city council unfinished business west hollywood …

CITY COUNCIL UNFINISHED BUSINESS

AUGUST 15, 2016

SUBJECT:

INITIATED BY:

WEST HOLLYWOOD MINIMUM WAGE POLICY

CITY MANAGER'S DEPARTMENT I (Paul Arevalo, City Manager) J;¥¥W -ttr ?~I Ari.l.}rl'tb

DEPARTMENT OF FINANCE AND TECHNOLOGY SERVICES (David Wilson, Deputy City Manager/Director) f)fJ'l'I (Christine Safriet, Senior Management Analyst) C'J2( DEPARTMENT OF ECONOMIC DEVELOPMENT (Maribel Louie, Director~

STATEMENT ON THE SUBJECT:

The City Council will consider and provide direction on the establishment of a minimum wage ordinance.

RECOMMENDATIONS:

1) Approve staff recommendation to not implement a West Hollywood minimum wage increase at this time.

2) Direct staff to support businesses as they adhere to the State of California minimum wage policy set to raise the minimum wage to $15.00/hour by January 1, 2022.

3) Provide direction to staff, as appropriate, regarding small business incentives that may be developed to support small businesses as they transition to a new minimum wage.

BACKGROUND I ANALYSIS:

At the July 18, 2016, staff requested that the West Hollywood Minimum Wage Policy item be tabled to the August meeting. This staff report is updated and differs from the information presented in the staff report of July 18, 2016.

At the March 21, 2016 City Council meeting, the Council approved the following substitute motion:

1) Receive the report providing an overview of wages paid by West Hollywood businesses;

2) Direct City Attorney to prepare an ordinance establishing a City of West Hollywood minimum wage within 60 days and requiring the payment of a city-

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AGENDA ITEM 4.8.

wide minimum wage of $12.00/hour as of July 1, 2017 for businesses with 26 or more employees; and require the payment of a citywide minimum wage of 12.00/hour as of July 1, 2018 for businesses with 25 or less employees and nonprofits of any size;

3) Include a Learner's Exemption; 4) Direct staff to conduct outreach meetings during a 60-day discussion period with

the business community, included small businesses, to present the framework of the ordinance and solicit their input and study the issue of workers between the ages of 16-17 who have work-permits, as well as tipped workers, prior to returning to Council with the draft ordinance; and

s) Follow-up on the Los Angeles County small business initiative and the result of the 2016 Election. ·

The item also included direction for staff to return with future modifications as appropriate, including those reflecting potential future changes in regional and state policies.

Per recommendation number 5 above, the following information provides an overview of the Los Angeles County small business initiative and the result of the 2016 primary election, including information on the State's Minimum Wage Policy.

Status of State of California Minimum Wage Policy

On April 7, 2016, the California Governor Jerry Brown signed a statewide minimum wage law which set a scheduled increase of the minimum wage as follows:

Based on the statewide policy now in place and the impact it will have on businesses in West Hollywood, staff recommends focusing its efforts on supporting West Hollywood businesses as they transition to an increased minimum wage as set forth by the State.

State of California Scheduled Minimum Wage Increases

Effective Date Businesses with 26 or Businesses with 25 or more employees fewer employees

January 1, 2017 $10.50/hr $10.00/hr (no change)

January 1, 2018 $11.00/hr $10.50/hr

January 1, 2019 $12.00/hr $11.00/hr

January 1 , 2020 $13.00/hr $12.00/hr

January 1, 2021 $14.00/hr $13.00/hr

January 1, 2022 $15.00/hr $14.00/hr

January 1, 2023 - $15.00/hr

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Recommendation number 2 above would increase the City minimum wage by $1.50 above the State minimum wage for businesses with 26 or more employees in July of 2017 and businesses with 25 or fewer employees in July of 2018. The City's minimum wage would stay ahead of the State minimum wage until January of 2019 for larger businesses and January 2020 for smaller businesses. At that time and going forward, the City minimum wage will equal the State minimum wage, unless the City's ordinance is amended. Staff does not recommend increasing the minimum wage at this time.

As the UCLA Labor Center analysis of West Hollywood labor market characteristics showed, West Hollywood businesses in the key industries most likely to be impacted by minimum wage increases (healthcare, food services, retail, and administrative and wage management services) already pay equal or significantly higher than the minimum wage (then $10/hour). In order to remain competitive, West Hollywood businesses would likely continue to pay above the minimum wage. Staff remains concerned about the overall impact to businesses in West Hollywood's food service industry. Workers in the food services industry in West Hollywood represent 26% of all workers in the City. The study indicated that changes to the minimum wage would have a relatively lower impact based on weekly salaries since West Hollywood businesses tend to pay above the minimum wage. However, the state's minimum wage policy did not address outstanding items raised by the food service industry including the how to account for tips and other forms of compensation. Given some of the complexities of the food service industry (the requirement that wages are scaled proportionally; the state not allowing tip credit; and the prohibition of distributing tips to all workers) stand to make the overall impact to operating costs significant for West Hollywood food service businesses.

County of Los Angeles Small Business Initiative

On June 23, 2015 the Los Angeles County Board of Supervisors (County) adopted a motion by Supervisors Solis and Knabe that directed the development of

recommendations and an implementation plan for using County resources to assist small businesses with fewer than 26 employees, transition to an increased minimum wage. Halsey Consulting was retained to solicit feedback from targeted businesses through in-person surveys, an online survey and small business focus groups held in each Supervisorial District. The recommendations are included in (Attachment A).

