Commentary: Will Innovation Parks Come Down to the Assessment of the City Budget?

Davis has a strong slow growth legacy embodied within the passage and renewal of Measure J/Measure R, which requires citizen votes for the conversion of agricultural land to urban uses. However, over the course of the last two years there has been a school of thought emerging, believing that the city needs to develop the capacity for new tax revenue through the development of innovation parks.

The belief, by some at least, has been that the sales tax revenue generated by innovation parks could help the city pay for existing needs without increased taxes. As Chief Innovation Officer Rob White wrote last fall, “One major reason that innovation parks are being discussed is the recognition that there is a significant need to increase the amount of revenues coming in to the city to pay for maintenance and upgrades of existing amenities — things like parks, bike paths, streets, swimming pools and public facilities.”

He noted, “A major reason Davis does not have the funds to completely pay for these amenities any more is that our sales tax collection is about half of that in a comparable community. Davis also has a lower comparable citywide property tax total because the community has not experienced significant resetting of values over the past few decades and has not built new housing stock.”

The Vanguard has identified the need for new monies to repair roadways and other crumbling infrastructure. However, following the passage of a half-cent sales tax last June, discussions of a follow-up parcel tax measure have stalled. Some of that was due to lack of support for an additional tax measure in polling conducted by the city. Some of that may be due to the perception that the economy is improving.

One of the key questions that might need to be asked is whether the voters would be willing to go against their slow growth tendencies, absent the perception of an economic crisis – a crisis that even last year most citizens, according to polling, did not believe existed.

Recently we have seen comments from readers pushing back against the notion that we need innovation parks to generate new revenue.

Last week, one reader wrote, “If the REAL problem is city revenue, then why didn’t the City council raise the sales tax to the level recommend by the citizens commission to put before the voters.”

Another reader would write, “I know that the issue of growth is controversial.  Personally I come down on the side of keeping Davis a small city, even if that means living with some pain in terms of higher taxes and fees and less services than we might like.  If I wanted to live with urban sprawl and congestion, there are plenty of other places in California that I could move to.”

The discussion of new taxes needs to be weighed against the increasing cost of living in Davis and the prospect of people being priced out of the community

The council may have to fight itself over this issue as well.

Last week at an outreach meeting, Councilmember Rochelle Swanson responded to a question as to why the city could not just cut its way into the black or raise taxes. She responded that things look bad for the budget.

She stated that the city has already made a ton of draconian cuts. There is not the money in the budget to do the things that residents believe Davis should do, and there is insufficient money to pay for what we are doing already.

That runs counter to the narrative that was developing late last fall from Mayor Dan Wolk, who was trumpeting the nearly $850,000 in additional revenue.

He wrote, “Like other communities, we were hit hard by the Great Recession, which resulted in cuts in city services, difficult concessions from our employees, and a painful 24 percent workforce reduction. But with the strength in our property and sales tax revenue — mirrored at the state and regional levels — I believe our community has begun to emerge from the downturn.”

“In fact, I am more confident than ever regarding the current and future state of our city’s finances,” the mayor added.

He noted, among other things, “We are on our way to eliminating our structural deficit. Our general fund deficit — a chronic imbalance between revenues and expenditures — was estimated to be about $1.5 million this fiscal year and was forecast to drop in the coming four years. However, the improved financial picture means we have immediately taken a large bite out of the deficit and are moving toward eliminating it completely.”

The mayor was quick to add, “We’re not out of the woods yet.” And he also pushed for the need to obtain “more revenue by continuing to process the two innovation park proposals, as well as the Downtown University Gateway District on the Nishi property.”

There was a belief at that time that the city would be using the improved fiscal situation to potentially justify increased compensation to city employees. Interestingly enough, we are in early April and still have not seen a proposed budget for the city and have not heard much about new collective bargaining agreements, despite the fact that the current agreements are about to expire.

It is ironic that the fate of the innovation parks may well hinge on the public’s perception of the city economy and budget situation.

There is little doubt that employees would like to see increased compensation – but, ironically, increased compensation now would signal to the public that the fiscal crisis is over. It would serve employees better to wait until the innovation parks are squarely approved before pushing their demands for increased compensation.

The city would be best off tackling its infrastructure needs and laying out the case that it needs a more diversified economy and tax base.

—David M. Greenwald reporting

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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29 Comments

  1. hpierce

    “…  about new collective bargaining agreement despite the fact that the current agreements are about to expire.”

