Monday Morning Thoughts: Davis Economic Development Scene – The Promise of 2014 and the Reality of 2017

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Last week, the Davis Planning Commission recommended certification of the EIR for the Mace Ranch Innovation Center (MRIC).  When I talked to Dan Ramos, the project manager for the project, he told me that they very much intend to bring a project forward on the site.  It is difficult to know whether or not that can happen and even less certain whether the voters would end up supporting an innovation center without housing.

But what it does bring up is a sense for just how much things have gone sideways since 2014.  It was at that time when councilmembers and business leaders alike rejoiced: “I think the word is out that Davis is ‘open for business.'”

But the door was about to shut.

While City Manager Steve Pinkerton announced early in 2014 that he would be leaving, the momentum seemed to continue when Chief Innovation Officer Rob White pushed forward the RFEI (Request for Expressions of Interest) that brought three proposals, two of which led to project applications.

In addition to MRIC, you had world-class developers Hines, pushing forward their own concept for an Innovation Center near Sutter Davis Hospital.

But the momentum for economic development in Davis, which seemed to peak around June 2014, would quickly start to recede.  One by one the pillars of progress fell by the wayside.

At the city level, the hiring of Dirk Brazil brought the end of regionally respected CIO Rob White.  Mr. White would quickly be hired by Sierra Energy, which is creating their own innovation center, but the city replaced Rob White with Diane Parro – a great person, but one who lacks the expertise and drive in economic development.

It was believed early on that Dirk Brazil was not a believer in the innovation park concept, and the priorities of the city have seemed to have waned in this direction.

The once promising two innovation parks projects have both fallen by the wayside, with the Davis Innovation Center essentially moving to Woodland, while MRIC is best described as on the brink of either a comeback or going away altogether.

Even the modest 300,000 square foot R&D space at Nishi fell by the wayside as voters, questioning things like affordable housing giveaway and the traffic study, narrowly voted against the project.

It is not just the city that is struggling.  In 2014 it looked to the world like UC Davis Chancellor Linda Katehi had finally overcome the missteps of the pepper spray incident and put it behind her.  But three years later, she is gone and UC Davis has dropped the momentum they had in 2014 on the front of technology transfer and economic development.

Gone are the big ambitious plans that UC Davis once had – can they be rekindled by Gary May, who would certainly seem to have the background?  That remains to be seen.

In 2014, the Davis Chamber had just hired Matt Yancey as its CEO.  Mr. Yancey had regional experience with economic development and the Sacramento Metro Chamber, but he lasted less than a year and the Davis Chamber finds itself in need of a new bolt of energy.

The landscape is not completely devoid of hope.  We have seen private investment by Fulcrum Property into the University Research Park and Sierra Energy into Area 52, restoring some promise, but if the city is to really take advantage of its proximity to UC Davis, if the city is to really rely on revenue from economic development to shore up its finances, it needs the space for large and mid-sized businesses to grow and remain in town.

As Mike Webb noted on Wednesday during the Planning Commission meeting, “The largest currently available parcel within the city is just 14 acres.  Even the vast PG&E site is 25 acres and there is no sign that (it) is actually available and (it) would be costly to repurpose even if it was.”

The 2012 Studio 30 report, in particular, noted, “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.”

What Davis needs is a new injection of leadership.  One of the interesting things that Dan Ramos told me on Thursday was that he needs to find an anchor tenant in order to have a chance to move his project forward.

Implicitly, that tells us that Schilling Robotics, thought to be a driver back in 2014, has indeed taken a backseat in their expansion plans.

But, at the same time, this seems like the exact type of need that led to the creation of the position of the Chief Innovation Officer.   The loss of people like Rob White hangs heaviest here.

The city council and city manager should be prioritizing getting the appropriate anchor tenant for MRIC.  This spot could generate $10 million a year in revenue for the city.  We’re talking about putting revenue measures on the ballot, but MRIC could help solve the long-term fiscal challenges from the city – and we have one last chance perhaps to prevent it from going “poof.”

The new start for MRIC coincides with the new chancellor for UC Davis.

