Sunday Commentary: City’s Economic Development Is Crumbling

Innovation-Park-example

A month ago we warned that “Cascading System’s Failure in Planning May Doom Economic Development in Davis” as we learned that the developers for the Davis Innovation Center were moving their development a few miles north on Highway 113 to Woodland.  Things just got worse – much worse.

With the news that Mace Ranch Innovation Center has been put on hold, and the precarious, at best, nature of the Measure A campaign, the real possibility exists that Davis will get none of the three proposed projects that could have, combined, added 7.5 to 8 million square feet of Research and Development space to Davis.

Already the city has lost homegrown high-tech giant Bayer-AgraQuest.  Marrone Bio Innovations has had to deal with a series of mostly self-inflicted wounds. The Panattoni-proposed 225,000 square foot office park has fallen through. And now there is a real possibility that Schilling Robotics will have to leave Davis.

Some have attempted to cushion the blow, arguing that we should pursue smaller infill projects.  While some have pointed to the Dispersed Innovation Strategy, even the Studio 30 report that came out in November 2012 laid out the need for a large anchor site or two.

That report offered both the near-term and mid-term strategies.  Nishi was at the center of the near-term strategy: “The Gateway (Downtown Research & University Innovation District) option offers the best close/in location due to the proximity to University and property owner and University interest, and should be pursued as the City’s top innovation center priority.”

However, the report notes, “The current isolated and dispersed sites that are available and appropriately zoned are not adequate in terms of size, location, or configuration (and related constraints) to address the emerging market need of an Innovation Center.”

The study continues, “With available reasonably priced land and effective marketing to innovative high tech companies, Studio 30 estimates Davis could absorb up to 10 percent or around 100,000 square feet of the 1-1.5 million industrial/office square footage absorbed annually in the Sacramento region. Because of this Studio 30 estimates Davis needs at least 200 acres for business development and expansion over a 20 +/- year time horizon.”

The Mace Ranch Innovation Center would have filled this clearly identified need.  But it is also clear that, over the last two years, the city has moved away from prioritizing economic development.

In the spring of 2014, the city of Davis, facing a $5 million immediate structural deficit and the need for additional revenue to fill roads and other infrastructure needs, put out an RFEI (Request for Expressions of Interest) that returned three potential innovation center projects, two of which were viable in the immediate term – Mace Ranch and Davis Innovation Center (located near Sutter-Davis).

However, at the same time, City Manager Steve Pinkerton left in late April and was replaced in the interim with Gene Rogers. Mr. Rogers always seemed reluctant to push forward on the innovation centers, although a lot of that could be chalked up to his interim status.

The city then hired Dirk Brazil in November 2014.  Almost from the start, we heard rumblings that Mr. Brazil was not convinced that the city, whose immediate budget crisis seemed resolved between the sales tax and improved economic, needed to go the economic development and, in particular, the innovation park route.

This seem confirmed more or less when highly-regarded Chief Innovation Officer Rob White was unceremoniously run off and, right around the same time, the Davis Innovation Center, perhaps for a variety of reasons, shut down their project.

Now just about a year later, MRIC is pausing their project.  Unlike its counterpart, this project is not dead.  However, there are publicly aired concerns about the economic viability of the project.  The Davis City Council in February shut down explorations into a mixed-use component – ironically citing the ability for the project to pass a Measure R vote.

Behind the scenes, even some supporters of the city manager are loudly questioning the city’s commitment to economic development.

The problem we see is that the long-range budget picture remains rather bleak. Despite the sales tax temporarily pushing the immediate budget into the black and an improved economy, the city faces about $655 million in unmet needs over the next twenty years.

That works out to the need for about $32 million to pay for things like roads, parks, greenbelts, other infrastructure, city buildings and the unfunded promises in the form of pensions and health care to employees.

As we have noted, the budget being balanced with a 15 percent surplus is a technical accuracy, but the margin that the city runs on is quite small.  A small increase in costs, a small decrease in revenue, or a failure to renew the sales tax puts the immediate budget into the red.  That doesn’t count the $32 million we need in addition, a number that represents over 60 percent of our general fund.

This is the case that the Vanguard has been screaming for the council to make to the public – and, for the most part, it has refused.  In July 2014 and again in February, the council declined to even put a small revenue measure on the ballot.

It does not help that political ambition by some have led to fanciful pronouncements about the sustainability and strength of Davis’ fiscal outlook.  While things improved in the immediate term, and opportunities were there, the city was not prepared to seize the moment.

In the short term, we need a parcel tax, or other tax, that would help to fund roads, an increased share of parks, and other critical needs.

In the longer term, the strategy was to augment that with economic development that hopefully could start cutting into our unmet needs as well as give us margin for error on our general fund.

Without additional revenue, the city is looking at the potential for large parcel taxes.  It would take something on the order of a $1500 to $2000 a year parcel tax to fund the full $32 million.  However, a smaller parcel tax could have addressed at least roads, sidewalks and bike paths, while a longer term strategy would have helped the city buffer the blow to the taxpayers.

Those who believe that the city is a great place to live are correct, but they miss that that quality of life rests on a very precarious mountain right now.  Roads are crumbling and the city has managed to fund only half our needs. Our parks, greenbelts, and recreation system is in bad need of an influx of money or we will see a dramatic decline in quality of life.

While we have worked hard to protect farmland, our interior is increasingly strained by a lack of housing and, in particular, student housing that will put huge pressures on the system as UC Davis continues to grow without providing adequate housing for the community.

So yes, Davis remains a great place to live today, but without building for the future, it will not be a great place in 10 to 20 years.

