Much has been made about the economic workshop that took place last week, with the acronym DSIDE – Designing a Sustainable and Innovative Davis Economy. The ideas presented at this conference could have been delivered 20 years ago, or even 30 years ago.
In recent weeks the Davis Chamber of Commerce and the City of Davis formed a Steering Committee to focus on the unique strengths, values and resources of the community. The Steering Committee was comprised of representatives of UC Davis, the City, and a broad base of business interests.
While Mayor Don Saylor was quick to bill this endeavor as unparalleled, others were more circumspect, arguing instead that many of the ideas presented were around for decades and have simply been repackaged.
“It has never been done on this scale in Davis,” Mayor Saylor told the Enterprise. “Today’s effort was a milestone in an ongoing effort that started with the Chamber of Commerce and the City of Davis two-by-two [meeting] four months ago.”
Co-chair of the event Bill Alger, who is also co-chair of the Davis Chamber, argued on Thursday that UC Davis is moving forward, this is their strategy, and that if Davis allows the opportunity to work with UC Davis pass us by, tech companies will just locate in West Sacramento, Woodland, and other nearby communities.
A recent report on Davis’ Economic Health and Prosperity looked at measuring Davis’ economic performance. The findings, as we reported a few weeks ago, are more mixed than the headlines might indicate. Overall, the survey ranks Davis third among nine jurisdictions.
Davis performed well when it came to quality of life issues, while City Revenue and Business Climate indicators were comparatively weak. In that category, Davis ranked in the bottom three for job salaries, commercial lease rates, construction permit revenue, cost of business, sales tax revenue, and property tax revenue variables. Davis ranked sixth of nine jurisdictions for the three core economic indicators (Business Health, Business Climate, City Revenue).
Basically, Davis does well because it has good schools, educational attainment, household income, and investments in culture and leisure when compared to cities like Woodland, West Sacramento and Dixon. It performs poorly when we look at the business environment.
The staff report reads, “Per capita sales tax revenue is unevenly distributed across business categories and considerably lower than regional averages. Sales tax capture rates – the amount of sales tax revenues collected versus estimates of the amounts Davis residents pay – are low in business categories such as clothing, furniture, and business-to-business.”
However, it also sees the upside, “Many Davis residents are highly skilled and commute to jobs outside the community. This should provide us with a competitive advantage over other jurisdictions for knowledge-based business.”
Moreover, “Historically, Davis has performed well in retaining UC Davis startup companies. However, UC Davis startups are increasingly choosing locations outside Davis to establish their companies.”
The conference really focuses on the idea that Davis residents are highly skilled as a base by which to link up with the desire to locate UC Davis startup companies in Davis.
There are several serious problems with this strategy, other than the fact that there is nothing new about it. The first problem is that a high tech economic development strategy is not one likely to increase sales tax revenue to the city. This is a problem going forward, as one of the points that Davis needs to focus on is stabilizing city revenue highly reliant on the automobile industry.
Auto sales reliance is highly ironic, given the fact that it is an old-school economy running counter to the progressive and environmentally sustainable image that the city wants to project.
But the problem runs worse than this. Held up as an example of Davis-based companies is Marrone BioInnovations, a spin off of another Davis-based company, Agraquest. Both of these attempt to develop natural products that control weeds and pests.
On Thursday Pam Marrone, founder of both companies, was among the group leaders. But long time readers might recall that there is a stark downside to efforts by such businesses.
Agraquest, as we reported in 2008, has brought in molds and pathogens from around the world. This has led to serious illness for at least one of their former workers, and serious questions about a largely unregulated industry that transports and transplants potential pathogens across the globe in search of unlocking some biofriendly pestidice.
Moreover, Agraquest has now entered into partnership with the very unfriendly environmental company, the industry giant Monsanto. So the praised innovators who look to create sustainable economy have actually been, at least in part, co-opted by the big multinational chemical business that is anything but.
A further complication arises from words from the keynote speaker, UCD Chancellor Linda Katehi. She argued that UC Davis must move its ideas from the laboratory to the marketplace and become more entrepreneurial.
What has happened under the watch of Dr. Katehi is that UC Davis is moving toward a more public-private model. She has been hailed for her vision for bringing in record research dollars. However, under closer scrutiny, Dr. Katehi’s success may be a bit overblown.
Two weeks ago, UC Davis News Service released a piece, that UC Davis “received almost $679 million in research funds in the fiscal year that ended June 30, 2010. The total is a record for the campus and double what it was a decade ago.”
UC Davis has seen a steady rise in research funding over the past decade, from $298 million in 2000-01, noted Vice Chancellor for Research Barry Klein. “UC Davis researchers excel across a wide range of fields, making discoveries that will have a lasting impact on our quality of life,” Klein said.
