Economic Development Subcommittee

Meeting Agenda August 16, 2021 – 4 p.m.

Virtual CALL TO ORDER

ROLL CALL

PUBLIC COMMENT

SUBCOMMITTEE COMMENTS & ANNOUNCEMENTS

NEW BUSINESS

Item 1. Economic Development Subcommittee Workplan Recommendation: Receive an informational report regarding city economic development activities and provide comments and recommendations on the anticipated work of the subcommittee.

Item 2. Inclusive Economic Recovery and Development Strategy

Recommendation: Receive an informational report regarding the development of a long-term, inclusive economic development strategy.

Item 3. Supporting Carlsbad Non-Profit Organizations

Recommendation: Provide comments and recommendations regarding city support for non-profit organizations.

SUBCOMMITTEE MEMBER REQUESTS FOR FUTURE AGENDA ITEMS

ADJOURN

NEXT REGULAR MEETING: October 18, 2021 at 3 p.m. Per State of California Executive Order N-29-20, and in the interest of public health and safety, we are temporarily taking actions to prevent and mitigate the effects of the COVID-19 pandemic by holding public meetings electronically or by teleconferencing. • All public meetings will comply with public noticing requirements in the Brown Act and will be made accessible electronically to all members of the public seeking to observe and address the Economic Development Subcommittee. • Economic Development Subcommittee meetings can be watched via livestream on the city website at https://livestream.com/cityofcarlsbad. • You can participate in the meeting by e-mailing your comments to business@carlsbadca.gov prior to 3 p.m. • If you desire to have your comment read into the record at the Economic Development Subcommittee meeting, please indicate so in the first line of your e-mail and limit your e-mail to 500 words or less. • These procedures shall remain in place during the period in which state or local health officials have imposed or recommended social distancing measures.

Reasonable Accommodations Persons with a disability may request an agenda packet in appropriate alternative formats as required by the Americans with

Disabilities Act of 1990. Reasonable accommodations and auxiliary aids will be provided to effectively allow participation in the

meeting. Please contact the City of Carlsbad City Manager’s Office at 760-434-2800 (voice), 711 (free relay service for TTY

users), 760-720-9461 (fax) or manager@carlsbadca.gov by noon on the Monday before the meeting to make arrangements.

Economic Development Subcommittee Meeting Date: August 16, 2021 To: City Council Economic Development Subcommittee From: David Graham, Chief Innovation Officer Item #1: Economic Development Subcommittee Workplan

Recommendation: Receive an informational report regarding city economic development activities and discuss and make recommendations regarding the anticipated work of the subcommittee.

Discussion: In response to the economic impacts of the COVID-19 pandemic, the City Council established an ad hoc economic revitalization subcommittee that was tasked with engaging with businesses, coordinating with business organizations, and providing recommendations to the City Council on ways to address the economic impacts of the pandemic. The work of the subcommittee and actions by the City Council had a notable impact in addressing the economic toll of the pandemic.

The ad hoc economic revitalization subcommittee held 36 meetings and guided the development and implementation of the city’s Economic Recovery and Revitalization Initiative. As a part of that initiative, an Inclusive Recovery Assessment and Implications Report (Exhibit 1) was developed to proactively guide the move from economic response to the pandemic to economic recovery. Given the extended nature of economic recovery and development the City Council approved the creation of the standing Economic Development Subcommittee to replace the ad hoc subcommittee.

The duties of the new standing subcommittee are to guide the following: • Creation of a long-term, inclusive economic recovery and development strategy• Coordination with Carlsbad business organizations• Development of workforce and talent programs and initiatives• Evaluation of the economic impacts of citywide policy• Other programs and initiatives as approved by the City Council.

This item allows for subcommittee member discussion and potential recommendations regarding the anticipated work of the committee.

Exhibits: 1. COVID-19 Inclusive Recovery Assessment and Implications

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COVID-19 Inclusive Recovery Assessment and Implications

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Exhibit 1

Introduction

The impact of COVID-19 and public health responses created an economic emergency in Carlsbad and other cities and regions around the country. Like similarly situated local governments, Carlsbad rushed to respond, deploying a $5 million response package and a host of other administrative and regulatory actions to reduce the impact on businesses, workers and residents. While these efforts helped buffer the impact of the crisis, in tandem with federal and state actions, the toll for Carlsbad, within the context of the broader San Diego economy, has nonetheless been significant. The immediate disruptions also elevated concerns over longer-term issues, such as job quality, remote work, automation, durability and growth of women and minority-owned businesses, and the “future of work”.