Davis is losing out on a huge opportunity. The university continues to look at technology transfer.  Right now that energy is going to have trouble finding space in Davis, and will instead be looking to Dixon, Woodland, West Sacramento and the increasingly ambitious Sacramento, with its huge railyards project as well as its ambitious new director of innovations.

Economic development alone will not fix what ails the city of Davis.  But the projects could have helped a lot.  The Hotel Conference Center that is on hold due to litigation could have brought in half a million by itself.  Nishi might bring in $1.4 million annually if it would pass and things break in the right direction.

The numbers on Mace were conservatively at $2.2 million, but that is before the city tweaked the fiscals to maximize potential.  At the very least, it could have generated $6 million in immediate revenue, with $10 million in one-time fees, while bringing in thousands of new jobs – with the potential to realize their revenue as well.  Davis Innovation Center, with its higher projected density, might have been at $7 or $8 million, also with $10 million in one-time fees.

Those are long term strategies, but for a relatively modest hit, we might have added $15 to $20 million in annual revenue within twenty years.  That might not have fixed everything, but it would have been a good start.

Can we fix things?

MRIC is not done completely.  The council subcommittee of Rochelle Swanson and Robb Davis is going to go back to the drawing board to see if MRIC can be saved.  That might take a housing component.  A lot of people are opposed to MRIC with housing, for reasons I don’t fully understand.

Troubling is that some have publicly suggested that this is simply part of the plan, bait and switch they call it.  I would argue that is not a helpful conversation – we should be trying to figure out if there is a way to save the project.  At this point it really should not matter whether housing was a bait and switch from the start because, unless something changes, there is no project.  And if there is no project, then we have to find money elsewhere.

If the project cannot be saved, we will be looking at a series of new taxes – we may be anyway.  That will put the city on a collision course with the school district, which is looking to renew its more than $500 a year parcel taxes this November.

Those who question the urgency of that ought to read carefully Bob Poppenga’s analysis from Friday.  The district relies on the $9.4 million it gets from Measure C and Measure E – without which, the district would face immediate 15 percent cuts in programs.

The future of Davis is at stake and the decisions we make in the coming months will greatly shape it.  I worry that the city my children inherit will not the city we have all come to love.

—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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83 Comments

  1. Frankly

    Every other community in the world would be bending over backwards to attract and welcome innovations parks like those that have been proposed.  But not Davis.

    I just find the demographics fascinating.  Davis as it is has attracted a certain personality profile to live here.  And that profile is much more change-averse than is the average person.  In fact, the change aversion of the average Davis voter is so strong that it overwhelms almost every other consideration.

    This is a collective psychological dysfunction that threatens the long-term viability of the community.

    The only hope is to get the youth vote activated.  However, youth today is another dysfunctional demographic… one also more prone to demanding short-term, feel-good obstruction rather than accepting delayed gratification advocating building for the future.

    I think Davis will just continue its spiral downward.  A sinking ship of fools.

      1. Mark West

        “They just have different values and political views than you do.”

        I really don’t see that as the issue as there are too many examples of people with vastly different views collaborating to create something that benefits all. What I see as the ‘fault’ in our discourse is that we spend too much time and effort focused on one aspect of a project, rather than looking at the overall impacts of the whole.

        I won’t support MRIC if it includes housing;

        I will only support MRIC if it includes housing;

        I will support Trackside if they keep it to four stories.

        I won’t vote for Nishi because the housing is not affordable.

        I don’t support Sterling because students shouldn’t have cars (that will clog up the streets making it hard for me to drive).

        I oppose new apartments because student housing is the University’s responsibility.

        These statements, focusing on the presence or absence of a single aspect are all examples of opposition.  Absolute opposition.   Whether you state “I will support it if…” or “I won’t support it if…” you are declaring your opposition.  Worse, you are setting up a situation where there cannot be a collaborative solution because you have precluded agreeing to any compromise that does not include your demand.  What these statements really are is a passive aggressive way of proclaiming “my way or the highway.” That is really what our discourse has devolved to – people in different camps all screaming ‘my way or the highway’ without regards to the impacts on the community. There is no issue with someone stating a preference in the form of ‘I like’ or ‘don’t like’ comments about some aspect of a project, but our discourse and decisions should come down to how well the overall project helps us solve the City’s problems, not on whether or not the buildings are painted pink.

        We have some very serious problems in our community.  We can find solutions to those problems if we are willing to compromise and accept that the solutions will not satisfy everyone’s preconditions. To face our fiscal problems we will need a combination of cost containment, business development, and tax increases. If we try to leave out one aspect (because we don’t like it) we will fail.  We also have a severe housing shortage in town, particularly a shortage of apartments and affordable townhouses and condominiums. We cannot address that problem unless we agree to build more housing. If your position is to oppose all new development, you have precluded finding a solution to either problem. In the end, if you are unable to contemplate a solution that violates your preconditions you are nothing but an obstructionist.  Solutions require compromise, sometimes very difficult compromise, and if you are unable to contemplate that eventuality, you are the problem and not a party to the solution.

        So Don, I don’t see this as an issue of different values and political views, but one of a town made up of people who are unwilling to contemplate compromise. We have evolved into a town of obstructionists too intent on our own personal agendas and unable to bring forth the compassion required to address the real needs of the community. The City, the community and our quality of life are the victims of this collective dysfunction.

