As this week brings news of our local unemployment rate just beginning to taper downward, local businesses are peering out from their frozen dens for the first signs of Spring. That’s of little solace to thousands of our families still losing their homes and jobs, but it does raise a crucial question as we try to get people back to work: how can we best communicate to businesses that they should make San José the place to grow?
Although the media typically focuses on the flight of jobs and companies from California, a 2007 study from Public Policy Institute of California found that far greater employment shifts occur within California, from businesses moving from one county to another—usually adjacent—California county. Yet an even larger impact on local jobs comes from a corporate boardroom’s decision about where and whether they will expand, rather than whether or where they will relocate. The authors, economists Jed Kolko and David Neumark, conclude that real estate costs appear to drive many of those decisions. Naturally, the regulatory costs that cities impose on a company’s real estate decisions also play a key role.
This week, Mayor Chuck Reed and Councilmembers Rose Herrera, Nancy Pyle, and I will lay out a multi-pronged business incentive plan. We don’t pretend that this will provide the panacea for our anemic job growth, or that any one of these proposals will itself magically alter the trajectory of a San José business. Rather, we aim to improve the perception about doing business in San José, and to encourage business decision-makers to take advantage of the City’s willingness to help them hire and grow here. These proposals include:
• Waiving business license fees on any new small business employing up to 8 employees, to help the many residents—particularly in our immigrant communities—who often start small businesses during periods of high unemployment;
• Reimbursing companies for city fees on tenant improvements or new development, by rebating the additional tax revenues created by the development activity over several years;
• Creating a fund to pay for expedited permitting where we need to move nimbly to secure a company’s expansion, tenant improvements, or move into a vacant building;
• Waiving fees for employee parking in public garages for two years for any company choosing to enter or renew a lease in a downtown office or retail space;
• Deferring the payment of some City impact fees on development—relating to transportation, sewer, or other infrastructure improvements—where those improvements will phase in over time; and
• Working with local business organizations to effectively spread the word about these incentives, and other programs, such as Enterprise Zone tax credits, that will make San José the place to hire and grow business.
Two principles animate these proposals. First, we need to take calculated risks to become a locus of job creation. Doing nothing, of course, poses far greater risks, by condemning us to our current economic anemia. Second, with a $100 million deficit, the City cannot use current dollars as an incentive for business activity. As our Office of Economic Development has explored, however, we can commit future tax revenues generated by that new business activity.
These ideas, and others that might be generated by the community, local businesses, and our colleagues, can work effectively if packaged together to sell San José to the rest of the world—but only if we act with the urgency that our struggling families deserve.
Sam Liccardo represents District 3 on the San Jose City Council.