Innovation Centers – FAQ Part 1

innovation-centerby Rob White

Though I know there has been significant discussion to date on the who, what, where, when and how (and even why) of an innovation center concept in Davis, what we shouldn’t avoid are the hard questions.

Resulting from the City Council meeting on July 15th (and rooted in the last 5 years of work by the City, commissions, and community), several questions are starting to surface that we as a collective need to work on to find answers. Some would say these are red herrings, or even impossible questions, and that is okay. By not working to answer them straightforward and discuss the concerns they present, consensus could be difficult to achieve, even for a majority of community members.

What I am committed to do is provide as much data as I humanly can and continue to enumerate resources where those that want to research information might do so. I’ll call this intermittent series a FAQ – frequently asked questions – though I don’t in anyway represent that my answers are the only answers. Maybe think of it as a sort of wiki project, where we can all provide collective knowledge and try to get to the best fit solution.

To begin, let me remind everyone that the following resources are probably the best place to start if you want to get caught up on current research and ideas concerning modern innovation centers.

“The Rise of Innovation Districts,” 2014, Bruce Katz and Julie Wagner, Brookings Institution.

http://www.brookings.edu/about/programs/metro/innovation-districts

“Driving Regional Innovation and Growth,” 2013, Association of University research Parks (AURP)/Battelle.

http://www.aurp.net/battelle-report

“Next Economy: Capital Region Prosperity Plan,” 2013, Valley Vision and Center for Strategic Economic Research.

http://www.nexteconomycapitalregion.org/

“The New Geography of Jobs,” 2013, Enrico Moretti- UC Berkeley, Mariner Books (reprint edition)

http://www.amazon.com/New-Geography-Jobs-Enrico-Moretti/dp/0544028058

Now to the FAQ. I will just number the questions sequentially with no forethought of importance or relevance. In my mind, all questions have merit and we should approach this as we do any other academic exercise – through rational consideration and sorting of ideas, looking for facts and evidence.

Remember, the answers herein are the beginning of trying to address each of these points. My answers reflect two decades of experience in development and land use, public policy and innovation. But they are incomplete at best and represent a knowledgeable viewpoint that can only be improved from more information, data and facts – which will be useful as we work to address community concerns.

1.     “The City Council is not really in support of an innovation center.”

Each member of the Davis City Council has reaffirmed in several public meetings their support for an innovation center and the likely benefits it will bring to Davis. They are also clear in pointing out that an innovation center would need to be cutting edge, world-class and innovative in design and application. A recent example of their public support would be at the July 1st and 2nd Council meeting.

2.     “Is this going to create a need for more residential housing?”

Adding jobs to any institution in Davis will potentially increase the demand for housing, including the university. People often want to live close to where they work. One solution is to work with the university to identify ways to decrease the amount of single family homes in Davis being rented for student housing, which is well over 40% of all homes. By providing more appropriate student housing in Davis (on and off campus), existing homes can be available for the workforce. And almost every university in the world deals with student housing issues – it is the benefit and challenge of having a robust university as a central core of the economy. Additionally, mass transit (both existing bus and train connections as well as new technologies) can be increased to serve the demand to surrounding communities of Woodland, West Sacramento, and Dixon – making an innovation center important to Davis and the region.

3.     “An innovation center will increase traffic.”

Though a traffic study will be required for any of the project proposals, a dispersed and smaller footprint for the proposed innovation centers (200 acres each) distributes and lessens impacts on the community. And traffic impacts will require mitigation by each proposed project, including likely support for increased mass transit and biking infrastructure. It should also be noted that there are a considerable amount of residents in Davis that are employed elsewhere in the region and by bringing more high-paying and professional jobs to Davis, the opportunities to live and work in the same community will increase for existing residents.

4.     “Some will say this will not generate tax revenue.”

