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  • General Plan - Economic Development and Employment Element - General Implementation Concepts


    ECONOMIC DEVELOPMENT

    The classical definition of economic development is the sustained increase in the output of goods and services, brought about by increases in the productivity or quantity of the three factors of production: land, labor and capital. However, as applied to urban economic development, it means a set of deliberate and planned interventions by local government or other public and quasi-public bodies into the economic process in order to accomplish some predetermined goals. It almost always involves the encouragement of private business investment within a specific geographic area in order to increase that area's employment, tax base, or economic activity.

    This can be accomplished in a number of ways. A wide array of tools is available to organizations involved in implementing economic development plans. These tools and programs designed to utilize them are all directed at encouraging, enticing or assisting businesses, or in some cases public entities, to develop, relocate, expand or retain facilities within a given area where they would contribute to its economic base.

    Economic development efforts are generally focused on the provision of incentives to influence private investment decisions. These incentives, in turn, are centered about the three classic factors of productions - land, labor and capital.

    Incentives related to land include the availability of developable building sites at competitive or, in some cases, written-down land prices. Labor-related incentives may include availability of a well-trained labor force and job recruitment/training/referral services. Government guaranteed or direct loans, below-market interest loans through revenue bonds and city administered federal funds are some of the capital incentives local government may provide to attract or retain desired businesses.

    There are other types of assistance and services which can be used to foster business development or retention which are not related to land, labor or capital. Among them are technical assistance and packaging services, expedited plan review and development processing, off-site capital improvements and improved public services.

    Even with all of the above incentives, there is still a need to promote the City as a desirable place to invest. This implies a good business climate, a growth-oriented image and a record of close public-private sector cooperation. Other features of the City should be advertised such as the quality of life it offers, its recreational and cultural amenities and its residential opportunities.

     




    EMPLOYMENT

    A comprehensive employment program involves a careful matching of business employment needs and available labor skills. It requires close coordination of all the steps leading from identification of employment needs to actual job placement. A successful employment program is one which produces a labor force trained in the skills required by new job opportunities as they arise. This implies a close working relationship between employment and economic development programs.

    There has always been the question of whether an economic development program should be tailored to produce jobs which match the skill levels of the local labor force of whether an employment program should produce a labor force capable of fulfilling the jobs developed through an economic development program. The answer is somewhat provided by changes occurring in the national economy as mentioned in the Background and Issues Sections. These changes imply that the work force must be molded or remolded to fit the skill demands of a changing labor market. The critical employment issue is not necessarily the lack of jobs, but the mismatch between the current work skills of the labor force and the skill requirements of the jobs that are available or will be created in the future.

    Due to the rapidly changing nature of the labor market, it becomes imperative that employment programs, especially those related to job training, keep abreast of technological advancements and innovations, economic development trends, business and real estate activity. Designing and implementing a successful job training program requires a thorough knowledge of the types of job opportunities that will be available when the trainee completes his or her course of study. Unfortunately, there have been cases when training programs have given trainees obsolete skills, because they failed to recognize technological changes occurring in a particular field. An example was the continued training of key punch operators when the computer field had already moved into direct data entry.

    Almost equal in importance to the training programs are job referral and placement programs. Nothing is more discouraging than not being able to find a job for which you have recently undergone extensive training. Ideally, a comprehensive employment program would have the following totally integrated components: job research and program planning, skills training, job counseling, referral and placement services. Far too often, some of these components are missing or operate independently with less than satisfactory results.

     




    STRATEGIES, POLICIES AND PROGRAMS

    The following strategies, policies and programs are designed to guide efforts toward achieving the City's economic development and employment goals and objectives. They are not designed in detail (i.e., specific projects, program scope, budgets, time frame). Rather, they are proposed to establish a general framework for decision making and program design. Their purposes are to establish an overall direction for economic development in the City, as well as to link related implementation measures in a coordinated approach.

     




    SOUND LOCAL ECONOMY

    STRATEGY

    The strategy for promoting and maintaining a sound economy revolves around three major points.

