22-041 Amendment #3 dated 9-28-23 Applied Development Economics Strategy Data Consultant1
THIRD AMENDMENT TO AGREEMENT 468 BETWEEN
THE CITY OF CUPERTINO AND APPLIED
DEVELOPMENT ECONOMICS, INC. FOR ECONOMIC
DEVELOPMENT CONSULTANT WORK
This Third Amendment to Agreement 468 between the City of Cupertino and Applied
Development Economics, Inc. is by and between the City of Cupertino, a municipal corporation
(hereinafter "City") and Applied Development Economics, Inc., a Corporation for Economic
Development Strategy Data Consultant work (“Contractor”) whose address is 3527 Mt. Diablo Blvd.
#248 Lafayette, CA 94549, and is made with reference to the following:
RECITALS:
A. The City and the Contractor entered into an Agreement for Economic Development
consultant work (“Original Agreement”) effective March 30, 2022 with a term expiring on
June 30,2022.
B. The City and the Contractor entered into a First Amended Agreement for Economic
Development consultant work (“First Amendment”) with a term expiring on December 31,
2022.
C. The City and the Contractor entered into a Second Amendment for Economic
Development consultant work (“Second Amendment”) and affirmed their intent that it remain
in full force and effect as amended and reinstated by the Second Amendment effective
January 25, 2023 with a term expiring on September 30, 2023.
D. The Original Agreement, First Amendment, and Second Amendment are collectively
referred to as the “Agreement” unless otherwise indicated.
NOW, THEREFORE, it is mutually agreed by and between and undersigned parties as
follows:
1. SERVICES
Paragraph 2 of the Agreement is modified to read as follows:
Contractor agrees to provide the services and perform the tasks (“Services”) set forth in detail
in Scope of Services, attached here and incorporated as Exhibit A-3. Contractor further agrees
to carry out its work in compliance with any applicable local, State, or Federal order regarding
COVID-19.
2. Exhibit A-2 to the Agreement is replaced with Exhibit A-3, attached hereto.
3. TIME OF PERFORMACE
Paragraph 3 of the Agreement is modified to read as follows:
3.1 This Agreement begins on the Effective Date and ends on December 31, 2023 (“Contract
Time”), unless terminated earlier as provided herein. Contractor’s Services shall begin on March
1, 2022 and shall be completed by December 31, 2023. The City’s appropriate department head
or the City Manager may extend the Contract Time through a written amendment to this
Agreement, provided such extension does not include additional contract funds. Extensions
requiring additional contract funds are subject to the City’s purchasing policy.
2
3.2 Schedule of Performance. Contractor must deliver the Services in accordance with the
Schedule of Performance, attached and incorporated here Exhibit B-3.
3.3 Time is of the essence for the performance of all the Services. Contractor must have
sufficient time, resources, and qualified staff to deliver the Services on time.
4. Exhibit B-2 to the Agreement is replaced with Exhibit B-3, attached hereto.
5. Except as expressly modified herein, all other terms and covenants set forth in the
Agreement shall remain the same and shall be in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this modification of Agreement
to be executed.
CITY OF CUPERTINO APPLIED DEVELOPMENT ECONOMICS, INC.
By By
Title Title
Date Date
APPROVED AS TO FORM
City Attorney
ATTEST:
City Clerk
Date
Douglas H. Svensson
President
Sep 28, 2023
Christopher D. Jensen
Deputy City Manager
Sep 28, 2023
Sep 28, 2023
Exhibit A-3
SCOPE OF WORK
Task 1: Kick-off Meeting and Data Overview (March 15 through March 31, 2022)
The ADE team will kick off the project by meeting with City staff to review the study objectives
and priorities, and begin the data collection and identification of key stakeholders. In addition to
collecting documents and background studies for the most recent general plan and economic
development strategic plan, ADE will also request access to the City’s confidential sales tax data,
business license data, GIS data, internally produced economic studies, and other policy
documents and information will help inform strategic planning process. ADE will also discuss
whether City policy has any identified opportunity sites, and what uses those policies anticipate
for those sites.
In addition, the project team will request contact information on stakeholders and other interested
parties for the focus groups and other communications. As appropriate, ADE will request email
introductions to initiate outreach.
ADE will review the previously completed general plan and strategic plan, and consult the
subscription-based data application JobsEQ, in order to expand economic background findings to
a greater level of detail. This would include employment and occupational data, wages, market
demand, and projected growth.
Task 2: Economic Data Analysis (March 15 through June 30, 2022)
To inform the economic development strategic planning process and support the expected
collaborative work ahead, ADE will produce a series of technical analyses relevant to that
process.