To that end, earlier this year, the City of Carlsbad engaged an independent advisory group to undertake an early quantitative and qualitative review of lessons, in order to objectively inform further action and the potential to strengthen supports. Based on data reviews, five stakeholder engagement sessions and a business survey, this analysis (1) examined COVID-19’s impact on the Carlsbad and metro San Diegoeconomies, (2) catalogued and assessed the city’s relief interventions inthe context of both broader regional action and national peer practices,and (3) offered forward-looking insights on implications for economicdevelopment focus and service delivery.

This assessment is based on the “City of Carlsbad Economic Response to COVID-19: Moving to Recovery” report prepared by Cities GPS which included extensive business community outreach including, five stakeholder meetings, collaboration with local and regional business organizations, and a business survey with over 160 participants.

Altogether, COVID-19’s impact and the response have exposed core economic challenges and opportunities for many cities and metro areas, including Carlsbad, presenting a unique moment for revisiting economic development strategy.

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Although Carlsbad was not immune to the virus and its economic contagion, it fared better than the San Diego region as a whole. Unemployment in the city reached 13.8% in spring 2020 -- a significant increase from the pre-pandemic level of 2.9%; nonetheless, this trailed the region’s peak of 15.9%.i Throughout the pandemic, unemployment in Carlsbad remained lower than the region and North County neighbors (see Figure 1). The city’s

While Carlsbad overall suffered a less severe COVID-19-driven economic downturn than the broader San Diego region, due to its industry and demographic mix, the city still experienced significant impacts in particular sectors and groups.

industry mix – with a disproportionately large share of the region’s manufacturing, innovation and professional firms alongside hard-hit hospitality, retail and wholesale, and small businesses – buffered the overall blow despite still concentrating impact in low-wage sectors (see Figure 2).

Leisure and hospitality – oriented toward segments including resorts, group travel and overflow from downtown San Diego – saw the most severe impacts from the crisis, following regional and national trends. Hotel occupancy declined precipitously, hollowing out at 30% in April 2020; as of December 2020, occupancy was down nearly 50% year-over-year, while as of March 2021 it had improved to roughly 20% less than pre-pandemic March 2019.ii

Accordingly, many larger companies furloughed significant numbers of workers and very recently ramped up efforts to re-staff.

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While some hospitality companies shifted marketing toward overnight and drive travel, the overall decline in business conferences and tourism, and occupancy caps have constrained a full rebound.

Findings

Figure 1: Unemployment Impacts of COVID-19 in the San Diego Region

Source: California Employment Development Department data

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needing $250,000 or more.v Attesting to the long tail of the crisis for these firms, a similar survey deployed in April 2021 found that nearly 68% of respondents needed financial assistance in the next six months, with 10% needing $250,000 or more; 62% of respondents reported revenue declines exceeding 25%, matching the previous fall. Still, several stakeholders interviewed also noted major positive changes forced on their operations, such as shifts to e-commerce, that generated immediate new revenue sources and will be sustained after recovery.

In many ways, Carlsbad was more resilient than other cities, likely owing to its relative affluence, suitability for remote work, and concentration of knowledge-driven high-tech and life sciences firms. For instance, home values in the city grew by 13% over the past year to reach a median price of $1.02 million in February 2021, reflecting the ability of wealthy residents to weather the crisis.vi However, these metrics within Carlsbad obscure other serious implications for its economic vitality; over half of the workforce in hospitality, leisure, and retail / wholesale trade sectors actually live outside the city’s boundaries.

Effects on life sciences and manufacturing firms were more nuanced. A survey of North County manufacturers found uneven – but net positive – impacts across manufacturing, in which Carlsbad’s concentration of jobs is about twice the metro average.iii Firms surveyed in the sub-region added jobs (a total of 770 new jobs) and expected to increase physical space; however, 43% reported revenue declines.iv Many innovation economy and manufacturing stakeholders interviewed, particularly in life sciences, reported continued growth in 2020, alongside adjustments to operations (e.g. fewer employees on-site, more virtual meetings and events).

The crisis quickly exposed capacity gaps in banking relationships and basic business practices. From a city business survey conducted in November 2020, 63% of respondents reported a more than 25% decline in revenue. Nearly 60% of respondents in the same survey reported needing financial relief within the next six months, ranging from $10,000 or less to over 11%

For smaller and locally serving firms, COVID-19 presented an existential challenge or an opportunity for a strategic pivot.

Figure 2: Estimated Net Job Losses by Sectors Source: Analysis of California Employment Development Department, SANDAG, and US Census LEHD data,

following SANDAG cluster classifications

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Carlsbad initiated an immediate response to the COVID-19 crisis that paralleled – and in some cases exceeded – many of the approaches undertaken in comparable cities.1 It spanned the major categories of intervention identified in a broad national review of peer city interventions: providing resources and information; offering regulatory relief; expanding capital access; and aiding workers.

