My View: Speaking to All of Davis on Business Park Development

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On Sunday, we reported on an op-ed from Michael Bisch, Robb Davis, and Brett Lee, which noted, “What useful lessons about how development decisions should be made in Davis can we derive from our experience with The Cannery?”

While they acknowledge that “it is unlikely that Davis will have another development of its size and type (500-plus housing units with a commercial component) in the near future, we are likely to have other types of development proposals before us.”

The authors put forth five ideas, which I’m not going to get into in this space.  More critically, in response to their op-ed, was a letter from Elaine Roberts Musser.  She writes, “In an ideal world, these five ideas sound great, but they don’t mesh with reality.”

While I do not necessarily agree with her, I think her next point is spot on: “What the city lacks is a clear vision of what it wants to be. This is because there are many differing views of what the city should look like in the future — varying perspectives between successive City Councils, among sitting City Council members, and by the community as a whole. But that is as it should be in this multifaceted world.”

Then she goes on to argue, “Development is about compromise.”

She makes a good point because, had ConAgra and New Homes not compromised on the Cannery to put in a second grade-separated crossing and compromised even with CHA, they may still have gotten their project approved but it would have most likely gone to a vote.  The compromises took a lot of steam out of an initiative drive.

But the main point of this column is not about Cannery at all, but about the next big project.  Those of you who are regulars might want to skip this part.

In June of this year, David Morris came forward with a project suggestion that we take land on Mace 391, that is being processed for a grant to put it into permanent ag easement, and he proposed we swap that easement with the Shriner’s property and put a large business park on it.

At the time, there were a variety of process issues on it and the council voted 3-2 to oppose the pausing of the grant process and allowed the parcel to continue to move toward an ag easement.

But Mr. Morris was not easily deterred and continued to press for council to at least consider his idea on its merits and after he published a piece in the Vanguard and numerous Tech-industry Leaders came forward to speak to the Council, the city briefly considered even, at the late date, stopping the grant process.

There will be some who will consider Mr. Morris’ effort a failure, but actually, without Mr. Morris, I think it is difficult to conceive how the idea of a peripheral business park would have any viability at all.

For me, as a slow growther who has opposed most development, the city of Davis is at a critical moment where the current model of fiscal sustainability has become strained to the point of breaking.  Here we are not more than five years since the collapse of the US economy, and we are facing what is likely our biggest budget deficit.

As the city manager noted this week: Davis faces a new economic crisis.

“Difficult decisions are ahead concerning how to balance funding ongoing programs vis-à-vis service-level expectations in the community,” he writes. “Davis is justly proud of the amenities it offers to residents. However, expenditures continue to grow faster than revenues, despite all the changes the City has made to date.”

He argues, “Largely these increases are outside the City’s control. This funding gap makes it difficult to continue to provide the current level of services to residents.”

“The bottom line is that, absent some new revenue or one-time funds, the City will be making reductions again and efforts to maintain critical infrastructure will result in difficult choices,” the city manager writes.  “This is a matter which needs to be addressed, since the overall trend is that the City has been drawing down on its carryover balances to make ends meet and those funds are projected to be depleted within the next several of years.”

The short-term options are very limited and we are likely to see a tax measure on the ballot.

The longer-term option is that we grow our economy through new revenue opportunities.

The combination of the efforts of David Morris and the realization of the state of our economy has given the idea of a peripheral business park a new lease on life.

With Mace 391 out of the picture, there are three areas that we are likely looking at: First is the Nishi Property which is next to the university but is a relatively small parcel.

Second, there are the lands that reside between Mace 391 and Mace Curve.  These are the Bruner Trust and Ramos-Oates tract.  While these too would be subject to a Measure R vote, they have some advantages.  To the east would be the Ag Buffer that will be preserved permanently through an agricultural easement on Mace 391.  That means that there is no chance of sprawl or development to the east or the north of these tracts.

If the face of that project were the expansion of Schilling Robotics and Marrone Bio Innovations and this were sold to the public as a means to keep these businesses in town, it might stand a chance on a vote.

The Vanguard has learned that a developer is moving forward quickly on a proposal that could place a citizen’s  initiative on the ballot perhaps as soon as November 2014.