Any new construction will generate tax revenue through permits, fees, property tax, sales/use tax and jobs. The question is how much and is there a point in time where the services for that new construction (whether commercial, residential, or open space) cost more than the ongoing revenue it creates. In the case of commercial and research facilities, they are typically minor consumer of services like police, fire, and parks/recreation due to their inherent activities. And in the case of the proposed innovation centers in Davis, each of the proposals is estimated to include over $1 billion in construction and infrastructure over the build out of the center (likely to be 10 to 20 years), of which a notable component is permit and fee revenue generation to the city. A thorough fiscal analysis will need to be done to identify the actual parameters for each proposal, but a very rough calculation based on some of our existing Davis-based high tech businesses indicates a net positive revenue over expenses for the City. And there is some research that seems to indicate that typically businesses consume less services than residents and may provide as much as 80% of all tax revenue to a city. The fiscal analysis will tell us what the actual amount is for Davis and we will also work with proponents to make sure that fiscal sustainability is a driver for any project.

5.     “Let’s raise the bar as high as we can so we can’t approve this.”

There is always a need to work with the project team on any proposal to make sure that the fiscal considerations and the needs of the community are balanced. The Council, City staff, many community partners and local business interests have committed to work very hard to find solutions to make an innovation center project in Davis top-notch and cutting edge while balancing the considerations of being financeable in the global markets.

6.     “Biotech research might result in a toxic dump site.”

There have been historically some bad actors and some bad mistakes made when it comes to handling of toxics. As someone who spent a large portion of my early career doing military base environmental evaluation and reuse plans, I have seen some of the worst issues that plague us as a nation (and world). But much of these issues arose from a lack of knowledge and effective processes to deal with the by-products. Our current environmental laws make it very difficult for bad actors to continue to inappropriately dispose of toxics in the US, though there is always an anecdote to be had that demonstrates there is more to be done. It is unlikely that any tech industry in Davis will result in the toxics issues we have seen in the past, primarily due to the strict government controls on the use and disposal of these compounds and chemicals.

7.     “Bad business practices could result from an innovation park.”

Though I am unsure exactly what might be meant from this idea, I can state that bad business practices can result anywhere. The safeguard to avoid outcomes like this is a collaborative business environment, where each of the sectors (community, government, business and non-profit) are working in partnership to develop the best possible outcome for a community.

8.     “An innovation park should not be net-zero but net positive.”

I think this would refer to net-positive with respect to energy. And I think that would be a noble goal and we should look to achieve that as much as it might be fiscally possible. I would also premise that we should work in collaboration to make the community as a whole net-zero (and possibly positive) across the entire City as no one project or neighborhood can stand on its own. And not just in energy, but broad spectrum across all resource use. This is why the City is partnered with Cool Davis, to help bring sustainability to the forefront of our community and help each of us do whatever we can to achieve a low (or no) impact.

9.     “Businesses prefer to be downtown.”

Most certainly, some business do prefer to be downtown. What all businesses prefer is a location that meets their needs to conduct their primary practice (whether it is retail, research, services, etc.). And that logically means not everyone wants to be downtown. Some, like Schilling Robotics, need space to spread out and conduct their research and manufacturing. During the Industrial Revolution, large processing and manufacturing plants were located downtown as a way to make sure that the town had a central core of activity. This led to conflicts with the neighborhoods due to noise, traffic congestion, and back then, toxics. And when the plant outlived its business cycle, there was a gaping hole left in the community when the plant shut down and new industry didn’t want to deal with the impacts and needed mitigations. And towns across the US (and globally) are still trying to address these issues. We have our own corporation yards and PG&E maintenance yard as examples of how our cities have grown up around these more industrial type processes. Downtown Sacramento has the railroad yards and the R Street industrial corridor. West Sacramento is still trying to address the impacts from robust cannery and petroleum processing plants along the waterfront (and the last canneries closed almost 100 years ago). True, some businesses would really like to be downtown, and I suspect there will be a growing trend for small startups and tech businesses to want to populate downtown Davis. But modern research instructs us that downtowns should be regarded as organic and ever-changing opportunity spaces that build in maximum flexibility and a broad spectrum of uses so that we don’t make the same mistakes of the past (or at least try not to).

Future articles will try to begin to address other ideas and concerns, so please feel free to send me your thoughts. Or take the opportunity to add your own perspective on the ideas and comments above. I certainly don’t have all of the answers, but I am committed to seeking out best practices and modern research on how we might best discuss and potentially build an innovation center that will be something Davis can be proud of for many years to come.

