Commentary: What Should the City’s Economic Development Strategy Be?

DMG-Mori – photo by David Greenwald in 2014

By David M. Greenwald
Executive Editor

Davis, CA – Yesterday as part of our weekly series of questions, the Vanguard asked the candidates how they would approach the city’s economic development strategy.

I am not going to weigh in on their answers—the voters in the third district will have a chance to choose between these two candidates on this and a whole host of other issues.

But instead, I do want to respond to a few comments made by readers yesterday.

A point was made that the city has already “undertaken a comprehensive economic development strategy and nearly every aspect of it has been shot down by the voters.”

That’s a fair point.  The dispersed innovation policy called for the city to better utilize existing parcels and space—which to a large extent the city has done over the last several years.  There have been some key wins for the city—the expansion of University Research Park, the landing of DMG Mori, and the retention of Schilling Robotics, among others.

At the same time, the Studio 30 report called for the development of an innovation center at Nishi which was narrowly voted down in 2016, and a peripheral innovation center was voted down by the voters in 2020 and 2022.

Moreover, the university has focused its efforts on Sacramento, in the form of Aggie Square, and has largely stayed out of any effort to expand the innovation space in Davis.

The commenter, however, goes on to argue: “Much as we’d love to believe there’s another approach out there, there isn’t.”

This I disagree with.  I think in fact there are a few answers.

The most obvious is that we just punt on the notion of economic development in Davis, and allow the university to focus its efforts at Tech Transfer on places like Woodland, West Sacramento, and Sacramento.

The problem with that approach is two-fold (or more).  One problem is that that doesn’t solve Davis’ needs for revenue and jobs for young families.  The other problem is that in a lot of ways it becomes the worst of both worlds—some people voted down DiSC 2022 because it would induce traffic and VMT, and yet by pushing university growth outside of Davis, we create traffic and VMT, just in the opposite direction.

A second answer is the community vision approach.  The idea is that in 2010, we failed to include all facets of the vision when we created the innovation strategy, and therefore, if we could somehow do it right, we could get buy-in from those segments that opposed DISC in 2020 and 2022.  But perhaps another approach comes out of these efforts.

A third answer is that we could get rid of Measure J which is what made the opposition to all three projects possible.  I see two fatal flaws here.  One is that in 2020, Measure D was approved with about 83 percent of the vote and I frankly don’t see that changing in the foreseeable future.  The second problem is, even if we didn’t have Measure J, nothing would prevent voters from petitioning to place an unpopular project on the ballot.

Finally, we have the “wash, rinse, repeat” approach—we simply keep trying what has failed the last two election cycles and hope with the right project and the right political environment, we can get a project approved.  After all, the original DISC was not voted down by a large margin, nor was Nishi in 2016.

Of the four approaches, I probably most favor the second.  My biggest criticism of the city was the failure of the council to really lay out the problem of the status quo.

As one commenter noted, “the folks who oppose these types of proposals aren’t stupid – they know that the promised ‘benefits’ won’t overcome the direct drawbacks.”

But there is another side to this—that is that the status quo cannot hold.

In other words, it’s easy to argue that a given project will not fulfill its “promised benefits” and perhaps even easier to point out the downsides of new development in terms of traffic, VMT, housing needs, and encroachment on farmland—it’s hard to argue that the status quo isn’t really the alternative.

What happens to this community is we continue current policies?

We continue to attract a generation of highly trained and qualified STEM students who take their talents to other regions.

Moreover, UC Davis, in my view, continues to expand and improve its R&D and technology transfer, but will focus its growth away from Davis.  As I pointed out earlier that means we get the worst of both worlds—an expanded university, and more commuting to and from campus without the upside of new jobs and revenue in the city.

The city continues to struggle fiscally as the main sources of jobs are the university and Sacramento.  The city with a scarcity of new housing is pushing growth outside of the city, but the university remains the focal point of economic growth in the region, which will exacerbate travel and commute patterns, worsening travel, while pushing young families to live elsewhere.

The housing crisis will further push young UC Davis and DJUSD students outside of the city, continuing to strain the schools, and continuing to make this community a bifurcated community of students and wealthy retirees, with fewer and fewer families and middle-class residents in between.

In other words, by attempting to preserve this community, we are actually changing it rather drastically.

Yes, creating jobs will create the need for housing.  That’s a big reason why DISC had housing on campus.  But not having DISC won’t alleviate the demand for housing and it also won’t alleviate the need for economic development; it simply pushes those things further out, requiring, ironically, more vehicle travel to and from the university.

In short there is no status quo.  Things will change.  My proposed solution is to figure out as a community how we want to approach this and go from there.  Doing nothing means that change will get decided by others.

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.

