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Home My WebLink About19D - WORKER COOP POLICYREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: OCTOBER 16, 2018 TITLE: RECEIVE AND FILE WORKER COOPERATIVE POLICY {STRATEGIC PLAN NO. 3,1,5C) 103 YA 515 i RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ❑ As Recommended ❑ As Amended ❑ Ordinance on 1 s Reading ❑ Ordinance on 2ntl Reading ❑ Implementing Resolution ❑ Set Public Hearing For_ CONTINUED TO FILE NUMBER Receive and file the Worker Cooperative Policy for the Community Development Agency. DISCUSSION Small businesses are the foundation of the City and the City's well-being is inextricably linked to a strong business environment. One of the City's Strategic Plan primary goals is to implement policies and strategies for economic development to encourage businesses to grow and prosper that provide living -wage jobs, reduce unemployment, and improve the quality of life for its residents. Today, there still exist several barriers to the development of worker cooperatives which include: lack of public awareness of its benefits; limited technical support in forming, operating, or converting existing businesses to a worker cooperative; difficulties obtaining financing for cooperative formation or conversion; and high startup costs (permit fees, license fees, lease rates) that many small businesses experience in California. As local municipalities look for new and strategic forms of community economic development efforts, Santa Ana has the opportunity to be a leader in Orange County to support and reduce barriers for the development and future of a cooperative economy in the City. This policy will provide resources for local residents to develop worker cooperatives and become business owners in the City. Worker cooperatives are businesses owned and operated solely by its workers. These businesses provide local goods and services, stable jobs for residents, and offer new economic opportunities for lower income workers in the City. A worker cooperative is different from a typical business structure in that the profits are shared amongst the owners and each worker has an equal vote in the direction and actions of the business. On August 1, 2017, the City of Santa Ana took the first step in community wealth building by becoming the first city in Orange County to adopt a Resolution of Support for worker cooperatives. This community economic development initiative was aimed at increasing the wealth of the City's 1913-1 Worker Cooperative Policy October 16, 2018 Page 2 residents and providing the necessary resources for residents to become business owners in the City. During the September 4, 2018 City Council meeting, staff was directed to bring back a policy to the City Council for their consideration. Several cities across the United States have developed initiatives designed to support the development of worker cooperatives such as: Madison, WI — created an economic development program designed to support worker cooperatives; Minneapolis, MN — refocused their small business loan program to support worker cooperatives, and cities of Oakland and Berkeley passed a resolution of support for worker cooperatives. Over the past year, Economic Development staff have been working with community organizations, such as Santa Ana Building Healthy Communities, Delhi Center and Cielo, which are currently engaging and incubating local worker cooperatives with a focus on addressing local issues like food insecurity, wage inequality, and other positive health outcomes for residents. These discussions have led to a new proposed policy within the Community Development Agency to provide support for worker cooperatives. The two main actions of the policy are summarized below: 1. Develop Worker Cooperative Support Program within the Economic Development Division 2. Support and promote the conversion of businesses into worker cooperatives by offering informational workshops to local businesses Many business owners do not have succession plans and communities should be prepared for the impending retirement of these businesses. Many times, these businesses close or relocate out of the area impacting the local residents that work there. By supporting the development of worker cooperatives, these businesses can take advantage of a new business structure that enables the workers to become owners and keep their jobs and the business in the City. Staff is recommending the adoption of the worker cooperative policy. With this policy adoption, future funding sources will need to be identified to continue to market and promote the actions of this Policy. City staff will also provide an annual report to the City Council on the progress of identifying and supporting local worker cooperatives in the City and will also work to include financial incentives for worker cooperatives in upcoming business license review initiatives. STRATEGIC PLAN ALIGNMENT Approval of this item supports the City's efforts to meet Goal #3 Economic Development, Objective #1, (Implement a comprehensive Economic Development strategy to ensure that Santa Ana is a City with a vibrant business climate that is accessible, user-friendly and welcoming to all residents and visitors), Objective #5, Strategy C (Develop a knowledge base to foster economic development by actively partnering with non-profit organizations). 