The city worked with intermediaries, such as the Carlsbad Chamber of Commerce and Carlsbad Village Association, to leverage networks and target response, likely improving effectiveness. Although some structural decisions regarding terms and duration might be reconsidered with hindsight, the city also actively sought business feedback and adjusted responses – such as eligibility for its loan program – in response to evolving needs and conditions. Whileit is not possible to make definitive causal claims about the impact of relief without a formal program evaluation,Carlsbad’s response appears comparatively comprehensiveand well-designed.

1 Alongside a review of national city responses, Cities GPS examined practices in a set of comparable cities, located in the Seattle, San Jose, Phoenix, Denver, Tampa Bay, and Boston metro areas, to better assess Carlsbad’s specific response. These cities were identified based on similarities in population, industry mix (tech and innovation and/or tourism economies), and position as an economic hub within a bigger regional economy having a larger city at its center.

Major Elements of the City of Carlsbad’s COVID-19 Response

• Established a $4.4 million business loan program

• Contributed funds to a joint tourism and businessmarketing campaign

• Provided landlord and tenant mediation andrenegotiation services, and rent relief on cityproperties

• Instituted “Joint Communications” to businesseswith Carlsbad Chamber of Commerce andCarlsbad Village Association

• Offered resources including directory ofassistance, GIS map of open restaurants, and“story map” and economic scan charting citytrends and performance

• Provided direct assistance to over 650 businesses

• Suspended commercial evictions for tenants ingood standing prior to the emergency, delayedbusiness license fees, halted utility shut-offs,waived utility late fees and offered new flexibilityon commercial solid waste services

• Adopted a worker recall ordinance for hotelworkers

• Established new temporary flexibility for use ofoutdoor public space, such as public sidewalksand private parking lots

• Supported local businesses through Shop Localand marketing campaigns

• Employed surveys and webinars to gatherbusiness feedback

Response provided by Carlsbad was consistent with national practices and in some cases, exceeded comparable cities.

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For example, the size of Carlsbad’s business loan program was among the highest of comparable cities examined; that it was capitalized by city funds versus CARES Act resources was distinctive and may have allowed the city to move faster to address the crisis.

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Access to technical assistance and navigation for available resources: Small businesses reported that they had difficulty identifying and navigating the array of supports across the region, as well as gaps meeting demand for technical assistance on emerging topics like pivoting to e-commerce. Intermediary service providers also recognized that COVID-19 highlighted their own challenges in reaching businesses and different types of firms. These findings reflect on fragmentation rather than quality. Access to capital: While the establishment of the city’s own well-capitalized loan fund was a benefit, the fact that the city offered low-interest loans -- versus the grants or no-interest loans supplied by the majority of comparable cities -- meant that businesses needed to start repaying funds before the crisis fully abated.

Carlsbad also did not target its loan program to specific sectors or demographic groups, expecting that the size of the program would allow the city to serve a wide array of recipients. These program design decisions were made at the outset of the pandemic, moving ahead of peer examples and without full knowledge of the duration; they may nonetheless have affected the fund’s initial reach and impact. In April 2021, the city adjusted the loan term for small business loans to 60 months and microloans to 30 months, responding to ongoing recovery needs.

Despite the overall strength of the city’s approach, local stakeholder feedback and review of national practices identified potential areas for improvement:

Streamlining of city processes: Stakeholders praised the flexibilities created in reaction to the pandemic (e.g. outdoor dining), while also contrasting against historical challenges navigating city permitting and other regulatory processes. Specific issues included processing time and gaps in the communication loop among businesses and city offices, which could be addressed as lessons from COVID-19 response. City communications and information-sharing: Small business stakeholders noted gaps in learning about available resources, while also acknowledging efforts like the City Manager updates. Despite the fact that the city provided regular joint communications emails with the Chamber and Village Association and leveraged other platforms, such as social media and webinars, businesses expressed interest in more “eye-catching” messages to break through.

Assessment of needs and interventions identified efforts to retain from COVID-19 response, as well as possibilities for improvement across city operations and business supports to advance firm resiliency.

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Like many businesses around the country, stakeholders reported difficulty navigating and securing financial assistance from sources such as federal, state and county funds

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Strengthen communications with businesses: Conduct a review of city communications with businesses, including digital analytics, to identify any ways to better design and target these products.

Longer-term actionsImprove business interface with the city: Responding to business feedback, reform the business license application process, permitting and other areas of business interaction with the city to provide clearer, customer-friendly service such as: single interface and simplified processes, clearer communication and shorter wait times.

Pursue ongoing regulatory flexibilities: Consider ongoing or permanent adjustments to regulatory measures eased during the COVID-19 pandemic, such as outdoor dining.