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28 Comments

  1. Don Shor

    A second answer is the community vision approach.  The idea is that in 2010, we failed to include all facets of the vision when we created the innovation strategy, and therefore, if we could somehow do it right, we could get buy-in from those segments that opposed DISC in 2020 and 2022.  But perhaps another approach comes out of these efforts.

    We’ve already had this conversation.

    https://www.davisvanguard.org/2022/01/commentary-city-of-davis-has-a-chance-to-go-bold-again-on-economic-development/

    David:

    Hot after the successes of Innovation Park Task Force and DSIDE along with the Studio 30 Report, the city came up with a bold plan of a city position, partly funded by the private sector and partly funded by the city.

    Don:

    And the voters scuttled them all, one by one.

    David:

    The city should be plotting out its plan of attack right now to be able to take advantage of this moment.

    Don:

    “The city should”? The mayor? The city council? The city manager? Just out of curiosity, what did you have in mind? Start another Measure J/R/D vote? Convene another task force, start DSIDE again? Would you bother to participate in such an event?

    It’s a waste of time for city officials and residents to work on planning processes that get voted down.

    The residents of Davis seem satisfied with what they have now: a nice bedroom community with great schools and increasing property values. They are apparently willing to keep increasing their taxes to pay for amenities. They don’t share your concerns about the budget situation, despite having had the opportunity in a couple of past election cycles to vote for candidates who focused on those issues.

    David Greenwald

    I largely agree on the last paragraph.  The problem I believe is it’s not sustainable.

    Don Shor

    I believe is it’s not sustainable.

    Probably not, but we’ve had commissions, ad hoc committees, conferences, expert presentations, Requests for Proposals, city council members who pushed hard for projects, forceful mayors, persistent mayors, candidates who ran on fiscal platforms (and lost). Am I missing something? Some lack of public engagement in all of those processes? How much more can you do?

    The public has supported two housing projects and voted down the economic development projects.

    DISC might pass, but it’s been cut in half and the economic benefits are reduced by the large amount of housing. I really don’t see why local civic leaders would get out in front of something like this at this point.

    When the downtown plan gets finalized and the Anderson and Hibbert families come forward with whatever they wish to do with their properties, we can have a discussion about economic development. Until then, we’re spinning our wheels. The reputation of this city with respect to economic development is firmly established: in the minds of the voting taxpayers, and in the offices of developers in the region. And apparently in the office of the Chancellor as well.

    Unlike Vacaville, Davis can’t just say “hey, we’re open for business! C’mon over!” because the past behavior of the city’s voters tells the potential business owners and developers what they can see they’ll go through. They are certainly not going to waste time and money on something where they have to pay for an election and campaign with the odds clearly stacked against them.

    Do you have a new angle on this topic to explore? Because I think economic growth advocates lost this argument locally about 5 – 10 years ago.

  2. Ron Oertel

    As one commenter noted, “the folks who oppose these types of proposals aren’t stupid – they know that the promised ‘benefits’ won’t overcome the direct drawbacks.”

    As a reminder, that comment was actually made in regard to a proposal in Roseville (though it could also apply regarding something like DISC). 

    Just found a YouTube video regarding this (link below), titled “Neighbors in West Roseville Aim to Stop a Proposed Industrial Park”.

    Good luck with that, as I think they’ll need luck to stop or change it.  Maybe those residents will consider something like Measure J, in the future, though I doubt they’d have much success with that in Roseville. Developers have way, way too much influence in that city for something like Measure J to succeed, there. As it is, Measure J is already under constant attack in Davis – at least attempts to weaken it.

    Kind of interesting:  I’m gathering from the city’s response (near the end of the video) that the city (might have) sold the land to the developer in the first place.  (It’s not entirely clear, but it stated that there was an exclusive negotiating agreement regarding the property, and that the city approved the purchasing agreement.)

    https://www.youtube.com/watch?v=BLJQsRihK2I

     

  3. Ron Oertel

    One problem is that that doesn’t solve Davis’ needs for revenue and jobs for young families.

    Uhm, I thought that there weren’t “young families” in Davis in the first place.  As such, why would these non-existent residents need jobs in Davis?

    The other problem is that in a lot of ways it becomes the worst of both worlds—some people voted down DiSC 2022 because it would induce traffic and VMT, and yet by pushing university growth outside of Davis, we create traffic and VMT, just in the opposite direction.

    Business parks are not “university growth”.  When the one in Woodland is built, it likely won’t have much direct connection to UCD.  But even if it did, traffic between that site and UCD would largely avoid the city of Davis.  In fact, I’d argue that it will have much LESS impact on traffic in Davis than a site like DISC would. And would likely result in more “efficient” travel between the two locales. (I also wouldn’t be surprised if a bus line eventually connected that site with Davis/UCD, as there’s already bus lines which do.) But again, it’s not going to be directly “connected” to UCD or Davis.