    1. Anon

      Frankly, I have to disagree with you here.  I believe much of the change averseness has to do with past political history.  At one time the city wasted huge amounts of money on projects like the current Bicycle Museum/formerly the Teen Center and Skateboard Park, probably involving sweetheart deals.  Then overbuilding SFR housing at Mace Ranch occurred right next to a toxic Superfund site (and the attempt to push through Covell Village), putting more fiscal strain on the city – which resulted in Measure R.   Not enough in funding was ever set aside by City Councils in the past for basic repair/maintenance of infrastructure, while ridiculous raises were given to some city employees.  As a result of these past irresponsible political actions, the seeds of distrust have been sown for many (including me).  The current and immediate past City Council has had to deal with the aftermath of all this, which has been a massive undertaking.  So far I think they have done a credible job, by moving forward with both the sewer plant upgrade and the surface water project, as well as pushing for well planned innovation parks.  But it is going to take time and patience to overcome the distrust many have in the political process.

      At the same time, we have a very few citizens who will stop at nothing to stop growth of any kind, including lawsuits, spreading misinformation, disrupting public meetings.  I very much doubt they represent the majority, but unfortunately they do a disproportionate amount of damage.  IMO the city needs to take a stronger stance against such nonsense, e.g. asking for attorneys fees for the filing of frivolous lawsuits.  I think a lot of citizens who were in favor of slow growth had started to embrace the idea of well planned innovation parks because of the city’s fiscal problems.  But between the city’s missteps and the screeching from those who oppose any growth, we have a long way to dig ourselves out.  But I emphatically do not chalk up the problems to any one thing, but a myriad of problems.  Another one that comes to mind is the city process a developer has to go through to get a project approved, and I am NOT talking about Measure R.

      In other words, I believe the problems in bringing the innovation parks to fruition is multi-faceted.

    2. KJW

      I just find the demographics fascinating.  Davis as it is has attracted a certain personality profile to live here.  And that profile is much more change-averse than is the average person.

      I don’t think it’s something in the water or a huge mystery of culture.

      There was a recent comment here that the 25-54 demographic went from ~38% in 2000 to ~33% in 2010, and is likely <30% now, especially given how much housing prices have increased since 2010 given the economic recovery and the increased student population since then.

      Older people, as an overall population rather than as individuals, tend to become much more change-averse.  Added to that: people in the 55-65 demographic were born in 1951-1961, and many of the people in that demographic have likely been longtime Davis residents, dating back to the 1980s or 1990s.  If you’ve lived in town that long, you’ve already seen a great deal of growth and change.  And in a small, geographically isolated college town with a small, concentrated downtown, there’s frequent interaction between older people and younger people, much of it likely not positive.

      I personally don’t see aversion to change in Davis as a good thing, but I can understand where it might come from.

      In fact, the change aversion of the average Davis voter is so strong that it overwhelms almost every other consideration.

      I’d be shocked if >20% of Davis voters were even aware of how bad the budget numbers cited above are.  Fewer than 10% of voters being aware wouldn’t surprise me that much.  The information doesn’t seem to be widely spread, and it doesn’t help to have public comments from some city officials about how it’s smooth sailing ahead again after a few rough years that are now behind us.

      I think Davis will just continue its spiral downward.  A sinking ship of fools.

      I’m (morbidly) curious to see what will happen over the next few years, especially if Nishi is voted down and no other innovation parks or other significant new revenue sources are built.  Specifically curious whether enough people are willing to vote in a large parcel tax, even though they’re quite willing to vote against measures that would decrease the need for such a tax — although, as I implied above, I don’t think that causal link is clear for many.

      (FWIW I myself don’t see it as gospel, but I’ve read enough evidence to be at least moderately to strongly convinced.)

      1. Don Shor

        I’d be shocked if >20% of Davis voters were even aware of how bad the budget numbers cited above are. Fewer than 10% of voters being aware wouldn’t surprise me that much.

        Go to the Enterprise web site and type “budget” into the custom search box.

        1. KJW

          I’m sorry, could you clarify your meaning?  I did that exact search just now, but I can’t tell whether you’re confirming my impression or countering it, because while there are some recent articles in the Enterprise about the city’s financial situation, I’m not seeing any that go into specifics.

          To be clear, in this case in particular I’d be thrilled to be corrected (that there’s more awareness than what I can pick up from reading, observation, conversations).

          1. Don Shor

            I find the first articles about the city budget on about the third page of search results. Almost no detailed analysis. And of course, the mayor’s rather sunny budget comments from his annual ‘state of the city’ speech.
            I think the mayor of Davis needs to give a public presentation about the budget each year, separate from the “state of the city” speech.

        2. Jim Frame

          Go to the Enterprise web site and type “budget” into the custom search box.

          I don’t think Enterprise coverage of budget matters has much effect on community awareness.  Enterprise penetration is already pretty small, and the percentage of subscribers who actually read and understand the articles pertaining to city finances is probably pretty low.  When you have a good job and a good housing situation, the temptation to ignore the minutia of city finances in favor of family and leisure activities is too powerful for a lot of people to resist.

          The only time we get a hard reality check is when a tax measure hits the ballot.  That’s when people have to decide — on the basis of deep study, intuition, or something in between — whether or not they’re willing to write the check.  And I think that the voters are increasingly resistant to writing those checks.

          The electorate becomes aware when something unreasonably interferes with their sense of everything’s-okay-ness.  When some city service that’s important to them degrades or disappears and causes the voter to think, “That’s outrageous!”, that’s when they start to get serious about understanding the city’s financial condition.  Articles in the Enterprise (and the Vanguard) can be valuable resources, but they don’t have the punch of a “who moved my cheese!” experience.

        3. KJW

          Don: Thanks, I appreciate the follow-up.  Admittedly I skim but rarely closely read the Enterprise, if only because closely reading it rarely seems to be rewarding.

    3. Tia Will

      Frankly

      You seem to be defining as “dysfunctional” any group that does not share your vision that change must equate to expansion or growth using current models as the basis for the future.

      There are many different forms of change.