     

    1. A clear and concise set of development objectives and policies which include a clear sense of direction as to where the City wishes to head in terms of its future development, the types of development it wishes to attract consistent with this direction, explicit development guidelines setting forth the standards by which prospective developments will be evaluated and which result in consistent and coordinated decisions.
    2. An improvement business climate in which a partnership is forged between the public and private sectors to achieve development consistent with the above objectives and policies. To encourage this development, the City could offer incentives such as expedited development processing, coordinated reviews and decision-making and direct assistance in land acquisition and assembly, capital improvements and financial assistance utilizing a variety of government programs (industrial Revenue Bonds, CDBG, UDAG, SBA). The private sector would contribute capital and entrepreneurial expertise to the partnership.
    3. A restructured economic development decision-making process which involves direct participation by the private sector and other groups affected by such decisions, as community-based organizations, neighborhood associations, minorities and employment development interests. Presently, there is no single formal mechanism by which these interests participate in the decision-making process on a regular, ongoing basis, particularly at the goal and policy setting level. The major objective of such a new process would be to develop and maintain a consensus on the direction of the City's economic development efforts. It might be patterned much like the ad hoc Urban Design Advisory Committee which was designed to have representation from specific areas of interest. In this manner, the broadest range of support might be achieved for the City's economic development policies.


    The following policies are proposed to carry out this strategy:

     

    1. Economic development in the City is to be carried out under a joint public-private partnership concept with an emphasis on cooperation and mutual support to achieve common objectives.
    2. The City shall strive to involve all of the interests affected by economic development decisions in the decision-making process.


    This strategy is proposed to be implemented by the following programs.

    The preparation and adoption of a Comprehensive Economic Development Plan and Implementation Program. In addition to establishing a clear direction for the City's economic development efforts, the plan would also develop strategies, priorities, measurable performance targets and annual work programs for achieving these targets. A major task will be to review all of the City's existing economic development programs and determine where they fit within the context of the plan. The plan would ensure that the purposes and objectives of these individual programs are consistent with the overall direction of the City's economic development efforts.

    The plan would also have a major employment component to integrate the City's employment needs into its economic development programs. Having this component in the plan would yield assurances that both its economic development and employment needs are addressed in a coordinated manner.

    The establishment of a process in which those who are affected by economic development decisions directly participate in the making of those decisions. The process is based on the principles of shared decision-making and public-private sector cooperation. b objective is to minimize, if not eliminate, the mistrust and confrontation, which on occasion has marked the City's economic development efforts. There are several alternative approaches to implementing this process. Each has its advantages and disadvantages.

    The critical issue related to each of these alternatives is one of defining its role and relationship with other bodies currently involved in economic development, as well as stimulating initiatives from the business/development community.

    A. Creation of a separate policy advisory board.
    This approach presents the opportunity to design a new organization designed specifically around the above principles free from existing mandates and responsibilities. Its disadvantages would be the establishment of still another citizen advisory body with its attendant staffing requirements, as well as the need to restructure the roles of existing bodies involved in economic development.

    This new organization could also serve in a coordinative role by having representation from existing City commissions and committees involved in some phase of economic development, in addition to the aforementioned private and quasi-public interests. These would include the Planning Commission, Community Development Committee, Utility Advisory Committee, Cultural Heritage Commission, and Resource Allocation Committee. However, this may lead to possible problems of size and the consequent ability of this organization to function effectively.

    B. Expansion of the Community Development Committee to include formal representation from all affected by economic development decisions.
    The major advantage of this approach is that it would retain the roles and relationships of the existing economic development organizational structure. Again, while the expansion of the Committee would have its advantages in its planning and policy formulation functions, the expanded size would prove cumbersome in carrying out its redevelopment project implementation role.

    C. Establishment of a process in which the interests of persons and organizations affected by economic development decisions can be integrated into the decision-making process short of creating a new permanent organization.
    This could involve the use of an ad hoc committee to supplement the Community Development Committee on matters dealing with economic development policy. This approach would provide for the development planning process, while at the same time would allow the Community Development Committee to carry out its other functions unencumbered by an unwieldy, permanently expanded membership.

