What is the City’s Role in Economic Development?

Chief Innovation Officer Rob White introduces Lawrence Livermore Economic Development Director Betsy Cantwell, at the Vanguard 8th Birthday Party on July 30
Chief Innovation Officer Rob White introduces Lawrence Livermore Economic Development Director Betsy Cantwell, at the Vanguard 8th Birthday Party on July 30

by Rob White

Over the past few weeks there has been an ongoing dialogue about the significant community discussions regarding innovation parks with little attention being paid to other economic development activities in Davis. And part of that discussion has focused on what is the City’s role in economic development?

First, I think it is important to remind ourselves that economic development has a very specific meaning, and as such, not every activity being discussed is actually economic development. Some of the items being discussed are community development, some are sustainability goals and some are just good community building with focus on place-making.

I think back to when the recession started to take full effect in 2008 and the federal government started to look at ways to jump start the economy. By 2009 and 2010, there was a flotilla of tax relief and the creation of the “Stimulus” (or American Recovery and Reinvestment Act [ARRA] of 2009). According to Wikipedia, “the primary objective for ARRA was to save and create jobs almost immediately. Secondary objectives were to provide temporary relief programs for those most impacted by the recession and invest in infrastructure, education, health, and renewable energy.”

Many started to loosely refer to ARRA as “economic development”, though the activities were most certainly not all economic development. Many of the activities were close cousins of economic development, such as economic investment and community development, but not actually true economic development.

And while some activities certainly had outcomes that could be tracked as economic development, the majority of the Stimulus’ efforts resulted in taking our own money and reinvesting it (I know, we can argue about whether we actually borrowed the money from foreign governments, but that would make my point even stronger). This is economic churn, not economic development.

Again, Wikipedia would point out that “the rationale for ARRA was from Keynesian macroeconomic theory, which argues that, during recessions, the government should offset the decrease in private spending with an increase in public spending in order to save jobs and stop further economic deterioration.”

Since the most basic meaning of economic development is the focus on the creation of new wealth and new investments from outside an existing economic system, you can clearly argue that ARRA was not strictly speaking an economic development activity.

I realize that this is semantics more than anything, but it is important to make sure that those responsible for certain tasks and outcomes have clear understanding of their roles so that execution is not confusing and efforts are maximized across all invested and interested parties.

As I have described in past posts and articles, the City of Davis’ “Innovation and Economic Vitality Work Program” lists specific focus areas that the City Council has directed staff to devote time to over the next 24 months (from July 1, 2014 to June 30, 2016). Staff are scheduled to report back to the City Council on a regular 6 month basis (with the first report out in January 2015) to discuss activities, outcomes and measures and seek affirmation or redirection of priorities based on the Work Program activities.

To remind you of what those focus areas are and where you can find the approved Innovation and Economic Vitality Work Program, I have listed the info here:

Focus Area 1 – Facilitate Technology and Business Development

Focus Area 2 – Increased University Engagement

Focus Area 3 – Expand Support Network for Local Business

Focus Area 4 – Strategic Branding and Marketing

Focus Area 5 – Leadership

Innovation and Economic Vitality

Realizing that not everything can be worked on by any single organization, and that even within the focus areas described by the Work Program there is need for collaboration and partnership, the City was very directive in describing its role in the activities described by the Work Program (and the companion Action Plan).

What this means is that the City has recognized that its role is most productive as a facilitator and convener, taking itself out of the realm of the market place which can often deliver many aspects of economic development at a lesser cost and in a more timely fashion than government. This is how the City has set such an ambitious agenda for 24 months while not suggesting we grow the City’s implementation structure (e.g. staff, resources and funding).

When you review the list of ten objectives developed by the Chamber, Downtown Davis and Yolo County Visitor’s Bureau, the question shouldn’t be ‘what is the City doing to meet these objectives?’ Because these objectives were developed by our business and tourism associations and have not been formally vetted or adopted by the City Council in any fashion. They are a statement, by the business and tourism associations serving Davis, of their objectives and we should be asking them (not the City) what progress has been made on each of the ten objectives.

