Commentary: Five Years Later… Why We Still Need Economic Development in Davis

Share:

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


Enter the maximum amount you want to pay each month
$USD
Sign up for

Share:

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.

Related posts

21 thoughts on “Commentary: Five Years Later… Why We Still Need Economic Development in Davis”

  1. Mark West

    “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.”

    There are three options for dealing with our fiscal shortfall. First is to reduce costs, which the community has shown little interest in. Second is to increase revenues by raising taxes, which recent evidence suggests that the community is nearing their collective limit. Third is increasing revenues through expanded commercial development, otherwise known as ‘economic development.’ Economic development is not ‘one tool in the toolbox,’ it is the only option that will have a significant impact in our future. If we were to make a list of the top ten items that the City needed to focus on in order to address our fiscal shortfall, economic development should be listed first, second, third, and at every other spot on the list of ten until the community agrees that cutting costs is a viable option.

     

    1. Bill Marshall

      Agreed… but in historical situations, except for the owners and immediate family, the ‘workforce’ did not live above the commercial establishment… but it is a damn good idea… if not directly above, close proximity… so, in basic agreement…

      That is the major concern, to me, about Trackside… and Roe Building, Mission Residences, etc.  And a failing (?) of one of the concepts of the Chen Building… which was meant to fully be mixed use… not sure if there is any residential there…

      But Craig, I agree that there should be residential in the Core, preferably workforce housing for those either working downtown, @ UCD, or anywhere else in Davis. In order of priority..

      A nuance to your post.

       

      1. Alan Miller

        That is the major concern, to me, about Trackside… and Roe Building, Mission Residences . . .

        One of these is not like the others, one of these things is not the same . . . one of these things does not exist.

  2. Alan Miller

    city is working on its Downtown Plan which could feature additional office and flex space

    While the Plan could feature it, you actually have to build it or it doesn’t exist.  — Captain Obvious

    1. Mark West

      All that has been proposed so far is a continuation of the status quo. Unless that changes, there will be no significant increase in the amount of commercial space downtown as a result of the update.

  3. Matt Williams

    There is a fundamental problem with this article.  It focuses almost exclusively on the supply of commercial space.  Availability of commercial office space doesn’t generate revenues.  The incremental addition of jobs adds revenues.  All this article really does is restate, one more time, the proposition that economic development is a necessity for a healthy economy.   As one e-mail to me this afternoon said about this article, “There is no There There. It is little more than lip service sloganeering.”

    As noted in the other Vanguard article today on economic development, Robb Davis was correct when he said:

    We have a renewed opportunity to step back and ask

    — What are the ends we want to achieve with economic development?

    — What is the full set of tools we need to utilize (and invest in) to achieve the ends?

    The “ends” of economic development are a more diversified and resilient local economy; a variety of jobs that provide meaningful work for people with a variety of gifts; and adaptable work spaces that accommodate start-ups, research and lab space and corporate offices.  Fundamentally, the ends should be about identifying our particular local strengths and focus on actions that build on them.

    For nearly two years [sic … it is now five 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.

    In the months ahead I believe we must join together to develop a renewed economic development strategy that is comprehensive and starts NOT with vague notions of innovation as an end in itself, but with how to foster development given the already existing strengths of this community—which are substantial.

    1. Alan Miller

      “There is no There There. It is little more than lip service sloganeering.”

      Maybe tomorrow’s article on economic development in Davis will have more there, there.

        1. Matt Williams

          Well what I think is that the description that “there really isn’t any there there” from yesterday’s e-mail still applies.  Today’s article is little more than a “build it and they will come” message. All supply-side.  Nothing about the demand-side.

          There is nothing provided that gives any insight into either the City’s or UCD’s or the community’s or the ARC partners’ tactical focus on the current needs of the human capital and talent that is going to fill the incremental additional jobs that make the “they will come” portion of the strategic message real. Those jobs are what is needed in order to improve the fiscal situation Davis faces as a community.

          Said another way, today’s article spends a lot of time on supply-side imagination and precious little time on demand-side reality.

          Said an even simpler way, “Who is going to come?”  If no one comes, all we will have is either empty built buildings or empty lots with no buildings.

        2. Matt Williams

          Bill, how many incremental new jobs in the rejuvenated DAC/MRIC will DMG or Mori Seiki be adding?

          To paraphrase Fire Chief Dennis Reilly, “There is a reason that the rear view mirror and the front windshield are the sizes that they are.  What we see in front of us is almost always much more important that what we see behind us.”

  4. Mark West

    Matt: “Said another way, today’s article spends a lot of time on supply-side imagination and precious little time on demand-side reality.”

    The ‘demand-side reality’ is expressed in the expanding list of companies (and jobs) that have left Davis due to the lack of space to expand. No reason to belabor the obvious.

    1. Matt Williams

      Mark, while I agree with the importance of the companies and jobs that have left, the demand-side reality is that those departed companies have already charted a non-Davis course … and the chances of them being monthly rent-paying tenants of ARC/MRIC in the next 60 months are very slim indeed. Bayer/AgraQuest isn’t coming back.  Bayer/Monsanto/Calgene isn’t coming back.  Superior Farms isn’t coming back.

      You are very correct to focus on the additional jobs that Davis could lose if we don’t act proactively, and further job losses will make an already bad situation worse, but the Vanguard article doesn’t even give lip service to those potential incremental additional losses.

      There is no discussion of how the collaboration of the City-UCD-community-ARC/MRIC partners are going to make the holistic needs of the human capital and talent into real who is going to come answers. 

      Said another way, who are the anchor tenants for ARC/MRIC, and how many incremental additional jobs are associated with bringing thoise anchor tenants to Davis?

  5. Mark West

    Matt: “Said another way, who are the anchor tenants for ARC/MRIC, and how many incremental additional jobs are associated with bringing thoise anchor tenants to Davis?”

    I truly feel sorry for those in life who believe that they have to know all the answers (in detail, perhaps in triplicate) before they will start reading a story.

    1. Rik Keller

      Mark West said: “I truly feel sorry for those in life who believe that they have to know all the answers (in detail, perhaps in triplicate) before they will start reading a story.”

      This is an ironic statement indeed from someone who won’t even read the most comprehensive study around of the (lack of) economic development impact of these types of research park developments, and instead is trying to dismiss it at every turn.

      It’s also interesting that the developers explicitly admit in their letter that their strategy is to provide as little detail about the project as possible for as long as possible. This should be regarded with a lot of suspicion.

       

      1. Mark West

        “This is an ironic statement indeed from someone who won’t even read…”

        Never said I didn’t read it. I have, and the only thing it says that is relevant to the local discussion can be distilled down to ‘don’t believe marketing materials.’ Now there is a truly shocking conclusion, in fact, I think Alan M. has said much the same, though perhaps not in the same way. The short story here Rik is that you have oversold the significance of this report, which is ironic considering the take home message (Don’t believe oversold marketing promises).

         

        1. Rik Keller

          Mark West:: If that’s all you got out of it, you didn’t really read it.

          If you insist on ignoring the data from a series of the most comprehensive studies of the subject, one wonders what your motivation is to keep discussing the topic at all.

Leave a Reply

X Close

Newsletter Sign-Up

X Close

Monthly Subscriber Sign-Up

Enter the maximum amount you want to pay each month
$ USD
Sign up for