Monday Morning Thoughts: We Need A Workable Economic Development Vision

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Innovation-Park-example

It has been nearly four years since the concept of an innovation or research park has become something I have fully supported in concept.  It comes to the need for revenue generating business that fits in a Davis model of high-tech and university research-based spinoffs and the lack of available space within town to accomplish that.

Has this vision failed in Davis?  To date it has indeed failed.  The question I think is whether that means we should give up on it, or whether we need community and council leaders to take the lead – even if it means taking our lumps along the way.

Last week, a reader assembled comments from Mayor Robb Davis over the last six months on economic development.

In October he wrote, “The RFEI led to proposals.  We moved on those. They did not pan out.  Anyone can submit any proposal related to the dispersed strategy at any time.  Nothing has changed.  Give us a proposal and we will act on it responsibly and in a timely way.  I will not apologize for a process that is broadly participatory for projects that are subject to a public vote.  That is the only way to do them.  Nearly all the sites in the peripheral strategy involve a Measure R vote. That is the reality we live with.”

In a different comment he said, “The reality is, it takes hard work to move from a concept like those embedded in the RFEI to a vote and then to an actual project.  The City absolutely did its role.”

He added, “My problem, as I have stated elsewhere is that for two years we conflated economic development with innovation parks. There are many other things we can and should be doing (and ARE doing contrary to what people on this blog seem to believe sans evidence) to promote economic development in a time when no new commercial development is happening.”

And then, back in June, he wrote the first piece in the economic development series.  He said, “For nearly two years we, as a community, have failed to advance a coherent vision for economic development in Davis. Instead we have advanced a peripheral real estate development strategy that has run into an inevitable dead end.  We have not articulated the ends we wish to achieve with an economic development plan, and have thus limited the discussion to revenue generation alone.

“Land use and the creation and maintenance of a supply of commercial space is an important element of economic development. And certainly revenue generation that flows from economic development is an important outcome.  However, by not critically analyzing the ends of economic development and failing to strategically put forth a vision for the means that will help us arrive at these ends, we have had a very narrow and, often times, counterproductive conversation about this issue.

“The Vanguard has been complicit in this narrow framing, having chosen to highlight the charged politics of peripheral land development rather than the more pedestrian realities of what it takes to have a thriving and diversified local economy.”

Before I go further, I want to make clear I am highlighting these points as I differ with Robb Davis somewhat on the thrust here, but I respect greatly the fact that he is willing to engage with the Vanguard community, even though he at times unnecessarily takes his lumps.

The Vanguard is complicit here.  I like being complicit because I believe we are right.

For me, it is an issue of numbers here.  As the Studio 30 report first made abundantly clear – we simply do not have enough existing commercial space to do what we need to do.

At that time, Studio 30 made it clear that we needed to develop Nishi and at least one peripheral site IN ADDITION to maximizing existing commercial space.

While Nishi was indeed defeated – narrowly, the addition of Area 52 and the University Research Park (URP) might obviate the need for the 300,000 projected square feet of R&D space at Nishi.

The reality is that the economic situation is, if anything, more dire in the long term than it was even in 2010.  The city faces a massive shortfall of infrastructure funding and a daunting and growing unfunded liability.

Yes, we can help some, particularly in the short term with development of hotels, expansion of the commercial sector at Area 52 and URP, and with some revenue measures that council has been very reluctant to put forward, but the long term picture I still think is that we need some – not a ton of – peripheral land development to house larger-scale operations.

That means we require a Measure R vote and, quite frankly, we have never tested Measure R on a commercial-only development.  A lot of people believe that a commercial-only development at Mace Ranch Innovation Center (MRIC) might have succeeded.  A number of people said they would have supported such a development.

I happen to believe that the developers were sincere when they believed financing would be a problem for a commercial-only project.  While I’m not opposed to a mixed-use project, for many that was a step too far.

I still believe there is another way forward and that we have a golden opportunity with the shift in leadership at the university.  I think the World Food Center as an anchor tenant at MRIC could make financing feasible.

We would have to figure out the tax-sharing arrangement.  We would have to convince the university to partner with us.  The university sees Measure R as a huge barrier to that and understandably so.