    The basic structure for such a committee would be similar to the now disbanded Goals Congress. This citizen-based goal setting effort was characterized by widespread representation of community interest groups which dealt with economic development issues in the goals development process. Other advantages to this approach include retention of existing economic development organizational structure and limited commitments by ad hoc committee members. It is envisioned that they would not only augment the Community Development Committee in the planning and program development phase of the process, but would also participate in annual reviews and evaluations of program performance. It should be noted that this approach was used successfully in the Downtown Urban Design Planning Program and in the Housing Element Revision Program conducted in 1978-79.

     



    BALANCED APPROACH TO ECONOMIC DEVELOPMENT

    Strategy

    The strategy for maintaining a balance between the need for development with other City needs centers around a process of establishing the City's goals, values and priorities, determining their implications on the extent and type of acceptable development and its impact on the community and reaching agreement on the tradeoffs that will have to be made to accommodate it. In essence, it is a process designed to identify the role of economic development in shaping the type of community and quality of life desired by its residents and to reach consensus on the proper standing of economic development in the City's list of priorities.

    The following policies are proposed to place economic development in proper perspective with other City goals and objectives.

     

    1. Economic development projects which require significant discretionary action on the part of the city and/or an Environmental Impact Report shall be required to prepare an Economic Impact Statement which identifies how and to what extent the project addresses the City's economic development and employment objectives.
    2. Economic development projects shall be reviewed within the context of overall City needs and evaluated on the basis of their contributions to meeting these needs.


    Through this Economic Impact Statement, the impact of a proposed economic development project can be measured against predetermined criteria and the results used as part of the decision-making process. The technique could also be used to decide among competing projects or to establish the degree of City assistance.

     



    INCREASED PUBLIC REVENUES FROM ECONOMIC DEVELOPMENT

    STRATEGY


    If one of the justifications for economic development is the generation of public revenues. then the strategy to achieve this goal should be directed at expanding both its sources and the amount. Since the passage of Proposition 13, new development can no longer justify itself solely on the amount of new property tax revenues it would produce. It must be able to make significant contributions in the form of jobs and revenues, if it is to support the finding of providing a net benefit to the City.

    In addition to paying for itself in terms of ongoing public service costs, economic development must be able to make contributions toward capital improvements required to mitigate the environmental impacts, principally traffic, it creates.

    The California State Supreme Court in its Farrell decision has opened up a number of potential new revenue sources from economic development. An additional tax burden on the business sector can be justified on the basis that since the passage of Proposition 13, the non-residential sector is carrying proportionately less of the property tax burden than the residential sector due to less frequent property turnover.

    In its current form, the business license tax can also yield additional revenues if the tax rate is increased and/or the maximum ceiling is raised or eliminated. Under current rates, the business license tax yields $7.45 per capita. as compared to $12.00 per capita for the State of California and $22.00 per capita for Los Angeles County.

    There are other means of increasing the total tax revenues derived from economic development. One is to increase hotel space and tourist and convention activity. Another would be to create closer linkages between office uses and other high employment centers and retail shopping facilities. This can be accomplished by either physically locating these uses near each other or linking them with some kind of internal transportation system.

    In addition to consideration of direct increases in public revenue experienced by development, secondary revenues and cost savings should also be taken into account as a significant factor. Although methods to quantity community attitudes and preferences for a specific quality of life are difficult to achieve, enhancement of economic independence for residents has indirect benefits. Reduced unemployment decreases requirements for local expenditures in the areas of public safety, public assistance programs and other related social services traditionally borne totally or in part by local units of government. Increased personal incomes also offer potential for increased demands for goods and services. This stimulates the local economy and generates additional revenues through sales and other taxes. Therefore, one factor in the economic development planning process should be consideration of proposed projects that import a labor force versus projects proposing local hiring to meet their work force needs.

    The policies to implement these concepts would include:

     

    1. Economic development projects shall have a goal to produce total annual tax revenues to the City which are more representative of their assessed valuation than property tax revenues.
    2. Speculative office development exceeding 150,000 sq. ft. in gross floor area or two acres in site area shall be required to have retail uses on the ground floor, unless it can be shown that such uses are impractical due to location.
    3. Expansion of tourism and convention activity is to receive priority consideration in the City's economic development program.
    4. Office developments shall be encouraged to locate within reasonable walking distance of shopping facilities and districts.
       


