Monday Morning Thoughts: Moving Into 2015

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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.

Parcel Tax

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.

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Firefighters

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.

Innovation Parks

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

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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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27 thoughts on “Monday Morning Thoughts: Moving Into 2015”

  1. SODA

    Thanks for the focus David!

    Naive question but WHY is the morale so low amongst the firefighters?  Is it the management team which to at least my view shows excellent data from the changes made, including management. OR is it the union’s stirring the pot? Seemingly the firefighters have a nice deal.

    What a shame if UCD pulls the plug on the agreement; who at UCD is now supervising the agreeement since John Meyer left?

  2. Tia Will

    David

    While I appreciate your perspective, I think that your are making too rosy an assessment of these “innovation parks”.

    we are vulnerable to future downturns without stable revenue sources.”

    You are making this statement with regard to the City of Davis, but seem oblivious to the fact that future downturns would also effect the businesses that would occupy these “parks”. This is the classic basis for the “grow our way out of trouble” philosophy. If not carefully balanced with other values, the pursuit of ever more money based on ever more growth is a recipe for ultimate failure. I recently came across an article on “dead malls”. Shopping malls which are currently thriving on the up scale side of the economic spectrum have too often failed despite earlier successes as business models have changed for those catering to a more economically modest clientele and are now sitting empty. We have seen this effect regionally with the Woodland mall and locally with the failure of Borders. As business models and technology change, too often the promised economic benefits fail to fully materialize ( as in our very own Target) or are transient in their benefits.

    Part of the reason that I would like to see a more gradual approach than two or three of these developments at the same time is my perception that they are not truly “innovative” as currently being proposed and that they may already be past the peak time for these types of developments which have already been in existence for at least 20 + years in some communities. Show me something truly “innovative” and I might be considerably more favorable.

    1. Frankly

      You are making this statement with regard to the City of Davis, but seem oblivious to the fact that future downturns would also effect the businesses that would occupy these “parks”.

      Tia – do you understand economic diversification?

      Show me something truly “innovative” and I might be considerably more favorable.

      How about looking at the bigger picture where the city can be economically sustainable and afford innovative services for the population?  You have yet to come up with any ideas to cover the massive and growing pension and infrastructure maintenance shortfalls.

      1. Alan Miller

        “You have yet to come up with any ideas to cover the massive and growing pension and infrastructure maintenance shortfalls.”

        Proposed solution: Municipal bankruptcy.

    2. Mark West

      Davis doesn’t have a balanced economy, for a City of our population we are short 10’s of thousands of jobs.  New business development is intended to help solve this imbalance and reduce our over dependence on increasing local tax rates.  The proposed business parks are not retail centers, they are business centers intended for growing, innovative businesses that create jobs and supply property taxes to the City and the region.  We are not talking about a shopping mall.

      We have no idea if a post-recession Target is producing as much sales tax revenue as was predicted  for a pre-recession store, since the sales tax numbers are confidential.  What we do know however is that there is no shortage of people who choose to use estimations (speculations) of recession era Target tax revenues to ‘prove’ that the store was a poor choice for the community.  From all appearances, Target is thriving and supplying $100,000’s of sales taxes to the City’s coffers, and in the process, saving untold numbers of trips to Woodland or Sacramento to buy basics.  I guess that is some people’s definition of failure.

      Reports at the time stated that the local Borders was financially successful.  It was the parent corporation that failed, not the local store, but don’t let the facts get in the way of a good hand wringing.

      “As business models and technology change, too often the promised economic benefits fail to fully materialize”

      The one guaranteed way to fail is to not try.  Even if the economic benefits ‘fail to fully materialize’ we will still be much better off than if we sit still. Supplying space for new businesses will allow several new ones to start, bringing new jobs to town. Some of those new companies will fail, some will stay small, and some will grow substantially.  We have no way of predicting which will be successful, nor what the time frame will be required for that success.  What we can guarantee however is that none of them will be successful in Davis, and none of them will create new jobs in Davis, if we fail to provide the space. We need new space for business in order to create the balanced economy that we need to keep Davis a great place to live.

       

       

       

        1. Matt Williams

          DavisBurns, last time I checked we have two book stores in Davis, Logos and Avid Reader. Before Borders arrived in Davis we had Bogarts and Avid Reader. What were the other two?

          With that questions asked, given the advent of Amazon.com and other online book selling websites, how many book stores do you think we would have in Davis now if Borders had never come to Davis?

        2. Don Shor

          Here’s a history of the bookstores in Davis: https://daviswiki.org/Bookstores Avid Reader and Bogey’s owners reported a 30% drop in business when Borders opened. The bookstore in Mansion Square closed when Borders was announced. Gayle’s closed some time in that period, not sure when. SweetBriar and The Open Bible closed a couple of years ago. Avid Reader toughed it out, opened a second store in Sac, then another store in Davis.

        3. Rich RifkinWDE 73

          The closing of Borders was very unfortunate, really having nothing to do with the Davis store. I realize that the national chain had some serious debt issues, and more generally Amazon and other online companies really hurt book sales at stores like Borders. However, the Davis unit never lacked for business. It was common, when I’d buy things there, that the queue would be 5-10 deep with several registers working.

