Monday Morning Thoughts: A Further Look at MRIC

As I noted over the weekend, if MRIC should come back before the council, we would hope that it would be fully analyzed by an outside consultant and reviewed by the Finance and Budget Commission.  We were able to find Phase II of EPS’s Economic and Fiscal Analysis of the Proposed Innovation Centers.  It was written in 2015 and presented to the Finance and Budget Commission on September 14, 2015.

What I will present here is only a very quick overview of the 199 page document and only as it pertains to MRIC as opposed to what would have then been Nishi 1.0.  It is important to understand that the project evaluated by MRIC was the version without housing – although they do reference at times the impact of housing on MRIC’s fiscal impact.

EPS concludes: “The proposed Innovation Centers have the potential to create benefits that generate economic value to the City and UC Davis alike. The projects could also support the goal of strengthening academic-industry partnerships in Davis and throughout the region, in support of the Next Economy Capital Region Prosperity Plan (Next Economy). The proposed Innovation Centers have great potential to move forward simultaneously. If phased and developed in concert with evolving market forces, the market should be able to accommodate both projects.”

In particular they note: “By increasing the supply of employment opportunities to be more in proportion to the housing available in Davis, the concept has the ability to improve the local jobs-to-housing balance while making fiscal revenues available to fund key City services in support of continued economic innovation and the overall quality of life in Davis.”

In addition, EPS warns of “significant opportunity costs if the projects are not built.”  They write: “The City runs the risk of losing more fast-growing companies to other communities due to its limited supply of land and buildings for business activity.”

Here are some of the key findings as they relate to MRIC and Innovation Centers overall.

First, “The proposed Innovation Centers have the potential to generate benefits to the City, Yolo County, and the region.”  UC Davis has “established research strengths that are aligned with challenges of our global food system through rigorous multi-disciplinary study of food and health, water and energy systems, adaptation to global warming, and development of sustainable technologies.”

While the city has attracted a number of prominent tenants like DMG Mori, FMC Shilling Robotics, and Marrone Bio Innovations, “in recent years, local and regional economic development representatives have noted interest from several companies that have not been able to find suitable space in Davis and have located elsewhere in the region or in other competitive communities.”

The proposed Innovation Centers “offer the opportunity to expand the amount of space that can house establishments interested in maintaining or establishing a presence in Davis.”

Second, “The intersection of UC Davis research strengths and the regional innovation economy point to clusters and related types of industries and companies that can potentially fill space in the proposed Innovation Centers.”

Third, “The proposed Innovation Centers have the potential to more than double the amount of existing office, flex, and industrial space in Davis, while fostering a stronger and more competitive innovation ecosystem.”

At the time of this study, Davis had about 2.6 million square feet of office, flex and industrial space but more than two-thirds of this was “office” space.  EPS estimated that MRIC and then Nishi would generate 3.1 million square feet of office, flex and industrial space and while Nishi has gone away with its 300,000 square feet, URP and Sierra Energy could more than pick up the slack.

The report notes: “Land and space constraints in Davis have led to volatility with the periodic loss of large tenants, however the City generally features lower vacancy rates and higher rents compared to regional averages, owing to its competitive advantages across a number of success factors related to university proximity and quality of life.”

They look at four prototypes and find, “The Flex-R&D/Office prototype is likely to be a critical component of the proposed Innovation Centers because of its alignment with targeted clusters and company types and its ability to generate high assessed values and sales tax.”

They look at a number of the alternatives.  For example, they argue, “the MRIC Mixed Use alternative that adds housing could reinforce links with the university.

“In the MRIC Reduced Project, the removal of the hotel precludes stays from visiting scholars, and rotating staff from global partners, while the omission of the conferencing space reduces possibilities for university-related events and activities that would strengthen the UC Davis connection.”

They conclude: “The only alternative that similarly supports the Innovation Center concept is the MRIC Mixed-Use Alternative. In this case, the potential for slightly higher development costs may well be offset by improved overall vitality offered by the inclusion of housing in a mixed use format. If well-designed and properly integrated, housing could lead to strengthened overall economic performance and would be attractive to younger, knowledge-based workers.”