The benefits under the County's Small Business Initiative (SBI) are available to all businesses within Los Angeles County that have fewer than 26 employees, which covers over 93% of businesses in the City of West Hollywood. Of the 18 recommendations approved by the County, 12 mirror programs also provided by the City of West Hollywood through existing programs/services or are under development.

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The remaining 6 are not feasible for implementation because the City does not have jurisdiction or those initiatives would be impractical to implement at a local level.

The following table outlines the 12 County recommendations, which are also available in the City of West Hollywood, or that mirror programs currently available in City of West Hollywood.

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Comparison of Business Incentives between County of Los Angeles and City of West Hollywood

Los Angeles County City of West Hollywood

1 Customer Service Outreach - Provide link on the Business Development Division (BOD) webpage includes links to Los Department of the Treasurer and Tax Collectors website to Angeles County webpage and resources. Department of Consumer and Business Affairs website. Provide any SBI marketing material at public counters.

2 Concierge - Liaise with County Departments to BOD provides technical assistance to businesses on an ongoing facilitate/expedite licensing and permitting process; expanded basis, including connecting businesses to County, State and Federal consulting services for technical assistance and business plan resources. development

3 Marketing SBI Resources - Information pamphlets; BOD will create a minimum wage information page on the website for counseling businesses with inquiries; social media updates businesses to obtain information about changes to the minimum wage

and resources available.

4 Serve as Small Business Advocate in establishing the The City provides a 4% preference to local vendors (i.e. a business, utilization goal and advocate on behalf of small businesses firm, or enterprise with fixed offices or locally taxable distribution

points within the city that holds a valid business tax certificate, issued by the city, and bears a street address within the city.) This is accomplished by reducing their bids by 4% (but not more than $5,000) when comparing such bids to those of other bidders. Staff do not recommend a utilization goal as the County has adopted due to the City's small size and ability for businesses and the City to procure all of its needed services from businesses within its boundaries.

5 Marketing sustainable initiatives Mobility and Planning Division is currently working to develop a solar technical assistance webpage which will connect businesses to resources.

6 Customized Training - Community and Senior Services BOD could explore this further to determine whether this program Department can design customized training program that would make sense for West Hollywood businesses and determine provide work-based and class-room training for new and feasibility of hosting a class in West Hollywood. existing employees.

7 Layoff Aversion - The County's Lay off Aversion program BOD provides technical assistance to businesses on an ongoing provides businesses with supportive services that can help basis, including connecting businesses to County, State and Federal mitigate job loss and assist with business retention. resources.

8 Direct Deposit - Require that payments to County vendors Finance & Information Technology Department are currently are made via Direct Deposit examining the possibility to offer direct deposit payments to vendors

as part of FY2016-2018 work plan.

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9 Talent Management - CSS can develop cohesive and In addition to services provided by the County, the City of West comprehensive strategies that build a supply chain of qualified Hollywood provides funding to Jewish Vocational Services to provide workers to meet the workforce needs of businesses. employee recruitment assistance to West Hollywood businesses at no

cost to them.

10 Employer Development Workshops - this includes topics Similar themed seminars occur through the West Hollywood Chamber such as: Workers Compensation Best Practices, Wage Theft, of Commerce. City currently partners with the Chamber. Understanding Unemployment Insurance, Shrinkage Management Workforce Planning and Navigating ADA, FEHA and EEOC Issues

11 Business Matchmaking - "Meet the Buyers," "Vendor Similar networking focused events occur through the West Hollywood Information Day," and "Contracting Connections" events- Chamber of Commerce. City could consider providing marketing and increase the number of contracting events hosted in order to financial support. put SBI eligible businesses in contact with greater contracting opportunities.

12 Permit One-Stop Shop to streamline the permitting process Currently part of the BOD work plan in partnership with Community for businesses Development Department (Start Up in a Day Initiative)

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Minimum Wage and City of West Hollywood Living Wage

At the City Council's meeting of May 16, 2016, during Council Member comments, there was a request for staff to return with information regarding the impact of the State's minimum wage on the City's living wage and recommendations to raise the City's living wage.

Definition

A living wage is typically described as the minimum income necessary for a worker to be able to meet basic needs for an extended period of time. These needs include shelter, nutrition, healthcare, and other incidentals such as clothing. This standard generally means that a person working forty hours a week, with no additional income, should be able to afford a specified quantity of housing, food, utilities, transport, health care, and recreation.

Living wage is often further defined as the wage equivalent to the poverty line for a family of four. Currently, the Federal Poverty Level for 2016 for a family of four is $24,300 (State Min Wage Fact Sheet), which equates to a wage of at least $11.68 per hour (for comparison, the current minimum wage is $10 per hour). Regional variations can substantially impact the calculations of a living wage; for example, the MIT living wage calculator for Los Angeles County suggests a living wage rate of $16.96 would be more reasonable.

History

The first living wage legislation was adopted in 1994 by the City of Baltimore. West Hollywood adopted Ordinance No. 97-505 on October 20, 1997. This ordinance, among other items relating to purchasing and contract administration, initiated a living wage rate for contract service providers to the City of West Hollywood. In enacting this ordinance, the City promoted an economic environment that protected public resources devoted to social support services and required service contractors to pay employees performing City-related work a predetermined living wage. At present, more than 30 cities, counties, and ports in California have some form of living wage requirement for contractors, over and above the minimum wage, according to the UC Berkeley Labor Center.

