Why The Business Attraction and Retention Program is needed

Many neighborhoods have been challenged by decades of "urban flight" where the amenities and low-crime rate of suburban communities have lured high quality businesses and residents from the inner city. The slow but steady exodus has resulted in property vacancy, a decrease in retail services for residents and the creation of an unhealthy community environment. Business and community leaders recognize that the responsibility to revitalize these communities does not rest solely on the shoulders of city officials. The private sector has a role, along with government to generate the economic investment needed to make these communities more vibrant.

While these older, established neighborhoods struggle to attract or retain businesses, the competition for the most viable companies also increases. With greater competition for these businesses, from urban and suburban communities alike, the strategies necessary to attract companies have become more aggressive and sophisticated.

While street banner programs, gateways, and other beautification programs are still important, a strong and effective financial incentive program adds to the strategic mix.

Business financial incentive programs are not new. Recently San Diego went head-to-head with Los Angeles, Emeryville, San Francisco and San Jose competing to be chosen the hometown for the California Institute for Regenerative Medicine by offering more than 17,000 square feet of rent-free office space for ten-years. Other incentives were also included with this offer. Although no more than 50 people will employed by the institute, it is expected to bring its host city prestige that could ultimately attract millions of dollars of investments in biomedical research and companies.

In another example, San Diego's City Manager established the Business Expansion and Retention Team in the Economic Development Division in hopes of encouraging key industries back into city neighborhoods. Many of the strategies this agency utilized were incentive based. Financial incentives like, Permit Assistance, Developmental Impact Tax Deferrals/Waivers, Sales and Use Tax Credits and Tax Deferments have been successfully used by city and state agencies to attract larger companies to targeted areas and were used by this agency.

These incentives however, typically address the needs of larger companies; the importance of the small business community and its contributions to the community are sometimes overlooked. And in some cases, when incentive programs are proposed, the scale and scope of the program is inappropriate to the needs of small businesses, which are often asset rich but cash poor.

According to data from the Economic Development Division of the City of San Diego's Office of Small Business, of the existing 60,000 companies located in San Diego, more than 92% are small, employing as few as two full and/or part time employees. This is a significant and growing sector of the business population that is primed for opportunities that will make them more competitive and profitable.

This program is needed because the small businesses we wish to attract to these targeted areas must be offered financial incentives that will have an immediate impact on their bottom line. The BAER Project's program offers such incentives.

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