HomeMy WebLinkAbout2013/09/17 Item 12 ,�
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°�-= AGENDA STATEMENT
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CHULA VISiA
SEPTE�4BER 17, 2013, Item_(�
ITE�I TITLE: PRESENTATIO\i OF THE CHtiLA VISTA BUSI\ESS CLliSTER
A\'ALYSIS
SliBA'IITTED BP: ECONOn4IC DEVELOP?�4ENT DIREGTOR � �' -
PRI�'CIPAL ECO\'O\4IC DE\rELOP\4ENT SPECI_ALIST
RE�'IE�VED BI': CITY MANAGER����.5.
4/STHS VOTE: YES � NO I�
SU�f�1.aRY
The Cit�� oF Chula Vista has a variet}� of positi�e geoeraphic; infrastructure, workforce and
customer attributes that make it an attractive and competitive location for esistine and new
businesses to thrive. Despite these abundant qualities, the Cin� continues to have a jobs/housins
imbalance and lacks a sufficient number of hieh pa}�ing jobs to reach and sustain its reeional
economic potential. Improving the parit}� between the number of City jobs and resident ���orkers
pro��ides a number of community and regional benefits. Improving the number of"qualin�"jobs
in pursuit of that parity provides a foundation for economic gro��Zh and sustainabilit��.
The City Council authorized staff to contract ��ith Chabin Concepts for a "Business Cluster
Analvsis,' to analvze the range of options µ�ith the potential to successfullv attack this challenge
and select the best strateev to re��erse the imbalance. The Anal��sis identifies business sectors and
dusters H=ith the most potential to create tbe ereatest number of qualin� jobs in Chula Vista.
Chabin was also tasked ���ith identif��in� the Cit��'s current streneths and ��eaknesses in retaining
and attractino businesses in those sectors and the business needs that must be addressed to
maximize the Cih�'s potential to e�pand; attract and sustain these qualit�� empiopers. De��elopin�
business clusters that create local qualirv jobs is a ke�� component in building Chula \%ista s
economically sustainable furure. The Eaecutive Summazv outlines all the recommendations in
the Anal��sis (Attachment A1; pages 10-18). The recommendations are detailed in their
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respective sections; Competitive Location Assessment (pages 30-38), and the Go-to-Market
Strateey (pages 3; 4, 16; 20 R. 22) sections of the Analysis and are summarized in this report.
Staff and the consultant will provide an overview of the Analysis and receive input from the City
Council. Staff will incorporate that input into a detailed work plan, action steps and budget and
return to Council �a�ithin 90 days.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed tl�e proposed activity for compliance with
the Califomia Environmental Quality Act (CGQA) and has determined that the activity is not a
"ProjecP' as defined under Section 15378 of the State CEQA Guidelines, therefore, pursuant to
Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no
environmental review is necessary.
RECOMMENDATION
Council accept the report and provide staff witl� direction for the implementation of the
consultant recommendations.
BOARDS/COMMISSION RECOMMENDATION
There is no applicable boazd or commission ��ithin the City that will review this report.
However, City staff will present the report to the Chula Vista Chamber of Commerce, the South
County Economic Development Council, additional business associations and a variety of
e,:isting businesses in the targeted cluster sectors, and report Cheir comments to City Council
with the work plan.
DISCUSSION
There have been two major strategic economic development planning efforts in recent years. In
2003, the Chula Vista City Council adopted the Comprehensive Economic Development
Strategy. In 2006, the City adopted an Economic Development Element as part of the General
Plan comprehensive update. These two strategic documenfs have provided a guide for the City's
recent Economic Development programs within the context of the recession. The current
Business Cluster Analysis does not replace these adopted strategic economic strategies. The
Analysis targets compo�ents of these strategies by identifying the key ti�eaknesses a�d best fit
solutions for economic prosperity from this point forward in the City's economic evolution. The
Analysis is intended to provide a road map that identifies the best prospects for expanding and
attracting the highest value business sector and 'cluster targets that generate immediate and
sustainable economic benefit for the community.
The Chula Vista Business Cluster Analysis consists of the following four documents:
� 1: Executive Summary
2. Competitive Location Assessment
3: Target Industry Clusters
4: Go-to-Market Strategy
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Comoetitive Location Assessment
The Competiti�e Location Assessment (CLA) is a qualitative process of evaluatina the local
business elimate to identify compatible industries that will most likely prosper N�ith Chula
Vista's assets. The evaluation focused on business factors associated «<ith location decisions b�
corporate e�ecutives and the business dimate perception of locai stakeholders. Throughout the
CLA phase, Chabin and their consultant partners (Consultant Team) analyzed Chula Vista
through the eyes of a Corporate Real Estate Executive who mal:es decisions on new long-term
investments for the company's ero��4h or market position plans.