Back when Chancellor Katehi headed up the university, she had a vision for putting the World Food Center and its billion dollar a year promise in the Railyards in Sacramento.  That plan has fallen by the wayside with the demise of the former chancellor, but perhaps there is a chance to revive the plan and revive it here in Davis, with access to agricultural lands and only a few miles from the main campus.

With leadership and movement, perhaps the city of Davis could proactively clear the way for the potential billion dollar World Food Center going into one of its own sites – either in a new peripheral spot or in town.  While the city would not generate the revenue from the WFC, the spin-offs and companies working adjacent to the WFC could be a huge boon for the burgeoning ag-tech and food security sectors in this community.

Local leaders have put food security near the top of the list of goals, and ag tech would fit in nicely with the community’s commitment to agricultural land preservation and innovation.

But unfortunately, right now I see no real leadership in this area within city government, in the business community itself or at the university.

Perhaps that can all change.

—David M. Greenwald reporting 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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25 thoughts on “Monday Morning Thoughts: Davis Economic Development Scene – The Promise of 2014 and the Reality of 2017”

  1. Roberta Millstein

    You still seem to be treating MRIC like a magic money box that will save us from revenue measures, i.e., taxes.  Meanwhile, half a glance at Silicon Valley shows that, if the business park is sucessful, the result will be higher prices on everything, housing shortages, people with lower income squeezed out, and mom-and-pop businesses squeezed out.  That is, until there is a bust and we’re left with the empty husk and the loss of prime farmland and open space.

    In comparison, revenue measures start to look a lot better and less harmful to the populations you’re concerned about.

    There is no free lunch.

    1. Keith O

      Or the better high paying jobs vitalize the whole region creating an economic boom uplifting and creating many businesses from support companies to food establishments.  I’ll never understand how people can thumb their nose at good jobs.  Are we now sorry that the state decided to put UCD in Davis which also created good jobs and contributed to higher real estate prices?

      1. Roberta Millstein

        I’m just saying — look at Silicon Valley, look at SF.  It has not lifted all boats.   That’s always what people promise, but it doesn’t happen.  If I actually thought it would happen I might feel differently.  Instead, people with low incomes are squeezed out.  Even if there are jobs there is no place to live.

        1. David Greenwald

          Roberta – I’ve been thinking about your post from a week or so ago.  You raise an important point, but I think it’s somewhat different from what you believe it is.

          the problem you have in the Bay Area and the Silicon Valley is a jobs / housing imbalance.  we have one here as well.  the problem you cite in the Silicon Valley isn’t the jobs, it’s that they haven’t produced housing for the workers.

          The problem we have in Davis is outside of UCD, we don’t have high end jobs and we don’t have housing for faculty and staff at the university, nor for people who would come work for startups or tech companies.

          I agree with you that it’s not a magic bullet, but I see the problem not with the jobs of Silicon Valley but the lack of “affordable housing” for those people.

        2. Roberta Millstein

          the problem you have in the Bay Area and the Silicon Valley is a jobs / housing imbalance.  we have one here as well.  the problem you cite in the Silicon Valley isn’t the jobs, it’s that they haven’t produced housing for the workers.
          The problem we have in Davis is outside of UCD, we don’t have high end jobs and we don’t have housing for faculty and staff at the university, nor for people who would come work for startups or tech companies.

          Right.  So, we don’t have enough housing for the people we already have, where “people” includes faculty, students, and low-income residents.  Now we’re talking about adding high end jobs, for whom we don’t have housing either, and businesses needed to support them (as Mark West points out) and we have no housing for them, either.  So I don’t see how it’s the same problem.  It’s exactly the same problem, and I don’t see how having all those business parks has made Silicon Valley a great place to live.  (I lived there from 1995-2006, so I have some direct experience. And I visit there fairly often and chat with residents, who are not happy with the changes and the insane traffic).