The advantage of this approach is that we would have a Davis solution to our problems.  Right now we lack retail sales and the sales tax of other communities.  But rather than build big boxes, we would invest in a high-tech, research and university-oriented project.

Food scarcity and security are at the heart of this community’s mission.  The use of research-based and high-tech means to produce more productive yields is at the heart of the emerging ag tech industry and we could invest in green technology in order to get there.  What is more Davis than this?

The question is whether we can sell our community on this vision.  I think we can.  Will it take work?  Of course.  Is it guaranteed to succeed?  No.

But without doing some sort of larger scale economic development, what is the plan to meet our service, infrastructure and retirement needs for this city?

I do not fear the voters and I do not fear losing at the polls.  That simply means that we need to figure out a better way to meet our challenges and address the concerns of our residents.  I don’t see this as an insurmountable challenge – but it is definitely a challenge.

If this isn’t it, I want to see an alternative plan that pencils out for our revenue needs.

—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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8 thoughts on “Monday Morning Thoughts: We Need A Workable Economic Development Vision”

  1. ryankelly

    Nishi has shown us that the voters will believe whatever is said in an effort to stop anything that requires peripheral growth.  The national trend is that gaslighting and fake news via social media works to manipulate voters and Davis voters are not immune to this.  The only way is redevelopment.

    1. Frankly

      The only way is redevelopment.

      Too expensive… Title 24 and other code regulations have exploded the cost… governor killed RDA to give the money to the CA teachers union.  NIMBYs and NOE people will not allow it.  Not enough redevelopment property to make even a small dent in the need.

  2. SODA

    Remind me of the tax ramifications of a UCD World Food Center at MRIC would be and how this would differ if it had been built at the Railyards? Who would have decisions or a say on plans, housing, trees, owls etc if UCD developed MRIC?

    How dead is the Railyard idea and why? Seems to have died when the Chancellor ‘left’. Can that be true? Something so big be tied to one person?

    1. David Greenwald Post author

      As was explained to me some time ago, there was great resistance to the Railyard idea internally because faculty working at the WFC now didn’t want to commute to Sac. I don’t know if that would have been fatal just as I don’t know that the Railyard idea is forever gone. I do know if Davis thinks having the WFC in Davis is a good idea, we have a window of opportunity.

      1. SODA

        I think it would be a good thing. What are the tax ramifications and decision making ?s I posed? Anyone know? Nishi undoubtedly too small for WFC? Is there already a WFC on campus? I remember an appointment of a head awhile back maybe promoted from within? Discussion last Tues didn’t include WFC did it?

  3. Jim Frame

    I happen to believe that the developers were sincere when they believed financing would be a problem for a commercial-only project.

    I do, too.  And what problematic financing tells me is that the market doesn’t believe that there’s sufficient demand for that much new commercial space at the price required to service the debt and make an adequate return on the investment.

    At one of the MRIC forums I asked Dam Ramos why they didn’t ditch the housing proposal and instead increase the amount of commercial space.  He referred the question to one of his consultants, who said that the area can’t absorb that much space quickly enough to justify the construction costs.  I’m other words, the demand for new commercial space in Davis isn’t strong enough to overcome the cost differential with places like West Sac.

    “Build it and they will come” might work for baseball parks in movies, but it doesn’t work when you’re dependent on real-world investors who know how to evaluate risk versus return.

     

    1. Frankly

      This is not quite accurate.  We have always talked about a 20-30-year build out.

      The issue was/is the length of time for ROI.  It would be the same for any business park except for those that have anchor tenants lined up… which is highly unusual.

      The problem is that over the last 20 years California and its state and local governments have added so much to the code and goodies list that the up-front investment has increased significantly.   On top of that we have new Dodd Frank rules that heap new requirements on banks for risk-mitigation and reserves… the longer the loan term, the higher the requirements.   So the financing gets more expensive.

      With housing the developer could pay off most if not all of the bank loan funding the initial construction phase, and then the rest of the development could be boot-strapped.

      Of course there are always unknowns related to the population rate of a business park.  If your bar is to have every acre allocated before construction, then few business parks would ever be built.

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