    INCREASED EMPLOYMENT OPPORTUNITIES

    STRATEGY

    The key factor in deriving greater job opportunities for Pasadena residents from economic development projects is close coordination between the economic development and employment development sectors of City government. This means that representatives from the employment sector are involved at the outset in negotiations with potential developers. The objective in these negotiations should be to encourage that-local residents and businesses be given preferential consideration in potential hiring and business opportunities.

    However, this also places an obligation on the part of the employment development people to be able to provide trained personnel and a list of qualified businesses which meet the developer’s and the tenants' needs. This is still further reason why employment representatives need to be aware of impending projects at the incipient stage. The long lead time for project development and construction would allow for the recruitment and training of potential employees and lining up of local contractors and service vendors.

    Related to the provision of trained personnel to meet business and industry needs are two additional factors. The first is a need for guidance for job training programs by persons or boards which keep aware of the latest employment needs and future trends based on shifts in the business economy, technological changes and type of required skills to meet a changing job market. The second is the availability of an active job broker whose job is to make periodic visits to medium and large employers to ascertain impending job openings or recruitment needs. His or her task would be to match up the opening with a person having the requisite skills.

    The former need is being addressed by the newly formed Foothill Employment and Training Consortium and its program advisory body the Foothill Private Industry Council. The Foothill PIC is a 27-member body whose membership is comprised of representatives from the local cities and education agencies, the Pasadena Chamber of Commerce, the State Employment Development, and business/industry of the greater Pasadena area (Pasadena. South Pasadena. Sierra Madre, Arcadia. Monrovia and Duarte). Business/industry representation is required by Federal and State law to exceed 50%.

    The Private Industry Council provides specific guidance in the design and implementation of the job training programs administered by the Community Skills Center. These decisions for programs are based upon analysis of the local labor market demand which identifies job opportunities currently available or anticipated within a year's period. The Job Training Partnership Act (JTPA). the new Federal job training legislation, requires direct participation of local business/industry representatives and economic development entities.

    Secondly, a Joint Policy Review Committee for the Community Skills Center has been developed with two representatives from each of the three participating entities, the City, The City College and the School District.

    While the Community Skills Center is providing job placement services for its graduates, there is a need to expand these services to persons who do not go through its training program for one reason or another. in short, it calls for a centralized source for matching people with jobs regardless of where a person may have received his or her training.

    An aggressive job/person matching effort is probably the most successful means of ensuring the hiring of local residents by local firms and those which intend to move into the City. Another advantage of this approach is that the job broker is given knowledge of potential job openings before the business advertises the opening, thus giving Pasadena residents an opportunity before others.

    Finally, closer coordination between City staff involved in both economic development and job training and development can ensure more effective use of Federal grant resources available in both areas. The result will be a greater ability to initiate projects which not only enhance the economic growth of the City but directly benefit both local business and City residents.

    A key element in any comprehensive economic development plan is consideration of total public needs. Some development efforts have failed, for example, to ensure that the jobs created by development projects go to local residents, thus making little headway against unemployment and losing City revenues that could have been collected on resident earnings through increased disposable income.

    To meet the employment needs of both the residents and affected business/industry, a myriad of options are available for local government. These options range from aggressive efforts in negotiating economic development projects where City financial assistance is involved such as first source agreements or local hiring goals to the adoption of policy statements which indicate the interest and preference of government for local hiring in jobs generated by development activities.

    A number of options ranging from minimum to maximum efforts have been used in cites across the country. While these options are too numerous for discussion in this element, they should be studied in the formulation of the Comprehensive Economic Development Plan.

    The following policies are designed to effectuate closer coordination between economic development and employment development activities.