    2. Don Shor

      One business park in a market with a significant shortage of commercial space won’t lead to any of those things you describe. And MRIC won’t cause sprawl because the property next to it is in an ag easement.
      Revenue measures will be necessary in any case. The only questions are what kind, how much, and for how long. How much of an increase in your property tax bill are you willing to pay? $400? $1000? Do you want to see the sales tax raised another 1/2 cent?
      Resolving our budget problems will require managing expenses and increasing revenues. Economic development can be one way of increasing revenues. But if you take that off the table, it just increases the taxes needed and/or the budget cuts.

      1. Roberta Millstein

        One business park in a market with a significant shortage of commercial space won’t lead to any of those things you describe.

        I think it’s scale-relative.  For Davis’s size, the proposed MRIC (well, the original proposal anyway) is huge, both in terms of acreage and #s of employees, and it will have a similar effect.

        I can’t say that I am excited about paying higher taxes. No one is.  But I will, and I will vote in favor of them, because I and the rest of the City will pay either way, and the one devil is less bad than the other.

        I don’t think we should take economic development off the table, just economic development at this scale.

    3. Mark West

      “the result will be higher prices on everything, housing shortages, people with lower income squeezed out, and mom-and-pop businesses squeezed out.”

      All the things you list in your doom and gloom scenario already exist in Davis, but without the good jobs and greater tax base that new commercial development will bring to the city. You are right, there is no ‘free lunch’ and since the approach you advocate for prevents us from paying for the ‘lunch’ you have already enjoyed, it is time that we start acting rationally. By your own description, the ‘more taxes’ approach you prefer has failed. It is time to expand our economic base, create good jobs, and build appropriate housing for all Davis residents.

       

       

  2. Roberta Millstein

    All the things you list in your doom and gloom scenario already exist in Davis

    Right.  And an MRIC-scaled project will only make them worse.

    The “more taxes” approach has not failed.  There have been many opportunities to put increased taxes on the ballot over the last several years but the City Council chose not to do it.  You can’t say that approach you haven’t tried has “failed.”

    1. Mark West

      It is the only approach we have tried, Roberta, and we have $100’s of millions in unfunded obligations and a 0.2% vacancy rate that shows that it has failed. Making Davis a more expensive, and more exclusive, place to live by raising taxes yet again, is not the answer.

       

      1. Roberta Millstein

        David has been calling for the City to consider increasing taxes for several years now — he could say better than I could — and yet the City Council has at each juncture scaled back or declined altogether.  I think we’d be in a much better position now if we’d done this a few years ago, but no changing that past.  Meanwhile, you suggest that we would make Davis a more expensive and more exclusive place to live by raising taxes now, and my point is that building the MRIC would make Davis even more expensive and more exclusive than raising taxes would.  Again, see Silicon Valley and SF.

        1. Mark West

          Raising taxes makes living in the City more expensive for everyone, making it an enclave for the wealthy (particularly those with tax payer funded pensions). Creating jobs and increasing the tax base makes the community wealthier and the City a cheaper place to live for individual tax payers. Pretty simple concepts. Your ‘hand waving’ comments about silicon valley and SF are both uninformed and uninformative.

          1. David Greenwald Post author

            Not passing taxes means we are deferring maintenance right now which is also increasing the costs over time. So in the short-term, we need to pass taxes.

        2. Roberta Millstein

          Ah, yes, when your arguments fail you fall back on your usual strategy of insulting me rather than making an argument.  I guess Zillow is uninformed, too.  What do they know about rent and home prices, after all?

          I can inundate you with links to other articles if you like.  There has been article after article about it in the SF Chronicle, a paper that I subscribe to.

          https://www.zillow.com/research/living-costs-silicon-valley-seattle-12314/

        3. Mark West

          I don’t need the Comical, or Zillow, to see the reality around me, Roberta.

          I’m not arguing the Davis is a more expensive place to live than silicon valley. I am refuting your argument that raising taxes doesn’t make Davis a more expensive, and therefore, a more exclusive place to live. Your approach harms everyone in town, and forces others to pay for your preferred ‘way of life.’

        4. Howard P

          Mark… haven’t seen all the dialogue, (per my parole terms), but ‘expensive’ is truly in the eyes (pocketbook?) of the beholder… dependent on their resources, and what they are used to…

          The migrant housing near Winters is ‘palatial’ to someone who grew up in rural parts of Africa/South America/ SE Asia… (take your pick).