Thanks for considering my thoughts. Your ideas are always welcome. My email is rwhite@cityofdavis.org if you choose to email me directly.

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48 Comments

  1. Don Shor

    I’m curious why these are being called innovation centers. They sound like business parks. I always think of an innovation center as being smaller footprint, more of an incubator for businesses. From what I understand, Nishi would contain an innovation center. Mace 200 and the NWQ proposals appear to be fairly standard business parks, inasmuch as they aren’t specifically targeted at spinoffs from UCD or ‘move-up’ companies from UCD. Isn’t that actually industry jargon of ‘Innovation Accelerator Zone’?

    1. Davis Progressive

      i think because they are looking at these as high tech university spinoffs and tech transfer centers rather than more generic and less specific business parks which can be any number of things.

    2. Frankly

      “Innovation Centers” is a definition that is a subset of “Business Park” and as I see it a hybrid of “Research Park” AND high-tech business park.

      But in the end, they are all “Business Parks”, because business will live there.

      One thing that will be interesting…

      How to keep the “riff raff” out like we do for housing.

        1. Frankly

          Business that does not meet the high standards of Davis DNA.

          The difference here is that people will not hesitate to demand we keep them out, while they deny the same about human riff raff.

          1. Don Shor

            Like what kind of business do you assume Davis residents would not want in a business park?

          2. Matt Williams

            a distribution center for WalMart, Target, etc.; a Kelloggs Rice Krispies packaging plant; a Brown Rice Triscuits manufacturing/packaging plant; an Armour Slaughterhouse and Meat Packaging Plant; an Intel Chip Assembly plant, an American Airlines call center …

          3. Rich RifkinWDE 73

            “Like what kind of business do you assume Davis residents would not want in a business park?”

            Hobby Lobby or anything owned by the Koch Brothers.

      1. Tia Will

        D.D.

        I see “business” as a neutral term. There are businesses that are clearly beneficial.
        There are businesses such as cigarette companies which do an enormous amount of harm.
        Just like people, each business should be judged on its own merits.

  2. Don Shor

    I’m curious why these are being called innovation centers. They sound like business parks. I always think of an innovation center as being smaller footprint, more of an incubator for businesses. From what I understand, Nishi would contain an innovation center. Mace 200 and the NWQ proposals appear to be fairly standard business parks, inasmuch as they aren’t specifically targeted at spinoffs from UCD or ‘move-up’ companies from UCD. Isn’t that actually industry jargon of ‘Innovation Accelerator Zone’?

    1. Davis Progressive

      i think because they are looking at these as high tech university spinoffs and tech transfer centers rather than more generic and less specific business parks which can be any number of things.

    2. Frankly

      “Innovation Centers” is a definition that is a subset of “Business Park” and as I see it a hybrid of “Research Park” AND high-tech business park.

      But in the end, they are all “Business Parks”, because business will live there.

      One thing that will be interesting…

      How to keep the “riff raff” out like we do for housing.

        1. Frankly

          Business that does not meet the high standards of Davis DNA.

          The difference here is that people will not hesitate to demand we keep them out, while they deny the same about human riff raff.

          1. Don Shor

            Like what kind of business do you assume Davis residents would not want in a business park?

          2. Matt Williams

            a distribution center for WalMart, Target, etc.; a Kelloggs Rice Krispies packaging plant; a Brown Rice Triscuits manufacturing/packaging plant; an Armour Slaughterhouse and Meat Packaging Plant; an Intel Chip Assembly plant, an American Airlines call center …

          3. Rich RifkinWDE 73

            “Like what kind of business do you assume Davis residents would not want in a business park?”

            Hobby Lobby or anything owned by the Koch Brothers.

      1. Tia Will

        D.D.

        I see “business” as a neutral term. There are businesses that are clearly beneficial.
        There are businesses such as cigarette companies which do an enormous amount of harm.
        Just like people, each business should be judged on its own merits.

