My conclusions come from over 30 years of experience as a CPA to small and mid-sized businesses in the East Bay, that cumulatively have hired thousands of employees and paid hundreds of millions in wages.
Spending money on economic development consultants and staff and promotion is mostly a waste. NPR's Planet Money had a very good series on the subject. http://www.thisamericanlife.org/radio-archives/episode/435/how-to-create-a-job
To the extent Oakland “succeeded” in the past at business development it was to attract government and non-profit organizations to downtown. Unfortunately, that was too successful. Those types of organizations pay 0 business taxes, 0 property taxes, and generally have employees who spend very little at lunchtime or after work. But they do require costly city services which are only partly offset by the social services they provide to Oakland residents. They do compete for office space with businesses that pay taxes.
Let's focus on providing high quality basic city services without going bankrupt. Let’s not encourage any particular type of enterprise to locate here.
Economic development will come all on its own if we don’t scare it away with high crime, poor schools and weak indfrastructure.
First the Negative Part:
Not a single member of our city council has substantial private industry job experience. We're not talking Bain Capital, just working for an employer that is not a non-profit, a government, or a union.
Lemley, Raya, Kalb were cast from that same mold.
No wonder Lemley, Raya, and Kalb conflate real estate development with economic development.
If all you know are government "projects' and 'grants' than you'd think that's where new jobs come from.
That’s the same mistake Jerry Brown did in believing that if you build the residences and office buildings that the businesses will come. Other than some great restaurants that pay minimum wages and no benefits to most of their employees, we got the residents but not the jobs and business tax revenue generating businesses we need to pay for the expensive services that the new residents need and expect.
Avoid trying to encourage certain types of businesses, be they green tech or green medical marijuana. If the Feds are bad at picking tech winners, and savvy venture capitalists assume that most of their investments will be duds, then the odds are not good that a bunch of City Council members, most of whom have never started their own for-profit business in their lives, let alone worked for a for profit enterprise, be trusted to decide which types of business or specific business to encourage.
And no, I don’t think the Army Base is a great victory of economic development. That 6,000 job number is puffery. No one can even tell me how that number was calculated but most of the candidates repeat it like it's gospel. There is no way the long term permanent number of employees at a state of the art automated logistics center will employ 6,000 people. The Army Base was a failure that Council is trying to call a success.
Now for the Positive:
If Oakland just had substantially less crime, it would attract a hefty percentage of the business that now goes to SF or skips over Oakland to go to the East Bay cities that surround us. I’ve heard that from numerous business clients who chose not to locate here and from affluent clients who won’t shop in Oakland.
If we improved our schools, that success would be even greater because of a better prepared workforce and a more attractive place for employees of prospective business.
There are specific things we could do right away. If we wait too long, we’ll have to do them just to avoid falling behind other cities.
- Find civic minded businesses that would invest in the installation of dark fiber internet to at least the BART corridor. There are Federal matching grants available.
- Implement free trade zones so that high value light assembly business could thrive here free of US customs fees.
- Start a City owned electric power utility that it could provide cheap electricity to industries that move here. This has the side benefit of providing green power for consumers who are willing to pay more than conventional power but still less than PGE would charge.
- Relax the super strict LEED energy conservation rules where they make it too costly to build in depressed sections of the city. Green is great, but we need more of the color of money to provide the jobs to help stop the red from the crime here.
- Lower the business tax rate permanently to the average of the 6 other largest cities in the Bay Area.
- Lower the business tax rate for total new start-ups, including newly constructed rental housing but not medical marijuana, a two year holiday from any business tax.