But we have concerns and these go back to the concerns laid out by Elaine Roberts Musser – we do not have consensus as to what this city should look like and we do not agree on how to move forward.

My fear is that this project will go by the wayside and go down to defeat at the ballot unless the people who run the campaign can speak to both sides of Davis.  I hearken back to the public Innovation Parks meeting from October – it was a good meeting, but the notable absence in the room was obvious and palpable.

The progressives were missing from the discussion.  The progressives may not have the power and influence that they did a few decades ago, but they still have sizable numbers.

If the developer community hires consultants who speak largely to one side of Davis’ room, this project will go down to massive defeat.

It needs to bring in substantial representation from the progressive community, and the progressives need to have a role in shaping the project, highlighting immediate concerns about leaping over Mace Blvd on the north side of the highway and developing a large business park.

A failure at these early stages will mean a dog fight and a likely defeat.  The early stages will define the issues and frame the discussion.  It is a delicate matter.

We saw in June just how fragile these discussions are – one mistake doomed any possibility of re-casting Mace 391 – forever.  We are going to get one shot at this and so the developer involved needs to seriously think about how best to move forward or they will likely lose what window of opportunity they have to get this approved by the voters.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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42 Comments

  1. B. Nice

    I agree with Musser that compromise is important. I think we would disagree on where the jumping off spot for negotiations to begin lies. On the Cannery, we started in the wrong place. I disagree with her fears that we would have scared away a developer by asking for “too much”. I don’t believe another housing developer would have risked purchasing that land from them. So, ConAgra, who presumably wanted that land developed for residential use, had very few options, then to work with us, and we should have capitalized more on that fact from the outset. When it comes to developing a new business park though, I don’t think we have the same bargaining power.

    I’m glad to hear the a developer is moving forward, and I agree that they should start reaching out now to the more moderate “slow grower” leaders in this community now. If these people aren’t involved and onboard with the process I doubt a Measure R vote can pass.

  2. Jim Frame

    “The Vanguard has learned that a developer is moving forward quickly on a proposal that could place a citizen’s initiative on the ballot perhaps as soon as November 2014.”

    Does this pertain to the Ramos-Bruner parcels?

  3. Frankly

    I have a vision for the future of Davis and it is the same picture being played out all over the country except in places where the brain trust of the community is more business mined and more understanding of the link between amenities and revenue. Davis does not have that. I think one of the reasons is that we have a larger percent of the population living of the softer money of government… and they are truly disconnected from understanding how robust private-sector economic development is necessary to fund the amenities they demand.

    I will be working very hard to help defeat any tax increase measure because it will just perpetuate that disconnect and have the effect of delaying cuts to services and staff. Because only when we get enough of the latter will the disconnected voters will get it.

    Foregoing the hundreds of millions of dollars in probable revenue that would have been derived from developing Mace 391 into a business park will prove to be the legacy of the council and the people that pushed them to this decision. It was a giant mistake that needs to be continually pinned on those people as the city continues down a path of financial dysfunction.

    1. B. Nice

      Frankly love the aviator, it really captures your essence. I agree that people coming to the table should do so willing to listen and be open to all possible solution for our city’s economic problem, both in the short and long term, and this in my mind includes the possibility of a temporary tax increase.

      1. growthissue

        B. Nice, you should love Frankly’s avatar, it’s a liberal’s hero. “Temporary tax increase”, don’t kid yourself, no new tax in Davis is ever temporary. Once they get their claws into your pocket the sales tax, as are temporary school parcel taxes, will be renewed into perpetuity.

  4. Jim Frame

    “I will be working very hard to help defeat any tax increase measure”

    I’m sure John will appreciate the company. He must be lonely now that Ernie’s gone.

    I view a tax increase as a stopgap measure until more sustainable revenue sources can be implemented. I also consider a “just say no” approach to the proposed tax increase to be as short-sighted as some consider the Mace 391 easement to be.

    1. Matt Williams

      I tend to agree Jim. We need to have a comprehensive approach. The Revised Budget presented by City Manager Pinkerton on Tuesday showed a 5-Year cummulative Budget Deficit of $28.43 million, which is almost double the $15.07 projected for the same period six months ago (in June). That deficit has to be addressed in the short run one way or the other.

