Memorandum TO: HONORABLE MAYOR AND CITY COUNCIL. FROM: Toni J. Taber, C City Clerk SUBJECT: SEE BELOW. DATE: October 13, 2016

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1 CITY OF CAPITAL OF SILICON VALLEY COUNCIL AGENDA: ITEM: 4.1 Memorandum TO: HONORABLE MAYOR AND CITY COUNCIL SUBJECT: SEE BELOW FROM: Toni J. Taber, C City Clerk DATE: October 13, 2016 SUBJECT: SISTER CITY PROGRAM REVIEW RECOMMENDATION: As recommended by the Community and Economic Development Committee on September 26, 2016, accept report on the Sister Cities program and approve the proposed amendments to the Sister City Guidelines.

2 CITY OF SAN IPSE uronmedam COUNCIL AGENDA: 9/26/16 ITEM: D(3)..., Memorandum CAPITAL OF SILICON VALLEY yxwvutsrponmljihgfedcbaywvutsrponmlkjigfedcba TO: COMMUNITY AND ECONOMIC DEVELOPMENT COMMITTEE FROM: Joseph Hedges SUBJECT: SISTER CITY PROGRAM REVIEW DATE: September 19, 2016 Approved i. / Date shfbia sb-fa- Iff } h COUNCIL DISTRICT: Citywide RECOMMENDATION Accept staffs report on the Sister Cities program and forward the proposed revision to the Sister City Guidelines to the full City Council for approval. OUTCOME By adopting the revised Sister City Guidelines, Council will affirm its policy framework for the Sister Cities program. BACKGROUND On March 22, 2016, the Rules and Open Government Committee declined to direct the City Manager to initiate the evaluation process establishing a Sister City affiliation with the Suwon City, Republic of Korea Municipal Government. Staff was further directed to add an item to the Community and Economic Development Committee Work Plan for August 2016 and to provide a status report on the City's Sister City Program, a consideration of any recommended updates to the current policy, including different levels of Sister City relationships, and an assessment of potential expansion to the program. The U.S. Sister Cities program was created by President Dwight Eisenhower at a 1956 White House Conference on Citizen Diplomacy. President Eisenhower envisioned an organization that could help to forge bonds between communities and people from different cities across the globe. The City of San Jose became a charter member of Sister Cities International, the national non-profit organization in the U.S. that formally recognizes sister city affiliations between U.S. and international cities, counties and states. Today, 570 U.S. cities, counties and states have over 2,300 partnerships in 150 nations through the Sister Cities program. A Sister City affiliation is a broad-based city-to-city relationship that involves city and community engagement in economic

3 Page 2 development, education, the arts, business, sports, civic affairs, faith-based organizations, humanitarian work, government and other programs. San Jose was among the first cities in the U.S. to establish a Sister City affiliation following President Eisenhower's "People-to-People" initiative. The 1957 Sister City linkage with Okayama, Japan was the third sister city linkage forged in the United States. Additional sister city affiliations were established with the City with San Jose, Costa Rica (1961); Veracruz, Mexico (1975); Tainan, Taiwan (1977); Dublin, Ireland (1986); Pune, India (1992); Ekaterinburg, Russia (1992); and Guadalajara, Mexico (2014). Because Sister City affiliations are permanent, formal city-to-city relationships and require ongoing City government participation and financial support, the City reviews, evaluates, and approves Sister City affiliations. Following an extensive review process, the Council votes on a proposed Sister City affiliation. The Sister City Guidelines, adopted by the City Council in 2008, include criteria for selecting a proposed new Sister City, the process to review and formally adopt a new Sister City, City recognition and financial support of Sister City program committees, and the process for terminating a Sister City affiliation. The Guidelines are included as an attachment to this memo. The Guidelines have been important due to the frequent number of requests the City receives to establish and support more Sister City relationships. Each Sister City affiliation is led in the community by a nonprofit Sister City committee or association that is recognized by the City to plan and implement that Sister City program in San Jose. The Office of Economic Development manages the City agreements with each Sister City organization and provides up to $2,500 annually to each to support their programs and activities. ANALYSIS Current Status of the Sister City Program Six of the City's eight Sister City affiliations are currently active and the local nonprofit Sister City committees are eligible to receive funding from the Office of Economic Development. The six active programs are Okayama, Japan; San Jose, Costa Rica; Tainan, Taiwan; Dublin, Ireland; Pune, India; and Guadalajara, Mexico. The Veracruz, Mexico and Ekaterinburg, Russia Sister City affiliations are inactive and there is no local nonprofit Sister City organization. (Note: the Guadalajara Sister City affiliation was added in March 2014, with recognition that the Veracruz relationship had long been inactive.) The number of active participants in each Sister City committee ranges from 10 to 25 on an ongoing basis. Specific local events can attract 100 or more participants. The six active Sister City affiliations have fostered participation in community programs and projects, such as the Downtown Association Foundation "Downtown Doors" artwork in beautifying the Downtown,