    (I’m referring to the business park which failed in Davis before even reaching a vote, and added 1,600 housing units during its “move” to Woodland.)

    Interestingly-enough, I’m pretty sure that the site selected in Woodland was (previously) “commercial-only”.  Which just goes to show that even there, these things don’t pencil out without a massive amount of housing.

    Of course, Davis (and even those in Woodland) can’t control what Woodland (or other communities) do, especially in the absence of something like Measure J. And don’t look for Woodland to do so anytime soon (though they do have a voter-approved urban limit line – which is quite “generous” in regard to development interests).

    But one “advantage” (if you want to call it that) is that anyone who is moving to Woodland is likely to be paying less for housing, than they would in Davis.  Which is usually important for those just starting out in their careers and adult lives.  (Not sure if this comparison is true throughout the region, as there’s some pretty expensive housing in other areas, as well.)

     

    1. Ron Oertel

      And don’t look for Woodland to do so anytime soon (though they do have a voter-approved urban limit line – which is quite “generous” in regard to development interests).

      To clarify, I’m pretty sure that Spring Lake and the adjacent, planned business park already abut the southern boundary of Woodland, so the city won’t spread further south toward Davis without voter approval.

      It’s other areas of the city (e.g., west, north, and east) that may accommodate a lot more growth without voter approval.  Especially if the council can convince the federal (and state?) government to fund levee improvements (for the north and east sides).  And can (also) overcome legal challenges that the farm bureau initiated against the city, in regard to concerns that levee improvements would impact farmland on the “other side” of the levee.

      https://www.davisenterprise.com/news/judge-rules-against-city-of-woodland-in-flood-wall-dispute/

    2. David Greenwald

      One problem is that that doesn’t solve Davis’ needs for revenue and jobs for young families.

      Uhm, I thought that there weren’t “young families” in Davis in the first place.

      I thought the point of my comment is that Davis needs jobs (and homes) for young families. Hence, right now, there aren’t enough young families in the first place.

      1. Ron Oertel

        Hence, right now, there aren’t enough young families in the first place.

        For what purpose?  To fill an oversized school district?  Or, to make “them” pay the city’s bills?

        Also, as the city’s population ages, folks generally use LESS “city amenities” (e.g., libraries, sports parks, schools, etc.). As such, why would they care about that? It’s the non-existent families which care about that.

        Old folks probably don’t even use the bike paths that much, and if they do – they’re going slow (with bikes that can handle a pothole). For that matter, the same thing regarding streets.

        You know what they DO care about? Development which has a negative impact on them.

        By the way, ALL housing eventually turns over, and Davis already has LOTS of single-family housing (which appeals to families).  Check this place out:

        https://www.zillow.com/homedetails/1103-Snyder-Dr-Davis-CA-95616/16544251_zpid/

        And despite that low price for a decent place in a fine location, it’s been on Zillow for almost a month, now.

        1. David Greenwald

          How are you expecting the city to be able to pay its bills? What do you think the health of the city would be with a population based on students and retired people?

        2. Ron Oertel

          How are you expecting the city to be able to pay its bills? What do you think the health of the city would be with a population based on students and retired people?

          Seems like you didn’t read my comment, regarding less need for amenities as the population ages. I suspect that if you ask the “average man/woman on the street”, they’ll largely say that they see no significant problem in the first place.

          I’m pretty sure that there are actual retirement communities, which “somehow” pay their bills.

          But let me ask you a couple of questions:  How is continuous growth a sustainable model?  And what makes you think that any new housing that’s built won’t also eventually suffer the same “dreaded” fate (people who age in place)? Note that this is even occurring in Woodland, in more-established parts of town.

          And what makes you assume that “young families” would move into that new housing in the first place, especially when nearby communities provide the type of housing which appeals to them at a cheaper price? (Also, see The Cannery – in regard to “who” that apparently appealed to, despite the type of housing it primarily consists of.)

          Part of the problem is that while declining enrollment is a problem for the schools, it’s also an indicator of a problem in the community.

          Your comment has no basis in reality.  Have you examined other (wealthier) communities than Davis, which are also experiencing a decline in enrollment?

          In fact, I suspect that (in general) the wealthier a given community is, the greater the decline in enrollment over the past few years/decades, and going forward as well.

        3. Ron Oertel

          I’d also add that a lot of the “city’s bills” are the same type of bills facing most other cities in California.  That is, unfunded liabilities in regard to benefits “promised” to retired city employees.