Over 48 stal:ehoiders were involved durine the CLA; �vhich induded a Land Supply & Building
Inventon�; a Corporate Location E�ercise, and Business Climate inten�ie���s. Those inten�ie��-ed
included?�TOn-residential Developers, Propert}� O��mers and Brokers; Site Location Consultants
and Corporate Real Estate Executives. Local Businesses and Partner Organizations.
The CLA examined t��elve main factors that Site Location Consultants and Corporate Real
Estate Executi��es utilize in selecting a location. Each factor is ranl:ed a Streneth (competiti�e
advantaee for e�pansion and attraction), Neutral (no ad��antage or disad��antaee), or a ��'eakness
(a disadvantage) as compared to other regions. The City's o��erall rankine in this e�ercise ���as
I�eutral. The City needs to impro��e the perception and real barriers to transformine Neutral and
VJeakness rankines that it controls, to Strengths if Chula Vista is going to be competiti��e H�ith
these tazeeted business sectors and dusters. The Studv contains recommended priority action
steps. se��eral of ���hich the City has already beeun implementine. Additional discussion of the
recommended actions and actions tai:en to date, aze discussed in the RecommendationslI�'ext
Steps section of this report belo���.
Tareet Industrv Clusters
This portion of the Study utilized a multitude of local, national and intemational sources to
identifi� esistine and potential "best fit ' industr}• clusters for Chula Vista. Determinine tazget
industries for Chula Vista involves both quantitative and qualitati��e evaluations. First, a Tazeet
Industry Analysis �vas conducted, ���hich consisted of a screenina process of multiple sources to
identifv the best fit tar2ets. Second, regional and industry research �+�as applied to tazeet industry
identifcation to alien Chula Vista's assets and opportunities to business dusters. Also included
as part of this task ���as the Competitive Location Assessment (discussed abo��e) which provided
the qualitative evaluation — corporate location decision factors; a real estate market analysis, and
a local business climate sun�e}°—�ihich ���as used to further identifi� the target clusters.
The final process for identif�-ine business clusters im�olved the further in��estisation of niche and
emer�in2 industries, as ���ell as research of the tareet industries identified to.understand their
needs; such as workforce, in a location. Durin� this phase the Consultant Team also investieated
linkages �vith regional assets and ho��� those assets / opportunities affect Chula Vista's position in
the market place, such as, Chula Vista's proximiR� to Tijuana and their manufacmring hub. The
result is matchin� Chula Vista`s assets and market situation from the competitive assessment to
identifi� Chula Vista's Tareet Industr�� Ciusters.
Six primar}� industry clusters ���ere identified as "best fits" based on Chula Vista`s strengths and
assets. The clusters include Advanced Manufacturing, Clean Technolog��, Education &
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Innovation Centers; Information & Communications Teclmologies, Headquarters &
Administrative Sales Offices; and Health & Wellness Semices. Average wages for the target
industries ranee from a lo�� of $42,000 to a high of $125,000 depending on the industry and
occupations. There is a convergence of strengths and assets around several of the clusters, such
as Health and Wellness ��ith Sports Medicine. Also identified were convergence indusvies; such
as, Medical Device (advanced manufacturing, innovation and health) as well as industries linked
to ero�Rh sectors in Tijuana.
The targeted clusters are not intended to exclude opportunities that present themselves. lnstead, it
is a means to focus limited resources to retain, expand and attract businesses. The sectors in this
analysis are Chula Vista's best opportunity for success. Preparing for the atVaction and
expansion of tazeeted clusters and building experience in creating "Go to Market StrateQv"
packa�es also prepares the Ciri� for a better and more rapid response to inquiries outside the
tar�et areas.
Go-to-Market Strateev
The final task of the Study is the Go-to-Market Strategy. The City's first actions in the Go-to-
Market Strategy will be to address the �+�eaknesses and constraints identified in the Competitive
Location Assessment. Addressing weaknesses and removing constraints are critical from both
business retention and atuaction perspectives. Those actions add to the City's business climate
reputation — changing neutral and weakness factors to strengths. The Go-to-Market Strate�y is
focused on the Industry Clusters identified in the Business Cluster Analysis and would become a
key component of the City's Economic Development program and a complement to the
Marketing and Communications Plans. It is not intended to be an overall City brandine,
marketing or communications plan.