      The problem is that the $28.43 million doesn’t include any of the deferred maintenenace “catch-up” that we clearly need to do. Based on the presentation given to Council by Bob Clarke on two Tuesdays ago (on 12/10) we need to spend $213 million over the next 20 years (see graphic below) . . . that would be another $10 million per year to add to the $28.43 Deficit, but because there is $2 million per year for Streets in the $28.43 million, the incremental is only $40 million over the 5-year Budget, taking the cummulative Budget Deficit to $68.43 million
       photo 05-Transportation-Infrastructure-Rehabilitation-Presentations-Combined_zps5f03f9ad.jpg

  5. Rich Rifkin

    In dollar terms, can someone explain to me why Davis needs a business park?

    Say, for example, we had a new industrial development near I-80 with 1 million s.f. of leasable units. How much gross tax revenue will that bring the City of Davis? How much net revenue? And what benefits will a large business park bring to residents unconnected to the industrialists who locate here?

    Certainly, any such commercial development will impose some costs (traffic, for example) on people in Davis. But such costs are different on different people, depending on your travel patterns, schedule, etc. Yet if there are some costs to ordinary people in Davis, but little or no appreciable, tangible benefits, I cannot see why the City or its residents would desire new industry on our periphery.

    I am not saying I think there are no benefits or they are simply too small. I am saying that, without some good estimates of how much those benefits are worth to the City and to me (as an ordinary resident), I cannot favor a giant business park. But if the benefits will be great, I can. So tell me what those benefits are?

    1. Frankly

      I agree that it makes sense to do a good job calculating and communicating the benefits; but there is a glaring counter point for requiring those in opposition to quantify the impacts they fear, and also provide alternatives for dealing with our city’s structure deficits. I’m sure but people arguing against business development without quantifying their concerns and without coming to the table with alternative solutions for our long-term structural financial problems… well, I don’t think they deserve a seat at the table.

      And if business development is NOT the answer to long-term structural fiscal problems, what is?

      People don’t want a business park on the periphery? Well there is a lot of things in life that we want or don’t want. These are amenities that we need to pay for. How do we pay for them? The only net revenue generator for a city is fees, property tax and sales tax. Business is a net positive revenue generator for the long run. Davis needs more retail and more business so we have long-term revenue inflows that allow us to maintain the amenities we demand.

      1. Rich Rifkin

        “if business development is NOT the answer to long-term structural fiscal problems, what is?”

        Most of the general fund–and increasing amounts of the other funds–goes to pay for direct labor costs, including present and future medical benefits and pensions.

        My suggestion for years–but never adopted–has been to tie the growth in total compensation costs directly to the growth in revenues per resident. If revenues grow reliably at 2.5% per year, then expenses need to be capped at 2.5% to match that. Our labor contracts need to be based on total comp.

        The problem with not doing business this way is that in good times we take on long-term liabilities to labor; and then during recessions the City goes into crisis and disemploys all of its marginal workers. The City of Davis now has about 100 fewer employees than it did 4-5 years ago; and in many cases, those losses (mostly to retirement) play out with a direct loss in services, including much deferred maintenance.

        Other than with debt-service payments, the City can–and should–look at its non-labor expenses in a similar fashion. That is, avoid contracts where the year-over-year expense will grow beyond the revenue growth rate.

        But, as your answer implies, expense is only half of the equation. I don’t think the voters are likely going to approve much in new taxes (though maybe they would favor increasing the amounts of old taxes, adjusted for inflation). That leaves business development–of a sort which generates a lot more in tax revenues than in needs for new services.

        In order to convince the voters of Davis any particular development is beneficial, they need to know the numbers: how much in property tax and sales tax; how much goes to the schools and the county; how much more quickly our roads will deteriorate as a result of the added truck traffic and how much that will cost; and how much expense will the new industry cost in police, fire and other city services. If we then get a good 5-year, 10-year and 15 year projection, we can see if it is beneficial or not. And subjectively, individuals will decide if it harms or enhances their quality of life.