          Now, if you want to put forth the case that Davis voters need to “bail out” fiscally-irresponsible decisions from prior years (that almost every other city made, as well), have at it.

          Maybe you can also convince them that an unneeded business park (during a period of unprecedented downturn/vacancies in commercial real estate) will be the financial savior of those prior decisions.  And that the only way that said business park will pencil-out for developers is if it also includes lots of money-losing housing, for the city.

          And that the “personal price” of approving such development will be felt every time someone attempts to drive out of, into, or through the city. (Among other financial and non-financial costs, as well.)

          Now, maybe you can convince them that they’ll repave a bike path as a result, at least. In addition to paying-off all of the prior, irresponsible decisions.

          But it doesn’t sound like a winning campaign strategy, to me. Nor does keeping unneeded schools open, for students which don’t exist.

  4. Tim Keller

    The city has never had a comprehensive economic development strategy.   “lets build a business park” does not equal an economic development strategy…. its a tactic, and a tactic out of a playbook that is mis-matched with our town’s actual competitive strengths and opportunities.

    Rather than re-iterate what I have said here previously I will just link back to it:
    https://www.davisvanguard.org/2022/10/guest-commentary-what-economic-development-looks-like-in-davis-and-what-it-doesnt/

    1. Richard_McCann

      Tim is exactly right, so I disagree with both Mark and Don for opposite reasons. The City had for a short while a single person who might have been considered an economic development professional who understood the need to do more than passively sit back and expect businesses to waltz into town. But he never fully developed a development plan–he only just got started. That was almost a decade ago now. We have not created a vision of what we want out of economic development and then mounted a concerted effort to bring those businesses to here. Identifying empty lots is not an economic plan. I’m pretty sure Aggie Square ended up in Sacramento because Sacramento has an economic development recruiter.

      For the seniors living here, for many the largest share of their asset values are in their homes. The value of those homes depend directly on both the amenities in the community and the quality of the schools. I’ve posted here just a sliver of the economic studies that prove this point. The quality of the schools depends heavily on having a population of families in the 25-49 age group. If those disappear, the quality goes down and then house values fall. The only places where house values remain high in the face of falling enrollments are those with strong amenities such as San Francisco and the Oakland Hills. There is no community in the Central Valley that has the amenities to counter the valuation impacts of falling enrollment.

      It is possible to maintain these values with having a growth “Ponzi” scheme, but it does require a much more dynamic community than we currently have. We’ve lost than dynamism over the last two decades and its really starting to show.

      1. Ron Oertel

        For the seniors living here, for many the largest share of their asset values are in their homes. The value of those homes depend directly on both the amenities in the community and the quality of the schools. I’ve posted here just a sliver of the economic studies that prove this point. The quality of the schools depends heavily on having a population of families in the 25-49 age group.

        Again, “quality” does not equate with “size”.

        If those disappear, the quality goes down and then house values fall.

        I thought your concern was overly-HIGH housing prices, no?  So given your claims and views, why would you be advocating to maintain high housing prices?

        The only places where house values remain high in the face of falling enrollments are those with strong amenities such as San Francisco and the Oakland Hills.

        Housing prices are falling faster in San Francisco than most places, and it has nothing to do with its horrendous public school system.  Neither did the rise in values in the first place.

        There is no community in the Central Valley that has the amenities to counter the valuation impacts of falling enrollment.

        The primary “amenity” that Davis uniquely has (for a town of its size) is an adjacent UC campus.

        But again, size of enrollment in not an indicator of quality.  And again, it’s not just San Francisco or the Oakland Hills which are experiencing declining enrollment.  It’s just about every single high-value community in the state!

        If anything, there’s a direct correlation between high housing prices and declining enrollment – not the other way around (as you claim).

        Or more accurately, there’s a direct correlation between declining enrollment and relative WEALTH of a community. The reason being that wealthy people don’t have as many kids in the first place, and/or are already-past their child-bearing years.

        Not having kids is, in fact, one of the ways to maintain wealth in the first place.

        And for communities, fewer children mean less need for costly amenities, such as schools, sports parks, libraries, etc.

  5. Mark West

    “The city has never had a comprehensive economic development strategy.”

    This statement is not true. We have had several over the years; we just ignore the findings. Then after a few years have gone by, someone starts up the chant that we need a new visioning process before we can make any decisions. In my view, the primary goal of most of our commissions and task forces is to delay change by convincing the populace that we don’t have a plan and need more community engagement before we do anything.

    If we want real economic development, we need to hire a City Manager who has experience implementing economic development in a city that is actually open for business, instead of hiring yet another bedroom community expert who knows how to count to three (and cash a paycheck).

