 |
|
|
|
|
Sunnyvale prepares for possible economic crunch
City closely reassesses its finances and relationships with many local businesses
By Daniel Hindin
In the midst of the current economic downturn, the city of Sunnyvale is taking a close look at its financial situation.
While city officials remain confident that growth will continue within Sunnyvale, despite the souring of many area tech companies, they realize the staggering growth achieved in the late '90s will not be replicated in the near future. Like most of Silicon Valley's tech companies, the city is now moving toward a policy of consolidation.
"We're not attempting to actively attract businesses," says Karen Davis, Sunnyvale's director of economic development. "We're trying to figure out what services are necessary to retain businesses."
Davis and her colleagues base most of their decisions on a January 2001, city-sponsored report called "State of the Sunnyvale Economy, Business Climate and Economic Vitality Strategies."
Officials believe the message of the report is the importance of treating large businesses differently from their small- and medium-sized counterparts.
Sunnyvale's business community consists of 9,311 companies and 93,609 employees. Almost 99 percent of those companies employ 100 people or less. But the 36 largest companies employ more than one-third of all the workers in Sunnyvale.
Those largest companies also provide the city--by way of sales tax, property tax, business license and other fees--with a large chunk of its general fund. That fund supports many of the most crucial city services, such as police, fire, road maintenance, libraries, parks and open space.
The city is most worried about keeping these large companies from relocating.
In a recent survey, 83 percent of local businesses agreed that "Sunnyvale is a great place to do business in." This suggests a largely contented business community. But the message isn't as clear upon further inspection. Only 26 percent of businesses with more than 50 employees agreed with the same statement.
"The larger companies have a global market," Davis says. "It's easier for them to pick up and move."
"Sometimes we take our businesses for granted," adds Councilman Tim Risch. "Other communities would be happy to take them away from us. They're our lifeblood."
The city has identified four critical issues that it feels are the biggest factors in retaining these businesses--land use, transportation, education and housing--and they've met with members of the business community to discuss them.
For example, according to local companies, "although Sunnyvale has a reputation as a highly desirable business location for emerging companies, the majority of the city's buildings are more than 20-years-old and are functionally obsolete," says Brice McQueen, Sunnyvale's redevelopment manager. "The city needs more class-A offices that provide the technology and design amenities preferred by new economy companies,"
Hence, local companies may choose a location where there is more room to build than Sunnyvale. Or where there is less traffic congestion. Or where there are more housing options.
But despite the low satisfaction rating among the largest businesses, McQueen is confident that Sunnyvale is more than capable--and willing--to accommodate them.
"A city must deliver a proven track record of success in its relationship with business and the institutional infrastructure needed to foster business's interests," he says. "Sunnyvale understands the competitive demands made on industry and works closely with companies to create innovative building solutions by cutting red tape, without cutting corners."
For the time being, McQueen says he has seen no effects in Sunnyvale from the recent downturn.
But McQueen notes Sunnyvale's business climate is very diverse. The January report, however, notes that a key factor in maintaining a ripe local economy is the need for more diversity. It states that "Sunnyvale's economy is less diversified than the overall Bay Area," pointing out that 55 percent of Sunnyvale's businesses are in the manufacturing industry. A focus of major worry in the report is that "departures, or downsizing, of manufacturers from Sunnyvale will have a significant impact on the Sunnyvale economy."
One way the city hopes to combat lack of diversity is to foster "industry clusters," where different businesses have access to all of their needs, without having to look beyond Sunnyvale to find them.
The city plans to hold biennial forums in order to make businesses aware of all the resources available to them within their own city. It hopes to act as a "catalyst" and "facilitator," in order to increase purchases within Sunnyvale. Similarly, the city plans to develop a "web-based information clearing house" that lists all of the products and services available within Sunnyvale.
Although the five years of prosperity in Silicon Valley appears to be winding down, city officials believe they are fully prepared for anything that comes their way. They say they understand the quick pace of the new economy and they're ready to role with the changes.
|
|
|
|
Sunnyvale, California Since 1994