Current Living Wage Ordinance

The City's Living Wage Ordinance (West Hollywood Municipal Code Chapter 3.20) provides that the City Council will, by resolution, adjust the living wage rate each July 1 by the Consumer Price Index (CPI). The City currently updates the living wage rate by the CPI each year.

Approved Living Wage Rates

On May 16, 2016 City Council approved an increase to the City's Living Wage Rate as follows:

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FY 2015-16 FY 2016-17

Vendor: 7/1/2015 - 6/30/2016 7/1/2016 - 6/30/2017

Provides health benefits $12.10 $12.21

Does not provide health benefits $13.42 $13.46

Time Series Analysis

The following provides a comparison of the approved State minimum wage schedule to the City's living wage based on estimates of the annual CPI adjustment.

$16

$15

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City:State Wage Comparison

City Living Wage:

State Minimum Wage: "$15/hr by 2023

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As shown above, the State minimum wage is below the projected City living wage with no healthcare from 2017 to 2022 for large businesses and 2023 for small businesses. At the point where the State minimum wage exceeds the City living wage approximately 2022/2023, the State minimum wage will supersede the living wage and effectively become the only minimum wage. Unti l then , businesses that do business with the City will have to pay the higher of the two wages. As the gap decreases, the City may elect to increase the living wage at a greater rate as part of the annual adjustment so that the State minimum wage does not exceed the City living

wage.

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Sensitivity Analysis

Businesses in the City follow the State's minimum wage rules, currently $1 O/hour. Only vendors that contract with the City are subject to the City's living wage, currently at $12.21 or $13.46 if they do not provide healthcare benefits to those employees. The City currently has over $6.5 M in contracts that will be impacted by an increase in the living wage. Most are these contracts are with vendors that are located outside the City limits and there are no West Hollywood businesses that provide these services. Therefore, the majority of businesses and employees in the City of West Hollywood are not subject to the living wage and would not be affected by changes to it.

Any increase to the living wage rate will cause a fiscal impact to the City, as it absorbs higher costs from vendors. Each one-dollar increase in the living wage is projected to result in approximately $500,000 in new costs to the City to maintain the same level of service. Staff does not recommend increasing the living wage at this time because it will have a significant financial impact on the City, as well as the current vendors that may have existing MOU's with employee groups or operation projections based on current contracts with the City. Dramatic increase in the living wage could result in reduced levels of service as the City attempts to balance future operating budgets. Any increase in the growth rate of the living wage should be modest and should be considered during the annual approval of the living wage adjustment.

CONFORMANCE WITH VISION 2020 AND THE GOALS OF THE WEST HOLLYWOOD GENERAL PLAN:

This item is consistent with the Primary Strategic Goal(s) (PSG) and/or Ongoing Strategic Program(s) (OSP) of:

OSP-3: Promote Economic Development while Maintaining Business Vitality & Diversity.

In addition, this item is compliant with the following goal(s) of the West Hollywood General Plan:

• ED-4: Monitor and evaluate economic conditions affecting the City's economic climate.

EVALUATION PROCESSES:

Staff will continue to monitor ongoing legislation around the minimum wage issue and return to Council as appropriate with any recommendations of policies or programs that can support small businesses as they adjust to wage increases.

ENVIRONMENTAL SUSTAINABILITY AND HEAL TH:

N/A

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COMMUNITY ENGAGEMENT:

Based on decisions made by the City Council as part of this item, staff will develop a strategy for education and outreach to the business community.

OFFICE OF PRIMARY RESPONSIBILITY:

CITY MANAGER'S DEPARTMENT

FISCAL IMPACT:

None at this time. An increase in the City's minimum wage could potentially impact local business and the local economy. An increase to the City's living wage will cause a fiscal impact to the City, as it absorbs higher costs from vendors. Each one-dollar increase in the living wage is projected to result in approximately $500,000 in new costs to the City to maintain the same level of service.

ATTACHMENTS:

Attachment 1 - Report with Recommendations to Develop and Implement Small Business Initiative (County of Los Angeles Department of Consumer and Business Affairs)

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~°'-~ COUNTY OF LOS ANGELES

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Date:

To:

From:

February 18, 2016

Supervisor Hiida L. Solis, Chair Supervisor Mark RJdley-Thomas supervisor Shella Kuehf Supervisor Don Knabe Su rvlsor I D. Antonovich

REPORT WITH RECOMMENDATIONS TO DEVELOP AND IMPLEMENT SMALL BUSINESS INITIATIVE (ITEM NO. 54-A, AGENDA OF JULY 21, 2015)

On July 21, 2015, a motion by SupeMsors Solis and Knabe directed the Director of the Department of Consumer and Business Affairs (DCBA). In consultation with other relevant departments, to 888888 and report back In writing with recommendations on how to dewlop and Implement the County's Sman Business Initiative (SBI).

The motion also dlracted DCBA to provide an estimate on the costs and flscal Impact associated with each of the proposal& recommended In the report. Further, the motion Instructed DCBA to evaluate and prioritize the proposals and tools needed to develop a plan 1D fund, launch, and Implement the Small Business Initiative by July 1, 2016.