    1. Matt Williams

      Mark, Tim’s statement is 100% true.  If you took the City’s Economic Development plan to the UCD Business School, Wharton, Harvard, Stanford, Chicago, MIT, and Nortwestern and asked the economic development faculty to giveDavis’ plan a grade, every one would give it an “F” because it only has one third of the core components of an Economic Development Plan.  There is nothing in Davis’ plan that describes the business development demand of the target market(s).  Nor is there any explanation or exploration of why the core competencies of the Davis community are a match for that market demand.  All the plan has is a space assessment tied to a mantra … “build it and they will come.”  With no assessment of the market characteristics the third part of a competent and complete plan … the projected profitability … is wholly missing.

      1. Keith Y Echols

        So I take a full or broad spectrum approach.  It’s like when I used to do sales back in the 90’s; you filled your sales pipeline from various marketing efforts (mail, website, trade shows, cold calling); some of which would result in (to use a baseball analogy) outs, singles, double, triple and home runs in terms of size of sales.  The same goes for city economic development efforts.  Yes BUILD IT AND THEY WILL COME.  That’s how most industrial/commercial development works….ESPEICALLY IN DAVIS where no one knows what’s going to be built until it’s built.   Absolutely, there should be someone out there gathering data about industries that match up with Davis’ talent/resources.  Someone out there courting those companies when they’re looking to move or expand.  Those are the home runs like the Vacaville bags Genentech kind of success….where the company chooses a city and the city plans for the needs of that company.  But that kind of thing doesn’t happen often.  So in the meantime city needs some singles and doubles.  The city plans for the creation of industrial and commercial office space.  Create the open opportunity for small and medium sized companies to consider Davis for relocation or expansion.  But you can’t just wait for companies to commit to commercial space that hasn’t been built and likely won’t be built before you approve a new business park.

      2. Mark West

        Matt:

        By the time your plan is fully developed it will be obsolete and you will once again start the chant for the need of yet another plan, and in the mean time, nothing will get done. The calls for a detailed economic development plan are simply an attempt to prevent action.

        We don’t need a plan, nor do we need more ‘engagement.’ What we need is a City Staff with the knowledge and interest in expanding commercial development and a City Council willing to approve projects. That is what has been lacking in town for decades.

         

        1. Matt Williams

          Mark, you made the bold faced statement that Tim’s assertion that “The city has never had a comprehensive economic development strategy.” is not true. Do you now admit that you were incorrect?

          That statement of yours was as poorly thought out as your campaign for City Council.

          I happen to agree that the City would be better off with a City Staff with the knowledge and interest in expanding commercial development.  We had that in the form and person of Rob White, but our City Council ran him out of town.  The Council clearly didn’t want “Staff with knowledge and interest.”

          But let’s imagine that with a snap of a finger we suddenly and miraculously had such a Staff. What criteria and metrics (more often than not part of a plan) would you use to measure the success/performance of that knowledgeable Staff?

        2. Mark West

          Matt:

          The 1961 Core Area Specific Plan was a very well thought out and fully justified economic development plan. It would have largely worked (with some modification) as the new downtown plan as well, at considerable less expense. So, no, I do not agree that my statement was incorrect. I do believe, however, that Tim has not lived here very long, so he should be careful with the use of the term ‘never.’

          I stand by my comment that we do not need a detailed plan moving forward, what we need is a willingness to accept change (and of course, a City Council with the collective guts to hire a City Manager capable of implementing it).

           

        3. Matt Williams

          Mark, 1961 was over 60 years ago.  However, let’s accept your point and drill down into it a bit.  In that 1961 plan what were the identified/innumerates core competencies that Davis had, and what market segments were identified for development?

  6. Keith Y Echols

    So as I (and others have said) Davis is a no fly zone.  It’s an real estate and business development superfund site.

    Baked into the very General Plan is pretty much a slow growth vision of a sleepy college town.  Now, many here would say that the answer to this problem is a brand spanking shiny new revised General Plan that takes into account everyone’s wants and needs for growth.  But that of course is unrealistic and doesn’t get to the root of the problem which are the people and their vision for a sleepy college town (and btw.  that includes me to a degree…when it comes to traffic and open space).  And as David points out: the vision of the sleepy college town does not meet with the reality of the growing Sacramento region and the housing requirements the state imposes on the city of Davis.

    It’s these people with their vision of a sleepy college town that make Davis a no fly zone that are the problem to overcome.  But that’s tough to do in a town where everyone thinks they’re smart enough and/or aware enough to make detailed decisions about urban, economic and residential development and growth.   Many people in Davis view developers and their political supporters as mustache twirling Svengalis.  But the truth is that in a properly working city; the city government should be the developer’s partner.  I mean sure the developer has to meet the (what should be) broad requirements for zoning…etc…in the General Plan…but after that…the city and the developer should be walking forward holding hands as a team.

