HomeMy WebLinkAbout2022-03-14; Economic Development Subcommittee; ; Economic Development Program and BEAR UpdateEconomic Development Subcommittee
Meeting Date: March 14, 2022
To: City Council Economic Development Subcommittee
From: David Graham, Chief Innovation Officer
Item #2: Economic Development Program and BEAR Update
City of
Carlsbad
Recommendation:
Receive an informational report regarding city economic development activities, discuss and
provide recommendations, including on whether to carry forward remaining ERRI funds to fiscal
year 2022/2023.
Discussion:
Economic development staff have been engaged on a number of programs focused on support
and growth of Carlsbad's economy. This report provides a summary of notable programs and
ongoing activities.
Response to Economic Conditions
Since January, the Omicron variant of COVID-19 had significant impact on the local economy.
However, due to the steep increase and subsequent sharp decrease in cases, that impact has
already largely subsided. Some businesses experienced workforce shortages and reduced
consumer demand because of the fast-sweeping variant. With the rapid decrease in cases, high
vaccination status, and lower hospitalization rates, many restrictions have been lifted at the
county, state, and federal levels. This includes the statewide mask mandate that was in effect
from Dec. 15 to Feb. 15. Staff continued to convey health order information to businesses via
Joint Communications along with the Chamber of Commerce and Carlsbad Village Association
during this time. Subsequent actions from the Center for Disease Control, State of California,
and County of San Diego indicate that masks will no longer be required in many special settings,
including schools and public transportation, beginning mid-March. Because of the repeal of
restrictions, optimistic sentiment expressed by businesses, and positive economic outlook, the
economic development efforts by staff are pivoting from its focus on recovery programs and
resuming focus on key industries, startups, and small business support.
With the Russian invasion of Ukraine beginning late February, new global instability has led to a
sharp increase in prices, extending and contributing to inflationary pressures. As of this report,
gas prices in the region have risen more than $.85 in the past three weeks with an expectation
to continue. These conditions have created a renewed sense of uncertainty for many
businesses, with the cost of commuting now factoring into remote work considerations.
ERRI Funds
As the impacts of the COVID-19 pandemic continue to wane, staff have been engaging with
businesses, stakeholders, startups, and entrepreneurs, who have provided feedback on the
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need for businesses to adapt to the "new normal." Many businesses face workforce challenges
as a result of increasing costs of living, wage pressures, global supply chain issues and inflation.
In a recent discussion with leaders from the Sports Innovation & Design industry — one of
Carlsbad's key industries driving economic growth — business leaders shared their expectations
that many of these shifts will continue to disrupt their individual businesses, as well as entire
industries. This sentiment was also expressed by respondents to the biennial business survey,
which is included in the 2022 Carlsbad Business Report.
As Carlsbad businesses face macro-disruptions and many new business ventures that started
during the pandemic begin to grow, staff recommends that remaining ERRI funds be carried
forward to fiscal year 2022/2023 so that the city is positioned to support businesses and
industries as they adapt.
Pros:
The city is prepared to help businesses and key industries adapt to new market
conditions and face disruptions, preserving economic vitality and mitigating some
pressures that may otherwise result in downsizing or relocating.
The city can support entrepreneurs that started a business during the pandemic to grow
outside of their home office and plant roots in Carlsbad, kindling economic growth
amongst the Carlsbad startup community.
Cons:
Should ERRI funds not be carried over, the funds would be returned to the general fund,
but it would leave the city with fewer options to support businesses and startups facing
current disruptions.
Carlsbad Tourism BID
At the Jan. 12 TBID meeting, TBID members considered and passed an item to appropriate
funding to explore a conversion to a '94 Act TBID. As a result, the TBID has retained outside
counsel and has selected a consultant to assist with the conversion process, which is
anticipated to take six months.
Banner Program
Staff has worked with Carlsbad Village Association to identify four additional areas around the
city to expand the banner program to enhance the aesthetic along certain retail corridors to be
more inviting and create a sense of place. The banners would be the same designs as those
currently hung in the Forum and Carlsbad Premium Outlet areas, which are representative of
the city's culture and active lifestyle.
The identified areas for expansion include:
The Shoppes
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Bressi Ranch
La Costa Town Square
The Crossings
Staff estimates an additional 70 banners would be hung across these four areas. To move
forward with this expansion, it is estimated that an additional $30,000 would be necessary,
bringing the banner program total to $65,000 in its first year. Staff estimates that there could
be significant cost reduction in subsequent years once the initial placement of hardware, and
printing of banners has been done. Based on the recommendation from the January 10
meeting, staff will continue to work with the Carlsbad Village Association toward this goal.
Business Expansion, Attraction, and Retention (BEAR) Update
Over the past several months, economic development staff have continued to engage on
several large BEAR projects that will yield gains in employment and new investment in the city.
Warner Brothers Gaming Studios, which is taking space at the new State Street Commons
building, experienced an issue while trying to process its business license, which caused an
initial denial. Economic development staff was able to work with the business to clarify what
was needed and correct the business's application issues to avoid delays.
BMW of Carlsbad, which is developing a new dealership in Car Country Carlsbad, experienced
delays in its development process, putting it behind from its target opening date in the Fall
2022. The dealership now anticipates its opening to be in the first or second quarter of 2023.
While the delay hindered development, the city's building department is committed to working
with the dealership's development team to work as quickly as possible as the dealership builds
out its space. As a positive note, the new dealership will be one of the first in the nation to have
BMW North America's new branding.
Aptera Motors, makers of solar powered, aerodynamic electric vehicles, selected Carlsbad for
its production manufacturing facility. As the company evaluated how to best setup its
production and assembly space, Economic Development and Community Development teams
worked with the company to get it operating as quickly as possible. Aptera is expected to
generate significant sales tax revenue and is now seeking additional space in the area.
Cruzan, owners of MAKE and COMMERCE developments on Avenida Encinas have partnered
with Alexandria Real-Estate to redevelop several buildings on those campuses. The Cruzan/ARE
development team is working with staff on renovating 50,000 sq. ft. at MAKE for a new biotech
research and development company that is moving from the Pasadena area to Carlsbad. The
partnership with ARE is significant, as ARE is the largest developer of life sciences space in the
country.
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Next Steps:
Staff will return at the next Economic Development Subcommittee with updates to these items.
If desired, committee members can provide input and direction.
Should the subcommittee members recommend a carryover of ERRI funds for an additional
year, staff will prepare an item for City Council consideration.
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