      It is true that I am more averse than you to rapid local population  increase and large scale industrial development in a small, university based city.

      But there are many areas in which you are the more change averse :

      You are very averse to changing from an oil / gas and private automobile based economy and transportation system. I would accept rapid and dramatic change to a transportation and economic model based on walking, biking and public transportation.

      You are very averse to changing from an employer and private insurance based medical system to a single party payer with universal coverage system which I would happily embrace.

      You are averse to changing from a dominant English speaking, white majority cultural ( melting pot) model society to one which embraces diversity and a multilingual/ multicultural. You have said many times that, paraphrased, it is up to them to adapt to our society rather than taking the more forwarded thinking, we will all need to adapt to changing circumstances point of view.

      You are averse to event considering the strengths of other economic and social systems which provide more for the health and wellness of their citizens without significantly compromising anyone’s lifestyle.

      None of these area utopian or unrealistic as all have been successfully demonstrated to be possible by other countries.

      1. Frankly

        You are very averse to changing from an oil / gas and private automobile based economy and transportation system.

        I am not.  I’m just a realists about it and not prone to chasing rainbows.  When alternative energy becomes viable the conversion will come naturally.

        You are very averse to changing from an employer and private insurance based medical system to a single party payer with universal coverage system which I would happily embrace.

        Only because in this country of 32o million with dysfunctional government that cannot deliver anything except national defense efficiently and with high service quality… combined with an open porous border connected to a sizeable population of the globe’s third-world population… it is completely foolish to think it a good idea.

        You are averse to changing from a dominant English speaking, white majority cultural ( melting pot) model society to one which embraces diversity and a multilingual/ multicultural.

        I don’t care what the national origin is of anyone that moves here, but I expect them to assimilate into American culture.  English is the primary language of this country.  It is also the language of business.   I don’t reject changing from this because of change aversion or for my own selfish benefit… I reject it because it is stupid and harmful to the country and the majority of the people that live here.  Multiculturalism a failed liberal experiment.  Just ask the residents of Brussels.

        You are averse to event considering the strengths of other economic and social systems which provide more for the health and wellness of their citizens without significantly compromising anyone’s lifestyle.

        Liberals cannot see the forest because they will always focus on that one victim/fairness tree.  I am open to any model that will improve the overall human condition.  The US system is imperfect… it is just the best there is and has ever been.  It has and continues to be the model that improves the human condition of millions if not billions.  What if the US did not exist?   Of course you will say that Scandinavia is better… yet you don’t live there… you live here.

        1. Tia Will

          Frankly

          When alternative energy becomes viable the conversion will come naturally.”

          Alternative energy will not “magically” become available. It will grow as  people recognize its less destructive nature and decide to invest in and utilize it themselves. Not being proactive in this regard is being change averse.

          that cannot deliver anything except national defense efficiently and with high service quality”

          This is a matter of choice, not capability. If we raised our entire population to believe that the best “national defense” is the promotion of the well being of all people rather than the subjugation of many in the name of our national interests we would probably do much better with delivery of other services.

           I expect them to assimilate into American culture.  English is the primary language of this country.”

          That was kind of my point. You and I cannot even agree on what is “American culture” and yet you want them to assimilate into your preferred version, completely ignoring that I have a different perspective on what that assimilation should entail. As for language, being multilingual has many proven advantages. My view is that all citizens of California should be bilingual English/Spanish and that all children should be encouraged to have proficiency in at least three languages.

           I don’t reject changing from this because of change aversion or for my own selfish benefit… I reject it because it is stupid and harmful to the country and the majority of the people that live here”

          Thanks for the laugh. Your claim that this is not for your “selfish benefit” but because it is “stupid” made me laugh out loud. It is certainly not stupid to see the benefits of being multilingual. It certainly is not proving harmful to any of the people we met while in France this summer almost all of whom were fluent in French and conversational if not fluent in English. It was not harming the job prospects of many of the young employed people we met who were fluent or conversational in French, English, Spanish,and Italian some with a smattering of Portuguese, German and or Turkish tossed in as well. What I think is “stupid” is the idea that knowledge of more than one language as an educational requirement would ever be harmful. It is certainly not harmful for the many young people who are building careers as medical interpreters or the health care professionals and aides who are more desirable because they are multilingual.

            I am open to any model that will improve the overall human condition”

          Your comments and positions do not support this statement. Virtually every industrialized country has better overall health care statistics at lower cost than the United States, and yet you steadfastly refuse to consider an integrated, non competitive model of health care provision for all as just one example.

           Of course you will say that Scandinavia is better”

          I will say that we do somethings better, and they do some things better. And why should the location of my abode have anything at all to do with an objective assessment of which things are great, and which things we could improve ?

           

        2. Frankly

          Alternative energy will not “magically” become available. It will grow as  people recognize its less destructive nature and decide to invest in and utilize it themselves. Not being proactive in this regard is being change averse.

          No, it will grow as technology advances so it is available, plentiful and reasonably-priced.  Government trying to control outcomes for something this big and important in our economy as where we get our energy from is a fools pursuit.  It will cause a much bigger mess than it will help.  See Solyndra.

          In terms of “magic” just look down at the device you used to typed the previous.  Despite what Obama says, government did not build that.  But I can understand how in your limited understanding of how the creative force of free markets it appears to be magic.

          Again, as a bleeding heart liberal you will always lack the ability to count the part of the glass that is 95% full, and base your entire being on that 5% that is unfair in your eyes.  Liberal progressives can never admit progress because criticism is their stock and trade.