This likely requires Carlsbad to prepare a formal economic development strategy that takes into account these issues:

• Prioritizing potential activities for maximum return on limited resources;

• Defining the specific role of the city in advancing these changes;

• Aligning with other contributors to fill gaps and eliminate redundancies, reflecting Carlsbad’s distinctive position as the major sub-regional economic and employment hub in North County.

Implications

Looking forward, lessons from COVID-19 indicate that continued strategic economic development action will be needed to both promote a full recovery and improve the business ecosystem, particularly extending to sectors, businesses and workers hurt most by the pandemic.

The following are examples of near-term and long-term ideas drawn from this initial response and recovery assessment.

Continue to improve and build capacity of city economic development operations: COVID-19 reinforced the imperative of a high-capacity, customer-friendly approach to economic development equipped to quickly identify and respond to business needs. Moving forward, the city should institutionalize and expand modern practices and flexibilities adopted for communicating with and serving businesses.

Near-term actionsBolster data and research capacity: Building on the Economic Scan, online “story map,” and other products, continue investing in data and research capacity for finely grained business and market intelligence to proactively identify issues and inform interventions. For example, adding demographics to business license applications and other city processes could offer further insights on trends by race and gender.

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2 Expand availability and access to business supports at city and regional levels: While business supports were fundamental to COVID-19 response, the crisis illustrated unevenness in coverage and access. Closing these gaps can help promote long-term growth during recovery and revitalization.

Near-term actionsAdvance longer-term capital access: Building on the city’s business loan program, consider tools like a revolving loan fund to continue servicing local business capital needs during recovery and revitalization. Potentially weigh how such a resource could target sectors or groups particularly impacted by the crisis and/or lagging in recovery.

Promote local businesses: Maintain “Shop Local” marketing efforts to promote local businesses capturing renewed consumer spending.

Longer-term actionsImprove connections to regional services: Through tighter coordination – or even a concierge function – work with partners across the North County sub-region to ensure full awareness of and easier access to available supports.

Expand technical assistance: Identify and resource additional common areas of need, such as workforce or business operations, either by emerging issue area or type of firm, working through intermediaries and service providers.

Create supports for inclusive growth: Promote expansion of minority chambers to the area and/or seed diverse business advisory groups to ensure representative assistance reaching all businesses and entrepreneurs.

Strengthen sub-regional collaboration on marketing: Consider flexibilities for a shared North County tourism promotion effort to gain scale and more efficiently market the distinctive assets of the sub-region.

Improve access to and upward mobility of talent base: The disparate impacts of COVID-19 on different groups of workers and the challenges employers report facing in rebuilding their workforces reflect gaps in supports for both talent development and recruitment. More ambitious action to address these challenges could benefit businesses, workers and the city alike.

Near-term actionsOrganize industry to strengthen talent pipeline: Consider industry-specific business alliances, mid-size firm coalitions and new models of technical assistance for human resources needs to achieve economies of scale in addressing talent sourcing challenges, including from outside the city.

Longer-term actionsFoster pathways to good jobs: Promote upskilling of incumbent workers, particularly in lower-wage industries, to ensure pathways from “promising” to “good” jobs, even across sectors.

Advance job quality: Provide thought-leadership and support interventions that provide incentives to businesses to improve job quality (such as the San Diego Workforce Partnership’s High Road Kitchens initiative) and address non-talent barriers to workforce participation like childcare.

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4 Prepare for future disruptions: Recovery and revitalization must acknowledge the likelihood of future challenges highlighted by COVID-19. Strategic planning should consider how to improve long-term resiliency to prepare.

Longer-term actionsSupport small businesses for a changing economy: Work to improve small business resiliency, including through adoption of digital technology.

Enhance broadband coverage and access: Work with internet service providers to improve broadband service to both enable potential expansion of remote work and support businesses.

Plan for future industry shifts: Consider impact of macro shifts underscored and accelerated by COVID-19 on major city industries like hospitality and manufacturing, such as automation and digitalization.

Endnotes i City of Carlsbad, Economic Scan, Second Quarter FY 2020-2021, January 20, 2021. ii City of Carlsbad, Economic Scan, Second Quarter FY 2020-2021, January 20, 2021; City of Carlsbad, Economic Scan, Third Quarter FY 2020-2021, April 2021.iii“The Future of Manufacturing in North County: An Economic Impact Analysis & Workforce Study,” Innovate78 / San Diego Regional EDC, February 2021, https://sd-regional-edc.maps.arcgis.com/apps/Cascade/index.html?appid=7ce1e49f99fc43e9bcceb6474217f67c#&previewiv Ibid, Innovate 78 / San Diego Regional EDC.v City of Carlsbad, Economic Scan, Second Quarter FY 2020-2021, January 20, 2021.vi City of Carlsbad, Economic Scan, Third Quarter FY 2020-2021, April 2021.