        1. Don Shor

          Voters in most of our surrounding communities have approved sales tax increases. I see no reason that Davis voters would be any different. If anything, I expect Davis voters would be more likely to approve a 0.25% or 0.5% increase in the sales tax.

      2. Tia Will

        So Frankly, if it is truly your position that those who do not offer a viable alternative do not deserve ” a place at the table” then why do you think that anyone should give any credence to obstructionists when their positions are representing obstructionism in other areas, say in the recent fluoride debate here in town, or on a broader scale the ACA. You seem to have a penchant for wanting to “blow things up” and “start all over again” without stating specifics when the issue is what you consider a leftist position, but decry the obstructionists when it is you who wants to see a policy enacted.

        1. Frankly

          I think you are making this more complicated than you need to. The point is that you can’t just argue for amenities without also proposing how we pay for them. Or, you can, but then I don’t think you are very credible or useful in the debate.

          Frankly, there is way too much of that type of thing in this town… demanding amenities and expecting someone else to pay for them.

          1. Don Shor

            Pay for them by continuing the local parcel taxes, ask the voters to enact a short-term local sales tax, and move forward on developing task-force-identified sites for business development.

          2. Tia Will

            There is a difference in demanding amenities and expectin someone else to pay for them, and wanting amenities and being more than willing to pay for them. The only reason that I think you might have been including me in your generality is because you posted that comment as a direct reply to me. I am quite sure that you know since, I have posted it directly many times and spoken to you directly about the fact that I am more than willing to pay more in taxes to support city services. I am also fairly sure that you are aware from posts and conversation that I believe that those of us who are more economically blessed should be paying more than those who are less advantaged. I certainly don’t mind comments about my preferences that are based in reality, but I think you are well aware that I do not expect anyone else to pay for my amenities.

            So what would my proposal be ? A balance. In the short term a modest increase in sales tax. Increased volunteer activities to help maintain some of the “amenities” that we enjoy. Consideration of long term development of some of the tech/business park ideas founded on a definite vision of where we, as a community ( not just you or me personally) want the city to be in five, ten, twenty five, fifty years.

  6. Jim Frame

    I did some very (very!) rough calculations based on input from Rob White and others, and came up with an annual net to the city of somewhere between $1.4M and $5.5M for a business park on the Ramos/Bruner site.

  7. Don Shor

    Current sales tax in local cities:
    Woodland 8.25%
    Davis 8.0%
    Fairfield 8.625%
    Rio Vista 8.375%
    Vacaville 7.875%
    Vallejo 8.625%
    Sacramento 8.5%
    West Sacramento 8.0%

    Of 117 cities listed at the State Board of Equalization, 26 have, like Davis, sales tax of 8.0% or less.
    54 have sales tax of 8.125% to 8.75%.
    34 have sales tax of 8.98 to 9.5%. 3 have sales tax of 10.0%.

    1. Don Shor

      That’s an excellent move by Sacramento, rezoning to greater flexibility of the land use. But given the location, I hope they aren’t counting on a very rapid buildout.

    2. Rich Rifkin

      “Sales tax is the most regressive form of taxation.”

      It is regressive, and that is a reason I disfavor it. But it’s not the MOST regressive. People with more disposable income buy a lot more and hence pay a lot more of it in total dollars. If I buy a $25,000 Toyota, my sales tax on that will be $2,000. At the same time, the wealthy guy who buys a $200,000 Mercedes will pay $16,000 in sales tax on his car (not to mention much higher annual registration fees, etc.).

      A much more regressive tax is a parcel tax. (Due to Prop 13, we have little local ability to get around this.) The person who lives in an 800 s.f. bungalow in Davis pays the exact same dollar amount as the lady who owns a 5,000 s.f. home elsewhere in town. As a percentage of property value, the bungalow resident is paying far more for his parcel tax than the lady with the big house. … In terms of value loss from parcel tax, residents who owned their places before the tax was put in place are hurt the worst. When a new buyer comes along, he will simply buy the house for less money if it is encumbered by add-on property taxes.

      What follows is a boring, but somewhat relevant aside, regarding a type of tax some pay in Davis.