    A couple of the current agreements expire June 30.  The bulk of the employees are covered by agreements that expire Dec 31.  Depends how you define “about”.  I believe it is true that all of the agreements expire within the next 9 months.

    1. Davis Progressive

      absolutely.  some of my slow growth friends already argue that the innovation parks are a method to get employee increases.  i for one will not vote for an innovation park if we increase compensation.

  2. Davis Progressive

    the question is whether dan wolk’s rhetoric last fall trying to argue that the city’s finances are good squares with the need for an innovation park.

  3. davisite4

    I’m surprised that this is the first mention of the outreach meeting on the Vanguard (as far as I know).  The Enterprise made quite a thing of it, saying that there was a strong slow-growth contingent at the meeting, including former mayor Ken Wagstaff, worried about the changes that an “innovation park” would bring to Davis.  I am glad to see this getting discussed.  Too often the discussion has been just about the money it would bring to Davis (which is far from guaranteed) without much discussion about the changes that a large business park would bring to Davis.

    1. Frankly

      Why don’t you take the first step and list what changes (I assume you are talking about negative changes) you think will happen.

      I think that everyone that supports the innovation parks would admit there will be more traffic and more people in and around town.   I think the vast majority of residents would agree that more traffic is a negative.  More people in and around town is going to be more a mixed bag.  On the positive side there will be more families and more kids for the schools.  More young professionals to help round out the demographic gap.  More creative class to help lead the city.  More well-off employees and business leaders to contribute to city causes and programs.

      What other negatives?  I really cannot think of any.

      But I can make a long list of positives to add to those I listed above.

      1. davisite4

        I think that, as Rich Rifkin wrote in a recent editorial for the Enterprise, that a large innovation park (or two – I am not counting the Nishi proposal as “large”) will change the tenor of the town.  Anyone who has been to Silicon Valley or heard about the recent conflicts over tech in San Francisco can see the truth of this.  A university-focused town has a very different feel and energy than a tech-focused one, and yes, these things matter.

        Along with the influx of tech workers, expect increased housing shortages and skyrocketing home prices (again, see Silicon Valley and San Francisco).  Some might see increased home prices as a positive, but to me it is a negative for the diversity in town.  With San Francisco the artists have been among the first to go.  I value Davis’s quirkiness.

        I worry that a big business park will siphon energy and money away from the downtown — the proposals are, as  I understand, for business parks with restaurants and a hotel, among other amenities.

        There is the question of water, and whether we ought to be growing as a town given the current water shortages.

        There is the loss of agricultural land and open space.  Yes, ag land uses water, too, but I think the benefits outweigh the costs.  We do not know what the economy will be like in the future and whether a business park will succeed, but we do know that we will need food.

        This is not an exhaustive list, but just some quick thoughts off the top of my head.

        1. davisite4

          DP, negative, because I have seen what high tech has done to Silicon Valley and San Francisco.  Silicon Valley is a soulless place and SF is becoming that as others are forced out.  I haven’t seen estimates for how many people they think these business parks will employ (has anyone?  I’d like to know), but with that kind of space I can only imagine it will be a substantial influx of people into Davis.

        2. Frankly

          Thanks for the list.

          – Change the tenor of the town.

          What DP asked.

          Saying it will “change the tenor of the town” is too nebulous and general to be useful.  What exactly does this mean?

          – Skyrocketing housing prices.

          I agree that innovation parks will put upward pressure on home prices, but they will be built out over 20+ years.  I don’t think you can make the claim that housing prices will skyrocket compared to what they would be otherwise.  There will still be the option to buy in surrounding communities.  That will provide a price-equilibrium.  UCD is growing and that is already putting upward pressure on housing prices.

          – Water shortages

          You mean converting ag land to other commercial land uses?  Sounds to me like a good move to save water.

          – Loss of ag land

          So, how much ag land do you think we need to preserve?  There is already not enough water in the state to farm all the prime ag land in the state.  There are already thousands of acres preserved around Davis.

          1. Don Shor

            There is already not enough water in the state to farm all the prime ag land in the state.

            I would suggest you abandon this line of reasoning, since it is irrelevant to this area.

            There are already thousands of acres preserved around Davis.

