When the Aggie Research Campus (ARC) project goes to the polls in November—if council approves it in July—the voters will have to weigh the benefits of the project against the potential impacts, like traffic. One of the big questions was how much of a financial benefit the city would receive and the EPS (Economic & Planning Systems, Inc.) report that was released late on Wednesday shows a substantial benefit—about $5.4 million in net fiscal revenue.
This is substantially higher than the $2 million or so in benefits that EPS had analyzed for the previous project, MRIC (Mace Ranch Innovation Center).
The ARC proposal is located on a 185-acre site immediately east of the City of Davis along the Mace Blvd. curve in Yolo County. Buzz Oates, Reynolds & Brown and Ramco Enterprises have an application on file with the City and are in the process of pursuing land use entitlements and an annexation into the City of Davis.
The ARC proposal features a mix of office, research and development, laboratory, prototyping, advanced manufacturing, supporting retail, a hotel, recreation, open space and housing. At buildout, the ARC would include up to 2,654,000 square feet of innovations center/business uses and 850 residential units of varied sizes and affordability.
EPS projects that at buildout the general fund gross revenue will be $7.3 million with another non-general fund revenue at $673,000 for a total of around $8 million in annual revenue.
Forecasted expenditures are estimated at $2.6 million, resulting in annual revenues net of cost to the City of approximately $5.4 million. Davis Joint Unified School District would collect $1.37 million annually in school assessments and bond levies.
Project Manager Dan Ramos in a statement to the Vanguard said, “What the analysis shows is that our project is a big financial winner for Davis.
“It’s clear that providing state-of-the-art facilities for companies focused on innovation and sustainability is critically important in enabling Davis to continue providing the high quality of life that its residents expect,” Ramos said. “The positive economic and City-budget impacts that the report highlights are especially important now, given the significant downturn we’re experiencing.”
The EPS analysis notes, “While the ultimate tax-sharing terms between the City and Yolo County (County) have yet to be agreed, this analysis is based on an assumed 50/50 property tax split between the City and the County, after transferring specific funds to reflect City absorption of post-annexation responsibilities.”
EPS finds that “the project is estimated to have a net fiscal surplus at the completion of each phase, growing from approximately $1 million annually at the completion of Phase 1 to more than $5 million annually at buildout.”
Another assumption is that the hotel on the site will average 79 percent occupancy with an average of $180 per night room rates for 150 rooms. They argue that the industry standard is 80 percent occupancy.
“Hotel development is assumed to occur during the third phase of the Project, after demand has been established and the available land area becomes more limited,” they write.
In addition to the on-going revenues, the Project will have permitting fees of $32.2 million, construction tax of $14.7 million, and impact fees of $113.6 million are estimated to be generated for the City. Total school impact fees of $4.4 million and County FSA fees of $4.5 million are also estimated.
Though they note that “impact fees will off-set the Project’s impacts to existing and planned public facilities, while permitting fees are generally considered to be revenue-neutral in that they offset staff resources.”
They also note that the expectation is the site will generate more than 5000 jobs with an expected employee compensation of nearly $500 million.
They write, “The City will experience some economic spinoff of that direct employment, but a much greater spinoff impact will occur in other parts of the County as businesses elsewhere in the County respond to the ongoing business, employee, and household spending generated by the Project.”
Thus they project approximately 9000 total jobs generated county-wide annually at buildout, with compensation between $600 to $700 million.
There is a CFD (Community Facilities District) built into the analysis.
They write, “CFD financing was incorporated into each phase of the Project. Residential CFD rates are assumed to be 0.4 percent of assessed value. Commercial use CFD rates are assumed to be $5,000 per acre. Both of these rates are in the middle- to lower-end of the range of CFD rates typically seen in the region.”
The city notes in their release that the project has so far been presented to and recieved by a number of city commissions.
The Draft Subsequent EIR had its public comment period closed on April 27 and staff is currently reviewing and responding to a multitude of submitted comments.
This EPS Fiscal and Economic Analysis will be reviewed by the Finance and Budget Commission on May 11.
Following the Finance and Budget Commission review, land use application hearings will occur before the Planning Commission and the City Council. If the proposed project is approved by the City Council, the project would be placed on the November 2020 ballot as a Measure J/R proposal to be voted on by the citizens of Davis.
The project was originally submitted to the city in 2014 in response to an RFEI (Request for Expressions of Interest).
Back in 2008, the City Council began to evaluate the need for additional business park lands/facilities to accommodate the long-term, economic growth potential in the city. In response, the Business Park Land Strategy was prepared.
The study determined that existing capacity was not sufficient to support long-term business needs and pointed to a need to annex additional contiguous lands to meet future needs.
In 2010, the Innovation Park Task Force was formed to explore potential sites. STUDIO 30, UC Davis Extension and the Innovation Park Task Force prepared a study to identify potential sites for the innovation center.
The Subsequent EIR is scheduled to return to the Planning Commission in June with Council expected to take final approvals steps by July if it wishes to place the project on the November 2020 ballot.
Dan Ramos noted, “With total annual economic output estimated at $1.71 billion for Davis and $2.20 billion for Yolo County, our project will be an economic-development engine during potentially challenging times for the City and region.”
—David Greenwald reporting