      2. joshjhthomas

        In response to Frankly’s point that government didn’t build the device used to type these comments, it sort of did. The internet was created by ARPANET, a program funded by DARPA, a defense department agency that operated the philosophy that ideas could take 10-20 years to be realized. Modern semiconductors and much of the design of personal computers came from DARPA funded researchers. If you are typing this with a smartphone, know that virtually everything that makes a smart phone smart (LCD, ips touchscreens, lithium ion batteries, GPS, the internet) was made possible with government investments. In most cases,, new technologies require government investments, at least in their early stages, because while venture capital funds tend to have 3-5 years horizons for profitability, it usually takes 15-20 years for a new technology to become commercially viable. That is why between 1971 and 2006, 77 of the 88 most important innovations (as rated by R&D Magazine) were dependent on government support.

        1. tribeUSA

          jjt–excellent post! The high-tech  business community likes to trumpet around as if they are responsible for many of the miracles of modern technology, whereas mostly what has happened is that they have found ways to make a profit by refining a pre-existing invention or technology (typically from government research labs or academia–also government) and finding a way to make it more cheaply and find a market niche to fill–these are valuable activities; but more in the realm of the mundane than in the realm of miracle-workers (though there are some exceptions)–its valuable work, but they are not captains of the universe as you might be led to believe from the marketing hype, promoted in major media reporting as well.

          I’ve worked in research in both government and corporate institutions; and have found that they are comparable in terms of productivity–the corporate research teams tend to work at a faster (often frantic) pace, but the loony-tunes hyper environment did not result in any more productivity, a lot more mistakes and misdirections were taken. The corporate environment is not conducive to long-term basic research (exceptions such as Bell Labs and others); now they are exerting increasing influence on public and private universities through research funding, and it seems to me a smaller proportion of academic research money now goes toward long-term basic research; the risky research ventures that might lead to development of fundamentally new scientific breakthrus and technologies do not get the seed money as much nowadays–in future decades the USA may lose its technological edge because of this.

  2. Anon

    Troubling is that some have publicly suggested that this is simply part of the plan, bait and switch they call it.  I would argue that is not a helpful conversation – we should be trying to figure out if there is a way to save the project.  At this point it really should not matter whether housing was a bait and switch from the start because, unless something changes, there is no project.  And if there is no project, then we have to find money elsewhere.

    Well said.  The bottom line is if we do not welcome innovation, it will move just up the road and this city will suffer all the impacts of the innovation but reap none of the benefits.

  3. Barack Palin

    At this point it really should not matter whether housing was a bait and switch from the start because, unless something changes, there is no project.

    Yes it does matter.

      1. Tia Will

        David

        Is the city in your opinion better off with a project at Mace or with it being vacant county farmland?”

        That is an interesting question which can only be answered from the viewpoint of recognizing that each has its pros and cons. I honestly do not know my opinion since I have not yet seen what I consider to be a good project for Mace let alone an optimal one.

      2. Ron

        David Greewald:  “Is the city in your opinion better off with a project at Mace or with it being vacant county farmland?”

        Quick note:  If there’s only crops, but no structures, is farmland “vacant”?

      3. Jim Frame

        Is the city in your opinion better off with a project at Mace or with it being vacant county farmland?

        In your opinion, would the city be better off with a good project at Mace or with a bad one?  Committing to a mediocre project now forecloses the opportunity to build a better one in later years.

    1. Anon

      So you would rather have no project?  How do you propose the city pay for repair/maintenance to basic infrastructure?  Higher taxes?  More cuts?

      And I personally do not agree with the premise that suggesting MRIC housing is a bait and switch.

    2. Barack Palin

      So we should cave into any developer that first proposes to build one thing then tries to change the project to something different then when the city says stick to the original plan they decide to pull out?

      Sorry, but it all matters to the voters.

        1. Miwok

          In other words you’d rather have the vacant field than consider a way to make the project viable.

          In other words, David, some people don’t like to be lied to. Especially as a strategy for success.

        2. Barack Palin

          As far as I can tell, no one has been lied to.

          If we haven’t been lied to then the powers that be have sure mucked up the message.

          David, correct me if I’m wrong, but you now seem to be onboard for onsite MRIC housing.  Is this a correct statement?

          1. David Greenwald

            I’m onboard figuring out how to make this project happen. The justification given by several councilmembers about the political considerations of housing is out the window. Without economic development I believe this town is in deep trouble

        3. Michelle Millet

          In other words, David, some people don’t like to be lied to. Especially as a strategy for success.

          This is what happens when you try and trick people, they stop trusting you.

          I know everyone thinks housing will kill this project, but if the city had just sucked it up two years ago and requested RFP’s that actually had a fiscal chance of happening instead of trying to delay dealing with the housing issue, we wouldn’t have wasted two years of everybody’s time and money.

          The slow growers have power because our political leaders give it to them. If they would just stop being so scared of this group (and acting based on that fear) we might actually get something done.

          I’ll give credit to Robb Davis on this issue. He has the courage not to duck and cover every time this group says “boo”.

          1. David Greenwald

            There were no tricks, there were political calculations involved in the decision on housing – people changed their minds. I’m not convinced that this is just about the fiscal projections and I’m not convinced that housing will save the project either. But if it gets the discussion back on the table, then let’s have it.

          1. David Greenwald

            You didn’t answer my before, why should I answer yours? I gave you the answer that I have. I want to see a proposal put on the table from the developers – I’m not convinced that housing is sufficient.

      1. Anon

        To Barack Palin: You didn’t answer my question, and it is a crucial question. How do you propose the city pay for repair/maintenance to basic infrastructure? Higher taxes? More cuts?

        And by the way, your distrust in the process just proves the point above I made to Frankly, that the problem is multi-faceted and has a lot to do with previous political missteps that have sown the seeds of distrust.