Economic Base Analysis and Projections
As it has throughout its modern history, the Silicon Valley region has rapidly evolved over the
past decade, as business activity and wealth creation have seen tremendous growth during this
period. While technology-based companies have driven the region’s prosperity, the regional
economy has a variety of other business activity that draws from a diverse labor force.
Understanding the nature of these local employers and the dynamics of their relationships with
other businesses, both locally and regionally, is crucial to identifying the path forward for
Cupertino through the strategic plan. This task will help provide the context for the economic
development strategic plan in terms of the business development priorities.
Economic base analysis reveals an economic region’s basic economic drivers—those industries
that, through export, bring wealth into the region. It also identifies which support industries have
trade relationships with these economic drivers through sales of specialized supplies and
services.
The analysis will begin with identifying the local and regional economic drivers, those
businesses that are the primary source of job growth and wealth in the community. Identifying
these economic drivers works on the underlying assumption that the most important sources of
economic opportunity begin with the existing business base and the types of new relationships
and opportunities that can form through expansion of this base. Based on this analysis, ADE will
define export-oriented, related specialized suppliers, and local-serving industries.
ADE will conduct a regional trends analysis based on employment growth, industry
concentration, and income trends. The regional trends analysis will reveal potential directions for
the overall economy, and provide a basis for estimating potential job growth in the City and
region. ADE will examine the regional economy to provide a clear and quantifiable profile of
Cupertino’s role in the context of the Silicon Valley region.
The trends will be distilled down to the city level, and include comparisons between Cupertino
and other comparable cities. The economic trends analysis will identify potential industries that
are well represented elsewhere, but not necessarily in Cupertino. The base analysis will allow
ADE to analyze the market demand for commercial and industrial uses, and estimate the city’s
capacity to capture its share of growth.
ADE will create an economic profile of Cupertino that compares the economic strengths in terms
of industry employment size, concentration and growth, and how these indicators have changed
over time. The analyses for this task are structured to provide the full accounting of local and
regional economic trends, providing key findings necessary to form economic development
policies and strategies.
The economic base analysis findings will include projections of future employment growth in
Cupertino and Silicon Valley region using the five- and ten-year projections from JobsEQ, and at
the county and metropolitan level from California EDD. The future employment trends will
serve as the basis for estimating the anticipated building square footage demand by land use
category. This will be compared with commercial and industrial vacancy trends, as identified in
commercial brokerage reports.
Workforce Characteristics
Using data from the American Community Survey and JobsEQ, ADE will identify the labor
force characteristics and occupational staffing patterns in Cupertino. This task will identify the
extent to which the labor force for the local residents compares to the occupational needs of its
businesses. The findings will include measures such as educational attainment, race/ethnicity,
wage rates and household income. In addition, ADE will project the occupational growth, based
on the five- and ten-year employment projections from JobsEQ. ADE will also review the
existing general plan reports to identify how much residential growth Cupertino is currently
planning over the next decade or more.
Sales Tax Analysis
In order to identify sources of revenue generation for the City, ADE will request access to
Cupertino’s sales tax records. This will allow for a detailed examination of which business
categories account for taxable sales in Cupertino. If available, the data could also allow for more
detailed examination of retail trends at the neighborhood center and district level, in order to
better assess the tradeoffs that would accompany different types of growth for any identified
opportunity areas.
While this type of analysis would normally track with retail store sales, Cupertino also has a
large presence of non-retail businesses that can potentially serve as points-of-sale for taxable
business-to-business transactions. Using the sales tax data, ADE will look at specific categorical
trends to identify how expansion for different types of non-retail businesses might impact taxable
sales.
Business License Review
ADE will request access to the business license data from the City of Cupertino and use the
available information to come up with a distribution of the types of businesses represented within
the city. Depending on the type of data tracked by the business licenses, ADE will use the
information to identify patterns regarding establishment size, industry category, location, and/or
business closures. If available, ADE will review the businesses that have not renewed their
licenses, and use that information to analyze any identifiable patterns for businesses that have
closed or started up since the start of the COVID-19 pandemic.
Retail Market Analysis
ADE will review any previously completed retail market studies to gain an initial understanding
of the local-serving business base. In order to provide greater detail on store types at a more
granular level, ADE will further analyze Cupertino’s retail market so that the store category
detail might be more useful for identifying any underserved retail markets.
To analyze commercial market opportunities, ADE utilizes a proprietary retail demand model
that can identify and quantify household spending in over 30 different retail store categories and
over 50 product groupings. The model can also identify household spending for entertainment,
personal and professional services. ADE’s proprietary retail model is unique in that, in
calculating household consumer spending, ADE tracks spending by household income.
