Analysis: What Do We Learn From Brett Lee’s Take on Innovation Parks?

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Councilmember Brett Lee makes remarks at a recent council meeting
Councilmember Brett Lee makes remarks at a recent council meeting

This weekend, Councilmember Brett Lee wrote a column in the local paper entitled, “The devil is in the details for innovation parks,” which presented his thoughts on the proposed innovation parks.

First, he differentiates an innovation park from a more typical commercial business park, noting that the innovation park “is tilted toward higher-end technology/science-oriented tenants — think biotech labs, commercial ag research and tech campuses. They are not for mini storage, auto repair or warehouses.”

He also notes, “An innovation or tech park would be more costly for tenants than other spaces in our geographic region, but the cost would be counterbalanced by, among other things, the advantages of proximity to the university; a large, well-educated labor pool; and the amenities and quality of life that Davis has to offer.”

For an innovation park, at this point we are talking about the Mace Ranch Innovation Center as opposed to Nishi, which is more of a mixed-use housing plan with a high-tech component, and the Davis Innovation Center, which is ostensibly on hold.

The Mace Ranch Innovation Center would face a Measure R vote, potentially as soon as June 2016. A Measure R vote in Davis has a high hurdle – the two previous projects which were largely housing projects were soundly defeated. There is a belief that a 3-2 vote approval could spell doom for the next project as well.

As such, the opinion of Brett Lee, one of five on the council, and a staunch opponent of a previous Measure R project, is crucial to the future of such projects.

Is Brett Lee in favor a innovation/tech park for Davis? The answer is that “it depends.”

Brett Lee puts himself into what we might call a 2/3 category – those who are willing to support an innovation park, but who have some concerns about specific issues.

As he puts it, “An innovation park could bring several very important benefits to Davis.”

“It could create high-paying jobs for our community,” Councilmember Lee writes. “Each morning, hundreds if not thousands of Davisites hop in their cars to head off to other communities to work. It would greatly improve the quality of life of many people if they were able to find high-quality jobs closer to home. Having an improved local job base also would provide much-needed internship and employment opportunities for UC Davis students and graduates.”

“It could create improved prosperity for existing Davis businesses,” he continues. “Having a couple of thousand new employees who eat, shop and play in Davis would bring additional revenue to Davis. In addition, having a hundred new employers would mean additional revenue for suppliers, contractors and consultants, many of which are Davis businesses.”

“If the taxes are structured properly on the innovation park, the innovation park would provide additional direct revenue to the city to pay for communitywide needs — road repairs, recreation programs and infrastructure improvements,” he adds. “The city has been relying on parcel taxes and a slightly increased sales tax to cover the basic costs of running the city. Diversifying our revenue sources would be a good thing. It would allow us to reduce the tax burden on all of our community members.”

Brett Lee therefore recognizes that there are a number of benefits that such an innovation park could offer the city of Davis, but his support does not come without caveats.

Councilmember Lee lists the following concerns:

  • Poor design is difficult to mitigate; therefore, any proposal must have a well thought-out design that includes planning best practices with a heavy emphasis on sustainability.
  • We must clearly identify and mitigate the negative aspects of a tech park. Loss of open space, increased traffic and a risk of changing the “character” of Davis are real and valid concerns. Many of these negative aspects can be mitigated — for example, improved and more efficient road design, improved infrastructure for bikes and pedestrians, and improved public transit networks, etc. It would be reasonable and proper to expect that the project proponent (developer) would cover the lion’s share of these costs.
  • The revenue-sharing agreement with the developer must be made concurrent with the developer agreement, and any agreement on a community facilities district. There should be no surprises and no “oh, we will work that out later.”
  • Any agreements must preclude (exclude) lowest-common-denominator development; we do not want the developer to have the ability to build low value-added facilities such as general warehouses, storage facilities, etc. This is meant to be a tech park/innovation center, not a generic business park/warehouse district.

“So am I in favor of a tech park?” he asks. “It will all depend on the specifics of the proposal. If it is a well-designed proposal that benefits our community, has proper mitigations and a solid revenue component for the city, then yes, I would be in favor. If it does not have these things, then I would not be in favor.”

Councilmember Lee is against the idea of including a housing component to the innovation parks. He writes, “I am against such an idea. If we lived in an ideal world, then yes, it might make sense from a design perspective. Who would argue with the idea that it would be wonderful for the new job-holders to be able to live and work in the same neighborhood.”

