, for reasons such as land values, construction costs, fees, etc. That does not, however, automatically translate to the exclusion of small businesses as tenants of the new retail and commercial developments that are occurring and will occur throughout Dublin. If you refer again to the U.S. Small Business Administration's definition of "small business" as a business under 500 employees, the majority of the 2 ~y m,arly 30 businesses at the C&S newest neighborhood shopping ce. (The Shops at Waterford) are "small businesses." . At the City Council's request (as outlined Objective II-E-7), Staff initiated a search request with cities and towns throughout California to determine if a similar program existed. Staff was unable to find a program that was structured to meet that goal/objective. The research did, however, find that all levels of government (federal, state, and city) have created a number of programs that could be publicized (Federal and State) and/or modified (City) to meet this community's needs. At the federal level, the U.S. Small Business Administration has a myriad of programs available to help a small business, including programs such as: Technical Assistance Entrepreneurial Development Business and Community Initiatives Native American Affairs SBDCs SCORE Small Business Training Network Women's Business Ownership Financial Assistance Loan Programs Specialty Loan Programs Financial Assistance Contractinl! Assistance Business Development HUB Zone Government Contracting Small Disadvantaged Business Size Standards Special Interests International Trade Minorities Technology Young Entrepreneurs Veteran's Development In the area of federal loan programs, the vast majority of businesses are eligible for financial assistance from the SBA. Applicants must operate for profit, be engaged in or propose to do business in the United States, have reasonable owner equity to invest, and be willing to use alternative financial resources first including personal assets. Staff believes that programs such as the SBA's basic 7(a) Loan and the Micro Loan program could benefit many local businesses. The 7(a) Loan has a maximum loan amouritof $2 million, $1 million of which the SBA guarantees with a maturity date of seven (7) to twenty-five years, depending on the ability to pay, purpose of the loan proceeds, and the useful life of the assets financed. The program allows loan proceeds to be used to establish a new business or assist in the operation, acquisition or expansion of an existing business. The use of proceeds may include: . Purchase land or buildings, cover new construction as well as expansion/conversion of existing facilities; Acquisition of equipment, machinery, furniture, fixtures, supplies or materials; Use as long-term working capital including the payment of accounts payable and/or purchase of inventory; Refinancing existing business indebtedness; Use for short term working capital needs; Purchase of existing business . . . . . The Micro Loan Program provides very small loans to start-up, newly established, or growing small business concerns. Under this program, SBA makes funds available to nonprofit community based lenders (intermediaries), which, in turn, make loans to eligible borrowers in amounts up to a maximum of 3'bt1 3 $~5,000. The average loan siz.' about $10,500. Applications are sub~d to the local intermediary (the non-profit community-based ders) and all credit decisions are Jlll!!!'de on the local level (by the community-based lender). The maximum term allowed for a micro loan is six years. However, loan terms vary according to the size of the loan, the planned use of funds, the requirements of the intermediary lender, and the needs of the small business borrower. Interest rates vary, depending upon the intermediary lender and costs to the intermediary from the U.S. Treasury. Each intermediary lender has its own lending and credit requirements. However, business owners contemplating application for a micro loan should be aware that intermediaries would generally require some type of collateral, and the personal guarantee of the business owner. Each intermediary is required to provide business based training and technical assistance to its micro borrowers. Individuals and small businesses applying for micro loan financing may be required to fulfill training and/or planning requirements before a loan application is considered. The Micro Loan intermediary for Alameda County is the Oakland Business Development Corporation (www.obdc.com). The State of California, through the Commerce and Economic Development Program (www.ca.gov). provides a variety of funding programs for businesses throughout California. State programs from the Commerce Department include