This is not to say that the City doesn’t agree that these objectives are important. It is important to note that the objectives are most certainly in alignment with the City’s stated economic development activities and interlace with the spectrum of activities, objectives, focus areas and measures that we are all doing to try and create a fiscally sustainable Davis.

To validate my line of reasoning, the City wouldn’t ask these business associations, the university or other community groups how they are fulfilling the City’s stated focus areas, objectives, outcomes or measures from the recently approved Work Program, right? Though many of these groups may have influence on the City’s efforts, it is not their primary role nor have they officially adopted these activities in any way.

I again note that the City has also been very directive in developing our Work Program to specifically identify the areas that we can have meaningful impact with limited resources. And since the City Council adopted the Work Program just three months ago, it is not a surprise that the biggest effort to date is around the innovation parks, the first focus area of the City’s Work Program.

As the process to assess and analyze the innovation park projects gets more formally underway with actual applications and work by planning, community development and public works staff, economic development staff have already started to shift the limited resources of the City over to business retention and growth as well as attracting new investment.

And not that the point of previous posters about the fiscal impact of the downtown on the local economy and the City’s revenues isn’t valid or important. But that impact is already realized in the revenue of the City and we are talking about new revenue growth as part of the economic vitality discussion. The City needs new revenue to pay for existing infrastructure, parks, pools and pathways, as well as replacement of these and many other community assets.

To put things in to perspective, a new DMG Mori facility generates as much property tax, sales tax, jobs and economic impact as several square blocks of the downtown. And though we should not pit one business activity against another, the efforts by existing downtown land owners, businesses and other stakeholders are on a much smaller economic impact scale than what a new tech business brings to Davis.

Make no mistake, we need both. We need our tech companies to create new investment and jobs that will drive more activity in our downtown. They become symbiotic and each supports the other in a healthy and sustainable economy.

As we progress forward, staff will be working in collaboration with the business associations and other community groups this fall to have a discussion about revitalization opportunities in the downtown and other commercial areas of the City. This will include looking at processes and policies that the community and City Council have previously put in place that may discourage business investment and possibly even make it difficult for revitalization to occur.

With the transition of leadership at the Davis Chamber, there is opportunity for renewal and re-commitment by each organization to partner on shared objectives and activities. Newness breathes fresh ideas and energy in to any system. The Chamber has done a great job in setting a new pathway towards the future and the soon to be finalized 2020 Plan that has been described in previous posts will allow the City and Chamber to sit down and formally identify areas of partnership and collaboration.

I am confident that since both of these documents (the City’s Work Program and the soon to be released Chamber’s 2020 Plan) were structured against the regionally adopted Next Economy plan, that shared objectives and activities will become apparent.

The new Chamber executive and I have worked together for a long time and we both have strong resumes in economic development. Building on the successes to date of the Davis Chamber, Matt and I will be able to use our strong regional and national economic development credentials to bring even more focus on Davis. Each time a new player is added to the team, they bring excitement, energy and new ideas that boosts all of the current activities. That is why sports teams have second and third strings, to keep players fresh and the energy high.

Though City staff have been working on the City Council approved Innovation and Economic Vitality Work Program for only three months, I am confident that over the coming years the activities and measures will demonstrate the City’s commitment to economic development specifically, and overall economic vitality as a community benefit.

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

About The Author

Rob White is the Chief Innovation Officer for the City of Davis and was selected as a 2012 White House Champion of Change for Local Innovation. He serves as an ex-officio Board Member for techDAVIS (a local tech entrepreneur industry group), as an executive Board Member for the Innovate North State iHub, and as a Board Member for Hacker Lab and the California Network for Manufacturing Innovation. He is a candidate for the Doctorate in Policy, Planning and Development from the University of Southern California and has a Masters from USC in Planning and Development and a Bachelors of Science in Geology from Chico State.

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14 Comments

  1. Davis Progressive

    “First, I think it is important to remind ourselves that economic development has a very specific meaning, and as such, not every activity being discussed is actually economic development. ”

    good point. so a lot of the identified targets while important and good, are not economic development. parking is a good example. probably arts as well.

  2. Davis Progressive

    what i would like to see after yesterday’s piece, and i think rob white touches on it here, is each of the three – chamber, dd, ycvb, give their own updates.