The councilmember argues that “there are some real problems with this concept. Unless the residents in such a housing component are required to be employees in the tech park, the vast majority of these people are likely to commute to jobs outside the area.”

In addition, he states, ”Due to the economics of housing in Davis, building housing is easier and more profitable than building commercial space. Over time, would it really be a surprise if the developer shifted the focus from the tech park component to the housing component? Why wouldn’t they want to build the easy part first?”

He concludes, “I believe we should keep our focus on the innovation park and not complicate the proposal with a housing component. I do agree that, as a community, we do need additional apartment units and smaller-footprint homes, but this should be handled as a separate and distinct issue.”

Where does that leave us?

Councilmember Brett Lee is in a similar place to the Vanguard on the issue of innovation parks. We are in full agreement about the upside and the concerns about such a park.

As he puts it, “Poor design is difficult to mitigate,” and the push on the sustainability end will be critical. A well-designed campus could work well in a university town, used to the layout and appeal of a college campus. The Vanguard continues to believe that this is crucial to the support of the community.

The other critical factor will be transportation issues – not just well-designed roads, but the ability to tap into and improve transportation networks as well as mitigate traffic impacts.

It is here where we somewhat disagree with Mr. Lee. While the councilmember recognized the advantage of a housing component in the ideal, he believes that housing would complicate the project and potentially cause the developer to shift the focus from tech park to housing.

Moreover, he worries that, without a requirement for residents to work at the park, “the vast majority of these people are likely to commute to jobs outside the area.”

These are legitimate concerns, but concerns that also can be mitigated. The Vanguard does not necessarily want a housing component, but believes it should be part of the early discussion at least.

The houses could be designed and approved as rental housing townhouses that make it unlikely to appeal to out of area people. By making them appeal to employees of the park, we would have a way to reduce both traffic impacts and housing demands inside and outside of Davis.

While mission creep is always a problem, the housing and commercial components can be written into the baseline features of the project, which would then require another vote to change.

While it is true that housing could become a rallying cry for opponents, Covell Village ultimately went down as much due to unmitigated traffic impacts as it did size and threat to the housing market.

It is a conversation worth having – even if it is ultimately dismissed.

—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 “Analysis: What Do We Learn From Brett Lee’s Take on Innovation Parks?”

  1. sisterhood

    Hi Brett,

    Thoughtful article. I’m glad my family voted for you.

    David, I really like your rental idea, as long as the rent is reasonable.

    Brett, what is your view re: ownership or cooperative affordable housing? Perhaps you could also answer an unanswered question I posed in a previous article re: the new developments in South Davis, off Drummond. How does one apply for the four designated affordable homes, and is David Thompson’s group involved in any way with those affordable home models? Thank you very much & best wishes.

    1. Brett

      Hi Sisterhood,

      Thanks for the post – I am about to zip off to work (I am running late!)  Anyway, quick answers – I’ll try to post or write an article about my views on ownership vs cooperative housing  (too long an answer to post in 2 minutes!), South Davis project not affiliated with Thompson, I’ll check on when/how people can apply.  Email me at blee@cityofdavis.org and I can respond with application info.

      Thanks!

       

  2. Doby Fleeman

    Brett does nail it with his analysis of the innovation center concept – for all the right reasons.   That said, his job would have been made easier if the independent Financial Analyses for the projects had included more quantitative analysis showing the expected financial revenue benefits, over time, to the city versus the anticipated rise in municipal operating revenues over the same time frame.

    At least in this community, it seems that discussion of revenue generating potential associated with growth in the local economy is not something that comes naturally to municipal government or city councils.   It’s a pretty normal topic for most communities, but here in Davis it doesn’t seem to gain much traction.    It seems the options on the table are most often “cut expenses” or “raise taxes”.    It sometimes seems that basic concepts like increasing tourism, growing the jobs base, growing the employer and commercial tax base are somehow outside our sphere of responsibility or concern.

    It would have been very helpful if the economic analysis had contained a specific element titled: “Projected Increase in Municipal Operating Expenses” over the next 30 years (or whatever window the study adopted).