      It is for that time-of-purchase reason that the huge Mello-Roos fees which many property owners in Mace Ranch (and some in other newer parts of Davis) must pay DO NOT mean that those residents are being screwed relative to residents who have no Mello-Roos fess on their property tax bill. The Mello-Roos residents bought their places at a market discount, because of that encumbrance. Since the Mello-Rees fees were put on at the time of development, the value loss was absorbed by the developer (mostly being Frank Ramos in Davis). …

      The only way this would not be true–that is, the only way the current payers of the Mello-Roos fees are in fact being hurt-is if you believe home buyers are completely irrational: That is, you think they would pay the same asking price for the same house in an equivalently nice neighborhood, where one house is encumbered by this tax when another is not. You still might think, not all buyers read all the fine print. Some might not know about the encumbrance until it is too late? The problem with that thought is that their lender will know. The lender won’t loan them as much money for the encumbered property, because, all else held equal, it’s not worth quite as much. And hence, those homes always sell for a discount, due to the Mello-Roos fees.

      1. Frankly

        I don’t have a problem with people living in their homes for a longer time paying lower property taxes considering the alternative. We are talking about a passive asset. It is punitive and problematic to key tax rates to real estate valuation since real estate became a speculative investment instrument and not just a place to make a home or a place of business. Prop-13 creates a much more fair and less problematic tax. California still ranks high on the list of states for property tax revenue per capita.

      2. B. Nice

        My question would be, how much of a discount do houses with Mello-Roos taxes sell for and how long does a home owner have to pay these taxes before they exceed the initial discount received because of them?

  8. IPad Guy

    Don, what are the total amounts of cash that the cities you list bring into their coffers with their sales tax levels?

    I was intrigued by Jeff Hudson’s recent in-depth story on the state of our property taxes, how parcel taxes were sold and what the funds really financed, the unfair legacy of Prop. 13, etc. I get the impression that Davisites might be getting a little tapped out.

  9. Don Shor

    “Don, what are the total amounts of cash that the cities you list bring into their coffers with their sales tax levels?”
    I would have to look up the individual budget reports of each city. Sorry, not going to do that. The only point I was making is that Davis would not be unusual in voting in a 0.25 – 0.5% sales tax.

    1. Frankly

      You can’t just argue about Davis sales tax rates relative to other communities without also looking at other revenue sources. Davis gets a higher ratio of tax revenue from real property taxes than most other communities. So, Davis housing costs are higher… in many cases much higher… than these other communities. So, in term of the regressiveness of a sales tax increase in Davis, it would absolutely be high given the higher cost of housing. A low income family is a low income family. It is more difficult for a low income family to live in Davis today because of our high housing costs. If you increase sales tax by .25% or .50%, you take away from what limited discretionary income they have.

      Said another way, with our high property tax revenue, we should be able to have a slightly lower sale tax rates. The REAL reason we don’t have enough revenue is that we have not grown our economy enough to meet our needs. Davis’s $7,700 per capita in sales revenue is significantly less that what these other communities generate.

        1. Frankly

          Yes. Discretionary income meaning income that isn’t already earmarked for paying bills and obligations, and can be used for things like saving and buying a pizza dinner for the kids.

          1. B. Nice

            Just wanted to confirm your views on this. I’ll save the discussion of them for the next time the issue of minimum wage increases arise on the Vanguard.

      1. Don Shor

        If Davis raised sales tax by 0.25%, it would still be lower than most local cities. If it raised it by 0.5%, it would be about in the mid-range of most cities statewide, including many that are much poorer and some that are much richer. Davis housing costs are higher than some, lower than others among those. An increase of Davis sales tax would not be out of line with much of the rest of the state.

  10. Jim Frame

    Hmmm…I’m getting notifications about additional comments to this thread, and I can see their author names and timestamps in the Hottest Topics sidebar, but the most recent comment I can actually see is Don’s of 12/21 at 9:54. I suspect that there’s supposed to be a “page 2” link, but I can’t see it in either Firefox or Chrome. Am I missing something?

    1. B. Nice

      It is taking some getting used to, especially when you are looking for a specific post, but I think it works better when you are reading comments straight through.

  11. Pingback: Commentary: City Remains Stuck Between a Rock and a Hard Place | .:Davis Vanguard:.

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