      2. Jim Frame

        The slow growers have power because our political leaders give it to them. If they would just stop being so scared of this group (and acting based on that fear) we might actually get something done.

        This notion hasn’t fared very well in real world testing.  Covell Village was backed by a majority (it not a unanimity, I don’t recall) of the CC plus a virtual Who’s Who of local organizations and community leaders.

         

  4. Michelle Millet

    This project died because it was not finically viable without a housing component. The city council made this decision. How is this possibly the fault of the current city manager or the chief finical officer? If anything I blame Pinkerton and White for not allowing housing to be included in the original RFP. Instead we have wasted a lot of time and energy on a project that never had finical legs.

    1. Barack Palin

      The developer originally submitted plans to build the project without housing.  Do all innovation parks include housing?  How are they viable and MRIC wouldn’t be?  The public has many concerns and questions?  We’re very skeptical on how this all came down.

        1. Tia Will

          Michelle

          That was the only choice they were given. My guess, and this is only a guess, is that the developer wanted to include housing from the beginning, but were told not to by city leaders who sent out the ordinal RFP.”

          I can confirm this ( at least as an option) from my original conversations with Mr. Ramos and Mr. Patel at the first of the MRIC public forums. I specifically asked about housing for the workers and both confirmed that they had been specifically directed by the city staff that no proposal with housing would be considered even though that was a more forward thinking model. So while it is true that not all innovation parks have housing, it is also true that the proponents of both MRIC and DIC expressed interest themselves in projects with housing, but had been instructed otherwise by staff.

        2. Barack Palin

          They submitted plans for a project with no housing and that plan has been green lighted by the city council.  IMO if they couldn’t do an innovation park with no housing they shouldn’t have submitted it for consideration.

      1. Matt Williams

        BP, the way that David Zehnder, the EPS consultant, explained it to the FBC on Monday was that the project pencils out very nicely at $20 per unit, but there is no comparable project in Davis to validate whether the market supports a $20 per unit rental rate.  Therefore, EPS went to comparable projects in the closest geographic locations (West Sac and Woodland) where the rental rate “comparables” were only $9 per unit.  David acknowledged that those projects had radically different missions than MRIC, and didn’t have the access to UCD that MRIC had, so $9 per unit was probably quite low . . . but there was no available alternative in the region that matched the innovation profile of what MRIC was trying to offer.

        1. Matt Williams

          davisite4, the written EPS report material presented to the FBC is 150 pages in length (6 from staff and 144 from EPS), and it was received by the FBC members on Friday 72 hours prior to the Monday meeting.  During the deliberation on the agenda item, the FBC members, individually and collectively had dozens of questions for David Zehnder, which he did his best to answer.  He was not able to address all the FBC’s questions, and the FBC collectively agreed to use the 10 days following the meeting to present written questions that would be answered by EPS in writing prior to the May FBC meeting. My comment above was/is based on the explicit verbal commentary of David Zehnder, not the written report.

          Because the MRIC application was placed on hold, the process of the submission of written questions for EPS was also put on hold.

      2. Michelle Millet

        BP: I think other innovation centers have tenants lined up, with leases signed before construction begins, which enables them to get a construction loan. That is not the case for the MRIC. Housing ensures that some revenue can be generated from the site, making it less of a finical risk for a bank to take.

        1. hpierce

          Your point is correct, except if the developer doesn’t NEED a loan… or, can ‘float’ themselves initially, then get a ‘re-finance’ loan later…

    2. Matt Williams

      Michelle, the discussions by the Finance and Budget Commission with the EPS consultants acknowledged the fiscal challenges of the project, and put forward ideas that could have made the project more financially viable.  However, no one from the MRIC team was present at that FBC meeting, so the ideas shared by the FBC fell on absent (deaf?) ears.

      1. davisite4

        Matt Williams wrote:

        Michelle, the discussions by the Finance and Budget Commission with the EPS consultants acknowledged the fiscal challenges of the project, and put forward ideas that could have made the project more financially viable.  However, no one from the MRIC team was present at that FBC meeting, so the ideas shared by the FBC fell on absent (deaf?) ears.

        Ok, that is really weird.  That makes it sound like the EPS report was not the real reason behind the withdrawal of the proposal.  The press release put out by the developer makes it sound like the discussion of the EPS report at the FBC meeting was part of the decision: “A study prepared by Economic & Planning Systems, Inc. and reviewed at the Monday, April 11, Finance & Budget Commission meeting concludes that the project might not be feasible given that only 128 acres or 60 percent of the site are considered developable and that infrastructure costs are high.”

  5. Misanthrop

    http://www.nytimes.com/2016/04/17/business/economy/san-francisco-housing-tech-boom-sf-barf.html?ref=business&_r=1

    We are not alone. This article says what I have been saying for years.

    “But BARF members are so single-minded about housing that they can be hard to label politically. They view San Francisco progressives as, in fact, fundamentally conservative. That is because, to the group members at least, progressive positions on housing seem less about building the city and more about keeping people like them out.”

    Sound familiar?

  6. Tia Will

    Misanthrop

    That is because, to the group members at least, progressive positions on housing seem less about building the city and more about keeping people like them out.”

    Sounds familiar from one point of view. From another perspective, the futility of thinking that one will always be able to grow oneself out of problems is another familiar theme.

  7. Tia Will

    Again, as a bleeding heart liberal you will always lack the ability to count the part of the glass that is 95% full, and base your entire being on that 5% that is unfair in your eyes.”

    Just love it when  your commentary devolves into telling me what I think.

  8. Ron

    In a sense, it doesn’t matter (anymore) what happened with MRIC.  Some will blame the developer, some will blame the city, some will blame (unexpectedly?) high infrastructure costs, and some will blame slow-growth individuals.  (Especially the last category, in my opinion.)

