By Dan Carson
Dan Ramos’ partnership is putting the Mace Ranch Innovation Center (MRIC) temporarily on hold to evaluate its options for making the project pencil out. On the heels of the Davis Innovation Center near the hospital being put on hold for the foreseeable future, it’s a fair question for The Vanguard to ask me and others what direction economic efforts by the City of Davis should take at this point.
My suggested response is that we don’t give up but instead redouble our efforts to bring jobs and fiscal stability to the City of Davis. Given the significant long-term fiscal challenges our city faces, in terms of both infrastructure and personnel cost pressures, we risk a serious deterioration of city facilities and services in the long run if we don’t do so.
Step one, in my view, is passing Measure A and the Nishi Gateway project on June 7.
The Finance and Budget Commission, of which I am vice chair, was tasked by the City Council with reviewing the economic and fiscal analyses of the projects that were prepared by city staff and consultants. What we found was that the project was consistent with the section of the official city goals for innovation centers related to economic and fiscal impacts.
Specifically, we found to be reasonable and credible estimates that the project will generate $386 million in economic output and 1,800 jobs in the long term at full build-out. We concluded that the project would have spillover economic benefits for nearby downtown, spark the transition of local incubators into full-fledged research and development firms, and create new opportunities for business-to-business enterprises.
We further found that the project could generate up to $1.4 million in net fiscal benefits to the city in the long run, plus millions of dollars in one-time fiscal benefits to the city. It should be a surprise to no one that infill developments like Nishi Gateway make fiscal sense.
In my personal view, a “yes” vote by the public on Measure A also sends a strong signal that we as a city are serious about economic development.
Step two should be to conduct an MRIC rescue mission.
The project applicants were understandably concerned about the findings of a new land economics analysis for the project that found it wouldn’t generate the financial return that is customary for such a large-scale project. But even before the announcement that the project was being put on hold, our commission already digging into potential solutions, such as dialing back such of the more exotic and expensive infrastructure proposals and putting mitigation more in sync with the proposed phasing of the development.
City leaders have said they plan to sit down with MRIC applicants to explore what should happen next, which is exactly what should happen. Earlier estimates indicated that the project could generate $2.48 billion in economic output for the City of Davis and more than 9,600 jobs. Even after adjustments to the project to bring the fiscal return numbers more into line, I have estimated that MRIC still has the potential for a net fiscal benefit to the city of $5 million annually plus one-time fiscal benefits in excess of $10 million.
Step three is to continue longstanding efforts to create a more vibrant downtown. This is already under way and recognized in a formal set of city goals adopted by the City Council, and could take many forms.
City building rules should be reexamined to see how use of downtown property could be intensified without overwhelming its neighbors. If Nishi Gateway and MRIC both were to eventually proceed, experts estimated that they would generate a secondary demand for an additional 1.5 million square feet of commercial space, some of which could be accommodated downtown.
The recent sale of several central downtown blocks is leading to important discussions about how to save cherished retail establishments while opening new business opportunities. The city must work with other local agencies to sort out what will happen with some former Redevelopment Agency assets.
Resolving downtown parking issues and promoting bicycle- and pedestrian-friendly streets will be important to making all of these strategies effective. If proposals to remove the railroad spur that crosses the city ever bear fruit, there are obvious commercial opportunities in an abandoned right of way that will have to be balanced with the needs for parks, bike paths, and housing.
Fourth, we should examine what opportunities exist to leverage surplus city assets for economic development.
City staff plan to embark on a study of what city buildings and parcels are actually still needed to deliver quality services to Davis residents. Some operations might be consolidated or moved. For example, the city plans to study whether the city’s corporation yard should be relocated to a more remote location, potentially creating a prime opportunity for reuse of the current site on Fifth Street.
Whether this particular move makes sense requires some study. But the general idea is to search out direct benefits to the city, and us as taxpayers, from the lease, sale, or creation of concessions of surplus city assets. The bonus is the potential creation or expansion of new local businesses generating sales and property tax revenues that shore up the city’s fiscal stability.
Some of the options outlined above admittedly will take a long time to come to fruition. The good news is that, in most cases, efforts to move ahead with them have already been set in motion by city staff and the City Council.
Dan Carson worked for 17 years in the Legislative Analyst’s Office, a nonpartisan fiscal and policy adviser to the California Legislature, retiring in 2012 as deputy legislative analyst. He now serves as vice chair of the city’s Finance and Budget Commission. This commentary reflects his views only and does not represent the position of the commission on this issue.
Editor’s note: following the decision by Mace Ranch Innovation Center to put its pending project on hold, the Vanguard decided to re-start a community discussion on the future of economic development in Davis. As such, we are reaching out to a very diverse group of people and starting May 1 we are hoping to publish one op-ed a day on this subject. We are pleased to announce that so far we have over 40 commitments and counting. Beginning today, we will publish one article per day for the month of May into June. If you would like to add your voice – please submit your piece on the future of economic development in Davis (800 to 1000 words).
May 1: Robb Davis
May 2: Elaine Roberts Musser