Economic Development Series: We Must Redouble Our Efforts at Economic Development

Innovation-Park-exampleBy Dan Carson

Now what?

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

About The Author

Disclaimer: the views expressed by guest writers are strictly those of the author and may not reflect the views of the Vanguard, its editor, or its editorial board.

Related posts

18 Comments

  1. Tia Will

    Thanks for the article Dan. I think you are making a number of good points. I have a very different view of one of your statements.

    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”

    To me, this speaks not so much to project “viability” as it does to removing aspects of the project that made it desirable in the first place. If one were to read “exotic” as forward thinking and “expensive” as environmentally sound, then one most likely has a far less attractive project. I cannot help but think  of the Cannery with its promises, only to be met with a string of ( in  my opinion) less desirable alternatives. I am not talking about an endless quest for “perfection” as a standard, but I am certainly talking about a project that adds to the overall well being of the city, not just its bottom line.

    1. Dan Carson

      Tina, Let me give you one example of an infrastructure scaleback that  that could reduce costs significantly. One project concept is to create a network of special new underground vaults to hold water, cable and other utility lines so that they can be easily accessed as opposed to the normal burial of underground utilities. An unusual and interesting feature that would generate some interest, true. But city staff cited that as an example of a change that could reduce costs significantly and help the project to pencil out. I suspect many would-be project occupants would care a lot more about having access to high-speed broadband and not care all that much about how the cable lines to provide it are buried.

      And, since the project is to be phased, what’s environmentally unsound about continuing to farm lands that might not be built on for 10 or 15 years, thus generating some revenue for the applicant that could go to offset project costs? Neither of these approaches undermine the quality of the project to the city in any substantial way that I can see.  Surely there are other ideas worth examining too, including how infrastructure is financed.

      The one thing that would harm the city fiscally for sure is to have no project at all, and that will probably be the case unless some changes are made in it.

  2. The Pugilist

    Tia: Adding to the bottom line means we can afford to pay for the things that add to the overall value and well being of the city.  Without money, we will have roads in poor condition, pools that will be closed, parks in need of repair.  All of that takes money.

    1. Tia Will

      Pugilist

      “All of that takes money”

      Thank you for sharing that. I had never considered that we might actually need money for those things.

      Ok, profound, eye rolling sarcasm aside. I have shared on many occasions my philosophy that we need to be willing to pay ourselves for what we want. I do not believe that we have the capacity to “grow our way out of trouble.” Why do I feel this way ?  Well I have lived in Davis for a cumulative 30 years. There has been a lot of growth during that time. There have been many businesses added and many housing developments both large and small and yet the financial problems persist. I believe that the most relevant and most basic cause is that we are always looking for someone else to bail us out.

      Let’s look at it on an individual level. Let’s suppose that you have house maintenance repairs that you know are needed, but that you have been neglecting ….. maybe because you genuinely didn’t have the money….or maybe because you unwisely used the money on toys or trips. I would be willing to bet that your solution would not be either to have another child or two in the hopes that when they got older their salaries could be tapped to pay your bills. You probably also wouldn’t divide up your yard and add a six story building in your backyard to rent out rooms even if you could get three votes on the city council to let you do so. So why exactly do we want to employee these strategies rather than accepting personal responsibility for our own mess ?

       

  3. davisite4

    I am starting to see that pro-growthers see Nishi as stimulus for more growth, in two ways: One, it will itself lead to more growth, by stimulating more business activity and more residents.  Two, it will help to show that we are “open for business” and so encourage more large investments.

    Whether you see this as a bug or a feature of Nishi depends, of course, on whether you think a lot of growth is a good thing or a bad thing.  My point here is just to state explicitly what I have been seeing implicitly in a number of recent pieces, including this one.

    Then the question remains as to whether there is a slow-growth argument for Nishi.  I would have thought there was one, but perhaps not, if Nishi is just the camel’s nose under the tent flap.

    1. Ron

      davisite4:  “Then the question remains as to whether there is a slow-growth argument for Nishi.  I would have thought there was one, but perhaps not, if Nishi is just the camel’s nose under the tent flap.”

      Ooh – I like that saying!  Never heard it, before.

      Your overall points have been something that I was wondering about, as well.

      1. davisite4

        Really – you want to have a conversation about slow-growth vs. fast-growth?  You’ve never heard anyone give any reasons for preferring slow-growth over fast-growth?  I find that hard to believe, especially given that such arguments have played out many many times on this blog.

        My point here is not to advocate for slow-growth over fast-growth, but rather, just to put forward my hypothesis that while it might seem like Nishi is consistent with slow growth (it’s infill, not that large), its proponents see it as the camel’s nose under the tent (with the body soon to follow).  If others disagree with that hypothesis, I’d like to know.  But I am not interested in discussing a huge issue like slow-growth vs. fast-growth here – I’ve got no reason to think that would be productive.

        (For what it’s worth – fostering start-ups doesn’t have to mean more growth, if the start-ups go elsewhere once they are established, and then we foster new start-ups in the same locations).

    2. Tia Will

      if Nishi is just the camel’s nose under the tent flap.”

      I am hoping that the camel’s nose does not signal entry of the whole camel. I’ll use my Corgi as an example. Every morning she pokes her nose out the cat door to check on the neighborhood smells. She cannot, and has not ever tried to push her entire body through the flap. Let’s hope that our community can tolerate the nose while still controlling where the nether regions are located.