Introduction:

On Jooe 23, 2015, the Board adopted a motion by Supervisors Solis and Knabe that directed the Interim Chief Executive Oftlcer (CEO). and Dlr8ctors of DCSA and Community and senior Services (CSS), to submit a report by July 21. 2015, with recommendations and an inplemantatlon plan for using County resources to assist small buslnesaaa with fewer than 26 employees (referred to herein aa ·se1 ellgl>le buslnesaee") transition to an lnaeased minimum wage. Halsey Consulting was retained tD engage businesses and report back with proposed rasourcea.

In developing the SBI, DCBA looked extensively to the Halsey report, which aoUclted feedback from targeted buslne8889 through In person surveys, an onHne survey, and small buslneas focus groups held In each Supervllorlal District. In addition to the lnfonnatlon gathered from these meetings, DCBA convened Its own working groups.

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Board of Supervisors February 18, 2016 Page2

The concerns expressed by businesses were consistent and Included: Increased overhead costs created by a higher minimum wage would lead to reductions In staffing and/Or hours worked; increase In wages would inpact businesses' ablnty to hire and expand; and the additional overhead would make It more dlfftcult for small busilesses to compete wlh large companies. In order to address these concerns, the County recognizsd 1he need to develop a Coll'ltywlde program to coordinate and leverage County resources to assist small businesses transition to the increaHd minimum wage.

Work Groupe:

DCBA convened a work group, consisting of represematives from Regional Plamlng, Public Works, Pubic Health, Agri<Utural ConvnisalonerfNelghts and Measures, Assessor, Treasurer and Tax Collector and Conmunlty and Senior SeMces to review the County's existing programs and resources available to small businesses and detennlne which resources could further the goats of the SBI. DCBA also requested that the departments provide proposals for new and expanded reaources and programs that could reasonably be tmplemented as part of the SBI.

DCBA connected with the business corrmunlty through the Los Angeles County Buslneas Federation (Blzfed) to assess County resources which would be most valuable to businesses, dlscuas how to engage small buslneases In this process, and detennlne how to market the SBI. The BlzFed group Included members of local Chambers of Commerce, financial Institutions, small business owners, and other busines.aervlng partners. AddlUonally, DC8A informaHy met With other IOcal business organizations to obtain feedbaCk on the SBI.

Based on Information gathered from the workgroups and the Halsey report, DCBA Identified 88V8r8I County resources that could assist SBI eUglble businesses. Those areas Include: expedited licensing and permitting; waived or reduced taxes and fees; revised bid preferences for procurement opportunities; workforce development and training; and business development resources.

Small Buslnea Engagement:

Our business stakeholders encouraged DCBA to contin.aally engage and educate SBI eligible businesses on how the new minimum wage ordinance and the SBI are creating opportun1tias to sti'nulate the local economy and encourage economic development. The SBI furthers this goal by creating Incentives for ·businesses to comply with the Increased minimum wage. Also of note, DCBA received feedback that many bullne8aea do not know that they are in the w.Jncorporated areas of the County and are, therefore, unaware that the new minimum wage ordinance pertains to them.


Proposals

DCBA solicited feedback from County departments on 1he services and resources they currently have or could feasibly make available to SBI elJglble businesses as part of the SBI. Attached, as Appendix A. is a table outlining the proposals received from each department and the anticipated flscal Impact of each proposal. These proposals are prioritized and discussed In detail below.

Buelnea Personal Property Tax

Pursuant to Revenue and Tax Code section 155.20, the Board may exempt all real property and personal property where the total taxes amount to less than the total cost of assessing and collecting them. The last adopted resolution on the low value ordinance was on February 21, 1989. The resolution '"exempted from taxation all real property and personal property with a full value of $2,000 or less." The Office of the Assessor (Assessor) Is currently looking at the feasibility of reducing the business personal property tax to businesses with aggregate estimated values below a predetermined threshold. The threshold is currently $2,000. The new threshold would likely be between $5,000 and $10,000.

Operationally, the Assessor conducts an annual business personal propertyfleld canvas. When the aggregate value of a business' personal property/fixtures exceeds $2,000 it ls estimated and taxed. This proposal would increase the value that a business' personal property and fixture must exceed before It can be taxed. This would benefit SBI ellglble businesses since It ts mainly small businesses that would have personal property valued below the new threshold.

In order to inplement this proposal, the Board will need to repeal the previous resolution and replace It with this new one. The Assessor Is preparing a Board Letter detailing this proposal.

Increased Contracting Opportunities

A key way to help offset the costs associated with a higher minimum wage is by Increasing the revenue flow of SBI eHglble businesses. An effective strategy for the County to achieve this Is by Increasing the number of contracts awarded to small businesses.

Utilization Goal

On July 7, 2015, your Board directed DCBA, In consultation with other County departments, to assess a variety of options to increase the County's utilization of Local Small Businesses Enterprises (LSBEs), social enterprises, and Disabled Veteran Owned Businesses (DVBEs).


Thereafter, your Board adopted a Countywide contracting and procurement aspirational goal of 25% (twenty-five percent) for LSBEs and 3%. (three-percent) for DVBEs with an effective target date for implementatlon of the initial steps necessary to achieve those goals of July 1, 2016. The County's utilization goal Is intended to Increase the number of contracts awarded to small buSinesses (Including SBI ellgl>le businesses), 1hereby Increasing the revenue to those certified small and disabled veteran owned businesses.

