Back in early May, we asked Rob White to weigh in on the impact of the failure of Measure O on economic development.
This weekend, Rob White updated his responses in a Davis Enterprise Op-ed.
While the Enterprise did not offer as much space, the key points that Mr. White made were that the council will look at a 12.5 percent and a 25 percent cut scenario depending on what they decide to do about public safety.
He writes, “A 25 percent cut means reductions throughout our economic development department, including cutting our staff from two people to 1.5. The remaining employees will be overloaded.”
He adds, “There will be delays in collecting fees, sales and property taxes, which will result in considerable lost revenue for the city. Delays and difficulties in operational efficiency will hurt Davis’ reputation as an attractive business environment.”
He argues that “economic development activities will mostly cease.” He writes, “Budget cuts will mean cutting opportunities for staff to meet with experts in economic development outside the city and showcasing Davis at the regional, statewide and national levels. These activities, which keep us competitive in the marketplace, will be severely curtailed or eliminated.”
He also argues, “New prospects will lose confidence.” He writes, “I’ve found the primary attribute businesses look for when considering a location is certainty. Business leaders become concerned when a city isn’t on solid ground — with revenue, infrastructure or operations — because that can hurt their own competitive advantage.”
He concludes, “If the city of Davis creates an environment where economic development is stifled by budget cuts, then the repercussions to Davis’ business growth and development could be huge.”
He also addresses the issue of Measure P.
He argues, “If passed, Measure P will repeal the water rates approved by the City Council in March 2013 meant to fund the Woodland-Davis surface water project. If P passes and the surface water project comes to a halt, that decision will critically hurt the water infrastructure improvements that are already underway.”
“Those improvements are critical to Davis’ economic development success and growth. They are the beginning of our infrastructure improvement program, which is lacking in more than just water infrastructure,” he adds.
Finally he writes, “Our roadways and access to high-speed Internet need major work, too. Good roads and a reliable water supply contribute to our efforts to attract new business and secure business expansion. Businesses may opt for a nearby community with more reliable infrastructure if we don’t show we are committed here.”
In early May, he was able to flesh out his answers more for the Vanguard.
The Vanguard asked Chief Innovation Officer Rob White to address some of these questions with the caveat that the answers are reflective of the proposed cuts and that the city council has the final determination of what cuts happen should Measure O fail to pass.
Vanguard: First, the city two weeks ago identified the cut list should Measure O not pass. Can you address which of those cuts involve people working on economic development?
Rob White: Let me start by saying that all of my comments should be taken in the spirit of education, not advocacy. City staff are legally unable to advocate or campaign for a Measure as a city representative.
There are two proposed “cut lists” for City Council’s deliberation as part of the budget process in the event that Measure O is not passed. One is a 12.5% unilateral cut across all departments. The other is a 25% cut across all departments except for Police and Fire, with the concept being that life-safety is a basic obligation of the City administration and the Police and Fire duties should be preserved more readily than anything else. As an important note on timing, Measure O will be voted on by the community on June 3rd and the City Council must pass a balanced budget by June 30th (as mandated by state law). We will not be able to legally carry over a deficit, so any decision by the City Council on cuts will be made during the mid to late June timeframe.
For economic development, the 12.5% cut proposes that, aside from the two people working daily on these tasks, all other costs would be eliminated. This includes any and all travel (including the Cap to Cap advocacy trip), all memberships in organizations like the Davis Chamber, the Sacramento Metro Chamber, SARTA, SACTO, Innovate North State, etc. It also means that essentially aside from the computers on the desk, basic administrative supplies are proposed to be removed from the economic development budget. This is primarily due to the fact that the economic development budget is mostly just people, and in order to get 12.5% cuts, we had to propose eliminating all other costs.
The proposed 25% cut suggests that the above costs are eliminated, and then 50% time for one of the two staff positions in economic development would be eliminated. This would take the two full time employees (FTE) down to 1.5. For comparison with communities of our size and relevance to our region, many have an economic development staff of 3 to 5 FTE.
Vanguard: Second, how would the cuts overall impact economic development efforts by the city?
Rob White: Since the majority of economic development at the City is being done by two people (the Chief and Deputy Innovation Officers), it would have a significant impact. It would translate into delays in meeting with new and growing businesses, less outreach to local businesses, slowed work on the innovation park, an inability to assist in expediting permits and planning, an inability to work on Yolo County-wide initiatives like broadband and rail relocation, and considerably scaled back interaction with the University on tech transfer and innovation.