  3. Davis Progressive

    rob two questions.

    first, how will these center and the build out be financed?

    second, will having an innovation park require upgrades to the off-ramps and infrastructure?

  4. Davis Progressive

    rob two questions.

    first, how will these center and the build out be financed?

    second, will having an innovation park require upgrades to the off-ramps and infrastructure?

  5. Jim Frame

    the amount of single family homes in Davis being rented for student housing, which is well over 40% of all homes.

    I find this number astonishingly high. Is it accurate?

    each of the proposals is estimated to include over $1 billion in construction and infrastructure over the build out of the center (likely to be 10 to 20 years), of which a notable component is permit and fee revenue generation to the city

    I’d like to see a breakdown of city permit and fee revenue in order to assess the value this aspect of a business park will bring to the community. If permits and fees merely cover the direct and indirect costs of development (e.g., staff time to process the application, increased infrastructure maintenance, impact mitigation), then there’s no net benefit from them and they should be removed from the analysis.

    1. Don Shor

      I find this number astonishingly high. Is it accurate?

      Most recent data I have at hand for overall rental situation in Davis is below. So it could be close, given the very low apartment vacancy rate here (still less than 2%):

      2000 census data: Housing Tenure
      Occupied housing units 22948 100.00%
      Owner-occupied housing units. 10235 44.6%
      Renter-occupied housing units. 12713 55.4%

      1. Don Shor

        Here is 2010 data comparing Davis to Woodland. Note that 2010 Davis apartment vacancy rate was anomalously high. It is rarely over 2%.

        Woodland: “There were 19,806 housing units … of which 10,472 (55.9%) were owner-occupied, and 8,249 (44.1%) were occupied by renters. The homeowner vacancy rate was 2.0%; the rental vacancy rate was 6.1%. 30,543 people (55.1% of the population) lived in owner-occupied housing units and 23,940 people (43.2%) lived in rental housing units.”

        Davis: “There were 25,869 housing units … of which 10,699 (43.0%) were owner-occupied, and 14,174 (57.0%) were occupied by renters. The homeowner vacancy rate was 0.9%; the rental vacancy rate was 3.5%. 27,594 people (42.0% of the population) lived in owner-occupied housing units and 35,928 people (54.7%) lived in rental housing units.”

  6. Jim Frame

    the amount of single family homes in Davis being rented for student housing, which is well over 40% of all homes.

    I find this number astonishingly high. Is it accurate?

    each of the proposals is estimated to include over $1 billion in construction and infrastructure over the build out of the center (likely to be 10 to 20 years), of which a notable component is permit and fee revenue generation to the city

    I’d like to see a breakdown of city permit and fee revenue in order to assess the value this aspect of a business park will bring to the community. If permits and fees merely cover the direct and indirect costs of development (e.g., staff time to process the application, increased infrastructure maintenance, impact mitigation), then there’s no net benefit from them and they should be removed from the analysis.

    1. Don Shor

      I find this number astonishingly high. Is it accurate?

      Most recent data I have at hand for overall rental situation in Davis is below. So it could be close, given the very low apartment vacancy rate here (still less than 2%):

      2000 census data: Housing Tenure
      Occupied housing units 22948 100.00%
      Owner-occupied housing units. 10235 44.6%
      Renter-occupied housing units. 12713 55.4%

      1. Don Shor

        Here is 2010 data comparing Davis to Woodland. Note that 2010 Davis apartment vacancy rate was anomalously high. It is rarely over 2%.

        Woodland: “There were 19,806 housing units … of which 10,472 (55.9%) were owner-occupied, and 8,249 (44.1%) were occupied by renters. The homeowner vacancy rate was 2.0%; the rental vacancy rate was 6.1%. 30,543 people (55.1% of the population) lived in owner-occupied housing units and 23,940 people (43.2%) lived in rental housing units.”

        Davis: “There were 25,869 housing units … of which 10,699 (43.0%) were owner-occupied, and 14,174 (57.0%) were occupied by renters. The homeowner vacancy rate was 0.9%; the rental vacancy rate was 3.5%. 27,594 people (42.0% of the population) lived in owner-occupied housing units and 35,928 people (54.7%) lived in rental housing units.”