19D-2 Worker Cooperative Policy October 16, 2018 Page 3 FISCAL IMPACT There is no fiscal impact associated with this action. �m Steven A. Mendoza Executive Director Community Development Agency Exhibit: 1. Draft Worker Cooperative Policy 19D-3 19D-4 Worker Cooperative Support Program Attachment 1 October 16, 2018 City of Santa Ana p' Administrative Policies and Procedures Executive Director, Community Development Agency Authorization Subject Date I Number October 2018 WORKER COOPERATIVE SUPPORT PROGRAM Purpose and Intent The purpose of this program is to encourage and support the development of worker - owned businesses in Santa Ana by creating new markets and providing technical support to enable worker cooperatives to grow and succeed in the City. A worker cooperative is a business owned and operated solely by its workers. Worker cooperatives provide local goods and services, stable jobs, and economic opportunities for lower income workers. Cooperatives build local leadership and business skills and assists individuals with significant barriers to employment, while keeping wealth and jobs local and positively impacting those affected by local inequities. This program will promote economic development that creates resilient and democratic enterprises, reduces poverty, and enhances the public safety, health, and welfare of the City. The establishment of this program will also raise awareness of the worker cooperative business model and conversion to worker ownership. Policies 1. Designate City Liaison and broaden specialization of staff to include worker cooperative expertise within the Economic Development Division of the Community Development Agency. Staff will work with community organizations, cooperative developers, stakeholders and existing worker cooperatives to evaluate and assist in the removal of barriers to development and growth, assist in identifying potential incentives and financial resources, and promote worker cooperative conversion as a path to worker ownership. 2. Coordinate business development efforts and develop partnerships among the cooperative ecosystem (City departments, worker cooperatives, technical assistance providers, financial institutions). Staff will coordinate efforts to support and promote worker cooperatives with other City Agencies to 19D-5 Worker Cooperative Support Program October 16, 2018 assist in the streamlining of permits and city approvals required to start up a worker cooperative. Staff will create a strategy for connecting worker cooperatives with demand markets, technical assistance providers, and resources for financial assistance. Staff will develop partnerships and meet regularly with community- based organizations, existing worker cooperatives, technical and financial partners and others. These meetings will help guide the strategy for worker cooperative development. 3. Identify obstacles deterring local entrepreneurs from starting worker cooperatives, or employees and business owners from converting their businesses to worker cooperatives. There still exist several barriers to the development of worker cooperatives which include: lack of public awareness of its benefits; limited technical support in forming, operating, or converting existing businesses to a worker cooperative; difficulties obtaining financing for cooperative formation or conversion; and high startup costs (permit fees, license fees, lease rates) that many small businesses experience in California. Staff will work to assist in connecting worker cooperatives to the necessary resources to alleviate some of these barriers. The City will also take a proactive position to support legislation that reduces the cost of doing business for worker cooperatives, as well as supporting efforts to remove barriers, decrease unnecessary burden and regulations and assist in the streamlining of starting up a worker cooperative in Santa Ana. 4. Promote knowledge and awareness of worker cooperatives as a local economic development strategy. Staff will promote awareness of worker cooperatives as a business model, economic development strategy, and local wealth creation tool through the City's website, flyers, and informational seminars. 5. Develop City webpage identifying resources for cooperative start-ups and conversion. The City's Economic Development website will feature informational materials about worker cooperatives, including, but not limited to, resources for formation, conversion, financial resources, relevant local and regional events, and a reference list of worker cooperative federations, associations, and development organizations. 6. Promote worker cooperative job opportunities at the City's WORK Center. City staff will proactively promote job opportunities for local worker cooperatives through the City's workforce development job center. 19D-6 Worker Cooperative Support Program October 16, 2018 7. Support and promote the conversion of businesses into worker cooperatives. Staff will identify businesses that have been in the City over 25 years and provide information on the option of conversion to worker cooperatives for retiring business owners. Staff will also jointly host workshops with local community stakeholders and experts on conversion. Staff will assist in providing access to technical assistance and information for employees and business owners seeking to convert existing businesses into worker cooperatives. 8. Submit annual report on worker cooperative development to•the Community Development Agency Director for City Council. Staff will produce a report for the City Council as an update on the progress of worker cooperative development in the City. The data in the report can also be used to develop future strategies and identify future funding sources for continued worker cooperative support in Santa Ana. 19D-7 19D-8