    If/when it comes back, the proposal will include housing.  The developer basically said this, already.

    Unless the developer wants to continue farming the land, sell it, or use it for mitigation, I strongly suspect that the proposal will resurface in the future.  (And this time, they’ll be able to argue that a development without housing isn’t feasible, since they will have “proved it” by backing out once, already.)  In the meantime, the developer will likely focus on other properties that they already own, and continue farming the proposed site of the MRIC (for now).

        1. Ron

          David Greenwald:  The reality is with housing or without housing, it has to pass a vote, and who is going to invest tens of millions into that uncertainty?

          I guess the developers/city didn’t know that, previously.  (Don’t tell the Nishi developers about this.  It will spoil the surprise!)

          In all seriousness, I think MRIC had a good chance as a commercial-only development. If/when it comes back with housing, they’ll likely have more resistance. Perhaps they will sell the property to another developer, to pursue commercial.

        2. KJW

          I guess the developers/city didn’t know that, previously.  (Don’t tell the Nishi developers about this.  It will spoil the surprise!)

          Attitudes towards reception of innovation parks, both from citizens and from some city officials, are clearly worse now than they were when MRIC was first being planned.  The city manager changeover, the CIO being let go, the reaction to DIC, etc.  Those changed attitudes signify more risk for the developers.

          I can’t believe the DIC group would have invested time, money, and effort into studying the possibility of building in Davis if they’d known beforehand that they’d eventually decide to say, “Screw it, we’re just going to build this in south Woodland up the road.”  But that’s what studies and analysis are for.

          Two years passing gave the developers and the city more information they did not have two years earlier.  In light of that new information, some or all of the parties involved might have surmised that considerable anti-innovation-park voter sentiment needed to be counteracted somehow, perhaps with a more realistic look at the city’s actual financial situation, which might come with a different city council composition after the June elections.

          Some of us can only hope.

          In other news, I wouldn’t mind certain surprises about two years in the future being spoiled.  Got any hot stock tips?

      1. Jim Frame

        Maybe the owner of the land should sell it to a developer who will agree and is able to build an innovation park without housing?

        I doubt it.  RAMCO et al are smart people, and they take a long view of their investments.  They know that the MRIC parcels are well-situated for eventual development, and they almost certainly have the wherewithal to continue holding the land indefinitely.  Their cost basis is likely pretty low, and the farm revenue probably pays the tax bill and then some.  They took a shot at developing now, but the stars didn’t line up right, and they’ll just have to pull back and wait.

        1. Barack Palin

           They took a shot at developing now, but the stars didn’t line up right, and they’ll just have to pull back and wait.

          They possibly could’ve developed it now as an innovation park with no housing but I think what you’re insinuating is that wasn’t in the plans all along.  Am I correct in my assumption of what you might be implying?

        2. Jim Frame

          I think what you’re insinuating is that wasn’t in the plans all along.

          I’m not implying that.  What I’ve heard, aggregated from multiple sources, is that the market for innovation space in Davis isn’t as red-hot as we were led to believe, and that low cost trumps proximity to UCD.  Developing innovation space in nearby jurisdictions costs less, so the demand for innovation space in Davis is soft by comparison.  MRIC could have been designed as a high-density innovation park, but market analysis indicated that the uptake rate would be uneconomically slow.  The housing addition would have allowed enough near-term cash flow to make the low sales rate of the commercial space  — in a low-density configuration — financially tenable.

          The original low-density design offered only modest returns to the city, nowhere near the rate once suggested by Rob White.  When they added housing to the mix, it became a “why bother” project in my view.

        3. Ron

          Jim Frame:  “What I’ve heard, aggregated from multiple sources, is that the market for innovation space in Davis isn’t as red-hot as we were led to believe, and that low cost trumps proximity to UCD.”

          As always, a thoughtful analysis.  Commercial development is a different type of market than housing development is.

          I still wonder about the viability of commercial development at Nishi, as well.  Is the “mixed use” design actually driven by market demands?  Or, is it really a “forced” design (driven by non-market forces, such as the desire to avoid housing affordability requirements, and/or the city’s “vision” of what should be there)?  What businesses are actually clamoring to be there?  Is access and parking going to be sufficient to support business? Will the commercial areas mostly sit empty, while the residential units fill up?  If so, what would that mean regarding the promised financial benefits for the city?

          I’m not just mentioning this because I’m a “slow-growth” advocate.  It’s intended as honest concerns/questions.

        4. Matt Williams

          Ron said . . . “I still wonder about the viability of commercial development at Nishi, as well.  Is the “mixed use” design actually driven by market demands?  Or, is it really a “forced” design (driven by non-market forces, such as the desire to avoid housing affordability requirements, and/or the city’s “vision” of what should be there)?”

          It has been reported a number of times by a number of different sources that it was not the Nishi developers who wanted the mixed use approach at Nishi.  Those reports said that it was the City and UCD who wanted the mixed use approach.

          My personal opinion is that a desire to avoid housing affordability requirements had absolutely nothing to do with that design choice.

          The explanation of what companies would want to locate within walking distance of the UCD campus were early stage innovation incubation businesses that have escaped the womb of “Mother UCD” as well as the services companies (e.g. legal and financial services) that support those actual early stage innovation incubation businesses or the incipient versions still existing with the womb of “Mother UCD.”

           

        5. Ron

          Matt:  “It has been reported a number of times by a number of different sources that it was not the Nishi developers who wanted the mixed use approach at Nishi.  Those reports said that it was the City and UCD who wanted the mixed use approach.”