Here are some of their economic impact findings:

First, “The construction activities associated with the backbone infrastructure, nonresidential, and residential development for the proposed MRIC and Nishi projects will generate a one-time, temporary economic impact.”

Second, “Establishments operating in the nonresidential space and residents occupying the housing units in the proposed Innovation Center projects will support ongoing economic impacts in the local economy.”

“The cumulative ongoing economic impact associated with the proposed MRIC and Nishi projects is estimated at approximately 11,000 jobs, $2.9 billion output, and $704 million of labor income on an annual basis in the Davis economy.”  About 85 percent of this is generated by MRIC alone.

Again they found that most of the alternatives for the Innovation Centers “decreased one-time and ongoing economic impacts.”  They do believe however that the MRIC Mixed-use alternative will increase ongoing economic impacts finding that it adds “residential construction activity and household spending on top of the base MRIC proposal.”

Fourth, “At buildout, the proposed MRIC and Nishi projects could directly support about 7,000 jobs on an ongoing basis.”  Again about 85 percent of that would be from MRIC and they believe with a multiplier effect, “spending, these projects could generate an additional 5,000 jobs in the local economy. These additional jobs will create incremental off-site demand for commercial real estate, which could translate to roughly 1.5 million square feet.”

Finally, “The Innovation Centers can benefit substantially from the economic impacts of a specific group of targeted clusters if the appropriate conditions are created.”

Finally they looked at the fiscal impact:

Here, MRIC “is estimated to generate an annual net fiscal surplus of about $2.2 million for the City’s General Fund.”  This assumed a 50-50 tax split, which is what the city and county agreed to on the recent projects.

EPS looked at four scenarios: the addition of housing in the MRIC project; the removal of the planned hotel in the MRIC project; a decreased City share of the applicable property tax rate (25 percent); and a lower capture of taxable sales generated from the Innovation Centers’ residents and employees.

They find with respect to housing that it would “result a lower net fiscal impact for the City’s General

Fund.”  But, “the presence of housing is a positive attribute that will enhance the mixed-use character valued in innovation centers and may improve the internal economics of the project.”

—David M. Greenwald reporting


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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51 thoughts on “Monday Morning Thoughts: A Further Look at MRIC”

  1. Matt Williams

    David’s article above prompts some very interesting and important questions.  I believe that is a good thing.

    I will post the questions that come to my mind … one question per comment, so that the follow up discussion of the question can be focused.  Here’s my first question.  The September 2015 EPS analysis report states:

    The proposed Innovation Centers have the potential to create benefits that generate economic value to the City and UC Davis alike. The projects could also support the goal of strengthening academic-industry partnerships in Davis and throughout the region, in support of the Next Economy Capital Region Prosperity Plan (Next Economy).

    A lot has happened in Davis and the Capital Region since 2015.  What is the current status of the Next Economy Capital Region Prosperity Plan?

    1. David Greenwald

      That’s a good question Matt and the answer appears to be that that particular plan is no longer active and what is moving forward is coming from GSAC.

  2. Matt Williams

    Here’s my second question.  The September 2015 EPS analysis report states:

    By increasing the supply of employment opportunities to be more in proportion to the housing available in Davis, the concept has the ability to improve the local jobs-to-housing balance while making fiscal revenues available to fund key City services in support of continued economic innovation and the overall quality of life in Davis.

    I would be very interested to hear what EPS currently thinks about this statement given the enrollment decisions at UC Davis.  It appears that EPS has assumed a “normal” housing market in Davis when they made that statement. As I stated to Richard McCann yesterday:

    Richard, in a normal microeconomic marketplace your point would be correct; however, the Davis housing marketplace is anything but normal.  The Demand side of the ratio has grown between 1,000 and 3,000 beds per year each year throughout this Decade.
    Nishi adds 2,200 beds, but those won’t come on line for at least 3 years. By that time the incremental increase in Demand will exceed the incremental increase in Supply.  Therefore, no net downward movement of the Supply/Demand curve intersection.