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Firm Overview Cities GPS LLC is an advisory group that brings together diverse topical experts and peer practitioners to help business, government, and civic stakeholders collaborate on finding and implementing solutions for competitiveness, growth, vitality, and inclusion, anchored in the shared economic assets of city-regions. Cities GPS focuses on traded sectors, talent, innovation, infrastructure, and governance, combining advanced research techniques, practical experience, and international networks. Cities GPS organizes multidisciplinary teams tailored to each effort, drawing from a pool with local, national, and global experience. Collectively, Cities GPS advisors have worked with public and private sector partners in more than 80 cities, 20 states, and 10 countries.

The analysis, conclusions, and recommendations presented in this report are solely those of Cities GPS, and do not reflect the views of any organizations or individuals that sponsored or contributed to the work, or with whom the authors are otherwise affiliated. The authors recognize that the value they provide are based on an absolute commitment to objective, candid, high-quality research and practical problem-solving for policymakers and the public. All activities or work products reflect this dedication to independence and impact.

Principal AuthorsMarek Gootman: Serving as Cities GPS Managing Principal, Mr. Gootman brings 30 years of experience focused on private-public action aroundcity-regions and economic opportunity. At the Brookings Institution, he currently is a nonresident Senior Fellow, following nine years as Fellow and Director of Strategic Partnerships & Global Initiatives with the Metropolitan Policy Program, where he advanced application of ideas through research, demonstration projects, policy promotion, and learning networks. Previously, he was a partner at Patton Boggs LLP where he counseled local governments and public agencies on policy, programs, and federal advocacy, including seven of the 10 largest US cities. Among other prior positions, he served in various roles with federal agencies, a bi-state metropolitan planning organization, and the UK government working on economic development, urban revitalization, cross-sector partnerships, and program delivery reforms. Mr. Gootman earned a law degree at Georgetown University; Master of Government Administration at the Fels Institute, University of Pennsylvania; and business degree from the Wharton School, University of Pennsylvania.

Rachel Barker: A strategist, analyst, and storyteller focused on building more innovative, inclusive cities, Ms. Barker has worked with nationaland local stakeholders to identify and advance solutions that support economic growth and mobility. Her experience encompasses program development and assessment, application of evidence and data, and codification of practices with multiple organizations, ranging from Results for America to the Pritzker Traubert Foundation. Previously, Ms. Barker served as an impact manager, policy analyst, and engagement strategist at the Brookings Institution, addressing issues like inclusive economic development, global competitiveness, and evaluation. Across these roles, she has coordinated and contributed to a broad array of applied projects and peer learning cohorts, undertook research, and produced dozens of reports, blogs, and podcasts. Ms. Barker graduated magna cum laude / Phi Beta Kappa from the Elliott School of International Affairs at George Washington University.

AcknowledgmentsThank you to the more than 200 Carlsbad businesses and stakeholders that contributed to the development of this report through stakeholder forums, survey responses, and community conversations.

Special thanks to the following organizations and individuals for contributing data and input that informed this process.

Carlsbad Chamber of CommerceBret Schanzenbach, CEO

Carlsbad Village AssociationChristine Davis, Executive Director

Visit CarlsbadMark Rudyk, Interim Executive Director

San Diego Association of GovernmentsRay Major, Chief Economist

Stephanie Guichard, Senior Economist

San Diego North Economic Development CouncilErik Bruvold, CEO

San Diego Regional Economic Development CorporationBree Burris, Director of Communications

Eduardo Velasquez, Director of Research

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Economic Development Subcommittee Meeting Date: August 16, 2021 To: City Council Economic Development Subcommittee From: David Graham, Chief Innovation Officer Item #2: Inclusive Economic Recovery and Development Strategy

Recommendation: Receive an informational report regarding the development of a long-term, inclusive economic development strategy.

Discussion: The City of Carlsbad has invested in economic development for many years. In recent years this work was led by the economic development division of the Community and Economic Development department. In March of 2020, the economic development functions at the city were combined with the Office of Innovation and Economic Development creating the city’s first Innovation & Economic Development department in the Administrative Services branch. At the time of this re-organization, an internal review was completed to assess the city’s economic development challenges and opportunities. During this review it was identified that while economic development is included in various city visioning and planning documents such as the Community Vision and General Plan, there is not a current economic development strategy or strategic plan.

As a primary outcome of the Inclusive Recovery Assessment and Implications Report that was presented to the City Council on May 11, 2021, and with direction from the City Council, staff has been working to procure a consultant to assist with the development of an inclusive economic recovery and development strategy for both the near-term activities and long-term goals. A Request for Proposals (RFP) is in development and will be issued by the end of August with the goal of completing the procurement process in the early fall.