Households in different income brackets exhibit different spending patterns for the same retail
goods, and ADE’s retail modeling captures this differentiation. This approach does not
underestimate spending for lower income households, and does not over project spending by
higher income households.
In addition, ADE will also project how future demand potentially changes with the growth of e-
commerce.
The sales data would come from the City’s sales tax records. Because the industry data analysis
already proposes a detailed analysis of taxable business revenues in Cupertino, the results from
that analysis can readily be used for the more detailed retail analysis. ADE’s retail demand
model also applies a data adjustment that estimates nontaxable sales on items such as groceries
and prescription drugs.
Task 3: Post-Pandemic Trends (March 15 through May 16, 2022)
The COVID-19 pandemic created a once-in-a-generation economic disruption that continues to
impact broad swaths of the global economy, and create unevenly distributed impacts on local
communities. In order to understand how these disruptions have impacted Cupertino, ADE will
review the quarterly employment data at the city level to see how the economic recovery has
played out for different sectors.
In addition, ADE will conduct a literature review to see how the pandemic has impacted demand
for building space with the growth of remote work, and the greater demand for interpersonal
distancing. This will also include a review of e-commerce trends to see whether the large uptick
in e-commerce demand at the beginning of the pandemic has begun to reverse itself as brick-and-
mortar retail stores reopened. ADE will also review how broader public policies have evolved in
response to the pandemic, and how individual cities have responded to business needs as the
initial shock of the pandemic waned.
Task 4: Stakeholder Focus Groups (October 1 2022 through December 31, 2023)
ADE will conduct three focus groups in venues of the City’s choosing, and ask for the City’s
assistance in identifying and contacting business owners, stakeholders, property owners, and
other interested parties. These focus groups will have a business orientation, and we anticipate
generally organizing the focus groups around the following themes:
Globally-focused businesses: This would include businesses that participate in the broader
Silicon Valley economy, and bring net wealth into Cupertino by serving regional, national, and
global markets. Their needs from the City will focus on how Cupertino can best address their
location and competitive needs.
Local-serving needs: This would include businesses that serve the local consumer base. These
businesses would primarily include retailers, local service providers, and hospitality sectors. The
focus group would address market challenges, opportunities, and economic development
initiatives that would help these businesses better operate in Cupertino. Participants in this focus
group can also include local residents.
Project development and real estate: This focus group would look at the commercial real
estate trends, and how Cupertino can best position itself in light of regional trends. This would
also include discussion on how the site selection needs of business might have changed as an
outcome of the pandemic, and how much of the current trends might be temporary and which
ones might more lasting.
Task 5: Strengths, Weaknesses, Opportunities, and Threats (SWOT) Analysis (April 25 through
December 31, 2023)
Achieving long term economic vitality and prosperity depends on a community’s ability to create
an optimal and sustainable business and economic climate as well as a strong quality of life. This
task utilizes all of the information gained from the technical studies for this task and the
stakeholder outreach in the prior tasks order to identify and rank the significant findings, with an
eye towards how this information will help support the strategic planning process.
The SWOT analysis will have both external and internal factors. The external factors include the
broader industry trends and economic factors. This also includes the needs of businesses and
specific industry sectors. Generally, these factors are not influenced by City actions.
The internal factors look at the assets and liabilities at a more local level, and addresses actions
that the City can take to improve the business climate, capitalize on specific characteristics that
can make the community attractive to a business start-up, and ensuring that potential obstacles
within the City’s control are addressed.
Anticipated Completion Date: contingent on timing of stakeholder focus groups
Task 6: Summary Analysis (July 15 through December 31, 2023)
ADE will collect the findings for all of the studies, and provide a background report that can
directly feed into the strategic planning process. The report will include appendix tables, as well
as data sources and the raw data files used to generate the findings.
Exhibit B-3
SCHEDULE OF PERFORMANCE
Task Timeline/Completion
Date
Task 1: Project Kickoff and Data Overview 3/15/22 – 3/31/22
Task 2: Economic Data Analysis 3/15/22 – 6/30/22
Task 3: Post-Pandemic Trends 3/15/22 – 5/16/22
Task 4: Stakeholder Focus Groups 10/1/22 – 12/31/23
Task 5: SWOT Analysis 4/25/23 – 12/31/23
Task 6: Summary Analysis 7/15/23 – 12/31/23
Economic Development Strategy Data
Consultant
Final Audit Report 2023-09-28
Created:2023-09-28
By:City of Cupertino (webmaster@cupertino.org)
Status:Signed
Transaction ID:CBJCHBCAABAA8Zsm18LsJCV0MFThPJ7KzTeb11qJL-TN
"Economic Development Strategy Data Consultant" History
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Agreement completed.
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