Yesterday, colleagues from Business For Good San Diego and I gave public testimony at the Economic Development & Intergovernmental Relations Committee (ED&IR) of the San Diego City Council as they reviewed proposed updates to the City’s Business Incentive Program [900-12] — a policy that hasn’t changed in 17 years despite significant changes in our regional economy and our understanding of it. As noted in my comments below, we’re enthusiastic about changing this program and embracing the fantastic research that the San Diego Regional Economic Development Corporation and the Brookings Institution have been leading on creating an inclusive economy here.
While all of us at Mission Driven Finance are obviously excited about private impact investment capital’s ability to change business behavior, we want to ensure that all available tools are being used to create the society we aspire to have. Public tools like the City’s Business Incentive Program are critical to have aligned in this work advancing economic opportunity!
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Hello, my name is Lauren Grattan and I’m one of the owners of Mission Driven Finance, a local impact investment firm. Through a commercial loan fund, advisory services, and hands-on technical assistance, we mobilize capital to advance economic opportunity. I am also here as a member of Business For Good San Diego.
I applaud the committee for embracing the mantra of inclusive economic development, but also want to ensure that updates to the business incentive program are made proactively and mindfully to support everyone in our local economy. This is an exciting opportunity to address the concerns raised in the city auditor’s recent report and build the right kind of policy.
However, I would like to make sure that the economic development goals in it are clear – and that the structure we put in place through the incentive program is built accordingly. As it currently stands, the mention of “inclusive economic growth” in this proposed policy comes across as mostly rhetorical. So let’s make sure the new policy creates new processes, structures, programs that make it easier to help grow the right kind of businesses.
And what are the right kind of businesses? I encourage us to think outside of our San Diego-specific “innovation economy” triad of biotech, telecom, and tourism when we define “base sector firms” that is a current requirement for this program. We have other financial programs and tools available to attract and incentivize these firms, so let’s use this program to prioritize small businesses that help us achieve our inclusive growth goals. Mr. Graham and Mr. Cafferty referenced the work of the Regional EDC and Brookings. Included in that research is that more than 90% of San Diego firms are small businesses employing half of our local workers, but the current incentives laid out are by and large not accessible to those businesses. At first glance at the materials provided, $10,000 to $100,000 to a business large enough to hire 25 people or raise $5M in one year will be a drop in the bucket of their budget and not alter their behavior.
A no-brainer that I’d like to see written clearly in the policy is a priority to outreach to & incentivize women-, minority-, and veteran-owned businesses.
And, finally, let’s aim high: let’s try to include opportunities to incentivize community-owned businesses. It’s the kind of innovation that puts cities on the map and makes them attractive to anchor institutions and residents.
In closing, I’ll just say this: if handled openly, the new city policy will have your staff meet with the right stakeholders as they build the specifics of the program. Business For Good is one of those stakeholders and we look forward to helping identify what you can do with this program so that it maximizes its impact.