More directly, it would mean that an already very under-staffed division would become mostly reactive and move away from proactive or planned actions and activities. I am not suggesting that more resources be directed at economic development, but cuts would hamper our current efforts. It would also mean that any regional interactions would need to be significantly scaled back, which would considerably hamper our local ability to facilitate new investment and attract new businesses.
I would use the analogy of living in a neighborhood and not recognizing or interacting with the neighbors in houses around you. We know from things like NextDoor and Neighborhood Watch that a communicative and well networked neighborhood/community thrives and has better outcomes. Similarly, a regionally relevant and leading community attracts more attention nationally and globally and businesses want to be associated with success and prominence. It’s why communities like Austin spend some much time convincing the world that it’s a center of innovation: when compared to a place like Palo Alto or the South Bay, the apparent level of innovation and entrepreneurial activity is unmatched (regardless of what the facts might tell us).
Vanguard: Third, can you address how important the city and city services would be to economic development?
Rob White: As I said recently at a manager’s group meeting for the City, the economic development efforts in any community might be led by a core staff, but the most important aspects of economic development are the responsibility of all staff. Namely that is speed of service and the ability to solve issues and find solutions. This translates in to reputation and creates an attractive business environment.
As an example, if a company wants to move or grow in Davis and either build an office or do serious renovations, but our planning staff and inspectors are overloaded, then that effort is significantly slowed down. That means it takes the City longer to complete a project on our end and that collection of fees are delayed, and ultimately the sales and/or property taxes are delayed that might result from the new company. Additionally, job growth is delayed and the resultant employees and their spending are delayed since they are not settled in to the new facility. And every week of delay on a mid-size project can result in literally $1,000s of uncollected fees or city revenues. Add this up across many projects and the impacts of delay can be significant.
This then impacts our ability to attract new companies because these delays in service are talked about throughout the broker and development community, all of which get a commission based on successful closes of deals. Time is money, and delays in processing lead to delays in construction, which translates into a hampered reputation as a community that can serve the needs of business. In many ways, our strongest economic development tool is our reputation, which is why working on branding and marketing at the regional and national level is important.
One more example is that many businesses locate in Davis because of the ties with the university (which can be attributed to things like the shared research collaboration or the large student population as a customer base or the community demographics that match their business profile). But the second most important driver in a business’ decision to locate in Davis (and something we hear constantly in talking with new and existing businesses) is the quality of life. Namely, the parks, the bikeways, the open space, a thriving downtown and retail sector, the community events and the overall amenities. With the proposed reductions, many of these elements will be again impacted and it will be that much harder to convince prospective and existing businesses to grow locally when communities around us are aggressively offering comparable opportunities.
Vanguard: Fourth, when trying to attract businesses to come to Davis, would the fiscal condition of the city impact their decision to come to Davis?
Rob White: It most certainly impacts a business’ decision. Not because they necessarily look at the budget (though some do as a barometer of health of the community), but because they will see direct evidence of the service levels in our infrastructure. When a business decides to grow or locate in a community, they are looking for quality of life for their employees as well as reputation of the community as a business-friendly and supportive location. If a business can’t get the services from the city that it needs in a timely manner, the cost of time and borrowing money become drivers in decision-making and surrounding communities are more than willing to take on the opportunity.
Vanguard: Fifth, how would cuts to the city manager’s office or Mike Webb’s office impact the ability of the city to process applications and expedite development?
Rob White: As I stated above, proposed reductions will impact all levels of city services. The staff are already stretched very thin for a city of our size and service level. In the City Manager’s Office (of which economic development is a part), if the 12.5% cuts were accepted by City Council, there would be a reduction in city supported events, the Sister City program, and community outreach (to name just the larger cuts). At the proposed 25% cuts, these services would be eliminated.
For community development, the proposed reductions would mean slower permitting and processing of applications and plans. This means longer wait times for businesses to do improvements for growth or new businesses wanting to open. It also means significantly slower processing times for residents on home improvements applications and inspections.
Most impactful will be the unintended message that will most certainly circulate throughout the broker and business community that Davis is a difficult (and slow) place to do business. Since longer processing times translate directly in to one of several factors that a business uses in their decision on where to locate, this will mean that some of the jobs and resultant economic impact from business growth will not be realized in Davis. Identifying just how much impact is a difficult task as much of the decisions are anecdotal and are realized only once the contrary decision is made and businesses go to surrounding communities instead of Davis.
—David M. Greenwald reporting