          Price per sq/ft of a nice (median) home in Davis (~ $250-300/sf)… for that, you could get a REALLY nice house in most areas of the country, including the Denver area, anywhere in the midwest/south…

          Of course, if you are early in your career, wages will be less…  Einstein’s theory of ‘relativity’ is not just about physics…  but, still pretty valid…

          Hence, “affordability” is ‘relative’…

          What is clear is that someone making $120 k + in salary and benefits in Davis, will not bat an eye re:  a $240/year parcel tax, but that changes for someone making $35 k/yr, with little/no benefits (or less) looking at the same tax.

          15 years ago, the 850 sf house I grew up in (San Mateo, Bay Area)[and a fixer-upper, arguably], sold for $450 k… tract house in a subdivision created in the early 1950’s… purchase price in 1955 = $9,600…

          1. Don Shor

            What is clear is that someone making $120 k + in salary and benefits in Davis, will not bat an eye re: a $240/year parcel tax,

            $240 more per year won’t be enough.

        5. Roberta Millstein

          I am refuting your argument that raising taxes doesn’t make Davis a more expensive, and therefore, a more exclusive place to live.

          Raising taxes will of course, by definition, make Davis a more expensive place to live.  But what you are refusing to admit is that a big business park like the MRIC proposal would do the same thing — likely even more so — plus with many other negative effects.

          Your approach harms everyone in town, and forces others to pay for your preferred ‘way of life.’

          As does yours.  But you’re still trying to pretend it’s a lifesaver that floats all boats, when in fact it’s an anchor for most of us (with just a few getting rich and getting out before the next downturn).

          1. Don Shor

            But you’re still trying to pretend it’s a lifesaver that floats all boats,

            Actually, I haven’t heard anyone making the argument that building a business park is going to reduce income inequality. Is that a requirement for a proposed development? Are you aware of any kind of development that would provide lots of jobs for lower-income people and somehow provide places for them to live? Really not following your argument here.
            It’s also quite a stretch, IMO, to call a 200-acre business park big.

        6. Howard P

          Actually Don, you support my point… a 1.00 % local income tax would raise a lot more money (particularly if businesses were included, on a lower basis) than a paltry $240/year parcel tax… We’d (spouse and I) pony up $1,000/yr if we knew that the affluent (relative) UC/Public employees, private employees, would do the same… and that we have expenditure controls in place) and exempt the folk making $30k or less, and a ‘progressive’ scale… say 0.25% for those 30k to 50k, 0.5% for the next 50 k, 0.75% (or even, 1.0%) for those above that.

          I expect ‘crickets’… or well-off folk whining, pretending/posturing that they are ‘progressive’

  3. Howard P

    Additional ‘taxes’ are very acceptable, when they are ‘parcel taxes’, to those ‘earning’ income of $100k+ per year… not so much if your income is $35k/year…

    Those on the high end should support a local income tax, excluding the first $20k… rather than parcel taxes…

    1. Howard P

      That approach would put their money where their mouth is…

      Say, a 0.75% local income tax… for discussion purposes… local inc. taxes are ‘deductable’…

      Or, they could just donate that amount, each year, if they don’t want to deal with the ‘charter city’ thing…

  4. Roberta Millstein

    Actually, I haven’t heard anyone making the argument that building a business park is going to reduce income inequality. Is that a requirement for a proposed development? Are you aware of any kind of development that would provide lots of jobs for lower-income people and somehow provide places for them to live? Really not following your argument here.

    The argument has been made (and it has been made on this page) that the reason we want a big business park rather than taxes is that taxes will price low-income residents out of Davis.  My point is that that argument makes no sense, because a sucessful business park will do the same thing, most likely to a greater extent.

    It’s also quite a stretch, IMO, to call a 200-acre business park big.

    It’s big for Davis, relative to most everything else that is in the City.  It’s supposed to emply 5900 people, which is a *significant* addition to the town on its own.  More so if (as Mark West suggests, and I agree with him on this point) there would need to be additional businesses in town to support the businesses in the MRIC.

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