The Vanguard has spent much of the summer so far talking to councilmembers, city staff, and community leaders about the need for economic development. There is a general agreement – especially noted by the city council that economic development is desperately needed – but also a sense of frustration as to how to go about getting the momentum from 2014 back.
In 2014, Davis appeared to be on the verge of realizing its need for large scale economic development – it had two peripheral innovation center proposals and Nishi was making its way toward a 2016 ballot vote with sizable R&D space.
But the Davis Innovation Center (DIC), bogged down in near-neighbor complaints and land use challenges, decided to cut its losses. Hines, a world class innovation center developer, pulled out of the project and local developers found Woodland a more receptive host city. Eventually the project moved to Woodland and has since been approved – as Davis languishes without a clear path to an innovation center.
Meantime, financing and other land use issues bedeviled the Mace Ranch Innovation Center (MRIC). When the developers, who had originally agreed to develop the project without housing, asked for the council re-consider housing on the site, they were rebuffed. They put the project on hold. They came back briefly to get the EIR certified, but have been largely quiet ever since.
Finally, Nishi seemed promising for providing short-term, near-campus innovation space, as articulated in the Studio 30 report. The project in 2016 featured 300,000 square feet of R&D space, and Sierra Energy agreed to come on as a major local investor – but the voters turned the project down by 700 votes.
With the student housing crisis worsening, the developers came back with a housing-only project that passed overwhelmingly, bypassing concerns about traffic by creating a university-access only project. The energy for innovation space has shifted to smaller in-town sites like the University Research Park, which has just filed a recent application for modifications to their existing site, and Sierra Energy’s Area 52.
In the meantime, the university, wary of embroiling itself in more land use disputes in the city of Davis, has joined forces with Sacramento and its Mayor Darrell Steinberg on Aggie Square – which would add a dense innovation center to Sacramento, bypassing Davis.
One thing is clear – with the failure of Measure I, the roads tax, the uncertainty about future tax funding, and the low yield from sales tax in Davis, Davis is in need of greater economic development and revenue generation if it wishes to retain its basic levels of city services and the amenities this community has grown accustomed to.
But the only realistic path to get there is for Davis to expand its economic development and take advantage of its status as a host city.
The question is – how does Davis reengage in the economic development push?
The biggest problem we have, as seen with the failures of our 2014 efforts – economic development gets bogged down in land use debates and investors cannot afford to wait out the market.
To illustrate this problem, let us look at the non-Measure R project, Sterling Apartments. It took the developers about two years of planning to get the project before the city council last spring (2017) for approval by the council. It has then taken another year or so to get the project ready and it will take approximately two years to build – with the hope that it is done in two years, ready to open for the 2020 fall quarter.
That is five years from conception to opening for an apartment complex that did not require a Measure R vote. Now imagine having to go through an expensive and lengthy planning process – both MRIC and DIC had spent well over $1.5 million just in the planning process and DIC had not even done an EIR yet – only to take it to a Measure R vote and lose.
That’s what happened to Nishi. Nishi had local investors waiting to come in and help them develop the innovation center, but they ended up losing a very narrow vote and that was enough to encourage even local developers who owned the land outright to punt on an innovation center and go for a more certain project that was housing only.
The landscape has actually changed rather drastically since 2014. Now we have Woodland, West Sacramento and Sacramento going forward much more expeditiously with innovation centers. If you are an investor, why would you wait through a long and uncertain process when you can hit the ground running in an adjacent community? These communities might not have the Davis label, but they are much more ready to go.
The problems in Davis are not just Measure R. We saw the Hotel Conference Center sued and then downsized due to lack of investment funding. We have seen two other hotel projects sued and delayed. These aren’t innovation centers, but they would be huge revenue generators.
Lincoln40 is a housing project that would be ready to go, but for a lawsuit. And now Nishi is on hold despite the 60-40 vote, because of its lawsuit.
What is clear to me is that the only way we can do larger scale economic development is by getting through the land use battles first, before getting tenants and investors lined up. And then go through a more normal planning process.
My idea for a pre-approval of land has generated criticism, but most people I have spoken to have acknowledged it is not only the best way forward, it might be the only way forward. We will have to bite that bullet and pay the price for having that debate – but if we want to be able to compete regionally, a pre-approval seems the best way.
Whether we do it through a General Plan process or simply a vote of the people, it seems clear we need to do it. That is going to take the council to take some hits and put us on a process forward, and it is going to take robust community debate and possibly one or more failed votes in order to finally succeed.
—David M. Greenwald reporting