    So my question to EPS (and David) is Does the jobs-to-housing balance statement in the September 2015 report need to be modified to incorporate the realities of UCD’s recent and continuing enrollment growth?

    1. David Greenwald

      I think this is something that should be put to EPS or whomever takes the next whack at this.  My personal view is that the jobs/ housing balance remains an issue as the data coming out of the DPAC continues to show.

      1. Don Shor

        I suggest we stop focusing on “jobs-housing balance” as having any real relevance to planning at the local level.
        https://www.sanjoseca.gov/DocumentCenter/View/3309

        ….steps to better align a community’s employment profile with its labor force profile may be difficult to implement and negligible in effect, given cyclical employment trends, changing technologies that influence future labor force education and skill requirements, and the various influences on employers’ site selection decisions (including availability and cost of space and location in relation to suppliers and markets, as well as labor force).
        Finally, whatever a jurisdiction might do to provide a match between jobs and residents’skills, employers in any metro region are aware that many workers commute out side their communities of residence; employers know that they cannot rely solely on local workers to fill their jobs. For the smallest metro area jurisdictions, in any event, expecting (or advocating) a match between jobs and workers is unrealistic.

        Viewing the “balance” in a regional context might have some use in transportation planning. The housing market for Davis workers is Davis/Woodland/West Sac/Dixon. The job market for Davis residents is similar, probably even further in reach. When my son was looking for a job, he considered everything from Fairfield to Elk Grove as within commute distance.
        Developing MRIC would probably have negligible impact on the jobs-housing ratio in Davis. It might improve the region slightly. If you want to reduce VMT’s by private auto, focusing on public transportation would be the most effective way to go.

        1. Ron

          Wow – we have a rare point of agreement, which acknowledges reality. Of course, this is also a primary downside, regarding this proposal. There’s a reason they want to locate it at a freeway access point (and adjacent to primary thoroughfares which go through/around Davis).

        2. David Greenwald

          An interesting point, but is it the best use of VMT to commut people from Elk Grove to Davis?  Or is it better to find a way to house more of the 28,000 people who work in Davis but don’t live here?

          1. Don Shor

            The question is whether the jobs-balance ratio is a reasonable statistic for any decision-making process. I suggest that personal decisions about where to live and work are not that closely linked. Adding jobs at MRIC will likely not make any difference in that regard. Also, Yolo County is in the bottom 1/3 of the state with respect to commute times. So it’s not likely a major factor in where people decide to live and work.
            So to your specific questions:

            is it the best use of VMT to commute people from Elk Grove to Davis?

            That is a personal decision and jobs at MRIC will likely not affect it one way or another. But if it’s a concern, better public transportation would be the most practical focus. The paucity of transportation between Davis and Dixon, for example, has always perplexed me.

            is it better to find a way to house more of the 28,000 people who work in Davis but don’t live here?

            I don’t see how MRIC would make any significant difference in that regard, either. I’d be surprised if you can find any direct correlation between economic development and reduced VMT’s. I suggest focusing on the provable benefits of economic development, rather than trying to extrapolate less provable benefits.

        3. Ron

          David:  Why would you advocate making that “balance” worse?

          Also, what about those new residents who would commute outward, as I did? (Based upon my recollection of your prior articles, outward-bound commuters already number 21,000.)

          At least those living at MRIC (e.g., including family members who don’t work at MRIC) would have easy access to the freeway, for their outbound commutes.

          Not exactly “green”, but what-the-heck. 🙂

        4. David Greenwald

          Ron:

          Where (or in what way) did I advocate making the balance  worse?

          I’ll give you a good example of people commuting outside of Davis who live here – my wife is one of them.  We’ve been living together in Davis since 2000, in that time, she has never once had a job in town.  One of the reason we need economic development is to create better jobs so that people in town have an option to work somewhere other than UC Davis.

        5. Ron

          David:  As Don pointed out, the “Davis market” (for both housing and jobs) is regional.  Your own comment notes this.