  3. John

    “To put things in to perspective, a new DMG Mori facility generates as much property tax, sales tax, jobs and economic impact as several square blocks of the downtown. And though we should not pit one business activity against another, the efforts by existing downtown land owners, businesses and other stakeholders are on a much smaller economic impact scale than what a new tech business brings to Davis.”

    Rob, when I read the above statement I have two questions. The first revolves around the square area of the DMG Mori property vs. “several square blocks of the downtown.” Visually, it appears that the DMG Mori property is the size of several square blocks of downtown. The second revolves around questions that SODA and Don Shor have asked numerous times here in the Vanguard about the revenue that DMG Mori produces for the City each year, as well as the expense for incremental services that the City needs to provide to DMG Mori, or as a result of DMG Mori’s presence in the community. Unless SODA or Don have gotten answers to their questions very recently, it would seem that fleshing out your “DMG Mori facility generates as much property tax, sales tax, jobs and economic impact” statement with some specifics would be in order.

    1. Rob White

      John – You make an excellent point. The consideration is that Downtown is pretty much built out and experiencing pretty low vacancy rates. In order to bring on an additional 7 to 10 acres of new tech business development in downtown area, we would have to do something radical (and maybe more than difficult) like completely replace the Amtrak parking, the PG & E substation, or possibly City Hall with a business. Since this seems unlikely at best, I point out DMG Mori as an example of newer tax revenue.

      It is of course a priority by the Council and some downtown land owners to identify ways for densification to happen and make the financial risk balance with the investment. With the loss of City redevelopment funding, the City can no longer make up any gap. But as the economy improves, I am hopeful that more downtown owners and businesses will find investment in to densification and revitalization to be a worthy opportunity.

      1. John

        Understood Rob, but even though everything you have said in your post is really good information, it really skirts what I was trying to get at in my two questions. let me try and reask them.

        Question 1) Is the City revenue generated per acre from the DMG Mori site similar to or different than the City revenue generated by the same acreage of Downtown?

        Question 2) SODA and Don (and others) have asked what the City revenue is from DMG Mori. Is their question answerable? If it is, what is the answer. If it is not, please help us put that into contact.

        The reasons that SODA and Don have asked for that information are specific to them, and I wot speak for them, but I can speak for myself. Having a sense of what is being realized from the Mori Seiki acreage will give input to the discussions about the likely incremental revenue that the RFEI Innovation Parks are likely to generate when/if their acreage is built out.

        1. Don Shor

          Just for the record, that wasn’t me. I think it was Tia. But I agree it would be interesting to know (within a range if necessary) what those kinds of developments yield.

          1. John

            Tia asked as well Don, but I remember (but I could be wrong) that you posted several times that you have requested sales tax information. If I’m misremembering I apologize.

          2. John

            I’m guilty of painting with too broad a brush. I apologize for overstepping. I felt your request was in the same category of SODA’s. Did you ever get an answer?

  4. John

    “With the transition of leadership at the Davis Chamber, there is opportunity for renewal and re-commitment by each organization to partner on shared objectives and activities.’

    Giving Kemble Pope his due, the Chamber is presently positioned to be much more collaborative with the City and the University and the other community associations (like Davis Downtown). When Kemble arrived the Chamber did not have the unity of purpose that it has now. Kemble wasn’t everyone’s favorite public figure, but he definitely put the Chamber on firmer footing, and was an instrumental part of the selection team that chose Matt Yancy as the best person to collaboratively build on that improved foundation.

    I would think that Matt Yancy would be very quick to deliver on DP’s challenge for “each of the three – chamber, dd, ycvb, to give their own updates.”

    1. Rob White

      John – no disagreement that Kemble has done a fine job of moving the Chamber forward. The sentences before and after should make that clear, but I will echo your comments. My point was simply that like when Kemble first took the job on, there is a renewed energy and passion in the org when a new person takes over. Not to worry, we will all grind away on Matt soon enough (said tongue in cheek).

      1. John

        Understood Rob. I don’t think I would go as far as “moving the Chamber forward.” I think it has been more a “laid the foundation so that the Chamber can move forward.” I believe that Kemble’s legacy will be some solid “prep work.” Prep work that desperately needed to be done, but prep work nonetheless.

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