The purpose of the Go-to-Market Strategy is to:
1. Recommend Business Retention & Expansion actions focused on Chula Vista's key
industries;
2. Recommend packaging, marketing; promotion and recruitment tactics for the targeted
Industry Clusters;
3. Provide tools to develop a list of Target Industry Businesses (domestic and intemational)
in each cluster to launch prospecting efforts; and
4. Provide an estimated budget for implementing business retention and attraction
marketing and prospecting.
1Vext Stens/Recommended Actions:
As stated above, staff���ill be returning to the City Council within 90 days �vith a detailed work
plan, action steps and budget. The Executive Summary provides an overview of all the
recommendations provided in the Business Cluster Analysis (Attachment A1, pages 10-18).
Below is a summary of those recommendations which are located in the Competitive Location
Assessment and the Go-to-Market Strategy sections of the Analysis.
The recommendations are focused on changing the perception and reality for Chula Vista
Competitive Location "factors" from neutrals and �n�eaknesses to strengths, for creating quality
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jobs throueh expansion_ attraction and investment. The priority recommendations contained in
the Competitive Location Analysis include: I) Project Development, Policies & Practices; 2)
Real Estate Readiness; and 3) Positionine; and 4) Packaeing.
Proiect Development. Policies & Practices.
The Cin� has been ���orkine on several fronts to impro��e the project development, policies and
practices. ?�Iost notabl��. in 2010 the City Council adopled se��eral development process
streamlining initiatives to sianificantly reduce the length of time it takes a project to receive its
entitlements. That is not a static process; staff continues to ���ork �vith stakeholders to
`continually improve," the development process. The perception remains that the tppical
de��elopment process is still too leneth�. To address this, one of the initial steps in the Economic
Development ���ork plan will be to prepare case studies, testimonials, and marketing materials to
demonstrate the improvements that have been made in this area and that ageressive timelines can
be met «�ith collaborative partnerships.
Real Estate Readiness
The Cin� is currentiv constrained �vith limited "shovel-ready' sites (major industrial sites for ne���
users within 6-12 months) in quality business-park em�ironments. The Consultant Team found
this to be a significant �veal:ness in the Cit��'s abilitv to retain, attract and expand high quality
emplo��ment.
The Cin� is limited in its authorit}� to control the ultimate "readiness" land of���hich it does not
solelti� o�im or control. The City continues to work in partnership with the Port District to move
the Bavfront A4aster Plan to sho��el ready status. Similarly; the Citv is ��orkine in cooperation
with the land o„mers in the Universit�• Villages to secure the necessan� entitlements to mo��e the
��illaees and the Uni��ersitv Pazk and lnno��ation District to���azds shovel readv status. The Cit��
needs to place a complimentan� le��el of emphasis on identif��ing and preparing Limited
Industrial and Industrial lands for shovel ready status. The City�vill also continuously work with
its partners to proacti��elv market these projects to the appropriate tareet audiences.
Positionin2
The Cit�� of Chula Vista is uniquely positioned in the heart of the US/A4exico bi-national reeion.
Ho���ever; locatine companies in Califomia is a challenge given the state's reputation, regulatory
climate and tax structure and puts Chula Vista in direct competitio❑ N�ith other south���estem
states which, on a comparative basis, have a lo�ver cost structure. ,
V�'hat is distinctly unique that differentiates Chula Vista is the proximity to Tijuana, the
connectiviri to San Dieeo's resources and educational institutions, as ���ell as a multinational
residence base. Chula Vista offers a quality location for headquaners, sales,
research/development and high tech testing «�ith the cross-border manufacturing opportunity.
There are several reeional effoRS takin2 place to capitalize on the Citv's unique ph��sical
location. The City ���ill be re-eneagine the Cali-Baja Mega-Region Initiative, which seeks to
attract business investment alon2 the entire California - Baja, �4exico border region. Cit�� staff
will continue to aro��� the relationship it has with the Tijuana EDC, as ���ell as other economic
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development organizations in the Baja region to jointly market and attract investment in the
region.
Providine the size and quality of workforce that Chula Vista will need to reach its economic
potential will require a renewed emphasis in partnerships between the City, targeted businesses
sectors, South��estern College and other regional centers of education that can build a workforce
with the skills that match those targeted business' needs. Those partnerships in vocational and
academic training are a vital pari of the expansion, attraction and retention of quality employers,
and South Bay's abilit}' to establish quality jobs for the current and future generations of Chula
Vista and South Bay residents.