          There’s already more inbound commuters, than outbound ones.  Due to UCD, Davis is already an “employment center”.

          If you add more jobs, the imbalance will become worse – even if housing is included.  Folks will commute from the entire region to the site.  Some would likely commute from the new housing developments in Woodland, down Road 102 onto Covell/Mace.

          And, those living at MRIC would commute outward, as well.

          You’re simply not going to be able to “sell” a freeway development as a “green” one.

          By the way, did any of the analyses mention the amount of parking that would be needed (for any of the scenarios)?

        6. Ron

          A more minor point, perhaps:

          Folks tend to get established (stuck) in their respective careers pretty quickly after college.  I, for one, would not assume that I could even get hired at MRIC.  They’d likely be looking for someone with different qualifications.  I suspect that applies to a lot of workers who have already established careers.

          I have never found it particularly easy to get a job, and I have some marketable degrees. I suspect it would be difficult to get a job at MRIC, especially since it would take decades to build-out.

        7. David Greenwald

          A few things…

          First, “Monday Morning Thoughts” is an opinion column not a news article.

          Second, you think I should oppose adding more jobs because it means would add to the imbalance?

          Third, the economy is a lot different than it once was.  People shift careers several times.  Depends on what you would want to do whether you could get a job.

        8. Ron

          I’d suggest that you can’t logically complain about the imbalance in one article, and then support a development that makes it worse in the next article.

          But, you can certainly try.

          Regarding getting a job: It’s generally not up to the applicant, regarding whether or not they actually get hired at a given location.

        9. Matt Williams

          Don Shor said . . . I suggest we stop focusing on “jobs-housing balance” as having any real relevance to planning at the local level.

          I agree with Don 100%. And also agree with his subsequent comments in this thread.

    2. John D

      Matt,

      Perhaps the EPS statement:

      By increasing the supply of employment opportunities to be more in proportion to the housing available in Davis

      is intended as reference to the affordability aspect in which the resulting compensation levels would be better matched to the mortgage payments required.

    3. Richard McCann

      Matt

      We have a large slug of new projects coming on line in the very near future, with UCD throwing in a bunch as well. Also I’m not sure what UCD’s enrollment plan is, but its nearing the end of its last announced ramp up. The incremental demand that you cite is mostly students, which means those new students are spilling over into family housing. So the more direct, and low cost, solution to affordable housing is building for students to get them out of existing affordable housing.

  3. Matt Williams

    Here’s my third question.  The September 2015 EPS analysis report states:

    In the [MRIC Mixed-Use Alternative] case, the potential for slightly higher development costs may well be offset by improved overall vitality offered by the inclusion of housing in a mixed use format. If well-designed and properly integrated, housing could lead to strengthened overall economic performance and would be attractive to younger, knowledge-based workers.

    The bolded sentence is extremely important, and given that any new MRIC proposal would not be burdened by the “bait-and-switch” label that City Staff burdened the 2016 project with, having a discussion of the why EPS believes the bolded portion of their statement is crucially important.  So my question to EPS is: What evidence do you have that supports your conclusion that well-designed and properly integrated, housing could lead to strengthened overall economic performance?

     

    1. David Greenwald

      Anecdotally, and again, good question, what I have been hearing is concern from companies about where their employees will live if they come to Davis.  To the extent that resolving that issue will make it easier to recruit companies, that’s important.  I can dive further into their report to see if they end up quantifying that statement later.

  4. Matt Williams

    Here’s my fourth question.  The September 2015 EPS analysis report states:

    The cumulative ongoing economic impact associated with the proposed MRIC and Nishi projects is estimated at approximately 11,000 jobs, $2.9 billion output, and $704 million of labor income on an annual basis in the Davis economy.  About 85 percent of this is generated by MRIC alone.