  7. Tia Will

    With regard to Point 6

    topics.nytimes.com/top/reference/…/a/anthrax/

    While this is not a reference to a toxic waste dump site, I do believe that it is important not to down play the risks associated with research on biohazardous materials. The time line layer out the the NYT in this article is about mishaps that occurred within the CDC itself.

    Each of the proposed sites is adjacent to major housing areas. This makes another aspect of cost relevant and that is the preparedness of our emergency responders requiring ongoing improvements in their training. While I am not proposing this as a reason not to proceed, I do think that the costs of preparedness and the community willingness to accept such risks should be factored in to the equation. It is important to realize that although there are tighter regulations now as Rob pointed out, there is no regulation that will prevent human error or carelessness.

  8. Tia Will

    With regard to Point 6

    topics.nytimes.com/top/reference/…/a/anthrax/

    While this is not a reference to a toxic waste dump site, I do believe that it is important not to down play the risks associated with research on biohazardous materials. The time line layer out the the NYT in this article is about mishaps that occurred within the CDC itself.

    Each of the proposed sites is adjacent to major housing areas. This makes another aspect of cost relevant and that is the preparedness of our emergency responders requiring ongoing improvements in their training. While I am not proposing this as a reason not to proceed, I do think that the costs of preparedness and the community willingness to accept such risks should be factored in to the equation. It is important to realize that although there are tighter regulations now as Rob pointed out, there is no regulation that will prevent human error or carelessness.

  9. D.D.

    I rented a home on Oak Avenue in the late 90’s. The city approved the owner to charge me a separate fee for her garage, which I couldn’t afford. Then they changed the parking so I had to get a permit to park in front of my home. It was tough, because we were close to the high school, and the spots were grabbed up quickly. The lady charged me full rent even before the city approved her added on bedroom in the back of my home. I had no idea my young son was living in a bedroom that hadn’t rec’d the final bldg. inspection approvals. What if it was an unsafe structure? I reported her to the city. I do not think she even rec’d a fine.

  10. D.D.

    I rented a home on Oak Avenue in the late 90’s. The city approved the owner to charge me a separate fee for her garage, which I couldn’t afford. Then they changed the parking so I had to get a permit to park in front of my home. It was tough, because we were close to the high school, and the spots were grabbed up quickly. The lady charged me full rent even before the city approved her added on bedroom in the back of my home. I had no idea my young son was living in a bedroom that hadn’t rec’d the final bldg. inspection approvals. What if it was an unsafe structure? I reported her to the city. I do not think she even rec’d a fine.

  11. D.D.

    Re: mini dorms, some of my best neighbors were graduate students. One of them came to help when my neighbor had her home invaded while she was asleep. Their class schedules often allow them to be home during the day, when homes can be burglarized while people are at work.
    IMHO, any neighbor can be a jerk and any neighbor can be wonderful. Get to know your neighbors as soon as they move in. Participate in Neighbors Night Out. Get the name of the homeowner who owns the rental, and contact them immediately if your neighbors can’t live cooperatively with you. They’ll probably evict the renters because they have no problem renting their home in Davis.
    If the city allows huge homes with multiple locked bedrooms, then change the law if you don’t like it.

  12. D.D.

    Re: mini dorms, some of my best neighbors were graduate students. One of them came to help when my neighbor had her home invaded while she was asleep. Their class schedules often allow them to be home during the day, when homes can be burglarized while people are at work.
    IMHO, any neighbor can be a jerk and any neighbor can be wonderful. Get to know your neighbors as soon as they move in. Participate in Neighbors Night Out. Get the name of the homeowner who owns the rental, and contact them immediately if your neighbors can’t live cooperatively with you. They’ll probably evict the renters because they have no problem renting their home in Davis.
    If the city allows huge homes with multiple locked bedrooms, then change the law if you don’t like it.

  13. Pingback: Analysis: City Needs to Educate Public on Revenue from Business Parks | .:Davis Vanguard:.

  14. Pingback: Analysis: City Needs to Educate Public on Revenue from Business Parks | .:Davis Vanguard:.

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