    In a properly functioning town the leaders sell a vision to the voters and the voters buy a leader’s vision with their votes.  That allows leaders to move forward and ask for forgiveness and not permission on every little step on every little project.   So that may mean that a 6 story mixed use commercial/residential project goes in next door.   The rest of the town likes it.  And neighbors may find out they like it…or don’t….and the councilmembers that pushed that pushed the project get held accountable……or they’ve moved on to selling voters their next great vision….rinse, wash and repeat.

    It’s not community input, new general/downtown plans, committees…etc… that achieves growth.  It’s vision, perseverance and greed.  It takes a greedy developer to get something built.  It takes a possibly greed but certainly  vision and ego by city leadership to get things built.

     The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.  -Gordon Gekko, “Wall Street”

    So bring back graft! Bring back backroom deals!  Have developers get haircuts at the City Manager’s barber shop.  Have developers attend the Mayor’s “charitable” poker tournament…..(those are just examples that I got……from somewhere).   Or in the very least leaders need to push a vision that gets things done.  A vision that creates an environment of growth where people from outside of Davis look to city leaders and think they have an ally to possibly get something done.  Be strong, don’t ask for permission (from voters)…though in some cases that’s impossible due to Measure J.

    As for the plan itself?

    1.  The development of commercial/real estate.  The creation of jobs

    2.  The development of commercial retail real estate to generate more sales tax revenue

    3.  The careful (begrudgingly) planning for residential development as required by the state and/or if necessary to support the commercial/industrial growth.

    All growth a mix of infill and peripheral development as needed to achieve the desired planned growth.

    And all this growth is for the support of city finances and services.  At the point that the city is comfortable financially and can provide most of the services the people want the city to provide the planned growth should slow down again.  As for those city services: I’d like more extensive kids summer camp programs…..many would advocate for city sponsored after school and summer child care options.  City parks services appear to be behind on some tasks as there are downed trees  that are still on the ground a couple months after they were knocked down.

    As for Tim’s comment about city economic growth:  I think he’s either too focused on his area of start up development and/or self serving in his singular focus on start up support and development as the sole potential economic driver for the city.  No doubt that start up growth is important for the city of Davis.  But start ups are only a part of the solution.  Luring established companies to Davis; particularly ones that are similar fields as the start ups acts synergistically with the economic mix for the city as well as the development of those start ups.  Start ups generally grow and develop not only out of academic institutions but also out of other companies.  There becomes a sort of shared focus of intellectual talent in certain areas between established companies, start ups and academic institutions.  For the city, well…most start ups don’t generate positive revenue and probably won’t amount to much as far as city tax revenue goes.  We can just hope that one out of 10 (15?  20?) companies becomes successful.  And in that case it either gets bought out and moves or by the even slighter chance that it sticks around and grows.  Like I said, I’m all for encouraging these start ups to grow and stick around.  But it sure makes sense to continue to try to lure the big companies that can provide more stability economically and in the community as they can also possibly support (or create) start ups.  What I’m saying is to support a variety of economic growth and not throw all your eggs in one high risk/high reward category of economics development. 

     

    1. Ron Glick

      Spot on analysis Keith. The one point I want to differ on is the greed part. For too long the idea that developers are greedy has been a mantra in this town so much so that its become dogma. However there is another view I have come to by meeting a number of people whose families got here early and prospered in both the real estate development and rental businesses. Most of these people are dedicated to this community, having spent generations here raising families and are willing to give back, as we saw with their generous funding of Paul’s Place. When they build new subdivisions they provide opportunity for others to buy in and build equity. Developers are capitalists in a capitalist society. They take big risks and often generate big rewards. Like it or not that is our economic system.

      I know one person who was against every project I can remember once she bought a home in Mace Ranch. She recently sold out and moved away taking with her $1,000,000 dollars in equity built up over the time she lived in that Mace Ranch home. Without that Mace Ranch developer, whose family has been condemned across generations as greedy, she never could have built up that home equity.

      Developers are trying to make money like most everyone else. When we think about equity in society we should be glad that a byproduct of developer profit is giving others opportunity to get a seat at the table to start building equity and intergenerational wealth.

      1. Ron Oertel

        I know one person who was against every project I can remember once she bought a home in Mace Ranch. She recently sold out and moved away taking with her $1,000,000 dollars in equity built up over the time she lived in that Mace Ranch home. Without that Mace Ranch developer, whose family has been condemned across generations as greedy, she never could have built up that home equity.

        Something’s not adding up, here.  Few Mace Ranch houses sell for that amount in the first place.  Then, subtract her purchase price (presumably some 25-30 years ago), transaction costs to buy, sell, initial costs to obtain a loan, etc.