    As I stated on Saturday (see LINK to my full comment) EPS concluded that the $2.9 billion annual output for the economy of the city’s residents and businesses at Full Build Out would result in a net $2.5 million annual  community.   EPS also reports the annual bottom-line revenues and costs impacts to the City of Davis government as a modest surplus of $205,000, growing to $1.5 million in Year 10 and $2.5 million in Year 25. (NOTE: Without a hotel the $2.5 million drops to just below $1.8 million.)  So my question to EPS is Why does each $1,100 dollars of revenues for the local economy only produce $1 for the City of Davis governmental entity?

    For Keith, who very understandably is concerned about the level of taxation, the combined aggregate Tax Rate on the $2.9 billion output to produce the $4,085,000 annual revenues to the City government is less than 0.15%.  That seems very, very low to me.

      1. Ron

        That’s right.  It will be tomorrow, the next day, the day after that . . .

        It’s not worth repeating the same counter-arguments and concerns, day-after-day on here. However, one has to wonder if the council is ready and willing to put the city through another fight.

        I guess we’ll see.

        1. David Greenwald

          I’ve resigned myself to the fact that I can never win.  I get criticized for not bringing up consultant reports or having real numbers in a discussion and I get criticized when I unearth long forgotten consultant report.

          On your fight comment – everything the city does evokes a fight.  They propose a hotel, it’s a fight.  They propose an apartment complex, it’s a fight.  We can’t do anything without a fight in this town.  So I suspect, just as I am resigned to it, so too are they.

        2. Ron

          David:  As usual, you’re on an advocacy mission, not some unbiased “reporting” or analysis.

          No – not everything that the city does evokes a fight.  That’s an excuse that development activists have now adopted, as a pretense for influencing the council.

          Note the relative lack of protest regarding Nugget’s new headquarters. Also, concerns regarding the Residence Inn were quickly and successfully resolved. (A reason, by the way, that another hotel is not needed at MRIC.)

          But, a third peripheral development proposal (on prime farmland, no less) may very well be too much for voters to consider at this time. I’m certainly going to point that out.

           

        3. Howard P

          Yes, Ron, we also know you are on an

          advocacy mission, not some unbiased “reporting” or analysis.

          You apparently want no residential unit approved anywhere.

          Got it.  Yet,

          It’s not worth repeating the same counter-arguments and concerns, day-after-day on here. However, one has to wonder if the council is ready and willing to put the city through another fight.

          and, you repeat the counter ‘arguments’ (in reality, spaghetti) day after day, hence my # references as to you… as to “fights”… funny…

          Takes two to fight (or tango)… bullies (and trolls) often threaten fights to cower those who have different views… I love engaging bullies… bring it on… I’ll not start a fight, but have no problem responding in kind, to someone who wants to start one.

          I am not pro-development, unrestrained, but am anti the opposite… therefore, I am the most loathsome of all creatures… despised by those at the two ends of the bell curve.  But we’re here, and not going anywhere… I say again, you want us to ‘avoid a fight?’  Bring it on!

           

        4. Matt Williams

          Hopefully it is not a fight, but rather a community dialogue … a dialogue that I believe is long overdue.

          Historically our community has been seen both from the inside and the outside as a “University Town” and because of the growth of the University and the parallel growth of the town there was enough financial resilience and sustainability in the local economy and the municipal jurisdiction (the City of Davis) to pay the bills.

          In the first decade of the 21st Century a series of events conspired to bring that period of resilience and sustainability to an end.  There were many reasons, but the “big three are (in my opinion:

          1) The growth rate of the City slowed due to both internal (e.g. Measure J/R) and external (e.g. the Great Recession, decline of bricks & mortar retail, etc.) factors.  That brought to an end the Ponzi Scheme effects that had existed prior to 2000.  I would argue that local economy was not resilient or sustainable prior to 2000, but that the fiscal imbalances were “masked” by the Ponzi Scheme effects

          2) The fiscal imbalance was further “masked” by a series of decisions (contrary to repeated staff recommendations) by Council to defer budgeted expenditures on the maintenance of capital infrastructure.

          3) Because of the nature of the capital maintenance being deferred, the cost of the deferred capital maintenance expenses have more than doubled as the capital assets continued on a recurring deterioration. Bottom-line, greater deterioration moves the needle from planned maintenance, to major maintenance, to rebuild.