Staff will provide regular updates to the Economic Development subcommittee with the ultimate goal of completing the work product in the spring or early summer of 2022.

Core elements of the strategy development process will include assembling new baseline data about Carlsbad’s economy, cataloging community assets and opportunities, analyzing economic pressures, engaging stakeholders - including business organizations, businesses, workers, and residents - and developing strategic goal and tactics recommendations that the city can employ.

As this strategy is being created in the recovery phase of the COVID-19 pandemic, it also brings an opportunity to ensure the city supports recovery and growth in a way that is inclusive and allows the city to support both hard hit sectors that will take longer to recover, as well as innovation industries that were quicker to rebound and are pursuing growth.

Prior to the COVID-19 pandemic, Carlsbad’s unemployment rate was 2.9%. In April of 2020, unemployment spiked to 13.8% before gradually declining. It currently sits at 5.9%.

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Economic Development Subcommittee – Staff Report August 16, 2021 Page 2

The tourism economy was hit hardest, with health restrictions preventing usual leisure travel and most groups cancelling planned conferences and events. While leisure travel has recovered quickly, group travel is expected to lag, leaving a noted gap in economic recovery.

Innovation employers pivoted more quickly, but as the economy recovers, the nature of work in these industries has changed, creating potential challenges and opportunities to economic development.

Fiscal Impact: The City Council approved the allocation of $100,000 of funding dedicated to the Economic Recovery and Revitalization Initiative for the strategy development process.

Exhibits: None.

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Economic Development Subcommittee

Meeting Date: August 16, 2021 To: Economic Development Subcommittee From: David Graham, Chief Innovation Officer Item #3: Supporting Carlsbad Non-Profit Organizations

Recommendation: Discuss and provide comments/recommendations regarding city support for non-profit organizations.

Discussion: Based on the April 27, 2021 City Council motion directing staff to return to the City Council with information for a discussion on supporting non-profit organizations. Currently, Council Policy 51 describes how the City may provide funding for community activities. Depending on subcommittee discussion and potential comments/recommendations, staff can return to the subcommittee with additional information, docket an item for City Council discussion, or pursue any other course as recommended by the subcommittee.

Staff has evaluated the types of support that a non-profit organization may seek which include but are not limited to:

• Official support, partnership or endorsement by the city

• Financial resources

• In-kind resources

These types of supports could be provided on a case-by-case basis or programmatically. An example of a case-by-case approach would be the request from the Carlsbad Charitable Foundation to provide an official endorsement or partnership with their organization to assist in raising money to distribute to non-profit organizations impacted by the COVID-19 pandemic. In discussions with staff the organization’s leadership believed that an official city endorsement could increase the money they could raise and distribute to other non-profit organizations. When this request was brought to the City Council direction was given through a motion to refer the discussion of potentially supporting non-profit organizations to the economic development subcommittee.

An example of a programmatic approach to supporting non-profit organizations is the City’s Community

Arts Grants, which is a program that supports projects and activities that provide quality arts and

cultural programming within Carlsbad. Funds are available for organizations, schools and individuals

through a competitive application and review process. In the Community Arts Grant 2020/2021 cycle

$88,000 was available for distribution. The city operates other grant programs like the Community

Development Block Grant program and has Council Policy 51 which provides process for funding

community activities. If the subcommittee wishes to pursue the development of a grant program for

non-profit organizations a comprehensive evaluation of all existing programs will need to be conducted

and gap analysis should be completed.

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Economic Development Subcommittee – Staff Report

August 16, 2021

Page 2

This item provides the opportunity for subcommittee discussion and potential comments and

recommendations on whether the city should develop a way to support non-profit organizations beyond

its current approach. Should the subcommittee be interested in pursuing the development of an

approach to supporting non-profit organizations staff would evaluate feasibility, develop

recommendations, and return to the subcommittee with additional information for its consideration

with the ultimate goal of making a recommendation to the City Council. Should the subcommittee not

wish to pursue an approach to supporting non-profit organizations beyond the city’s current approach,

staff can docket an item for full City Council discussion and consideration.

Fiscal Impact:

Depending on the subcommittee’s comments and recommendations, a non-profit organization support

program could have a fiscal impact on the City’s general fund. If the subcommittee recommends

pursuing an approach to supporting non-profit organizations beyond the city’s current activities, staff

will develop a fiscal impact estimate for any new programs and return to the subcommittee for

consideration.

Exhibits:

1. Council Policy 51 – Community Activity Funding

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Page 1 of 5

Council Policy Statement

Category: COMMUNITY ACTIVITY FUNDING Specific Subject: Process for Funding Community Activities

PURPOSE: To establish the process for distributing funds for community activities, special events, support for winning teams, and community spirit activities.