Small Buslness Adyocates

DCBA is re-launching the Small Business Advocate program to provide the Advocates with improved resources to empower them to be the voice of SBI eligible businesses and to encourage small business utilization within County departments. The Advocates w111 serve to increase small business utilization in the County's procurement of goods and services.

Business Matchmalslng

DCBA, In conjunction with other relevant County departments, Is helping to Increase opportunities available to SBI elglble businesses through •Meet the Buyers,• -Vendor Information Day,• and ·contracting Connections• events. These events partner DCBA end other County departments to provide networking opportunities for SBI eligible businesses. Through these events, DCBA Is working to ensure that SBI ellglble businesses are aware of procurement opportuntties with the County and are competitive In the bid process. In response to the SBI, DCBA will Increase the number of matchmaking events It hosts in order to connect a greater number of SBI eligible businesses to the buyers and purchasers of the County departments.

Small Business Development

Free consulting and counsellng services will be made available to SBI eligible businesses during the transition to the higher minimum wage to assist them with developing business plans and strategies.

Consulting

A primary goal for DCBA is to Increase the number of small businesses created in Los Angeles County. To that end, DCBA's Small Business Concierge program (Concierge) provides counseling services to potential small buSiness entrepreneurs.

The Concierge service assists prospective business owners successfully open their businesses in the unincorporated area of the County by: 1) serving as a single point of contact providing Input during the complex process of opening a business In Los Angeles County; and 2) providing counseling services to prospective small business owners on the steps necessary to opening a business.

Board of SUpervlsors February 18, 2016 Pages

DCBA will expand on these consulting services to include small business and social enterprise incubation projects which would broaden the scope of services offered by our Concierge to include technical assistance, business plan development, and enhanced business coaching and counseling. This suite of services will promote the operational stability of SBI eligible businesses.

Como!!ance Training

SBI eligible businesses struggle with the administrative burden of compliance. Many are simply unaware of their obllgatlons under the law. Based on informa11on obtained through the work groups, it Is clear that small businesses need personal assistance and counseling. As a result of the SBI, DCBA developed a "Sman Business New Laws Training• which educates businesses on the laws affecllng them. This workshop was Implemented this year and is being offered at DCBA srnal business events. DCBA will include infonnation on the minimum wage ordinance and the SBI in this training.

The Department of Community and Senior Services (CSS) conducts Employer Development Workshops throughout Los Angeles County. These workshops are offered Countywide through Amertcan Job Centers of C81ifornia. The workshops Include information on Workers Compensation Best Practices, Wage Theft, Understanding Unemployment Insurance, Shrinkage Management, Workforce Planning and Navigating ADA, FHEA and EEOC Issues. DCBA will supply CSS with printed materials about the SBJ to distribute during these workshops. DCBA and pertinent County partners wlll market these workshops as part of the SBI.

Workforce Development and Wage Subsidies

Effective counseling on workforce planning will enable SBI eligible businesses to avoid or minimize reductions In staff.

Workforce Planning

CSS currently provides comprehensive workforce planning services to small businesses through their Business and Professional Services' Business Services Managers (BSM). This no coat service includes an assessment of the businesses' lifacycle, talent management needs and growth opportunities. Once a business needs analysis Is conducted, a Workforce Plan Is prepared.

The plan Incorporates CSS' tool box of business solutions which Includes training, subsidized employment and workforce planning, and any additional pertinent referrals or connections.

Board of Supervisors February 18, 2016 Pages

Talent Management

CSS, In partnership with SBI eligible businesses, wlll develop cohesive and comprehensive strategies that build a supply chain of qualHled workers to meet the workforce needs of businesses. CSS provides workforce development, covers the cost of background checks, and recruitment and placement of skilled workers creating a sustainable pool of qualified candidates.

CUstomized Training

Working In collaboration with SBI elgible businesses and educational Institutions. CSS can design customized training programs that provide work-baaed and classroom training for new and existing employees.

Lay Off Aversion

The County's Lay Off Aversion program provides businesses with supportive services that can help mitigate job loss and assist with business retention. These efforts are accomplished through the use of a series of activities and studies to examine a business' logistics, organization condition, labor markets and broad community relatlon&hlps.

DCBA Is partnering with CSS to Increase the marketing of these servlces and offer them to new entrepreneurs and SBI eligible businesses as part of 1he consuttlng services offered through the SBI.

Expedited Permitting/Fee Waivers and Reductions

Expedited services and fee waivers wlH allow SBI eligible businesses to open their businesses sooner and earn/retain more revenue.

Expedited Plan Checls Review

Small food businesses can request, for an additional fee, an expedited plan check review that would be conducted within 1 O working days, Instead of the 20 working days allowed for under existing law. Thls is a currently-existing, fee.based service offered by the Department of Publlc Health that DCBA could market with the SBI to Increase awareness to small businesses that this is a service available to them. DCBA Is exploring whether the fee for this service may be reduced for SBI eligible businesses.

sys1ness Ucense Fee W&fyer

The Treasurer and Tax Collector (TTC), upon Board approval, could waive the Business Ucense fees tor SBI ellglble businesses.