          The real question is what will our community’s identity be for the next chapter of our existence (for the sake of argument 2020 and beyond).

          In order to answer thast question, we need to have a community dialogue.

        5. Ron

          Matt: There is nothing wrong with dialogue.  But, I suspect that it will ultimately become a fight between two opposing sides. Apparently, it will soon be up to the council regarding whether or not they want to initiate that fight.

          Unfunded liabilities are a trillion-dollar concern throughout the state, and is not one which has been resolved regionally by economic development.

          How does Davis compare with other, nearby communities (which are more open to development), in resolving challenges regarding unfunded liabilities?

        6. Ron

          David:  Is capital maintenance being put off because of unfunded pensions?

          Is capital maintenance being put off in other cities which have pursued more development?

          Part of Matt’s theory seems to be that the rate of development in Davis is causing these problems, and that Measure R is preventing economic development. I’m suggesting looking at other nearby cities to see if their development policies have solved these problems.

          In looking at such questions, I would also differentiate between housing, vs. economic development.

        7. David Greenwald

          During the recession we put off tough choices by doing things like cutting employees through attrition instead of making payouts and layoffs and we deferred maintanence on capital infrastructure.  With the recession over, the reason we have failed to close the backlog is largely insufficient revenue (at least $8 million per year is the shortfall) – the failure of Measure I didn’t help things.

        8. Mark West

          “we need to have a community dialogue.”

          We have had an ongoing community dialogue for years which has generally been quite successful. Where we have failed is in the implementation of the plans we created through that dialog. There is no sound reason to stop everything we are doing now in order to have yet another round of dialog unless your goal is to block change by never implementing our decisions. The dialog is something that should happen concurrently, in coordination with our implementation efforts so to be prepared to make the next round of decisions. Think of it as ‘walking and chewing gum at the same time,’ something most of us should be able to accomplish.

          We have already had a thorough discussion on the need for and our approach to economic development. What we need to do now is implement those plans, not throw them aside in order to repeat the conversation from the top.

        9. Matt Williams

          Ron, I have said this before and I will say it again (especially in reference to your “fight” comments)

          The reality of the $8 million per year shortfall (each year for 20 years) is going to force the mun icipal jurisdiction of the City of Davis to stop plunging its head into the sand plying ostrich, and deal with the fiscal realities we face.  Your questions about comparison to other jurisdictions do not change that $8 million shortfall, that is our problem and ours alone.  Whatever the balances are in other jurisdictions, those are their problems

          You are right that there are different (opposing is too polarized a word, since the number of them is greater than two) sides.  The one thing all those sides will have to deal with is change.  Change brought about by the recurring shortfall.

          — One of the groups sees  Davis as a one-company, “University Town,” and wants to hold on to the illusion that nothing has changed.

          — Another group of people want to hold onto the one-company University Town identity, and believe the best way to deal with the collapse of the pre-2008 Ponzi Scheme is by paying the additional taxes needed to cover the costs of the City’s services to which they have become accustomed.  They are willing to see Davis become more and more expensive a place to live.

          — A third group is comprised of people who acknowledge the collapse of the pre-2008 Ponzi Scheme and know we need to address the fiscal shortfall, but do not want to see Davis become more and more expensive to live in.  They also still see Davis as a one-company University Town.   They are willing to see a substantial cutback in both the cost and the level of services the City (and DJUSD) provide.

          — A fourth group is much like the third group, but they do not want to see their personal taxes increase or the level of services decrease.  They will push for taxes that are paid by others (e.g. TOT and sales taxes and gas taxes).  They will push for modest economic development like more hotels and building the cannabis economy), but fundamentally they don’t want Davis to change.

          — A fifth group is comprised of people who acknowledge the single-threaded University town economy that we historically and currently have is both unbalanced and fiscally unsustainable … and want to add the companies and jobs needed to reduce the community’s reliance on the University.