          In my opinion, Borders was–by a long way–the best bookstore Davis has ever had. It was far more than a bookstore–they had a nice cafe and sold CDs and various other sundries, including quite a variety of magazines and newspapers. Part of its charm (for me) was the nice strip mall it was located in. I thought it was great, especially on a cold day, to get a book and a hot coffee and sit in one of Borders’s sofa chairs by the windows looking out over the rest of Davis Commons.

          It looks to me like Whole Foods is doing good business in the old Borders’ space. I don’t do my grocery shopping there. But they have a very nice deli/cafe, and it seems to be popular. On a warm day I can enjoy getting my mug filled up with coffee at Borders and sitting out in the seating by the Commons lawn. But as nice as all that is, I miss having a great bookstore in Davis like Borders. I don’t think there will ever be one as good again. Very few people buy books these days. And those who do mainly buy online. No retailer interested in making a profit would build something as nice as Borders was.

        4. Rich RifkinWDE 73

          From your link, Don:

          According to the American Booksellers Association, since hitting a nadir in 2009, the number of indie bookstores in the U.S. has grown 19.3 percent, from 1,651 to 1,971. The current total is less than half the 1990s peak of around 4,000.

          I’m not sure it matters all that much how many bookstores there are. What matters to me is their quality as stores. Before Borders was here, we had several bookstores and most filled a niche. But none, not even Avid Reader, which is the nicest full-service independent, was a destination store, the way Borders was, for me.

          What Borders did not cover, however, was the niche filled by Bogey’s. At its peak, that was a good, but small, used and overstock bookstore. Where my brother lives in Colorado Springs, there used to be a really, really great used bookstore called Four Corners. It was about half the size of an entire block in our downtown. They had rooms that would go on forever and then there would be a door and another giant room full of used and overstock books would be there. The only thing that Davis ever had which was similar in layout was the old Shields library, where you’d walk up three steps to a new room full of library books, and that room would run into some other oddly shaped room and so on.

  3. odd man out

    SODA asked “Who at UCD is now supervising the agreement since John Meyer left?”

    On Oct. 14, “University of California, Davis, Chancellor Linda P.B. Katehi named Dave Lawlor as vice chancellor of Finance and Resource Management, and chief financial officer.” As John Meyer’s replacement, albeit with somewhat amended job duties, Lawlor is probably the one involved with this issue.

    More info:

    http://news.ucdavis.edu/search/news_detail.lasso?id=11056

     

     

      1. SODA

        That seems good news since Karl has history with city back when John was CM. And assume he lives in Davis.  Hope your prediction (too strong a word?) is wrong David.

        1. odd man out

          Karl is “Senior Associate Vice Chancellor”. He reports to David Lawlor who is “Vice Chancellor & Chief Financial Officer”for Campus Planning, Facilities and Safety. Both live in Davis. Karl came to UC Davis not long after John Meyer transitioned from his city CM position to the campus. There was no sitting VC (replacing Meyer) when the September meeting took place.

  4. Anon

    DG: “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.

    Absolutely agree.

    DG: “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.

    Despite all evidence to the contrary, you make this guess based on what?

    DG: “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?”

    Why not put two innovation parks on the ballot, if they are well planned and are projected to bring in significant revenue to the city?

    “Slow growth roots?”  I think there are some no growthers and slow growthers, but they do not necessarily represent the majority of citizens in Davis.  Secondly, even the slow growthers are beginning to realize the city must do something about its fiscal problems, otherwise the only alternatives appear to be cut services/city personnel, a very painful prospect.

    Revenue is hardly on the rise enough to make much of a dent in the backlog of infrastructure repair needs in this city.

    1. David Greenwald Post author

      “Despite all evidence to the contrary, you make this guess based on what?”

      The evidence to the contrary is only that UC Davis said no in September.

      “Why not put two innovation parks on the ballot, if they are well planned and are projected to bring in significant revenue to the city?”

      When I ran the math on that, it looked like both parks would lose if they were on the ballot at the same time or at least there was a good chance of that.

      1. Alan Miller

        “When I ran the math on that,”

        Class, your math test answers will not be accepted without also showing your work.  Please submit, along with your answer sheet, your Blue Book with notes on your methodology in a form that anyone could understand.  Ready?  Pick up your pencils!

      2. Anon

        “The evidence to the contrary is only that UC Davis said no in September.”

        At least that is some evidence.  What specific evidence do you have that shows UCD will pull out?

  5. Davis Progressive

    people are underestimating the extent to which bobby and his crew are making everyone involved lives miserable.  the city has done next to nothing to protect the firefighters being retaliated by bobby and company.  the problems that were highlighted in the fire report are still in place now.  the city manager and mayor are talking about employee morale as though it were a two-sided coin here – the firefighters union brought most of this on themselves, but unfortunately no one wants to protect the real victims here.  so ucd will pull the plug, it’s only a matter of when and how.

  6. Tia Will

    the city has done next to nothing to protect the firefighters being retaliated by bobby and company”

    I am wondering that if retaliation on the part of the union were to be occurring, what options are available to the city to protect firefighters ?

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