The average business license fee is $280. TTC reports that the department receives approximately 1,000 new applications and 5, 700 requests for renewals of business l1censes annually: they estimate that twenty-five percent (25%) of these businesses may qualify as SBI ellglble businesses.

eerm!t Qne-Stoc Shoo

Your Board Is examining the feaslblllty of opening a County One-Stop Shop for business permitting. Currently, entrepreneurs looking to open brick and mortar businesses In the County must work with several different County departments, venued at various locations, to obtain the permits necessary to conduct business In the County.

By establlshlng a single facility that houses each of these departments, the County would assist SBI ellglble businesses by expediting the permitting process and reducing unnecessary delay In opening their businesses.

Streamlined Payment Process

Streamlined payment processes put money In SBI eliglble businesses' pockets sooner.

Prompt pay

Pursuant to the "Bold Steps Forward• Initiative submitted to the County by the Small Business Commission, the Board Implemented a Small Business Prompt Payment Program for certified LSBEs.

This request was based on the belief that the previous 30-day policy for payment was Insufficient for small businesses due to potential cash flow Issues. As a result, the Board Implemented this new policy. which established a 15-day payment goal for certified LSBEs.

DCBA has streamRned the process by which SBI eDglble businesses can acquire the tools necessary to receive prompt payment under this program. Prior to this change, businesses would have to walk Into a DCBA Small Business Services office in East Los Angeles to sign an acknowledgment form and obtain a •prompt Pay Stamp• which the business would use to stamp their Invoice before submmtng for payment DCBA was advised that this process was burdensome to small businesses and, in particular, SBI eligible businesses. Based on this Input from small business owners, DCBA has revamped the process. Now stamps can be mailed directly to the businesses. saving SBI eligible businesses time and money.

Plrect Oeoosb

The Auditor-Controller (A-C) a.arrantly encourages County vendors to enroll in a direct deposit service, which allows registered vendors to receive payments electronically.

Board of supervisors February 18, 2016 Pages

In addition. 1he A-C ts in the process of requesting the Board for a mandate requlrlng that au County contractors, vendors and payees entering Into new, renewed, and materially modified COunty contracts receive payments electronically. This new mandate would beneftt SBI eligible businesses by reducing delay In the receipt of payments Issued by County departments.

It would make the money avalable in the businesses' bank accounts sooner, eliminate the problem of lost. stolen or damaged checks, and save businesses time In physlcally going to a bank, thereby reducing the uncertainties that can be associated with Issuing checks.

Suatalnabla Initiatives

There are several state programs which offer funding for small businesses utlllzlng alternative and clean energy. The County can promote these programs to SBI ellglble businesses to help offset some costs associated with an Increase In overhead due to the higher minimum wage.

Local Vendor Preference Program

As part of the Utilization Motion, your Board has implemented a uttllzation goal for sman and local businesses. DCBA currently certifies LSBEs. An LSBE Is defined as those small businesses enrolled and approved to participate In the Local SBE Preference Program pursuant to Los Angeles County Code, Chapter 2.204, adopted by the Board on July 23, 2002. This program Is modeled on the State of califomia's small business preference program and utlllzes the State's certification of small business status as a requirement for the County's certification of Local see status.

In addition to State certification, the County"s Local SBE Program requires a small business to have its principal otnce currently located within the County for a period of at least the past twelve months.

Your Board has already Implemented a 25% utilization goal for Local SBEs. The deliverables on that utlllzatlon motion Include an analysis of the County's current preference programs and proposed programs. As such, this Information Is currently being assessed by DCBA and wlll be Included In the report back to the Board on the utilization motion. DCBA foresees Increased marketing of the LSBE certification program to SBI eligible businesses.

Outreach

DCBA understands that assisting businesses during the transition to a higher minimum wage is as Important as educating people on the new wages.

Board of SUpervisors February 18, 2016 Page9

Accordingly, DCBA has developed an outreach strategy that mirrors the strategy belng Implemented for the launch of the new minimum wage ordinance and the corollary wage enforcement program. This comprehensive outreach and education campaign wll alert SBI eligible businesses to the resources available to them through the County's SBI.

Print materials

In advance of the July 1, 2016 launch, DCBA wlll develop a pamphlet which will Identify an county resources available to SBI eJlgible businesses to assist them during the transition to the higher minimum wage. This resource will be distributed extensively throughout the business community as addressed In further detal below.

Partnerships with State and Local Agenclea

In addition to working wlth COUnty departments, DCBA will forge partnerships with State and local agencies that have a nexus to small business. This Includes the Smal Business Administration. the Governor's Office of Small Business and Economic Development and local Chambers of Commerce. These partner agencies will assist In disseminating Information about the SBI.

Countywlde Communications

The Chief Executive Office - Countywide Communications Unit serves as the County's central source of Information tor the public.

DCBA will work with the unit to develop a SBI media campaign to educate businesses about the new programs. DCBA will partner with Countywide Communications to aid In amplifying efforts to reach a broad base of SBI eligible businesses. Witt their assistance, DCBAwtll:

• Create a multlllnguat Public Service Announcement (PSA) that can be used on multiple platforms (e.g. television, social media, website, etc.)

• Create posters using their graphic design resources • Add a link to the SBI resource pamphlet on lacounty.gov • Coordinate a press conference for the launch of the SBI • Develop a script for radio advertisements • Disseminate press releases • Secure Interviews on the County Channel

Paid Advertising - Radio

Purchasing radio airtime Is another strategy DCBA wtll use to reach the SBl's target audience. DCBA will look at Nielson ratings and audience demographics to determine which radio stations are best suited to advertise the SBI eligible businesses.-

Board of Supervisors February 18, 2016 Page 10

Eamed Media

Earned media Is media In which the press voluntarily covers a topic of i1terest to their audience. DCBA's dedicated outreach unit will develop a strategy for pitching coverage of the new SBI to local media outlets and newspaper publlcatlons to read\ SBI ellgible businesses.