        Now, I’m sure that she had some equity, but $1 million does not seem realistic.

        Let’s not forget that to obtain any “equity” at all, it also requires payment of property taxes, insurance, mortgage, maintenance, etc., over some 25-30 years in this case.

        And if she actually made more than $250K “net profit” as a single person, or $500K “net profit” for a couple, she’d be hit with some massive capital gains tax.  (For sure, neither of those figures are anything to look down on, but it’s not $1 million.)

        It also seems strange that someone who was “against every project” that you can remember would then tell you how much money she reportedly made by selling her home.

        1. Ron Oertel

          (Admittedly, I’m mixing the terms “equity” vs. “net profit”, above.  “Net profit” is the number that would be viewed as the more-relevant term.)

          In any case, try and buy a house today, and see how long it takes just to offset the transaction costs in a declining housing market.  The day you buy a house is (also) the same day that you immediately lose about 7% of your net “investment”, due to these costs (e.g., if you turned-around and tried to sell it right-away).
          t
          The days of “big growth” are over, in Davis (and California as a whole).  Demographics, declining birth rate, exodus of people and businesses from the state, high taxes, and regulations are all contributing to that. On the other hand, housing prices are declining faster in the west (especially places like San Francisco) than anywhere else. (You’d think that those concerned about high housing prices would be celebrating this.)

          In recent years, those just starting out have realized that they’ll do better elsewhere.  Just as prior generations did when moving to California (and/or this region, from more-expensive locales).

          Now, folks can either accept that, or they can continue blaming the “slow-growthers” (who actually aren’t even the ones causing it).  And we already know which of those two choices will be made on this blog.

    2. Tim Keller

      Keith, you are over-simplifying what I have said, and then accusing me of having too narrow of a focus lol… I actually don’t disagree with most of what you said above, even though you are accusing me of having too narrow a vision.

      Of course we should welcome larger companies too… but as I pointed out in the article that I wrote earlier.. the big companies come here for the same reasons that the startups do: its TALENT.

      Any robust economic development plan needs to focus on that.  Davis can, and should be the world’s mecca for AgTech, crop science, renewables etc.    We are also strong in areas like pharma, medical device, and robotics but there are other places which are better established in concentrating talent in those industries.

      A comprehensive economic development plan would take this into consideration.   All I have seen thus far is “lets build some buildings” – which isn’t bad, because we need those buildings… but it doesnt count as a comprehensive or a strategic plan.

      This is also why any good economic development plan ALSO needs to be integrated with a good plan for housing… If we cant HOUSE the talent that we want to concentrate here, then the rest of it falls apart.

      1. Ron Oertel

        Of course we should welcome larger companies too… but as I pointed out in the article that I wrote earlier.. the big companies come here for the same reasons that the startups do: its TALENT.

        “Talent” (assuming that you mean those who just-graduated from UCD, for example) is the most “mobile” of all of the factors.

        I just watched a YouTube article regarding the massive investments that electric car companies, investments in robotics/electronics that are being made in the Phoenix area.

        And you already know why companies locate to those areas – lower COSTS (e.g., lower salaries, lower housing costs, fewer regulations, lower taxes, more vacant /cheap space, ease of supply chain access, etc.).

        Actually, West Sacramento provides some of these benefits, just on the other side of the causeway.

        Workers will relocate to the locations where employers exist, not the other-way around.

        No worker in history has ever been able to say, “here I am, I’m not moving – build a factory around my desires”.

        Now, I realize that some might point to Stanford University (and Silicon Valley), but some of those companies are the same ones now relocating out-of-state (for the reasons already pointed out). (Of course, some also complained about the resulting housing costs, which are only just now starting to decline.)

        Though telecommuting has been providing more flexibility, for many.

        Here’s the thing that the growth advocates seem to forget: No one in Davis is waiting-around for a factory to be built, so that “they” have a place to work.

        Instead, what we have on this blog is a handful of people repeatedly attempting (and failing) to change Davis into something it’s not. Must be quite frustrating for these folks, though you’ve got to admire their tenacity. Never say die, as it were.

      2. Tim Keller

        Like I said, I’m all for encouraging these start ups to grow and stick around.  But it sure makes sense to continue to try to lure the big companies that can provide more stability economically and in the community as they can also possibly support (or create) start ups.  What I’m saying is to support a variety of economic growth and not throw all your eggs in one high risk/high reward category of economics development.