Chancellor Katehi wants to move that number up to a billion, but even a cursory glance suggests a more plausible explanation. Almost two-thirds of the total — $437 million — came from the federal government, up from $329 million last year, the News Service reports.
Here is more:
The largest single source of federal funds was the U.S. Department of Health and Human Services, principally the National Institutes of Health, which provided $258 million, an increase of more than $60 million over the previous year. The National Science Foundation awarded $64 million, up from almost $50 million last year. The U.S. Department of Agriculture provided $36 million, up about $4 million.
Other federal award totals:
• Department of Energy, $19 million
• Department of Defense, $19 million
• State Department, $15 million
• Department of the Interior, $11 million
• Departments of Education, $3.5 million
• Department of Justice, $2.3 million
• Department of Commerce, $1.4 million
• Department of Transportation, $590,000
• National Foundation for the Arts and Humanities, $300,000
In fact, they report, “All federal sources provided increased funding over the previous year.”
The problem is that much of the federal money increase is not due to anything special that the university is doing, but rather has to do with the influx of money from the stimulus plan and much of that money is about to run out.
In fact, of the $678 million, $550 million came from the Federal and State sources and a lot of that was driven by stimulus money. By contrast, private business only contributed $44 million.
So the idea that Davis’ research boom is going to become the labratory for new business startups is perhaps fleeting.
While it makes sense to plan during economic downturns, the reality is the economy, while technically out of recession, is still badly teetering. There was a report last week on the slow and almost non-existent jobs market rebound. The city’s reliance on the university and state jobs, which are strained by a still unpassed budget and likely continuations of furloughs and deeper layoffs, suggests that any prospect of economic recovery is far in the distance.
Moreover, as we mentioned further, the types of jobs and business Davis is promoting is not likely to bring in much-needed sales tax and local revenue.
Furthermore, while we have been supportive of Davis’ slow growth policies, it should also be pointed out that any benefits would be diminished if there is no housing to accommodate these proposed new jobs.
The bottomline here is that this conference offered a lot of smoke, a lot of already-created recommendations wrapped in the language of modern industry, but very little in terms of new and actionable gameplans.
This may have been a brilliant production by Davis’ PR department and its enterprising Mayor, but one that in the end was likely hollow. The idea that the emperor has clothes and that these proposals have meat is more than a bit fleeting.
—David M. Greenwald reporting
I did not attend this conference so I don’t know specifically what was said. I would be interested in hearing comments from people who went to the conference. I certainly share this blog’s skepticism about Saylor’s comments, but that doesn’t mean the conference had no merit.
I think using UC Davis’ unique talents is exactly what Davis needs to do. UC Davis is a world class Ag/tech campus. Only a handful of universities in the world have that sort of talent in Ag tech, so of course the City should try and benefit from that (also helping the university). Is it a coincidence that silicon valley was located near Stanford? And route 128 around Boston has a similar profile (-)ue to MIT and Harvard) though silicon valley won out in many ways. The fact that one company was bought out by Monsanto does not imply its a bad strategy at all. Davis may be too small for larger companies but I would think its perfect for many smaller companies and we should do what we can to attract such companies.
We can’t rely on sales tax dollars. Retail is shrinking and Davis will never be a Roseville or Vacaville (nor do most of us want it to be). Blockbuster went bankrupt last week and though they are only slated to close 20% or so of their stores at first its a harbinger of the future. Borders may be next. Many local businesses are hurting. WE should try and stop the bleeding but that is not a growth strategy, its triage.
THe way we do business in California most cities get revenue from property taxes, sales taxes and some get a substantial portion of revenues from transient occupancy taxes. Green tech and Ag tech would help all three and also generate other business taxes. Many silicon valley companies started small (Apple, HP etc etc).
We are on the verge of a revolution in bio/Ag tech Do we want to be part of it or build more retail for consumers who are already tapped out ? Is our growth strategy to sell tomato fields cheap to developers so they can make a killing when the land is reclassified for residences (see CV, WHR, CVII)? Or to build big box retail ? (wouldn’t work even if we wanted it).
Green/Ag biotech can give us some real economic growth and keep Davis vital. I feel sick to my stomach because I may agree with Saylor on this.
David,
The tone and content of this blog make it clear that you have an ax to grind with Saylor and others, so you’ve taken a partisan line against this. The Davis economy has weakened, and will continue to weaken, if we depend so much on UCD and state government to maintain income levels. We need more private industry. I agree with Dr Wu that we should use the things that are unique to Davis to help it grow. Biotechnology and high tech are two industries that Davis may be able to incubate and grow because of the uniqueness of UCD. While they may not provide sales tax dollars, they do provide generally high paying jobs are are relatively “clean” from a footprint standpoint.