Soclal Media Campaign

DCBA will use its existing Facebook and Twitter accoums to share messages in English and Spanish about the minimum wage law and resources available to SBI eligible businesses through the SBI. DCBA will also coordinate with other County departments to leverage their social media resou~ to ensure the information Is disseminated to a broad spectrum of constituents.

Website Content

DCBA will create content for Its website relating to the launch of the new SBI. All written resource materials wlll be posted on the website. In addition, DCBA will work with Countywfde Communications and other County departments to disseminate this Information on their respective websites.

Targeted Outreach

As part of the Wage Enforcement Program, DCBA Is canvassing businesses in the unincorporated areas of the County to Inform them of their responslbilHles under the new minimum wage ordinance. DCBA Is expanding the Information available to businesses during these visits to include the pamphlet of resources pertaining to the SBI.

Community and Stakeholder Events

Prk>r to the July 1, 2016 Implementation of the SBI, DCBA representatives will continue to attend business Industry events. hoSt roundtableS In each of the Supervisorlal districts and seek speaking engagement opportun1ties to educate the business community about the minimum wage law and the SBI. These events will afford DCBA the opportunity to build relat1onshlpa with the business community and explain our role as the County Smalt Business Advocate. DCBA Is also scheduling addttlonal meetings with the Working Committee; these meetings are to take place over the next few monlia leadlng up to the Implementation of the SBI.

For the year following the Implementation of the SBI, DCBA will focus on attending and hosting events in order to obtain stakeholder feedback on the progress and success of the SBI.

Board of Supervisors February 18, 2016 Page 11

DCBA Fiscal Impact:

The education and outreach plan is estimated to cost $15,000 annually. These costs will allow DCBA to expand existing programs, collaborate with business assocJations, other county departments, and State and local business organizations, and to develop the print materials which will be distributed to businesses.

Consumer Affairs Specialist, (Proposed): DCBA has a crltlcal need to estabDsh a position within Small Business Services to oversee and monitor the varied and complex programs aimed at serving and supporting small businesses.

The Specialiafs primary responsibility will be to oversee the Small Business Advocate Program, Small Business Initiative, Small Business Utilization, Social Enterprise Program, Small Business Concierge, and the proposed Small Business & Social Enterprise Incubation Project.

DCBA will amend its FY 2016/17 budget request to include this position and associated funding.

DCBA appreciates 1he opportunity to update your Board on the status of the Small Business Initiative. DCBA win submit an updated status report to your board in 90 days.

Should you have any questions or need additional information, please contact me at your earliest convenience.

SMALL BUSINESS INITIATIVE

APPENDIX A

Department Proposal What is needed to Implement Fiscal Impact Proposed Implementation ~ Comments

Countywlde Utilization goal- 25" for local Small Your Board has already adopted the Cost dependent upon policies 4 year action plan to be finalized May DC8A designated lead department on

Business Enterprises (LSBEs) and 3" goal . DCBA Is now working on the implemented 24,2016 facilitating Implementation of for Disabled Veteran Business steps outllne<l In the Board motion to Utilization goal

Enterprises (DVBEs). Researching Implement

appropriate utlllution goal for social

enterprises

Establish Small Business Advocate in Each department to identify an Additional workload, if any, to be March 1, 2016 DCBA has coordinated with the

each department to advocate on Advocate absorbed by departments departments to obtain the names of

behalf of smaM businesses during the the Advocates purchasing and procurement process -

DCBA will advertise these individu1 Is to SBs so they are aware of who to

contact in each department

Business Matchmaking - "Meet the OCBA will lnaease the number of Additional worldoad to be absorbed July 1, 2016 Buyers," "Vendor Information Day," events hosted byDCBA

and •contracting Connections• events

increase the number of contracting

~ts hosted in order to put SBI

eil1ible businesses in contact with

greater contracting opportunities

Permit One-Stop Shop to streamline Your Board Is examining the feasibil ity Unknown - Based upon final Board Unknown - Based upon final Board

the permitting process for businesses of housing departments key to the approval approval

permitting process In a single locatio n

p~~ 'of 6

Department Proposal What Is needed to Implement Fiscal Impact Proposed Implementation Date Comments

Assessor Reduce business personal property Pursuant to Rev & Tax code 155.20 TBO Based on Board review and approval Assessor to provide separate Board tax to businesses who aaresate the Board may exempt all real letter and Resolution estl~ed value Is below a threshold property and personal property

determined in partnership with the where the total taxes amount to less Board than the total cost of assessin1 and

collectl1111 them. The last adopted

resolution on the low value ordinance was on February 21, 1989. The

~

resolution "exempted from taxation all real property and personal property with a full value of $2000 or less."

The threshold is currently $2000. The If the Assessor and the Board want to likely new threshold would be either increase the exemption it may do so $5000 or $10,000 by way of resolution repealing and

replacing the previous resolution. A

resolution could be presented to the Board through a Boa rd letter.