          I would argue to you that choreographing/strategizing a fight in that complex an environment is essentially impossible.  There are too many moving parts and too many different perspectives to keep track of.  Fighting will lead to little more than exhaustion (both physical and spiritual).  Mutual respectful dialog is the only way those competing perspectives can be addressed.  If you don’t attempt to do that you end up with schisms like the ones that revolved around Sue Greenwald and Mike Harrington and others.

        10. Ron

          Matt:  If a peripheral development is being proposed as a solution to that shortfall, isn’t it reasonable to look at other cities experiencing the same problems (but with very different approaches to development)?  At least, to see how things are working out, for them?

          Especially if some are advocating that Davis follow that same path?

        11. Matt Williams

          Ron, the ability to ask questions back and forth is infinite.  I could ask you whether any of those cities have a world-class research University as the company in their one-company town.

          However, the principal and principle objection I have to questions like yours rather than a true community dialogue about the community’s vision/mission is that yoiur question isn’t getting to root causes.  It is simply dealing with on-the-surface symptoms. Said another way, your approach is reactive, while a community dialogue about what Davis wants to be in the next chapter of its existence is proactive.

          Mark West’s comment in this thread (see LINK) is worth considering.  He is right that

          “We have had an ongoing community dialogue for years which has generally been quite successful. Where we have failed is in the implementation of the plans we created through that dialog.” 

          However I think he is wrong when he says

          We have already had a thorough discussion on the need for and our approach to economic development. What we need to do now is implement those plans, not throw them aside in order to repeat the conversation from the top.” 

          The reason I think he is wrong is that we have never brought the conversation to a conclusion.  It has been all talk and consultants’ input, but we have never reduced all that discussion into a tangible set of guiding principles.  That means that every time we try to “walk the walk” there are legitimate loose ends left over from “talking the talk” Loose ends produce uncertainty and in a democracy, uncertainty produces default “no” votes.

          Said another way, when Davis voters ask “Why are we doing this?” there isn’t an answer.  Phil Coleman illuminated that problem clearly in his November 18 comment when he said  

          But the city and especially the council did not put on the full court press there either.  There was no robust complaint.  There was no door to door canvassing.  There was no making the case about the $8 to $10 million shortfall.”

          A united and mobilized Council would have certainly helped sell the need for a supplemental funding measure prior to a public vote. Several talking points could have been raised in support. The Finance Department could have prepared cost/revenue projections if directed to do so. The economy was improving, tax increases had been held in abeyance during the darker economic times, and the city revenue stream showed promise for the future.

          We can’t, however, cite just the Council for leadership failure. Other leadership components should have mobilized themselves and others to march in-step with our governing body. Where were the city employee unions, the community advocates demanding increased city services for particular needs, the department heads? All would directly benefit and yet their voice and presence during the campaign were notably lacking.

          Add to the three “no’s” in the above quote, there was no city leadership and initiative. They received in return exactly what they invested, nothing.

          What Phil is calling for in his comment is community dialogue.

        12. Ron

          Matt:  Apparently, having a world-class university next to town (and in the case of MRIC – about 3 miles away from UCD through town, I’m guessing) isn’t a pre-requisite to having an innovation center.  Maybe one of the reasons that other cities are apparently pursing them.  (One might compare ease of access, as well.  For example, the one planned in Woodland might actually be easier to get to, from UCD.)  Of course, this also assumes a lot of interaction (travel?) between the university and an innovation center, which isn’t something I’d automatically conclude.

          Strange, how we used to call these things “business parks”.

          You are correct, that there are a lot of assumptions that might be challenged.

          I’d also suggest that the budgetary concerns are not obvious to most people.  However, another peripheral development would be painfully so.  Hence, I disagree with you that the answer is to “get the word out”, any more than has already been attempted.

          I jokingly suggested the other day that some development activists might be considering making the local potholes bigger, to “prove” the need. (As if all of the other struggling communities have pristine roads, etc.)

           

        13. Mark West

          “we have never brought the conversation to a conclusion.”

