Municipal CFO Series: Jay Goldstone, San Diego

Jay Goldstone was appointed to the position of Chief Operating Officer for the City of San Diego in 2007, overseeing the City’s daily operations and implementing Mayoral and Council initiatives and policies. Goldstone has also served as the City of San Diego’s first Chief Financial Officer and the Director of Finance for the City of Pasadena. During Goldstone’s tenure, San Diego has launched the Clean Technology Initiative in an effort to attract businesses involved in environmentally sustainable production.

What has San Diego done to earn its reputation as a hub for clean technology?

A lot of the development was because of our universities and our research centers: Scripps, the UC systems, to name a few. There was a push for clean tech, and we tried to provide an arena for that to flourish. The city helped with the organization- finding a way of bringing together a lot of companies that had some basis in clean technology to help create synergy. Because it was such a new field, companies were previously not coordinating, not knowing what each other was doing. We focused on bringing people together, sharing ideas. I think that was one thing that the city was able to do- just help foster that kind of discussion.

As a city, we were looking for economic development, and clean tech was almost the right thing at the right moment, at a time when we were trying to create jobs. I think that was the driver for the city more than it was the idea of clean tech. It was economic development. It was jobs. It was research. And that is what we felt was going to drive our economy to work our way through the recession.

What incentives did the city provide to bring businesses to the area and help current businesses flourish?

We did not really provide a lot of financial incentives. It was a matter of encouraging, but not getting in the way. It was providing the forum. Businesses tend to find a niche or a need and try to then develop that. They may have gone after federal grants or federal subsidies, and to a lesser degree maybe state grants or state subsidies. But they really did not get local grants or local subsidies, because we did not have that kind of resource, especially during the recession as we were cutting back other kinds of services. But that doesn’t mean you don’t provide the forum and stand out of the way.

But just helping businesses find locations proved fruitful. There were also some zoning changes and/or permitting that they needed to get their businesses going that we made it easier for them to get. Permitting is important with research labs. For instance, we have something called enterprise zones. We don’t necessarily give businesses a tax break, but through the state or even the federal government, they can get these credits if they locate within an enterprise zone area. We just were trying to create a campus.

To what extent did you partner with utility providers? Does integration of clean tech into a city involve direct investment from the city towards utility technology?

There is no question that utilities are a big part of trying to come up with clean energy.

The San Onofre Nuclear Power Plant has been closed for about a year and requires permits to restart. There is a big question as to whether the PUC will relicense it. Environmentalists are fighting that, and San Diego Gas and Electric is looking at other alternatives. For my part, the city is just providing the forum.

As a city, we have tried to develop programs to provide some economic incentive to homeowners to utilize clean technologies. One program offered tax exempt financing or low cost financing through the city to homeowners or small businesses that were interested in installing solar. It would have been part of their tax bill and they could have paid it back over 20 years. So, taxpayers didn’t have to come up with the all the money and then hope they might recover it when they sell their homes. You could finance it over a 20-year period, with the loan going to the property.

The advantage to the homeowner is that they only pay for the years they are in the house. Our program had some pick-up, but trying to get the financial markets on board- to get enough mass to make it economical to borrow the money- has been part of the challenge. So, it was a great concept that hasn’t fully come together yet. Our new mayor is more of an environmentalist, so it’s possible to see if some of the consumer-oriented programs get resurrected under his administration now.

But those are the kinds of things we are looking at where maybe we as a public agency could provide assistance to encourage solar or other areas.

How has clean tech fed back into the city to promote economic development?

People are able to come to San Diego and recognize that we have a business friendly environment. We try to expedite the permitting process, even though we aren’t directly providing a financial incentive. So, if people can get permits more quickly, that is a form of an incentive. Whether it’s in this arena or in other arenas, they want government out of the way.

Of course, from my perspective, I have to strike a balance. You can’t totally turn a blind eye because you have the community which you need to protect. But, you have to strike a balance in how you allow free enterprise to flourish, protect the neighborhoods, and keep things moving.

Is San Diego’s success in this arena replicable in other cities?

Cities have to make that decision for themselves. What will drive things like clean tech in a city? If it’s the universities, do they have that type of environment? San Diego has Scripps, so that’s a natural fit. Scripps is not new; rather, the clean tech concept is maybe an outgrowth of years of their research.

Trying to create clean tech from whole cloth, with no support systems in place, won’t work. As such, although all cities want to create economic development, that might not be the niche to go after.

As for the success of the clean tech industry in the future, in any start-up type of industry there are going to be some winners and losers. We recognize that. And yes, some of the companies might not be around tomorrow. That’s going to happen. But I don’t see the clean tech industry dying.