the Infrastructure State Revolving Fund Program, the Industrial Development Bond Program, the 501 (c) (3) Revenue Bond program, as well as several small business loan programs such as the SBA Certified Development Company (504) Loan program and the California Small Business Loan Guarantee Program. The State of California also operates 45 Small Business Development Centers throughout the State which link federal, state, educational and private resources to provide one-stop access to free business counseling, planning, marketing, and training programs for small business. The State also operates, as part of the Office of Small Business, the Small Business Assistance and Advocacy Program that helps small businesses take advantage of the resources made available from the State. The State of California also assists small businesses with services by the State's Employment Development Department. The Employment Development Department's goal is to help business find skilled workers through the provision of job placement services, information of the labor market, tax and hiring incentives, and more. Staff has found that the size and extent of available small business funding is dependent on the size of the community. The larger cities in California (ex. San Jose, Los Angeles, and San Diego) have extensive programs to assist small businesses. As an example, the City of San Diego identifies twenty (20) programs - using federal, state, and local/redevelopment funds - to assist San Diego businesses. Staff would suggest that, through the expansion of the City's website to include information on all relevant State and Federal small business funding programs that might be available to local businesses, attraction of new businesses and retention of existing businesses could be enhanced. RECOMMENDATION: That the City Council consider Objective II-E-7 complete. G:\Chris\Business Expansion and Retention Stratcgy\FORM-agenda statement small business goal 11 022004 finaLdoc 4q,t 4 , ./ .... .' .' . . Iq,~ The collective City Council ranking was DELETE. ECONOMIC DEVELOPMENT ADDITIONAL OBJECTIVE #5: "Evaluate the need for specific area business associations within Dublin." Mayor Lockhart requested the above additional objective and gave it a High priority. Cm. Sbranti asked how it would interface with the Chamber? Mayor Lockhart stated the Chamber supports all businesses. The small business associations would help each other. They could pool funds for their neighbors. Cm. Oravetz stated there could be a Village Parkway Business Association. Mayor Lockhart wanted to investigate what programs are out there. Cm.' s McCormick, Oravetz, Sbranti, and Zika gave it a High priority. The collective City Council ranking was HIGH. ECONOMIC DEVELOPMENT ADDITIONAL OBJECTIVE #6: "Develop a plan to attract and retain independently owned businesses in new projects, as weD as the downtown area of Dublin and investigate opportunity zones." Cm. McCormick requested the above additional objective and gave it a High priority. Cm. McCormick was concerned with the branding of Dublin in the east as ouly chains and . corporate businesses. She wanted to make opportunities for independently owned businesses. She felt we need diversity. Cm. Zika felt #5 & #6 complemented each other, but they are two different things. Once the business association develops, they could help each other. OTY COUNOL MINUTES VOLUME 21 ADJOURNED REGULAR MEETING April 3. 2002 PAGE 143 Il-I~-OY. 8.~ Attachment I f . .' ,;.... . ~~e;\ . Cm. McCormick stated that DSRSD provides a ten-year payment plan for the small businesses. Mayor Lockhart and Cm.'s Oravetz, Sbranti, and Zika gave it a High priority. The collective City Council ranking was HIGH. PARKS & COMMUNITY SERVICES OBJECTIVE #12: "Explore opportunity to use Dougherty Hills Open Space on Amador Valley Blvd at Stagecoach for Dog Park & Community Garden." Mayor Lockhart asked if anything has been done? Diane Lowart, Director of Parks & Community Services, indicated that Staff has started gathering. information on dog parks and community gardens. Cm. Oravetz asked where a dog park could be put in Dougherty Hills? Mr. Lowart responded on the plateau. Cm. Oravetz asked what would have to be done? Ms. Lowart indicated water is an issue as well as parking. Mr. Ambrose stated that the coyotes have reappeared with a lot of sightings. Cm. Sbranti asked about separating the dog park and the community garden as objectives. Ms. Lowart indicated there were three acres of use able space. Mayor Lockhart stated that the high density housing residents asked for a community garden. Cm. McCormack felt dog parks were not attractive. CITY COUNCIL MINUTES VOLUME 21 ADJOURNED REGULAR MEETING April 3, 2002 PAGE 144