        Not to beat a dead horse, but I think its important to be REALLY CLEAR here:

        1) Startups are NOT a high-risk proposition to the city.   Yes, individual startups are high risk but we DON’T CARE about that as a city!    This might seem callous from someone who has donated a LOT of his professional career to helping a lot of these startups individually…   but its true… The city only needs to cultivate a healthy “tech sector” in a general sense – and that includes companies at multiple stages of their life cycle – some of which will fail, and others which will succeed.

        Even those companies that fail are bringing in investment dollars, spending it here, paying taxes here, etc… so even the “failures” are good for our economy.

        And of course, some % of startups WILL grow into medium sized, and then larger companies… which have even greater positive impacts on our economy.

        So long as the pipeline is full, then the city WILL benefit.     Thats all we need to keep in mind.  And the key to keeping that pipeline full is to make sure we have ample commercial space of the right types for the industries that naturally want to be here AND we have housing to keep the talent here.

        2)    Not all companies, (especially the big ones) are the same when it comes to their contribution to our city’s finances.

        Companies like DMG Mori and FMC Techfip are hugely productive for the city because they generate local sales revenue.   – which means that when they produce sales, they recognize those sales in Davis.  The Auto Dealerships are (ironically for a bike town) also significant contributors to the city’s finances for this same reason.

        “Big” companies that set up shop here in town, including BASF / Mars etc are creating local jobs, which IS good…  but those kinds of companies are NOT likely to realize any local sales tax.  Again, they aren’t “bad”… they just “aren’t as productive” when it comes to our city’s finances.

        The big successful companies that are most likely to record their sales here are going to be the ones who are headquartered here or who manufacture and sell from here… Most of the companies who fit that description are companies that were BORN here.   (DMG is an notable exceptioon, so it CAN be done.. )

        So if we are going to have a well developed economic development strategy is HAS to include a recognition of our opportunities and a long-term outlook on how to translate those opportunities into success.   For Davis, we have an obvious and very specific opportunity with a narrow set of high-tech industries that already have a track-record of success here in town.  It only makes sense to develop a strategy which makes best use of those existing strengths.

        This is my criticism of the “lets build an innovation park” approach…  Its not that we dont need the space… we absolutely do… and thats why I supported it… but ANYONE can build a commercial park and try to attract the same companies from out of town.  It isnt somethig we have a unique advantage in… if anything we are at a dis-advantage because commercial space in Davis is probably going to be more expensive than similar space build in woodland.

        So we HAVE to do more than just build an innovation park… and we CAN do quite a bit even without an innovation park… So my stance is let’s do those things right now – so that if we ever DO develop an innovation park, (or even just find more commercial space as infill ) we have a full pipeline of local companies ready to move into it.

      3. Keith Y Echols

        Keith, you are over-simplifying what I have said, and then accusing me of having too narrow of a focus 

        Really?  Did I misread this statement of yours?

        The better approach, which is more aligned with our actual competitive advantage, would be to nurture a pipeline of these home-grown companies and help them find interim space as they grow.

        Don’t get me wrong, I’m all for you championing the growth and development of start up companies in Davis.   I agree with much of what you say and propose….I just don’t agree with specific start up economic development at the expense of developing larger companies to help stabilize and improve the local economy  (which will also improve the start up environment as well).  And your statement in your previous post pretty much states that you want the city to focus on nurturing start ups.

        Startups are NOT a high-risk proposition to the city’

        Start ups like all things that bring people to the city uses city resources.  Roads, police, fire….they add traffic…like residential developments…start ups use resources and their contribution to the city are the meager property tax they pay through their rent.  Some of those workers might end up living in Davis which then adds the burden on local resources.  Yes they add to the city tax revenue through their meager purchases at Target…because let’s be honest; most major purchases are done outside of Davis…because the retail here sucks.  The other thing is that with start ups you have a constant churn of people…..because start ups fail….often…. So yeah, I support the nurturing of start ups.  But the end goal is to get the few successful ones to stay and produce some sort of tax revenue or other benefits to the city.  All the failed ones are an investment by the city of resources and infrastructure…..or in other words, I’m willing to endure a little more traffic on the roads, less parking availability…etc… in the hopes that one of these companies becomes successful and gives back to the community through tax revenue and successful founders/executives.

        The good thing about big companies is that they usually have a more stable workforce.  The key to making this work is to have concurrent RETAIL development growth to better capture the spending money of people that work and live in Davis.  In general, I’m against new market rate residential development (because it’s a cost to the city).  But if that development is tied to industrial/commercial growth AND RETAIL GROWTH….then we’re talking about more captured sales tax revenue for the city.   To go along with industrial/commercial growth….I’d like to see DESTINATION RETAIL planned hand in hand with the other areas of growth (a couple decades ago I worked for the largest destination retail owner/developer in the world).  Getting people to come here….along with a local market of well paid workers with stable jobs is a winning combination.

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