We keep hearing people question whether Aggie Research Campus (ARC) will work, whether it can bring in the business that we need in order to make the economic models that show it generating $5.4 million – which I still think is on the conservative side.
The issue was actually studied at length a decade ago – DSIDE (Designing a Sustainable and Innovative Davis Economy), Studio 30, the Innovation Park Task Force and others studied the issue and believed that high tech economic development, a dispersed innovation model and a large peripheral research park on the edge of town were the ways to go.
The Vanguard has seen this as the most likely path forward to sustainable jobs and revenue generation since 2013. Unfortunately, the halting progression of such projects that emerged back in 2014 has led to the process slowing down.
Not waiting for Davis to act, Chancellor Gary May partnered with Sacramento Mayor Darrell Steinberg to create Aggie Square. Make no mistake—that was a blow to Davis’ efforts. But as we can now see, if Davis gets its act together, it only illustrates the vast potential of the Sacramento region.
One of the more interesting things that Barry Broome reported during Thursday’s Greater Sacramento Webinar was that Aggie Square already has 28 companies lined up to move in.
What this means is that before the Aggie Square project has even broken ground, they have their entire space filled. That is exceedingly good news for so many reasons, which I will explain shortly.
But back up one level. Barry Broome also talked about that the tech industry is actually booming. CNET this week had a story that, while the US job market has had the worst month in history, putting 33 million out of work, tech companies are hiring.
CNET reports that “there’s been an uptick in job openings in Silicon Valley over the past few months.”
That’s good news.
What we heard from the community and from some members of the Planning Commission when ARC came before them a few weeks ago was concern. Why are we planning this when the economy is tanking?
One member of the Planning Commission suggested that ARC would be competing with Aggie Square for companies and, along with Woodland’s proposed park, we would be cannibalizing the market.
But we aren’t.
As Greg Rowe pointed out back at the April 22 Planning Commission meeting, “I’m also concerned in the urban decay category that if you look at the UC Davis website and the kinds of businesses they are trying to attract to Aggie Square.”
He said, “It’s all the very same business that this Tech Park is trying to attract.”
He is concerned, along with Woodland, because “it seems to me with three tech parks trying to attract the same clientele we are looking at over-saturation of the market.”
In fact, all of these concerns turn out to be completely wrong. The tech industry, with everyone shifting to telecommuting, is expanding not contracting. The commercial demand is high for the Davis area. And Aggie Square will have no impact on ARC.
Rowe was also mistaken that Aggie Square and ARC are likely to attract the same clientele.
As Broome pointed out on Thursday, “The strength of that institution is still in Davis, not Sacramento.”
He said, “If you can get 28 world class companies and $1 billion in the Sacramento market which is largely the medical school and health care sector, think what happens when we more meaningfully engage the number one veterinary school in the world, the number one food and agricultural school in the world and all of the other incredible sustainability achievements.”
Aggie Square’s companies are focused heavily on medical technology, but that leaves the strengths of the UC Davis Davis campus—ag and clean energy as well as veterinary medicine—to be explored.
“We have 14 science-based enterprises looking at Yolo County right now for space,” he said.
The problem of course is that ARC is not going to be ready to go now. Even if it gets through the process and passes a vote in November, we are looking into the future. The good news is that there are plenty of opportunities to fill this part—but we have to have shovel-ready space, companies are not going to sit around and wait on the uncertainty of an approval process with a vote at the end of it.
Readers inclined to be skeptical will point out, of course, there are key differences between ARC and Aggie Square. Ironically, they will undoubtedly miss the biggest difference—not that it is subsidized or that is it is on university land, but rather that Mayor Steinberg owned and championed this process.
ARC may and probably will get support from the Davis City Council, but there is no champion on the council. You don’t see Mayor Brett Lee stepping up on this and leading the way like Steinberg to make this happen.
Nevertheless, the opportunities are there for ARC. ARC is in most senses of the word adjacent to UC Davis. I still think a win-win move with the university would be to put the World Food Center at ARC, and allow businesses to develop around that university anchor.
There are those who will argue that ARC’s model is based on a demand for housing. This isn’t. ARC needs housing for a lot of reasons. Aggie Square has housing too—it is simply across the street rather than on-site.
Ultimately, commercial development is vastly higher risk and has a lower return on investment than residential. That is based on the slower build out times, the higher costs of construction and the rental rates.
Given that this project is not subsidized by the city or university, ARC need to be able to manage that risk, and one way to do is to add housing. That doesn’t make it a housing project any more than adding a hotel doesn’t make it a hotel project and adding retail doesn’t make it a retail project.
Will ARC ultimately benefit the community? We have a model that conservatively shows it adding $5.4 million in ongoing revenue plus thousands of jobs and multiplier effect on the economy. That seems like a big benefit.
Does that benefit create issues that need to be mitigated and offset? That’s how life works.
In the end, if approved, will this be successful? We cannot have guarantees. But what the success so far of Aggie Square shows is the potential for being able to find commercial companies to move to ARC. If that happens, then we have a chance to create jobs and revenue for this community.
—David M. Greenwald reporting