The year 2013 was the first time I took seriously the notion of large scale economic development in Davis. We were coming off the worst recession since the Great Depression and, unlike other downturns, this one hit Davis fairly hard. As recently as 2014, the city had a $5 million structural deficit that had to be closed requiring a half cent sales tax – up for renewal next year.
Since then, efforts at economic development in Davis have seen victories and defeats. We saw the defeat of Nishi in 2016 with 325,000 square feet of innovation space. We saw Davis Innovation Center leave and MRIC (Mace Ranch Innovation Center) put on hold.
On the positive side, we have seen the adding of two hotels, one of which could open shortly. We have seen the investment in University Research Park.
The city is working on its Downtown Plan which could feature additional office and flex space that could serve economic development.
But the loss of five years has hurt. No longer is Davis leading the way in the region, as we have seen efforts in Woodland and West Sacramento to develop innovation centers, as well as the university investment at Aggie Square.
But, as Barry Broome indicated last fall speaking before council, while there are efforts underway in Sacramento and Woodland, “Davis (is) the front door to the Silicon Valley for the region.”
Davis, he said, has the ability to help solve the world’s food security, farming and climate change problems.
“It’s a bit of a frustration that we haven’t been able to figure out how to take this research park forward between the city and between the university,” he said. “UC Davis has the opportunity to be among the most impactful universities on climate change, farming, food security.”
If anything, the need is greater now than ever before. A recent analysis by the city staff shows that there are around 130 acres of available commercially zoned land in Davis. BUT, when we evaluated that land, nearly 80 acres of that is fundamentally unavailable due to either other land uses, size, location, or, in the case of the Frontier Fertilizer site, because it’s a Superfund site that still has to be cleaned up.
While the city has kept its operating budget balanced since the passage of the sales tax measure, the full one percent sales tax is up next year for renewal. City estimates on the budget are also not encouraging, with an ongoing deficit of $8 to $10 million.
Voters voted down a parcel tax last year for road maintenance, despite needs that remain between $6 million to $16 million annually over the next 20 years.
It is not just roads: bike paths, facilities, parks, parking lots, traffic and more. The estimated funding gap over the next 20 years is $224.4 million.
We should not look at economic development as a panacea here, but rather one tool in the toolbox that can help improve revenue without raising taxes even higher on citizens. Increasingly, citizens believe they are taxed too highly.
In the recent school poll, 37 percent percent responded in agreement to the statement, “Taxes in this area are already high enough; I’ll vote against any additional tax.”
Davis receives less in per capita sales tax than many other comparable cities, as our analysis from 2016 bears out – and nothing has substantially changed since then. If anything, you might argue things have gotten worse.
And in a way they are worse. Davis relies heavily on auto sales, which is ironic for a community that purports to be green and wants to be on the technological edge. Without finding ways to shore up its revenue generation, the city will struggle to be fiscally viable.
As noted, I was not always on board with the idea of a peripheral innovation park as a way to move forward economic development.
My thinking began changing in the summer of 2013. Bayer Crop Science announced it would be expanding its facility, which required it to move from Davis, where the company AgraQuest was founded, to West Sacramento which had space available to accommodate the company.
That move of a native Davis company that had been founded, grew, expanded, and been bought out by an international company was a huge blow to Davis, in both the loss of jobs and tax revenue.
In 2014, the fear was that other companies would follow – that danger appears to be even higher now.
The key question going forward is not only the future of economic development in Davis, but how does Davis move forward to produce the revenue needed for a sustainable future?
The problem that Davis faced, however, was laid out in the Studio 30 report. In order to generate the kind of tax revenue needed to retain the larger companies like Bayer AgraQuest or Schilling Robotics, or perhaps Mori Seiki down the line, Davis needs commercial space to accommodate growth of startups and development of small companies into larger ones.
If you read the now-aging Studio 30 report, you will see that this is not an eggs-in-one-basket approach. The Dispersed Innovation Strategy calls for utilizing space where it exists, in a number of places – some in the core, some near the university, some in the downtown, and some on the periphery.
The near-term strategy: “The Gateway (Downtown Research & University Innovation District) option offers the best close/in location due to the proximity to University and property owner and University interest and should be pursued as the City’s top innovation center priority.”
However, the key point raised is this: “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.”
Studio 30 instead called for: “A combination of one ‘close in’ hub or incubator with one (or in some future time, two) larger, less constrained (and presumably less costly) edge site offers the right mix of University proximity and identity with the expansion capability to address job growth and rapid business expansion.”
But as noted a lot of has gone wrong since the Studio 30 report has come out. But the need remains – and, if anything, is more acute.
What we see right now is an ongoing deficit in our ability to pay for key infrastructure, we have a lack of available commercial space and a continuing lagging per capita of sales revenue. The future of the quality of life in this community depends on the ability to find a sustainable solution into the future. I continue to believe economic development is a tool we need to maintain in our tool chest.
—David M. Greenwald reporting