          What a complete and utter pile of used bovine food (male bovine in particular)…

          We bring all of the conversations to a conclusion, the problem is that some are unwilling to accept those conclusions and act as if the discussions never happened. You need only look at the Parking Taskforce as an example, where there was a unanimous conclusion including a list of specific recommendations, some of which have subsequently been attacked by the members of that same task force who had previously voted in favor. Starting with the ’61 CASP and continuing ’til today, we bring our discussions to a conclusion, then the naysayers jump in with their disingenuous attacks aimed at creating confusion and distrust. We should keep talking, for sure, but that continuing conversation should not be used to block action as only through action will we make a difference.

           

  5. Rik Keller

    Why does Greenwald feel the need to provide an executive summary of the report without providing any critical analysis or broader look at the context/impacts?

        1. David Greenwald

          Simply put, it was a 200 page report, I didn’t want to write a 4000 word article that no one would read and still not touch it, so I highlighted some key findings figuring that people like Matt would ask questions and we could see what people were more interested in diving into deeper.  Is it the best way to do things?  I don’t know.  Seems like there are some good avenues for discussion and some for follow up.  I think Matt raised some good issues.

        2. Rik Keller

          Greenwald: interestingly when I brought up issues  and questions about previous reports like this, you said I was “late” to the game and everything had already been addressed and discussed. And now you are summarizing (without analysis) one of these previous reports.

  6. Rik Keller

    Looking big picture at some of the numbers:

    In the baseline MRIC project, the hotel (160K sf) and the ancillary retail (63K sf) uses make up just 9% of the total building floor area (2,511,5K sf) . Those uses are could be located elsewhere is the city and have no necessary connection to the research park uses. Removing those uses from the equation removes $714K of TOT and $129K of sales tax, or almost 40% of the total net revenue of the project (this doesn’t account for other revenue from these uses that would be removed but it’s a starting point). This shows how inefficient the research park uses are in addressing City General Fund revenue shortfalls.

    For scale and context, the remaining net annual General Fund revenue at MRIC buildout (25 years down the line) of about $1.36 million is only about 2.3% of the City’s total budget of around $58 million and only addresses about 17% of the City’s current General Fund shortfall of $8 million.  Yet it would require increasing City size by about 23,000 people* or 40% above our current population. Note: I also have some questions about some of the larger assumptions in the report that would reduce this estimate drastically: for example, the valuations of industrial and flex/office space that are far out of line with actual regional market rates.

    I know no one is talking about addressing the budget deficit with just “economic development” in the form of research parks, but to give an idea of the scale and inefficiency: to fully address the $8 million shortfall with just research park development would be about 6x the impact of the MRIC research  park component = 65,000 more jobs and 135,000 more people.

    *11,000 total direct, indirect, & induced jobs with 1.2 jobs per household, and 2.5 persons per household.

    1. David Greenwald Post author

      On the hotel: “In the MRIC Reduced Project, the removal of the hotel precludes stays from visiting scholars, and rotating staff from global partners, while the omission of the conferencing space reduces possibilities for university-related events and activities that would strengthen the UC Davis connection.”

      You are correct somewhat correct that the hotel uses could be located elsewhere, but the most logical space for this was reduced down from a hotel-conference center, which is actually part of what we need – a space to hold conventions and conferences that we are sorely lacking right now off campus. I don’t know why you continue to be bent on removing the hotel, when in fact, we need the hotel.

      The second point is that while the EPS study provides us a baseline, that’s actually a very low estimate of their yield. To illustrate this, imagine if we had a $2 per SF CFD – that alone would generate nearly $5 million at buildout. If that’s the case, the project could generate $7 million directly a year. That doesn’t include the multiplier effect.

      1. Rik Keller

        I’m not “bent on removing the hotel”. I’m saying that we need to look at the benefits of the research park component separately. And that we should look at the relatively marginal revenue benefits in context of the scale of the impacts.

        There is also strong evidence that the potential benefits of the research park are vastly overstated due to unrealistically inflated figures used for the valuation of the industrial and flex/office space land. Free scoop: look into that! Follow the money…

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