      1. davisite4

        Ha!  Thanks, this made me smile.  Yes, I guess I am trying to figure out whether our community can control the camel’s nether regions.  🙂

    3. Frankly

      Arg… I am tired… really tired… of this silly attempt by the no-growers to try and inflame anxiety in everyone about SPRAWL, FAST-GROWTH, ORANGE COUNTY, GRIDLOCK, THE SUN WILL BE BLOCKED OUT, THE SKY IS FALLING, THE AIR WILL BE TOXIC, WE ARE ALL GOING TO DIE, etc.

      You slow growers and no-growers have had your way for decades related to commercial development.  You have been helped by the downtown merchants and their constant whining about “BIG BOX” competition… which was really just a mask for their lazy-ass refusal to compete.  And now many of those downtown merchants are getting stuck with rent increases they cannot afford and there is nowhere else in town they can go because there is nowhere else in town they can go.  Landlords like Mike Harrington like it this way… keeps the big rent checks rolling in.

      Davis can build 1000 acres of business parks and we will still be below the norm for any comparable city.

      Business is the only long-term net positive revenue source for a city.  Because we have less than half of what we should have, our city general fund budget is about 60% of what a city our size needs.

      You can make the case about Davis growing in housing over the last 40 years, but not the last 15.

      And UCD is growing 1000 new people every year.

      So in summary…

      We have not grown our commercial space and now we need to play some catch-up.

      UCD is growing (because there are more people pursuing 4-year degrees than there were 40 years ago) and we need more housing because of it.

      Those are the simple facts.

      It is not a battle between slow-growth and fast-growth…. it is a battle against the unreasonable and the reasonable.  It is a battle for the future of Davis being hostile to low income people, young people and young families only to satiate the demands of the older more affluent residents.

      [moderator] I have not edited this comment, but I want to reiterate that we want the tone of comments on this series of essays to remain especially civil and conducive to discourse. Please self-moderate. Thanks.

  4. Tia Will

    davisite4

    (For what it’s worth – fostering start-ups doesn’t have to mean more growth, if the start-ups go elsewhere once they are established, and then we foster new start-ups in the same locations).

    It will probably come as no surprise that this is my favored model. I think that this is by far the best option for a city the size of Davis paired with a university the size of UCD. For companies that need more space, their is plenty available in adjacent communities that would contribute to the overall regional well being while still preserving the atmosphere that is a key element that attracts people to the city of Davis.

     

  5. Michael Harrington

    edited

    All of these Yes on A people should be ashamed and embarrassed for supporting this project that is so big, so intense, so congested, so polluted, and so …. wrong for Davis..

    Gotten run put up signs and knock on doors.  In nice neighborhoods, with fresh healthy air.  Let’s keep it that way.

    Vote NO on Nishi on June 7.

    [moderator] edited. Attacks and criticisms directed at the authors will be removed immediately from any of the comments on the essays in this series. We wish to keep the discussions civil and productive, and encourage participation.

    1. DavisforNishiGateway

      Nishi is an infill project at the nexus of downtown and campus. It was specifically identified in the Studio 30 report commissioned by the City as an ideal site for providing innovation incubation as part of a dispersed strategy of creating a climate suitable for innovation and tech transfer to grow in Davis. To me, that seems pretty consistent with what Davis has always been about–leveraging the research and bright minds working at the university. Nishi invests millions in traffic solutions. Although you apparently think Richards is just fine as it is now, the reality is that Nishi is the only viable solution to the existing gridlock by creating an additional entrance to campus and expanding the capacity and safety of Richards and Olive Drive. Nishi’s air quality if fully mitigated, and as Tia stated on an earlier article, there is absolutely no demonstrated increase in health problems related to air quality in places like Olive Drive that are similar to Nishi in proximity to the freeway and railroad (or anywhere in Davis, for that matter). Making misleading and unsupported claims is neither honorable nor in the public interest. To me, that is wrong for Davis. Nishi will create much-needed student housing, invest millions in traffic solutions (while creating another access point to campus and making Old Davis Road a more viable entrance to campus and downtown), build R&D space to host start-ups and small businesses looking to benefit from the research being conducted at UC Davis, create 1500 jobs, generate $1.4 million to fund city services and $400k for Davis schools, and many other great benefits.

  6. nameless

    Michael Harrington: “All of these Yes on A people should be ashamed and embarrassed for supporting this project that is so big, so intense, so congested, so polluted, and so …. wrong for Davis…

    How about letting voters decide?

  7. Tia Will

    All of these Yes on A people should be ashamed and embarrassed for supporting this project “

    This is so confusing. I am supposed to be ashamed for supporting Nishi. I am supposed to be ashamed for being an affluent, home owning,  NIMBY, no growther. Is there no end to the shame I am supposed to feel ?

    1. Frankly

      No, you are only justified in shame when you opine a strongly held position that you project as righteous, but then back-peddle when you are given the opportunity to actually stand by your position.

      You have consistently opposed every peripheral development and demanded a car-less and more dense city… and to get this the downtown core and near cord should have buildings that are least six stories.

      You had the opportunity to support that which you demand, and yet you opposed that too.

      If you don’t support that then others are justified in calling your strongly held position just a bunch of BS.  IMO.

      But supporting Nishi does begin to rebuild your credibility.  IMO

Leave a Reply

X Close

Newsletter Sign-Up

X Close

Monthly Subscriber Sign-Up

Enter the maximum amount you want to pay each month
$ USD
Sign up for