By David M. Greenwald
Davis, CA – I never bought the idea that a small amount of supportive retail at DiSC would somehow cannibalize the downtown. That never seemed to be a realistic possibility.
If anything, the long-term economic growth and new businesses attracted to the city should “provide benefit to businesses in the Downtown and throughout the City.”
As explained in the staff report, “Retail uses shall be limited to support (to the Innovation Center) commercial uses, which may include lodging, conference space, restaurant, fitness and other convenience services. Said uses should not compete with the downtown and neighborhood shopping centers and shall be appropriately limited in size to achieve the objective of serving the Innovation Center and reducing the need for offsite vehicular trips.”
Still, it seems this was a concern by the subcommittee and the applicants, so they felt the need to allay the concerns of downtown businesses.
According to the staff report, “Prior to occupancy of retail space, Developer will demonstrate that the proposed ancillary retail will not exceed the anticipated demand increase generated by new project employees and residents.”
It continues, “If the analysis demonstrates that the proposed amount of ancillary retail space is outpacing employee- and resident-generated demand, then the ancillary retail uses shall be scaled back to be commensurate with the projected demand or omitted.”
During his presentation to council on Tuesday, attorney Matt Keasling addressed the issue of the impact to downtown.
EPS Consulting estimates that employees on the site will “spend on average $8.3 million offsite within Davis a year – that’s $8.3 million spent at other Davis businesses by the folks living and working here.” Keasling continued, saying “that does not include the almost $42 million in business-to-business transactions where the businesses at the DiSC site are doing business with other businesses within the city of Davis.”
He continued, “Additionally, what it shows is at full buildout, the annual employee compensation is around $200 million from the people that work at this site, which is a major boost to the regional economy.”
Finally he noted that “as sort of a safeguard against any concern that perhaps our retail will draw people away from the core, we do have a requirement that prior to developing any retail on site, we have to conduct a demand study to show that there is sufficient demand generated on our project site that warrants creation of that retail, or we are precluded from creating the retail until the demand exists from within the DiSC 2022 development.”
Councilmember Josh Chapman, who is a downtown business owner, said he was “extremely happy with and appreciates the retail demand market study.” He said, “That was a huge piece, as a small business owner downtown, that some of my business colleagues were wondering how it would affect the downtown. But I think that this a tool and mechanism to really help address some of those concerns.”
As I understand it, the reason you would put a small amount of retail at the center is that you have around 4000 employees at buildout, so you don’t want to force all of those employees to drive into town in order to get food during the day.
So just as having housing on-site can reduce traffic impacts, VMT and GHG, so too can having supportive retail.
While that makes intuitive sense, some downtown businesses see this as a potential competitor with the downtown.
The question is how can you address the need to provide the on-site employees with food and services during their workday, without creating a market that draws from external demand?
So the agreement calls for the developer to demonstrate that the retail “will not exceed the anticipated demand” that is generated by new project employees and residences.
If it finds that it does exceed that internal demand, then the retail uses will be scaled back or even omitted.
Will that win over nervous downtown businesses? Hard to know. Josh Chapman, a downtown business owner, who took no position on the last DISC project in 2020 when he ran for council, seemed pleased with the development.
This kind of move is probably not going to convert naysayers, but it could quell concerns in the business community, which is an important constituent.
As I said, in general, I think this only helps the downtown, particularly if it drives more business and capital into Davis.
The downtown plan is part of what the city sees as the way forward.
As Councilmember Dan Carson explained, “Right now, when you look at our budget financial forecast, we’re in the $6 to 7 million a year range for the next 20 years of the money, we need to be sustainable.
“We’ve got a downtown plan nearing completion that would get us a couple of million or more,” he said. “This could go a long way to helping us turn the corner and putting us on a fiscally sustainable (path). It’s almost 4 million plus almost 30 million in construction taxes and infrastructure. That means less pressure in the future for tax hikes and program cuts. And it helps schools and the county and other local agencies.”
Overall, I see this as being nothing but a huge benefit for the downtown, infusing more energy, more business, and ultimately helping the city improve and upgrade the downtown as well.
If this agreement helps to allay the concerns of some business owners fearing this project will cannibalize the downtown, then that could help pave the way for project approval in June.