BACKGROUND: The City Council has, in the past, chosen to fund community activities with General Fund monies. This has included the allocation of funds to agencies that provide various programs that enrich Carlsbad residents and visitors, and/or assist in enhancing their quality of life.

POLICY: 1. It is the policy of the City of Carlsbad to allocate funds for “start-up costs” to initiate new

programs/ideas/organizations that provide for community activities or enhancements withinCarlsbad, or to celebrate community accomplishments and spirit. The program is not intendedto fund ongoing services/programs. There are four (4) funding programs available under thisCouncil policy: Community Activity Grants, Special Event Grants, Winning Team Grants, andCommunity Spirit Grants. A description of each program and its related eligibility criteria isprovided below.

2. The Grant Funding shall have the following term limits per organization:

A. Community Activity Grants: An organization may receive no more than one grant per yearfor up to a maximum of three (3) years. After three (3) years, the organization will beineligible for any type of funding from the City, including these grant funds, for at least two(2) years. After a two (2) year hiatus from receiving city funding, an organization will beeligible to again apply for and may receive this Grant funding for an additional two (2) yearsmaximum. This grant will provide no more than five (5) years total of funding for anorganization.

B. Special Event Grants: An organization may receive no more than one (1) special event grantper year and may receive no more than five (5) years of grants total with cash assistancebeing provided for no more than three (3) of those years and grants for in-kind cityassistance to pay for city services/facilities for special events permitted for each of the five(5) years.

C. Winning Teams Grants: A team may receive no more than one (1) grant per year for anational championship competition as defined below.

Policy No. 51 Date Issued: December 4,2012 Effective Date: December 4, 2012 Resolution No. Cancellation Date: Supersedes No. May 10, 2011

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Exhibit 1

Policy No. 51

Page 2 of 5

D. Community Spirit Grants: An organizer/organization may receive no more than one (1) grantper year for an event which reflects community pride or community spirit to help otherswithin the community as defined below.

3. The organization cannot receive money, or donated city services from other city sources(including CDBG) for the current fiscal year to receive one of the above noted grants.

4. All awarded grants will be disbursed on a reimbursement basis only, and will be subject tocompliance with an agreement or letter of agreement approved by the City Manager ordesignee. The reimbursement shall be based on actual costs with receipt and proof of paymentrequired from the applicant.

5. Community Activity Grants – Criteria and ProcessA. These grants provide funding for enrichment programs for the community and/or for

physical or other neighborhood enhancements within Carlsbad, with the exception that thefollowing will not be eligible: 1) social service programs; 2) programs sponsored byeducational institutions; and 3) a program that conflicts or is in competition with a cityprogram.

B. City funding shall be awarded to fund approved program/project costs only. The City fundsshall not be used for operational reserves for the applicant or for future yearprograms/projects. The City funds received by the applicant may also not be used fordonations to other organizations.

C. The City Council will annually determine the amount of funds to be budgeted forCommunity Activity Grants. This amount shall include the interest earned on the initial $1million set-aside for said fund, but may also include additional general funds at thediscretion of the Council.

D. Once the budget is adopted by the Council, interested groups will be notified of theapplication process to request said grants.

E. The application process will consist of the following:i. Completion of city application for funds.ii. Review by city staff and a Citizens’ Advisory Committee.iii. Recommendations submitted by Advisory Committee to City Council.iv. Action by City Council to approve, modify, or disapprove the request.

F. The City Council will establish a review panel comprised of citizens and city staff to evaluatethe applications, and make recommendations to the City Council. The review panel will becomprised of the following: one representative from each quadrant of the city, one memberof the Senior Commission, the Library Board, and the Parks & Recreation Commission.

G. The review panel will consider the provision of matching funds from other sources inevaluation of the applications. Every effort should be made by the applicant to leverage thecity funds to develop a long term funding plan for the proposed project/program; this effortshall be evaluated by the advisory committee in evaluating the funding priorities for thesefunds.

6. Special Event Grants – Criteria and ProcessA. These grants provide city funding for startup costs related to new Special Events (as

defined below) held within the city that have a citywide interest; and shall be available to arecognized 501(C)(3) non-profit organizations, or to an organized all-volunteer, Carlsbad-

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based group on a reimbursement basis of actual costs only. B. For the purposes of this grant, a “special event” shall be defined as set forth in Chapter 8.17

of the Carlsbad Municipal Code (Special Event Ordinance), with the exception that thefollowing “special events” shall not be eligible for this grant:i. Events hosted by a commercial enterprise for profit and/or fundraiser purposes.ii. Regularly offered programs, activities or events.iii. Any event held for primarily a political or religious benefit or other similar purpose,

which in the opinion of the City Attorney constitutes an unlawful use of publicfunds.