          I appreciate your response.

          It seems that neither the city, nor UCD are in a position to determine what the market actually is for Nishi’s “mixed use” commercial space.  Given what’s just happened with MRIC (along with the unique challenges of the Nishi site), I’m wondering how much demand there will be for Nishi’s “mixed use” space.  If much of the commercial component sits vacant for an extended period, it would have a negative impact regarding the financial benefit expected from the development.

          The city’s plan to address unfunded liabilities by encouraging the development of “innovation centers” is apparently not going to be sufficient anytime soon.  Just an observation.

          1. Don Shor

            It has always been intended as part of a long-term strategy of cost-cutting, sort-term tax increases, and increased revenues from economic development.

        6. Matt Williams

          Ron said . . .  “It seems that neither the city, nor UCD are in a position to determine what the market actually is for Nishi’s “mixed use” commercial space. 

          Given what’s just happened with MRIC (along with the unique challenges of the Nishi site), I’m wondering how much demand there will be for Nishi’s “mixed use” space. 

          If much of the commercial component sits vacant for an extended period, it would have a negative impact regarding the financial benefit expected from the development.”

          Ron, UCD has made a very significant commitment to and investment in its Office of Research, with responsibility for technology transfer spearheaded by the Innovation Access department within the Technology Management and Corporate Relations (TMCR) division.  The Venture Catalyst office within Innovation Access (see http://research.ucdavis.edu/offices/vc/ ) has a very good handle on how many start up companies have moved into the private sector from UCD in recent years, and what the pipeline is for future startups.

          For 2014 and 2013 UCD reported 21 companies launched over the last two years and in the following Business Journal article Check out where Stanford, Berkeley rank among top schools for startups, female founders  reported that in the 5-year period from 2009-2014 UCD produced 99 startup companies, which ranked #46 in the World for that period.

          What all that tells me is that the City may not be in a position to determine what the market for Nishi is, but UCD is definitely in a position to make that determination.

          In addition to the velocity of outward bound startups, UCD has a very active relationship with a significant number of companies that fund research at UCD each year (see http://research.ucdavis.edu/about-us/reports-publications/annual-research-funding/).  It would not be a surprise to see some of the companies that have provided the $249 million of research dollars in 2014-2015 locate satellite offices in Nishi in order to be close to (and collaborate with) the research they are funding.

          The above is all the more interesting in this time when Chancellor Katehi is being excoriated for being research oriented and too close to corporate sponsors of research.

          BTW, I concur with David’s comment to you yesterday. You ask excellent questions, make interesting (even challenging) observations, and are a great addition to the Vanguard community.

        7. Matt Williams

          Ron said . . . “The city’s plan to address unfunded liabilities by encouraging the development of “innovation centers” is apparently not going to be sufficient anytime soon.  Just an observation.”

          Don Shor replied . . . “It has always been intended as part of a long-term strategy of cost-cutting, sort-term tax increases, and increased revenues from economic development.”

          Don is correct Ron, the MRIC announcement shone a bright light on a reality that has always been the case in the short run. Now that “in the short run” is considerably extended.

          With any potential revenue from MRIC gone, and a minimum of three years before any revenues flow to the General Fund from Nishi, the Council for the next four years is going to be consumed with cost cutting and the only possible source of additional revenues being justification to the voters of the need for additional taxes.

          The immediate future facing the Council requires thoughtful and diligent fiscal and technical expertise.  We need a Council that avoids fiscal giveaways like the Cannery CFD ($5.9 million given away by the City to date with $0 received by the City in return).  It is going to be a very busy, very demanding four years with a lot of very tough decisions.

  9. Barack Palin

    David, have you done any sleuthing to find out why the structure costs are four times higher than industry standards for similar projects?  Have you found it curious that they’re using as a reason the project might not be feasible is that only 128 acres or 60 percent of the site are considered developable when I believe that had to of been known all along?

    1. Matt Williams

      BP, it is not the “structure costs” that are higher than the industry standards for similar projects, it is the “infrastructure costs” that are higher.  There is not one simple answer to why that is the case.

      One of the contributing factors is the requirement for an Agricultural Buffer running the full length of the eastern boundary of the site and the northern boundary of the site.

      A second contributing factor is the choice that the development team made regarding how utility conduit will be constructed.

      A third contributing factor is the cost of the mitigation land required by local ordinance.

      A fourth contributing factor is the cost of a Measure R ballot measure.

      Those are just a few that come to mind.

  10. failsafe

    And the current city manager says what about this?     With the looming disaster ahead, seems like a good time to get a quote.    I’d rather read that than sift through all of these comments.

     

  11. Biddlin

    “… since I have not yet seen what I consider to be a good project.”

    And I will walk down F street naked singing Yankee Doodle if ever you do see one. Let’s be honest here and I don’t think it has to do with your equity, you are unwilling to accept any substantial change to Davis. That’s OK. It apparently is consonant with most of your neighbors.  But the result of your intractability is the same, whatever your motivation.  No housing for blue-collar and service class workers who must drive or find public transportation to come and serve you, and no incentive for growing tech companies to build there.

  12. Tia Will

    you are unwilling to accept any substantial change to Davis.”

    Except for the inconvenient fact that there has been substantial change to Davis over the past 25 years and you did not see me out in opposition to any of it except the Cannery. More recently, I was not in opposition to  DIC nor Nishi on which I am undecided. I am not opposed to a Trackside project that honors zoning and design guidelines. MRIC I did not favor and my quoted comment was only about that site. So what is happening here is that any time I post anything about growth or development, the claim is made that I am unwilling to accept any substantial change. Again, I believe that this is because it is far easier to categorize and label than it is to actual consider what is being said.

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