PackaQlpg ,
The packing of the City's marketing materials will require developing a cohesive data set from a
variety of sources both internal and extemal to the City. Staff has begun to compile a
compendium of user-friendly maps identifying all existing and planned.business and industrial
areas within the City, applicable zoning; major property owners / broker contacts, and probable
timing of delivery. Staff is also developing collateral materia] such as maps, workforce data and
business cases to support marketing and business attraction. Developing the capacity to
promptly prepare a comprehensive business package, tailored to the specific economic
development target will improve business expansion and attraction outcomes. Economic
Development will work with Marketing and Communications to maximize the package's
professional appearance and to compliment the City's marketing and branding objectives.
In regards to the Go-to-Market Strategy, recommendations are focused on a tactical approach
to business retention, expansion, attraction, and prospecting. The focus will be on existing
industries that are aligned N�ith ide�tified targets. The recommendations include: 1) Existing
Business De��elopment; 2) Packaging; 3) Positioning; 4) Target Markets; 5) Business
Attraction Tactics; and 6) Eamed Media.
Existina Business Development
The first place to start in the Go-to-Market Strategy is to work with the businesses and clusters
that are alread}� located in our City. The City has long reached out to all segments of the local
business community. Recent efforts have been focused on those businesses within the City's
Enterprise Zone, with an emphasis on advanced manufacturing businesses. As recommended in
the Go-to-Market Strategy, staff �vill focus efforts to work with businesses industries in the
targeted clusters to better understand the needs of these particular industries.
Packaeing & Positionina
As noted above, the Package and Positioning recommendations are factors that cross over into
both the Competitive Location Assessment as wel] as the Go-to-Market strategies. The efforts
described above will be carried forward in this section.
Taraet Markets
The six target clusters were identified in the in the Best Fit Targets Clusters portion of the study.
One to two target clusters will be selected for priority prospecting campaigns and building a
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pipeline of prospects. Staff v��ill begin to identifi� priorin� clusters «�th best opportunities to be
matched to a neaz term project development.
Business Attraction Tactics
A variety of attraction ���ill be utilized, ��ith a focus on direct marketine and sales �iith
screened business tareets, collaborati��e marketine ��ith Tijuana to promote the bi-national
opportunities; and relationship mazketing through regional oreanizations such as the South
Countv EDC; TeamCalifornia and ���ith site selection and brokeraee communiq�.
Eamed Media
Communications. messaeine and media are handled b�� the Office of Communications. Several
media outlets aze aliQned ��ith tareet clusters and will be targeted for earned media (ne�vs,
announcements, and stories).
Conclusion - _
�'Jhat is distinctiv unique that differentiates Chula Vista is the proximit�� to Tijuana; the
connecti��it�� to San Dieso's resources and educational institutions as ���ell as a multinational
residence base. Chula Vista offers a quality location for headquarters, sales, research and
development, and hieh tech testin2 ���ith the cross-border manufacturine opportuniry.
The Consultant Team has developed a detailed course of action that ���ill increase the City's
abilin� to attract and retain qualiri�jobs for the communitv. Several of the recommendations aze
currently being implemented by Cit�� staff.
"\i'hat ���ill success look like ��=hen the plan is implemented?" The Consultant Team ran an
impact model based on a scenario of a compam� similar to Chula Vista's targeted industry
sectors; light manufacturing that ���ould employ 80 people at an average annual total payroil of
�3S million, �cith a capital investment of S8 to �]0 million in construction and equipment. Usine
multipliers for lieht industry estimated economic benefit generated by the company would be
$19+ million annually in goods and services; an additional 100+ indirect (support) jobs. and
�rould result in an additional �200.000+ annuall�� in local taxes. «'hile these are appro�imations,
this example sho���s the financial benefits to the local economy and the need to best position the
City for these t}�pes of investments.
DECISION A4AKER CONFLICT
Staff has reviewed the de.cision contemplated by this action and has determined that it is not site
specific and consequently, the �00-foot rule found in California Code of Re2ulations section
1870�.2(a)(1) is not applicabie to this decision. Staff is not independently a�i�aze; nor has staff
been informed b�� am� City Councilmember, of any other fact that may constitute a basis for a
decision maker conflict oF interest in this matter.
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CURRENT 1'EAR FISCAL IMPACT
The Business Cluster Analysis study was funded under the FY13 fiscal year budget. No
additional funding is required to complete the study.
ONGOING FISCAL IMPACT
Staff will return to the City Council with a range of options to implement the recommended
business cluster/quality job development strategy. The resources to execute each option and a
projection of the costs and benefits of those options will be outlined in stafFs report.
ATTACHMENTS
A. Business Cluster Analysis
1. Eaecutive Summazy
2. Target Industry Sectors
3. Go-to-Market Strategy �
4. Competitive Location Analysis
Prepared by: Craig Rurr, Principa/ Economic Development Specialrst, Administrution/Economic Development
Departmen[
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