C. Special fundraising events shall be eligible if:i. The event is hosted and coordinated by an all-volunteer, Carlsbad-based

organization, and provided further that City grant funds are used only for directcosts of the event and no staff of the organization is paid for working the event,other than short-term consultants or contractors that are directly necessary forholding the event; and

ii. The event is held to raise funds for a Carlsbad-based (located) organization with acommunity-wide benefit and no cash funds are provided directly to individuals orfamilies; the benefit must be to an organization providing services to the largerCarlsbad community.

D. Such grants can be requested any time of the year, and may not exceed $10,000 for a singlegrant in a year.

E. Grant requests for cash assistance shall not exceed 20 percent of the total estimated eventcost; total estimated event costs shall not include valuations for volunteer hours forplanning or implementing the event or in-kind city services, and may not include paymentor reimbursement for applicant-provided resources, such as office space, staff and otheroperational expenses. Total costs shall include expenses to be paid directly by the organizerto third party vendors.

F. A “new event” is defined as an event that has been newly established and has been initiallydeveloped within no more than three years of the date of the first grant request to the City.A change of location does not classify the event as “new” for the purposes of eligibility forthis grant.

G. Grant applications shall be submitted no less than 60 days prior to the event to allow foradequate processing time by the City.

H. All approved grants will be funded from the City Council’s contingency account. An annualappropriation maximum shall be set by the City Council at its discretion.

I. The City Manager, or designee, is authorized to approve grants up to $5,000 , and theFinance Director shall be authorized to appropriate said funds from the City Council’sgeneral fund contingency account. The City Council shall approve grants over $5,000.

J. The application process will consist of the following:i. Completion of a permit application for the special event (if applicable).ii. Completion of a Special Event Grant supplemental application.iii. Administrative review and tentative support/approval of special event by special

events committee (if applicable).iv. Approval of grant by City Manager, or designee, if the grant request is $5,000 or

less. Approval of grant request and appropriation of funds by City Council, if thegrant request exceeds $5,000.

7. Winning Teams Grants

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A. These grants provide funding to youth teams to offset the cost of travel expenses tonational championship competitions. To be eligible for these grants, the team(s) mustadvance through a series of competitive levels, earning the right to compete at a national orinternational level. Exhibition only or non-competitive events are not eligible for this grant.Additional eligibility requirements are provided below.

B. Such grants can be requested any time of the year.C. Grant requests should not exceed 20 percent of the team’s total travel cost; team costs

may include participants and coaches. Eligibility does not extend to the family members orother individuals accompanying the team. Eligible travel costs include: airfare, lodging, entryfees, and food for the team.

D. These requests will be funded from City Council’s contingency account.E. Eligibility requirements are:

i. The participants are all 18 years of age or under.ii. The group or team is an organized non-profit corporation or unincorporated

association.iii. The request for funding must be made prior to the date of the national or

international event.iv. At least 90 percent of the participants in the team or group are residents of

Carlsbad; or, if the team is participating on behalf of a local school, the private orpublic school shall be physically located within the boundaries of the City ofCarlsbad.

F. The application process will consist of the following:i. Written request to the Housing and Neighborhood Services Director.ii. Administrative review by the Housing and Neighborhood Services Director, or

designee to determine the eligibility for a grant.iii. Consideration and approval of grant by the City Manager, or designee, if the grant is

$5,000 or less. The teams approved for an administrative grant will be recognized bythe City Council at a public meeting following the competitive event.

iv. Consideration and approval of grant request funding by the City Council if the grantrequest exceeds $5,000.

8. Community Spirit GrantA. These grants shall provide city funding for events that contribute towards a vibrant

community and strengthen the residents’ quality of life by demonstrating community prideor spirit to help others or celebrate the community.

B. Grants to be utilized for in-kind city services only, ineligible costs include: operations,ongoing projects and capital costs; no cash assistance available under this grant program.

C. Recognized non-profit or donor driven charitable organizations are grant eligible. Activitiesinclude: parades and charitable initiatives directly benefitting Carlsbad residents.

D. Fundraising events are not eligible for this grant.E. Such grants can be requested at any time of the year, one grant per organization per year.F. All approved grants will be funded from the City Council’s General Fund contingency

account.G. The application process will consist of the following:

i. Written request to the Housing & Neighborhood Services Director.ii. Administrative review by the Housing & Neighborhood Services Director, or

designee, for grant eligibility and confirmation of a special event permit application(if applicable).

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iii. Consideration and approval of grant funding (for in-kind/city services only) by theCity Manager, or designee, if grant request is for $5,000 or less.

iv. Consideration and approval of grant funding (for in-kind/city services only) by theCity Council if grant request exceeds $5,000.

9. This policy may be amended as necessary and appropriate by the City Council.

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