    It would have been nice if the study could have included projected costs associated with the City developing its own network of public transit, i.e. buses, (financed by the city rather than the State or regional governments) as example.   Likewise, we could have included components to address the costs of developing improved infrastructure for our aging population demographic.  Be it parking infrastructure, improved interconnectedness of our transit corridors,  reinvestment in public buildings and recreational facilities, improved delivery systems and safety nets for our regional at-risk subpopulations, more affordable housing……..the list goes on.

    Kudos to Brett for his analysis and conclusions, but I guess my question remains: “When is the correct time to incorporate a community discussion concerning how we go about projecting the need for future revenues necessary to support an aging public infrastructure and inexorably growing municipal services budget?”

    It’s nice for our Mayor to remind us of the need to reinvest in the community, but the majority of those original improvements were financed by the decades of new construction taxes and project related amenities, as well as contributions made possible by a GROWING population of NEW Davis residents & taxpayers.

    This is not the Davis of 1960 – driven by a post-war demographic push of the Baby Boom generation – with scores and scores of new university jobs and new families settling into this affordable, burgeoning college town.

    Bottom line, to be discussing a pivotal “Go / No Go” decision on the future of these Innovation Centers, it sure seems like a good idea to be taking the long view and really getting down to the brass tacks of how the community intends to craft a truly sustainable economic model for the decades ahead.

    Call it a 40,000 foot overview, but I had always thought that is what planning is all about.

    1. Alan Miller

      It would have been nice if the study could have included projected costs associated with the City developing its own network of public transit, i.e. buses, (financed by the city rather than the State or regional governments) as example.

      I agree with this.  Davis has a real challenge with public transit, as the majority of the City is not dense at all and never will be.  Even apartment areas or fairy spread out.  Thus, you run into the challenge of windy, slow routes with lots of stops to pick up passengers, which slows the bus service down and makes it unattractive to get anywhere.

      Davis already has a bus service, with buses and maintenance yard in place:  Unitrans.  However, it has two transfer nodes on campus and doesn’t grid the City well and runs when it works for students, making it virtually useless as a City transit system.  Setting up a new City fleet/agency would be costly.  We did it with fire services, so could we consider a boundary drop with Unitrans as well?   Find where a grid pattern could serve the city itself with timed transfer points, and complement the student-oriented service, with the best way to blend the two services to save money overall without having to create a new fleet/agency/yard and all the costs the city can’t afford for a new agency.

      Express from Nishi and Business parks from downtown/train station during business hours would be a focus, as would some fan routes from park/walk/bike & ride points in North/West/East/South Davis direct to the train station to shuttle people in to the Capitol Corridor on express shuttles to combat the lack of parking at the station.

      Ridership studies would have to be done to determine the best routes / frequencies / fares / stop distances.  Davis is in that category of not quite being able to capture a market large enough to justify better service, limiting public transit largely to those who can’t drive, are too young to drive, handicapped, or the elderly.  Attracting those who can drive to use public transit means it has to be convenient to them and get them to central destination points, fairly fast.

      I don’t believe Davis can justify a whole new agency, but use of Unitrans to link some of the denser parts of town with destination nodes may be feasible, since we already have a transit agency infrastructure in place. Can we beat down the bureaucratic barrier between City and University to even explore the option? Hmmmm . . .

      1. Tia Will

        Alan

        While I believe that improved bus routes would be one potential factor in improving our transportation within town, I wonder if maybe we are not being to self limiting in our thinking. While in Istanbul, I was introduced to the concept of a shared taxi like service called a “dolmush”. These are private cars that have set routes which they run frequently with people getting on and off at various stops along the way. Think of a hybrid between a small bus and a large taxi with an Uber like model of either matching electronically or by physically flagging one down. There are frequent stops, but there are more of them operating separately and in a less cumbersome fashion than with buses. A small fleet of electronic or hybrid vehicles might be an alternative to consider rather than the current bus model.

        You are the “transportation man”.  Your thoughts ?

      2. neilruud

        I agree. Why re-invent the wheel? Seems to me like investing in Unitrans is the best option (and not the first time I’ve heard the idea). They’re one of the highest rated public transit systems in the area and already have the required infrastructure

        1. Doby Fleeman

          Neil,

          I’m guessing that Unitrans would be the most obvious agency to administer any expansion of services.

          The point of my original post, however, was merely to point out that any such undertaking would require an investment and an ongoing stream of operating revenue – neither of which is currently in the City’s budget.