-

In operational terms the Office of the ~r does an annual business personal property field canvas. When

the ~ate value of a business's personal property/ fixtures exceeds

$2000 It Is estimated and taxed

Page 2 of6

Oel)Mtment Proposal What Is needed to Implement Flsal Impact Proposed lmplemenntlon Date Comments

Auditor-Controller Direct Deposit- require that payments Board m1nd1te Unknown- believed this will save time Based upon Board approval to County vendors are made via Direct and money since w~I no lonaer have Deposit to issue paper checks

Community and Senior Workforl:e Plannina Services-Business Currently Exlsti na Fundlna throu1h Wor1dorl:e Currently Existinc DCBA to partner with CSS to market

Services and Professional Services' Business Investment Opportunities Act (WIOA); these services to SBI eliaible

Services Manaaers (BSM) provides Addlttona I costs associated with businesses

comprehensive Worlcforce Planning increased marketln1 will be absorbed

services. No cost services Include an byOCBA

assessment of the businesses'

llfecycle, talent mana1ement needs

and arowth opportunities.

Talent Management- CSS can develop Currently Existing Funding through WIOA; Addlttonal Currently Existing DCBA to partner with CSS to market

cohesive and comprehensive costs associated with Increased these services to SBI eligible

stnrtqles that build a supply chain of marketing will be absorbed by DCBA businesses

qualified workers to meet the

worlcforce needs of businesses.

Employer Development Workshops- Currently Existing Fundin1 through WIOA; Additional Currently Existing DCBA to partner with CSS to market

this Includes topics such as: Workers costs associated with lnaeased these services to SBI eligible

Compensation Best Practices, Wage marketing wtll be absorbed by DCBA businesses

Theft, Understandina Unemployment

Insurance, Shrinkaae Man11ement.

Workforce Planning and Navi1atlng

ADA, FEHA and EEOC Issues.

Department Proposal What Is needed to Implement Fiscal lmp;ict Proposed lmplementiltlon Date Comments

Community and Senior Customized Tralnln&- CSS can design Currently Existing Funding through WIOA and other Currently Existing DC8A to partner with CSS to maricet Services (Continued) customized training programs that funds as available; Additional costs these services to SBI eligible

provide work-based and class-room associated with Increased marketing businesses

training for new and existing will be absorbed by OCBA emplovees. lay Off Aversion- The County's Lay Off Currently Existing Funding through WIOA; Additional Currently Existing DC8A to partner with CSS to maricet

Aversion program provides businesses costs associated with Increased these services to SBI eligible

with supportive services that can help marketing will be absorbed by DCBA businesses mitlgate job loss and assist with business retention.

Page 4 of 6

Department Proposal What is needed to Implement Fiscal Impact Proposed Implementation Date Comments

Consumer and Business Conclerse - li1ise with County Currently Existing Costs associated with increase in July 1, 2016 W~I include SBI resources in the Affairs departments to facilitate/expedite services will be 1bsorbed by OCBA Concierge's "How to Start your

Ncensing and permitting process; Business" (Small Business Saturdays)

expanded consulting services for workshop series

technical assistance and business plan development

Prompt Pay - mail SBI eligible Revamped the program this year Increased mailing costs will be Currently Existing

businesses prompt pay stamp so can absorbed by OCBA receive money quiddy from county

contracts Marketing SBI resources - DCBA wMI implement a $15,000/annually Printed materials available M1y 2,

informational pamphlets; counseling comprehensive marketing campaign 2016. Marketing to begin July 1, 2016

businesses with Inquiries; social media for the SBI

updates

Serve as Small Business Advocate in DCBA to serve as volte of small Request to establish a Consumer Immediately Specialist will OYerSee the Small

establishing the utilization goal and business for increased utdization Affairs Specialist position with the Business Advocate program, Small

advocate on behalf of small Small Business Services unit at a cost Business Initiative, Small Business

businesses of $150,000 Utilization, Social Enterprise program,

Small Business Conderse and the proposed Small Business & Social Enterprise Incubation project

Marketing sustainable initiatives DCBA can market state programs lnduded in OCBA marketing budget July 1, 2016

which offer funding for sma n businesses to use alternative and

clean energy

p,.- - 'iof6

Department Proposal What Is needed to Implement Fiscal Impact Proposed Implementation Date Comments

Public Health Small food businesses can request, for Currently existing. Board could Currently existing program so no Currently existing

a fee, an expedited plan check review consider reducing the fee for 5BI impact. if your Board chooses, could

that would be conducted within 10 eligible businesses reduce or waive the fee.

working days instead of the 20

working days specified in law

The average expedited plan check fee for a food faclllty ranges from $202 to

$705. Approximately 2,105 requests

for expedited plans are received

annually. If 25% of these businesses

are 581 eligible, revenue loss to the

department would be $352,000

(increase to NCC)

Treasurer and Tax Customer Service Outreach Provide link on the TTC's website to Minima! Dependent upon development of

Collector DCBA website. Provide any 581 Funding - Departmental Budget marketing materials.

marketing material at public counters.

Business License Fee Waiver Approval from the Board of Average Business License fee is $280. Fiscal Year 16/17

Supervisors to waive Business License We receive approximately 1,000

fees. applications and 5, 700 renewals

annually. Assuming that 25% of

businesses meet the SBI

requirements, revenue loss to the

department would be $500,000.

(Increase to NCC)

Page 6 of 6

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