4 Page 3 sponsoring scholarships for high school and university students in our Sister Cities to enhance educational opportunities, raising funds to donate equipment for City community centers, and sponsoring film showings for San Jose residents. The activities planned by Sister City committees typically bring social and cultural, rather than economic, benefits. Recommended Change to Current Sister City Guidelines Staff recommends changing the proposed Sister City Guidelines to require that a new Sister City organization have a minimum of 20 members rather than the current 10 and that a majority of members be San Jose residents. Staffs experience in working with new and existing Sister City organizations is that 10 is not a sufficient number to build and sustain a strong program. Existing Sister City organizations with fewer than 20 members are being asked to increase their membership incrementally annually. The City's Sister City Guidelines are consistent with the policies of Sister Cities International. Sister Cities International will recognize a city affiliation as a "Friendship City" if the proposed Sister City has one or more U.S. Sister Cities and the U.S. cities do not provide written approval for the proposed Sister City affiliation. Staff does not recommend that the City establish "Friendship City" affiliations due to the commitments required to establish these lower level relationships. Assessment of Potential to Expand Sister City Program Because of San Jose's global prominence and the worldwide economic reach of Silicon Valley, the City receives many inquiries and requests annually from cities throughout the world and their representatives seeking to establish formal Sister City ties with San Jose. Staff recommends that the City focus the next few years on strengthening the existing Sister City relationships. Several existing Sister City affiliations will celebrate milestone anniversaries in 2016 and 2017 that will require significant City staff commitments and financial resources. The Dublin Sister City affiliation marked 30-years in 2016, with a Sister City visit to Dublin in April 2016 by a City/Sister City delegation. The Dublin Lord Mayor and delegation will visit San Jose in The Okayama, Tainan and Pune Sister City affiliations will mark 60-years, 40-years and 25-years, respectively in The City will host a visit in April 2017 by a 100-member Sister City delegation from Okayama and the Tainan mayor recently visited San Jose. The Okayama and Tainan Sister City organizations are working with the City on a reciprocal visit to Okayama and Tainan later in Also, the Guadalajara Sister City linkage remains under development and requires additional staff involvement. The adopted Guidelines state that the City's ability to enter into new Sister City affiliations will depend on the availability of City resources, staff and financial, to develop and build a successful Sister City relationship. Although the number of Sister City affiliations is limited due to the requirements of City resources and involvement, the Office of Economic Development recognizes the value of community organizations and residents engaging internationally to

5 Page 4 promote friendly relations with people worldwide. Given our residents' extraordinary diversity and natural global ties, staff believes global community engagement can be extensive throughout San Jose without the City government being a party to formal agreements and long-term commitment of public resources. Apart from the Sister City affiliations, the City actively engages with cities, regions, and nations across the globe on numerous initiatives, such as governance, economic development, air service, transportation, the arts, public safety and numerous other areas. This informal City engagement nationally and internationally is expected to increase in future years with more of the nation and world recognizing San Jose's unique placement. Resource Allocation The Sister City program is administered by the Office of Economic Development as part of the Department's International Programs portfolio. This also includes coordination with the Mayor, Council Offices and other City departments on international relations and delegations, coordination with the Airport on economic analysis and business outreach for air service attraction, coordination with State and Federal entities on potential foreign direct investment opportunities, outreach and coordination with international companies, coordination with foreign trade and investment entities, and administration of the federal Foreign Trade Zone program. These functions are supported wholly within the Business Development Team and currently requires one of the five Business Development Officers dedicated to business outreach, policy creation and coordination, economic analysis, development facilitation and program management. At any given time, the Sister City program alone can consume percent of one FTE, rising to percent during peak event times, such as Sister City trips or when facilitating visits by Sister City delegations. In addition to the necessary staff resources, OED currently funds the activities and contracts associated with the Sister City committees from its non-personal budget. Before the budget and staff reductions of the period, the budget included a line-item for Sister City expenses, including hosting and travel expenses. This was eliminated, with the expectation that grant agreements and other operating expenses be absorbed into the Office of Economic Development budget. Agreements with the six active Sister City committees amount to $15,000 annually, and the other expenses associated with the program amount to between $5,000 and $15,000 depending on the activities occurring within a given year. The addition of future Sister City affiliations would place additional staff and non-personal resource constraints on the City's business development function and may impact the Department's ability to meet its performance measures related to companies met and jobs created. Staff recommends that consideration of additional Sister City relationships be postponed until the City has financial capacity to support the program expansion with dedicated staff and nonpersonal funding, so that Sister City program administration does not detract more from the core business outreach and development facilitation work required by the City's limited Business Development staff.

6 Page 5 EVALUATION AND FOLLOW-UP The Office of Economic Development will provide the Community and Economic Development Committee an annual report in the fall on the status of the Sister Cities program. COORDINATION This report was coordinated with the Office of the City Attorney and the City Manager's Budget Office. /s/ JOSEPH HEDGES Manager, International Affairs Office of Economic Development For questions, please contact Joseph Hedges, Manager of International Affairs, at (408) Attachment