Now that New Year’s and the holidays are over, I want to refocus on three critical issues that we will be dealing with in 2015. The city starts out in better shape with about $850,000 in unexpected carryover fund balance, and the economy shows signs of life as well.
Nevertheless, we are concerned about where things are headed in the city.
Let us start with the parcel tax. The issue of the roads has gotten some attention in the last few weeks, in part because Dan Carson questioned whether the 2013 Nichols report was accurate in its projected $154 million for road needs.
Mr. Carson argued that the 2013 Nichols Consulting Engineers report had overstated cost increases to pavement repairs needed for roads, sidewalks and bike paths, to the order of $50 million, which drops the projected costs from $154 million down to $103 million.
Mr. Carson added, “Because the city does not have the financial resources in place to catch up immediately on the existing backlog of work, or to prevent any future backlogs from occurring, the true cost of the work is certain to exceed even my lower ‘budget needs’ estimate. Costs will go up as projects are delayed for lack of funding.”
Nevertheless, he concluded that “the Nichols report estimates of how costs would escalate because of constraints on available funding are, like their estimate of ‘budget needs,’ significantly overstated.”
As we have argued, whether you accept the $154 million or the $100 million, the costs are significant. We can quibble over the numbers and lose sight of the big picture.
The price of oil dropped dramatically in 2014, and therefore the asphalt prices have not keep up with the 8 percent annual increase projections.
In addition to material costs, there is also the question of labor costs, insurance, worker’s comp and other material costs, which have increased at or beyond the inflation rate during that time period as well. The city has, since 2008, slowed down its increases to employee compensation, but that may well change as soon with the next round of MOUs later this year.
In 2013, the council after considerable discussion finally opted for a modified plan that would call on the city to spent $25 million in two years up front and then another $3 million per year – but even that level of spending was only expected to slow down the rate of pavement deterioration.
To get that money, the council was to put a measure on the ballot for a parcel tax that the city would bond against. After much discussion, however, there is no parcel tax planned for the ballot and the city is still figuring out the terms, amount, and what would be funded by such a tax.
In the meantime, the council has been able to secure about $4 million per year in general fund money for roads – a huge accomplishment.
But we really need to get even a $50 per year parcel tax to secure that money into the future. That is going to be a prime issue for this year.
Everyone wants to believe that the city’s fire service is headed in the right direction. The data on shared services, boundary drop, and decoupling are very encouraging. The model is working as hoped, with fewer times when units are pulled out of position to serve their primary service area. That means faster response times and a safer community.
Getting there was a struggle and I don’t need city staff to tell me that morale issues are a huge problem for the rank and file firefighters, although at least some of that is their own doing.
On the surface this appears to be a fairly stable condition – at least three council members have told the Vanguard they support the shared management agreement that would automatically roll over to December 31, 2016 if no one pulls out by July 1. The firefighters’ union leader pushed UC Davis to end the agreement and the university pushed back.
However, there are problems behind the scenes that are going to complicate matters. My bet is still that UC Davis ends up pulling out of this agreement by July 1, believing that it is more trouble than the upside that the university gets for it.
Remember, this is at most a break-even situation for UC Davis financially. And for the city, we never implemented the plan to move the division chiefs onto UC Davis payroll, which would have saved the city about a quarter of a million.
You have the Davis firefighters’ union president, along with the president of the statewide firefighters’ union, attempting to pressure the university to end the agreement – at some point, the university may just decide the situation is untenable and cut its losses. We will see; I know a lot of people do not think that is going to happen, but I see signs to the contrary.
I wanted to stick with three – a fourth issue will be the new contracts, which will tell us everything about the direction that the city is headed. But for now I want to conclude here with the innovation parks.
As we have noted, 2014 was a banner year on the economic development front. We have discussed innovation parks, but 2014 saw the emergence of a vibrant start-up culture embodied by the efforts of the Davis Downtown and Jumpstart Davis. As Mayor Wolk and Mayor Pro Tem Davis write, “We continue to be excited about a variety of grassroots efforts — Davis Roots and Jumpstart Davis, for example — that encourage and foster an innovation and startup culture in our community.”
Chief Innovation Officer Rob White also trumpeted the efforts of the Davis Downtown and other community leaders who helped launch “the creation of the Jumpstart Davis monthly networking events and the soon-to-be-opened downtown co-working space are adding resources for entrepreneurs and startups.”
But 2015 is fraught with pitfalls. Staff projects two innovation parks plus Nishi could go on the ballot by Spring 2016. But the Vanguard believes that putting park against park is asking for trouble. Will there be a process to determine who goes first? How will the city deal with expected push-back on traffic and housing impacts? 2015 will be a key year in determining how this process unfolds, and by this time next year we could be three or four months away from a public vote.
Moreover, one of our concerns is that the perception that the city is no longer in fiscal crisis will lessen the public’s appetite for economic development and building on the periphery. We believe strongly that the city’s finances remain fragile and we are vulnerable to future downturns without stable revenue sources.
The critical decisions are as follows:
First, do we attempt to put two innovations parks on the ballot for Spring 2016 or do we attempt to choose which is first and which is second?
Second, if the fiscal climate has improved will residents revert to their slow-growth roots or will they allow for the development of at least one business park as a way to shore up revenue?
Third, how much of a priority will the city place on economic development if revenue is on the rise?
As I have said, this is a critical time period for the city and will help determine our direction for the foreseeable future.
—David M. Greenwald reporting