          We can have all the dreams we want, but until we address the fundamental issue of how the community intends to pay for the many amenities it might prefer – we remain at a standstill with absolutely no focused discussion of the problem.

          Hopefully, the second phase of the financial analysis, due in early September, will begin to help frame this long overdue discussion.

           

        2. neilruud

          Doby,

          I also agree now is not the time to do it. We need to be in a better financial position or identify additional/self-sufficient funding sources before we take on any expansion of services.

          I’d love to see a light rail option to Sacramento (and I believe that would really cut down on traffic) but that’s also not in the cards at this moment.

  3. Anon

    If it is a well-designed proposal that benefits our community, has proper mitigations and a solid revenue component for the city, then yes, I would be in favor…

    Councilmember Lee is against the idea of including a housing component to the innovation parks….

    The councilmember argues that “there are some real problems with this concept. Unless the residents in such a housing component are required to be employees in the tech park, the vast majority of these people are likely to commute to jobs outside the area.”

    In addition, he states, ”Due to the economics of housing in Davis, building housing is easier and more profitable than building commercial space. Over time, would it really be a surprise if the developer shifted the focus from the tech park component to the housing component? Why wouldn’t they want to build the easy part first?””

    Council member Brett Lee has it exactly right. Bravo!

  4. Anon

    Vanguard: “The houses could be designed and approved as rental housing townhouses that make it unlikely to appeal to out of area people.

    I don’t get the logic here.  Why is rental housing unappealing to out of area people who desperately want to live here?  The town is rife with out of town folks renting expensive houses for their budding families who would like nothing better than to rent a nice new townhouse that might be cheaper.  I don’t see any way you can guarantee those townhouses will be rented by the employees of the companies within the business park.

    1. David Greenwald Post author

      My thinking is that why move to Davis from out of town and work out of town in a rental? You can rent cheaper elsewhere. The key advantage is if you don’t have to drive to work. Will that stop all people? Not a chance.

      1. Doby Fleeman

        Have you considered that the “key advantage” might be Davis schools (for the single parent) or our cool Downtown scene (for the young working professional)…….?   And, lest we forget, what about all those young UCD professors who might find the prospects irresistible – versus commuting from Dixon or Woodland?

        Just so we’re clear, and given that this article is strictly about “innovation centers” and not about Nishi which you describe above as “a mixed-use housing plan with a high-tech component” – how then would your view of this issue apply to prospective tenants for the Nishi Project?

  5. Jim Gray

    Brett thanks for your thoughts on the Innovation Park.  Good design and civic amenities is the key to a not only a likely vote of approval from the Planning Commission, the City Council, and the Davis voters.  But good design and the proper mix of amenities is what is wanted by great, innovative global/local companies that are trying to attract and retain talented and creative workforce.

    Insuring that their are good transportation linkages, a focus on sustainability and reduced impacts on the environment and mitigating environmental impacts is an aligned interest for the City and for the Innovation Parks..  In addition employers and their talent want high speed broadband, safety and security, strong commitment to other creative companies as well as collaborative and almost seamless indoor/outdoor spaces.

    Good paying jobs and increased property taxes as well as the potential for sales taxes from the businesses will enhance the local and regional economy and will add to the City’s fiscal health.

    I hope that we can keep these projects and ideas moving forward. Attracting and retaining great companies and diversifying our local economy is tough, long term work and we need to collaborate as a community to achieve great projects that we can all be proud of.

    Brett and Vanguard I hope that you can both be voices for high quality innovation projects and for achieving results that will be beneficial tomorrow and for future generations.

  6. Frankly

    Poor design is difficult to mitigate; therefore, any proposal must have a well thought-out design that includes planning best practices with a heavy emphasis on sustainability.

    We must clearly identify and mitigate the negative aspects of a tech park. Loss of open space, increased traffic and a risk of changing the “character” of Davis are real and valid concerns. Many of these negative aspects can be mitigated — for example, improved and more efficient road design, improved infrastructure for bikes and pedestrians, and improved public transit networks, etc. It would be reasonable and proper to expect that the project proponent (developer) would cover the lion’s share of these costs.

    The revenue-sharing agreement with the developer must be made concurrent with the developer agreement, and any agreement on a community facilities district. There should be no surprises and no “oh, we will work that out later.”

