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22-041 Amendment #1 dated 6-20-22 Economic Development Strategy Data Consultant1 FIRST AMENDMENT TO AGREEMENT 468 BETWEEN THE CITY OF CUPERTINO AND APPLIED DEVELOPMENT ECONOMICS, INC. FOR ECONOMIC DEVELOPMENT CONSULTANT WORK This First 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. On March 30, 2022 Agreement 468 (“Agreement”) was entered into by and between City and Contractor for Economic Development consultant work. B. City and Contractor desire to modify the Agreement on the terms and conditions set forth herein. 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-1. Contractor further agrees to carry out its work in compliance with any applicable local, State, or Federal order regarding COVID-19. 2. Exhibit A to the Agreement is replaced with Exhibit A-1, 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, 2022 (“Contract Time”), unless terminated earlier as provided herein. Contractor’s Services shall begin on March 1, 2022 and shall be completed by December 31, 2022. 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. 3.2 Schedule of Performance. Contractor must deliver the Services in accordance with the Schedule of Performance, attached and incorporated here Exhibit B-1. 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. 2 4. Exhibit B to the Agreement is replaced with Exhibit B-1, 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 By Title Date APPROVED AS TO FORM City Attorney ATTEST: City Clerk Date APPLIED DEVELOPMENT ECONOMICS, INC. By Title Date Doug Svensson President Jun 17, 2022 Christopher D. Jensen City Manager Jun 20, 2022 Jun 20, 2022 Exhibit A-1 SCOPE OF WORK Task 1: Kick-off Meeting and Data Overview (March 15 through March 31) 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) 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) 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 (June 1 through September 30) 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 September 30) 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 September 30) 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-1 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 6/1/22 – 9/30/22 Task 5: SWOT Analysis 4/25/22 – 9/30/22 Task 6: Summary Analysis 7/15/22 – 9/30/22 Exh. D-Insurance Requirements for Design Professionals & Consultant Contracts 1 Form Updated Jan. 2022 Consultant shall procure prior to commencement of Services and maintain for the duration of the contract, at its own cost and expense, the following insurance policies and coverage with companies doing business in California and acceptable to City. INSURANCE POLICIES AND MINIMUMS REQUIRED 1. Commercial General Liability (CGL) for bodily injury, property damage, personal injury liability for premises operations, products and completed operations, contractual liability, and personal and advertising injury with limits no less than $2,000,000 per occurrence (ISO Form CG 00 01). If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location (ISO Form CG 25 03 or 25 04) or it shall be twice the required occurrence limit. a. It shall be a requirement that any available insurance proceeds broader than or in excess of the specified minimum insurance coverage requirements and/or limits shall be made available to the Additional Insured and shall be (i) the minimum coverage/limits specified in this agreement; or (ii) the broader coverage and maximum limits of coverage of any insurance policy, whichever is greater. b. Additional Insured coverage under Consultant's policy shall be "primary and non-contributory," will not seek contribution from City’s insurance/self-insurance, and shall be at least as broad as ISO Form CG 20 10 (04/13). c. The limits of insurance required may be satisfied by a combination of primary and umbrella or excess insurance, provided each policy complies with the requirements set forth in this Contract. Any umbrella or excess insurance shall contain or be endorsed to contain a provision that such coverage shall also apply on a primary basis for the benefit of City before the City’s own insurance or self- insurance shall be called upon to protect City as a named insured. 2. Automobile Liability: ISO CA 00 01 covering any auto (including owned, hired, and non-owned autos) with limits no less than $1,000,000 per accident for bodily injury and property damage. 3. Workers’ Compensation: As required by the State of California, with Statutory Limits and Employer’s Liability Insurance of no less than $1,000,000 per occurrence for bodily injury or disease.  Not required. Consultant has provided written verification of no employees. 