     

    1. Representatives of the job training and employment development sector shall be involved in the very early stages of negotiations with developers involving projects of 100,000 sq. ft. of gross floor area or greater.
    2. The City shall make use of development agreements and covenants to obtain commitments to hire local residents and utilize local businesses or make good faith efforts by major development projects which are found to have environmental impacts which cannot be mitigated to insignificant levels.
    3. Affirmative Action Plan and a plan for hiring local residents and utilizing local businesses shall be normally required of development projects for which a finding of consistency with the General Plan must be made or which involve significant discretionary action on the part of the City.


    The policies below focus on the need to make job training programs and employment development efforts more responsive to the needs of the job market and Pasadena residents.

     

    1. The City shall seek to ensure that job training and vocational education programs receive proper guidance from persons/agencies that are knowledgeable about the needs of the job market.
    2. The City shall take a pro-active position in seeing to it that the hiring needs of the private sector are fulfilled by well trained, qualified local residents.


    Programs to implement the above policies would include:

     

    1. The formation of Foothill Employment and Training Consortium and Private Industrial Council and Joint Policy Review Committee for the Community Skills Center.
    2. Establishment of a centralized jobs brokerage house which can provide the following services:
      1. Jobs/skills matching
      2. Referral and placement services
      3. Information exchange/job bank
      4. Economic development/skills training coordination
      5. Recruiting and screening for job training
      6. Subcontracting for training services



    REDUCTION IN UNEMPLOYMENT RATE

    STRATEGY

    There are several methods to reduce the City's unemployment rate. The first, obviously, is to create more jobs. However, this approach will not be successful unless the jobs fit the skill levels of the unemployed or the unemployed are trained or retrained to meet the skill level requirements of the jobs being created. Another approach is to remove the impediments that keep the unemployed from seeking jobs. wherever they may be found, whether within or outside the City. These include lack of transportation or even information about job opportunities outside the City. Given the metropolitan context the City finds itself, development economics and the changing nature of its economic base, it should not be expected that the City would be able to provide the full range of employment opportunities to meet the needs of its resident labor force. This implies a greater effort toward identifying regional job opportunities, the types of which the City is unable to provide.

    Still another approach is to give priority to the retention and expansion of existing businesses at which great numbers of local residents are already employed. Creating new jobs to replace jobs that are lost does not lead to a net increase in jobs. Moreover, it is undesirable from the standpoint that most often the new jobs do not replace the jobs that are lost. New clerical office jobs are of little benefit to an assemblyline worker who has been laid off because the firm has relocated out of the city. Therefore, within this priority, top priority should be given to retaining those jobs that are not being replaced in kind by new jobs.

    In terms of providing employment opportunities for the low skilled unemployed, emphasis should be placed on the development and nurturing of small businesses which have traditionally been a major source of entry level jobs. This is particularly important in minority communities. While these small businesses may or may not offer opportunities to develop marketable skills, they do provide job experience, a work record and references.

    In order to do a better job of meeting the needs of the City's unemployed and underemployed, more information should be gathered on the specific characteristics of this population segment. This information could be used to identify potential limitations or constraints to job training such as lack of education, need for child care services or language difficulties, as well as to differentiate between the structurally unemployed and those affected by economic conditions. The intent is to gain as much knowledge about the person needing employment as about the employment opportunities available to him or her. The Career Services Division has tabulated characteristics of the unemployed population the job training program serves. This information should be kept current and distributed to entities involved in economic development and job training activities.

    Reduction in the City's unemployment rate can be addressed by the following policies:

     

    1. First priority shall be placed on the retention of those existing jobs in the City which are not likely to be replaced in kind, if lost.
    2. The search for jobs for the City's unemployed shall not be limited to within City boundaries. Job opportunities shall be sought wherever they may exist.
    3. The City's Economic Development Program shall emphasize and give support to small businesses, particularly those located in minority areas.
       

    Possible programs to implement these policies would include:

     

    1. Use of redevelopment process to meet the needs of small businesses.
    2. Expansion of existing small business assistance programs, especially those related to capital acquisition, management training and technical assistance.
    3. Creation of a regional job information clearinghouse or joint sharing of job infromation among local employment development programs.
    4. Maintenance of a data bank on the demographic and socioeconomic characteristics of the unemployed population.