            More to the point: the one site (Mace 200) that is prime ag land is now surrounded on all sides by conserved land or freeway. Allowing that to develop for commercial purposes is a reasonable compromise. Mace 391 is protected. Howatt Ranch is city-owned. Developing Mace 200 doesn’t promote or encourage any further loss of ag land; it is surrounded. The other site isn’t prime ag land.

        3. Frankly

          I worry that a big business park will siphon energy and money away from the downtown

          A few points to this.

          1. The downtown is over saturated with customers and too few retail options.

          2. The downtown will benefit with some congestion relief.  People with money might go there to shop with a little less congestion.

          3. There is not enough commercial real estate in Davis and there is no vacancy downtown.

          4. More people with money working for the innovation parks will shop downtown.

          Bottom line is that business parks are more likely to help the downtown rather than hurt the downtown.

      2. Alan Miller

        ” . . . there will be more families and more kids for the schools.  More young professionals to help round out the demographic gap.  More creative class to help lead the city.  More well-off employees and business leaders to contribute to city causes and programs.”

        How so, if housing is not part of the mix?

        1. Don Shor

          They’ll do all that rounding out and leading and contributing on their lunch breaks, then drive home to Woodland and Dixon at the end of the day. And they’ll transfer their kids into DJUSD via inter district transfers.

        2. davisite4

          Don, no, they’ll outbid whatever Davis houses are available.  Why should they go to Woodland or Dixon and commute when they have high salaries that can afford pricey houses?

        3. Frankly

          People decide to purchase a house based on a value assessment.  Some people do not value living in Davis enough to pay the premium and decide to live in Woodland, Winters, Dixon or Sacramento where they get more house for the money.  That same assessment will happen with innovation park workers.  And the availability of less expensive real estate within easy commute distance will prevent Davis home values from going too high.  In fact, if and when Davis home values get high enough, people that live here will sell to buy elsewhere.

          Despite what some might think, Davis is not so attractive a place to live that people will pay anything to live here.

          1. Don Shor

            It probably bears mentioning here that Woodland plans to build out Spring Lake fully, adding many, many new houses to the market just a few minutes north of Davis. People who want more space at lower cost will buy there.

        4. Frankly

          How so, if housing is not part of the mix?

          Business and the employees of business will contribute to the community where the business is located even if the business owners and employees don’t live in the same community.

      3. Davis Progressive

        more traffic

        more vmt

        more congestion

        conversion of prime agricultural land to urban uses

        pressure to put housing to accommodate workers

        industrialization of the city

        1. Frankly

          Thanks for the list.  Let’s take them one at a time.

          – More traffic.

          Check.  Already have traffic.  UCD growing and will add more traffic.

          – more VMT.

          Not necessarily.  Especially not from a macro perspective.  People moving from places to take a job where they have a shorter commute.  Transformation from Davis being a bedroom community to one where more people work and live in the same town.

          – More congestion

          You are just recycling your more traffic point.  Let’s not be redundant.

          – Conversion of prime ag land to urban uses

          No, conversion of one type of commercial land use to another type of commercial land use.  There is more prime ag land in California than we have the water to irrigate.  Better to use some of the land for other things.  And at least one of the sites is class-2 soil and not really prime ag land.

          – Pressure to put housing to accommodate workers.

          Check.  But the pressure already exists to put housing in to accommodate students.  And we don’t need to succumb to that pressure as there are plenty of homes available in surrounding communities.  Davis will convert over time to fewer commuters and more workers living in town.

          – Industrialization of the city

          This is too nebulous to be useful.  Is “industrialization” a negative thing?  Why is it a negative thing?

        2. Davis Progressive

          “You mean converting ag land to other commercial land uses?  Sounds to me like a good move to save water.”

          one of your better points.  only problem might be where the water comes from.

    1. davisite4

      As I said above, it depends in part on the numbers of people employed, which I admit that I don’t have numbers on.  Has that estimate been given as part of either of the two large proposals?

      In the meantime, that part of town goes from lovely agricultural viewscape to massive gridlocked business park.  200 acres is pretty darn big.  That is a change in tenor itself, and divorces us further from our agricultural surroundings.

  4. Davis Progressive

    “Despite what some might think, Davis is not so attractive a place to live that people will pay anything to live here.”

    i’m not so sure you’re right on that.

     

  5. Topcat

    There was a belief at that time that the city would be using the improved fiscal situation to potentially justify increased compensation to city employees.

    If the “improved fiscal situation” is so that great that we can be talking about increased employee compensation, then we certainly won’t need any of the proposed industrial parks.

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