4. Professional Liability for professional acts, errors and omissions, as appropriate to Consultant’s profession, with limits no less than $2,000,000 per occurrence or claim, $2,000,000 aggregate. If written on a claims made form: a. The Retroactive Date must be shown and must be before the Effective Date of the Contract. b. Insurance must be maintained for at least five (5) years after completion of the Services. c. If coverage is canceled or non-renewed, and not replaced with another claims-made policy form with a Retroactive Date prior to the Contract Effective Date, the Consultant must purchase “extended reporting” coverage for a minimum of five (5) years after completion of the Services. EXHIBIT D Insurance Requirements Design Professionals & Consultants Contracts Exh. D-Insurance Requirements for Design Professionals & Consultant Contracts 2 Form Updated Jan. 2022 OTHER INSURANCE PROVISIONS The aforementioned insurance shall be endorsed and have all the following conditions and provisions: Additional Insured Status The City of Cupertino, its City Council, officers, officials, employees, agents, servants and volunteers (“Additional Insureds”) are to be covered as additional insureds on Consultant’s CGL and automobile liability policies. General Liability coverage can be provided in the form of an endorsement to Consultant’s insurance (at least as broad as ISO Form CG 20 10 (11/ 85) or both CG 20 10 and CG 20 37 forms, if later editions are used). Primary Coverage Coverage afforded to City/Additional Insureds shall be primary insurance. Any insurance or self-insurance maintained by City, its officers, officials, employees, or volunteers shall be excess of Consultant’s insurance and shall not contribute to it. Notice of Cancellation Each insurance policy shall state that coverage shall not be canceled or allowed to expire, except with written notice to City 30 days in advance or 10 days in advance if due to non-payment of premiums. Waiver of Subrogation Consultant waives any right to subrogation against City/Additional Insureds for recovery of damages to the extent said losses are covered by the insurance policies required herein. Specifically, the Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of City for all work performed by Consultant, its employees, agents and subconsultants. This provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer. Deductibles and Self-Insured Retentions Any deductible or self-insured retention must be declared to and approved by the City. At City’s option, either: the insurer must reduce or eliminate the deductible or self-insured retentions as respects the City/Additional Insureds; or Consultant must show proof of ability to pay losses and costs related investigations, claim administration and defense expenses. The policy shall provide, or be endorsed to provide, that the self-insured retention may be satisfied by either the insured or the City. Acceptability of Insurers Insurers must be licensed to do business in California with an A.M. Best Rating of A-VII, or better. Verification of Coverage Consultant must furnish acceptable insurance certificates and mandatory endorsements (or copies of the policies effecting the coverage required by this Contract), and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements prior to commencement of the Contract. City retains the right to demand verification of compliance at any time during the Contract term. Subconsultants Consultant shall require and verify that all subconsultants maintain insurance that meet the requirements of this Contract, including naming the City as an additional insured on subconsultant’s insurance policies. Higher Insurance Limits If Consultant maintains broader coverage and/or higher limits than the minimums shown above, City shall be entitled to coverage for the higher insurance limits maintained by Consultant. Adequacy of Coverage City reserves the right to modify these insurance requirements/coverage based on the nature of the risk, prior experience, insurer or other special circumstances, with not less than ninety (90) days prior written notice. Economic Development Strategy Data Consultant Final Audit Report 2022-06-20 Created:2022-06-16 By:City of Cupertino (webmaster@cupertino.org) Status:Signed Transaction ID:CBJCHBCAABAAo95AWWXFggnmCUn4bu7f8m3HLRRqUqn3 "Economic Development Strategy Data Consultant" History Document created by City of Cupertino (webmaster@cupertino.org) 2022-06-16 - 11:59:23 PM GMT- IP address: 35.229.54.2 Document emailed to Araceli Alejandre (aracelia@cupertino.org) for approval 2022-06-17 - 0:01:18 AM GMT Document approved by Araceli Alejandre (aracelia@cupertino.org) Approval Date: 2022-06-17 - 0:09:10 AM GMT - Time Source: server- IP address: 73.170.27.253 Document emailed to dsvensson@adeusa.com for signature 2022-06-17 - 0:09:12 AM GMT Email viewed by dsvensson@adeusa.com 2022-06-17 - 1:33:34 AM GMT- IP address: 104.28.123.70 Document e-signed by Doug Svensson (dsvensson@adeusa.com) Signature Date: 2022-06-17 - 4:18:08 PM GMT - Time Source: server- IP address: 69.181.139.14 Document emailed to christopherj@cupertino.org for signature 2022-06-17 - 4:18:11 PM GMT Email viewed by christopherj@cupertino.org 2022-06-17 - 4:29:12 PM GMT- IP address: 104.28.124.106 Document e-signed by Christopher D. Jensen (christopherj@cupertino.org) Signature Date: 2022-06-17 - 4:30:40 PM GMT - Time Source: server- IP address: 174.194.202.234 Document emailed to Jim Throop (jimt@cupertino.org) for signature 2022-06-17 - 4:30:42 PM GMT Email viewed by Jim Throop (jimt@cupertino.org) 2022-06-20 - 11:27:10 PM GMT- IP address: 104.47.74.126 Document e-signed by Jim Throop (jimt@cupertino.org) Signature Date: 2022-06-20 - 11:27:28 PM GMT - Time Source: server- IP address: 64.165.34.3 Document emailed to Kirsten Squarcia (kirstens@cupertino.org) for signature 2022-06-20 - 11:27:30 PM GMT Email viewed by Kirsten Squarcia (kirstens@cupertino.org) 2022-06-20 - 11:30:24 PM GMT- IP address: 104.47.73.254 Document e-signed by Kirsten Squarcia (kirstens@cupertino.org) Signature Date: 2022-06-20 - 11:30:32 PM GMT - Time Source: server- IP address: 69.110.137.176 Agreement completed. 2022-06-20 - 11:30:32 PM GMT