    Any agreements must preclude (exclude) lowest-common-denominator development; we do not want the developer to have the ability to build low value-added facilities such as general warehouses, storage facilities, etc. This is meant to be a tech park/innovation center, not a generic business park/warehouse district.

    Just read all this again and then join me in lamenting the loss of Mace 391… a parcel WE OWNED and would have had complete control over the design.   That was a point repeated over and over again by me and others.  Now, since we don’t own the innovation park land we have to be very strategic and firm in negotiations and agreements… something that the City has routinely demonstrated weakness on.

    I know, I know… water under the bridge.  Well, really no.   Because there is a potential giant problem with the USDA NRCS FRPP program as per the federal register:

    Landowner means a person, legal entity, or Indian tribe having legal ownership of land and those who may be buying eligible land under a purchase agreement. The term, “landowner” may include all forms of collective ownership including joint tenants, tenants-in-common, and life tenants. State governments, local governments, and non-governmental organizations that qualify as eligible entities are not eligible as landowners, unless otherwise determined by the Chief.

    The problem here is that the FRPP program is not supposed to be used by government entities.

    This means that the current owner of Mace 391 might be able to challenge the easement as being invalid under Federal law.

    Then this mistake grows even bigger.

     

     

    1. Don Shor

      we have to be very strategic and firm in negotiations and agreements… something that the City has routinely demonstrated weakness on.

      And yet you think “the City” would be good at design oversight, development, brokering, and selling land for a business park.
      We have complete control over the design now by means of zoning and by oversight of the development agreement.

      1. Frankly

        We have complete control

        No, we have limited control.  Does the Cannery development ring any bells for you?

        You must understand the difference between ownership control and what a government entity can force a landowner to do, right?

        1. Don Shor

          You trust the city to exercise good ownership control, yet you don’t trust them to negotiate a proper development agreement. Maybe in 2016 you’ll stop beating this dead horse. We can only hope.

        2. David Greenwald Post author

          I see your point. But I do think the city has more control here with the Measure R vote than they had with the Cannery Development Agreement.

          1. Don Shor

            I think the council majority got the Cannery Development Agreement they wanted. I see no reason to expect that similar political pressures and accommodations of developers would somehow not occur if the city owned the property and somehow oversaw the development process. In fact, it would probably be worse. Generally, I don’t think cities should be in the land development business. I’m always surprised to hear conservatives advocate for this versus having private interests propose developments subject to city oversight. Finally, for the city to have taken Mace 391, purchased for the purpose of conservation, and then proposed to develop it would have led to a political battle epic even by Davis standards.

        3. Frankly

          I see your point. But I do think the city has more control here with the Measure R vote than they had with the Cannery Development Agreement.

          Actually no.  The developer does his own due diligence to help get to a 50% + 1 vote.  And so during that time he will be motivated to appeal to the voters… and will agree to most of the amenities that voters would be attracted to… up to the point that he gets his 50% + 1.

          But here is the problem… you generally don’t get a final development agreement until after the Measure R vote.  And even if you do, what is to prevent the developer from coming back to the table afterwards like the Cannery for the CFD?

          No matter if the City finalizes the development agreement before or after the Measure R vote, depending on the strength of that vote,  the developer will have leverage to negotiate with the city in his best interests.

          You forget that with land owned by outside interests, those interests are going to expect a certain profit margin for putting their capital at risk.  If Davis owned the land, we would forgo more profit margin on the returns of the development (because we get the ongoing tax revenue benefit), and that margin would instead go to pay for amenities for the City.

          Davis owned land = amenity returns because they provide ongoing value to the voters who are supplying the capital.

          Outside owned land = profit returns because amenities don’t provide value to those supplying the capital.

          1. David Greenwald Post author

            That’s why the most important components of the project have to be in the baseline features which are locked in by the Measure R vote.

    1. Don Shor

      Hines that was part of the team that has backed out of the Davis Innovation Center? Or put it on hold? Doesn’t exactly bode well for their staying power in a development partnership with an ever-changing council and a city manager that may become a revolving door.

  7. CalAg

    “We must clearly identify and mitigate the negative aspects of a tech park. Loss of open space … … It would be reasonable and proper to expect that the project proponent (developer) would cover the lion’s share of these costs.” Brett Lee

    BL:  Where will the conservation easement for the 2:1 ag mitigation acreage be located? How will the City Council deal with the adjacency requirement?

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