I didn’t attend this session either, so I do not know whether the planning session will be helpful for Davis or not. But planning for way to grow our way out of economic problems is certainly better than not planning, and may provide an alternative thought process to cutting city and school budgets further and further.
Finally, you report that Monsanto “bought” Agraquest. That is patently false. Relevant quotes from the news release are contained in the paragraph below:
ST. LOUIS — Monsanto Co. said Monday it entered a three-year partnership with pesticide maker AgraQuest Inc. to develop new strains of pesticide-coated seeds.
Monsanto, the world’s biggest seed company, said its partnership with AgraQuest could yield seeds coated in AgraQuest’s microbes that fight off nematodes, disease and insects.
Under the terms of the partnership, Monsanto will have exclusive rights to AgraQuest’s seed-treatment technology for core crops and vegetables. AgraQuest will retain the rights to its technology for pesticides that are sprayed over the top of plants.
AgraQuest will also get an upfront payment and research funding, performance-based payments and royalties. The size of the payments was not disclosed.
Monsanto has entered a number of similar partnerships in recent years, teaming up with companies like Germany-based BASF AG to speed up Monsanto’s research and development pipeline.
I hope your other stories, particularly about the DAs office, are more factually based than this entry was.
I don’t have an axe grind as much as I think this conference was more about promoting Don Saylor and a few elites in Davis than it was about coming up with anything new – and there was nothing new there.
Thanks for correcting the issue of Monsanto, I still consider that concerning given Monsanto’s environmental track record.
Hearsay reporting again .
“””Thanks for correcting the issue of Monsanto, I still consider that concerning given Monsanto’s environmental track record.”””
I DID ATTEND THE CONFERENCE. Many seated at the table with me commented that they liked the conference and what they heard, but were somewhat skeptical that there would be any follow through. That remains to be seen, but I would like to give this concept of economic development in Davis a fighting chance.
Here are some observations of what I took away from the conference, where there was some real soul searching, honest talk by business people, and good positive energy, especially from BEDC and startups who had succeeded:
1) The city has tended to put its eggs all in one basket with auto retail, and needs to diversify what varieties of business its sales tax revenue comes from.
2) There is also a sales tax leakage problem to neighboring communities like Woodland, West Sac, Dixon and beyond.
3) There is a definite perception if not reality that Davis is not business friendly that needs to be addressed.
4) UCD is not the only game in town; but partnerships with UCD should be encouraged to whatever extent possible.
5) Start-ups have difficulty establishing in Davis and expanding because of the anti-growth policies that preclude anything but infill development of business. This discourages start ups from locating in Davis.
6) There was a split in whether Measure J was good for Davis – some believed it had resulted in smart growth, others believed it is stifling workforce housing.
7) Davis must have a clearer overall vision of what it wants for the future, and then head in that direction. Right now, Davis does not have a clear vision of what it wants to be or how it wants to grow if at all.
8) Davis does not have a uniform or fair process by which business can become established in Davis – some businesses are able to sail through the political process w ease, while others have extreme difficulty.
Elaine:
Thanks for the detailed comments. A few comments:
1. It is natural for smaller cities like Davis to have retail “leakage”–more people spend their dollars outside the city than we bring in from outside. This basic economic theory (and empirical reality) is routinely ignored by consultants like CBRE and BAE who are regularly paid by big box stores to promote retail. Unfortunately sales tax dollars do matter and are distributed mostly at the point of sales (except autos where the formula is more complicated). WE can’t reject retail out of hand but few of us would like to emulate Roseville.
2. Interesting that we are seen as anti-business. I guess that shouldn’t be surprising, but I think there are many people in Davis who support J but would be happy to see small high tech businesses grow.
I think it would make sense for the City to market itself to small green and Ag tech businesses and see how we can make the process fair and efficient without giving away the candy store. This will undoubtedly involve some rah-rah that some Davis folks (DR Wu included) don’t always fancy, but it is necessary.
dmg: “There are several serious problems with this strategy, other than the fact that there is nothing new about it. The first problem is that a high tech economic development strategy is not one likely to increase sales tax revenue to the city. This is a problem going forward, as one of the points that Davis needs to focus on is stabilizing city revenue highly reliant on the automobile industry.
Auto sales reliance is highly ironic, given the fact that it is an old-school economy running counter to the progressive and environmentally sustainable image that the city wants to project.
But the problem runs worse than this. Held up as an example of Davis-based companies is Marrone BioInnovations, a spin off of another Davis-based company, Agraquest. Both of these attempt to develop natural products that control weeds and pests…
Moreover, Agraquest has now entered into partnership with the very unfriendly environmental company, the industry giant Monsanto. So the praised innovators who look to create sustainable economy have actually been, at least in part, co-opted by the big multinational chemical business that is anything but.”
So what are you saying, that there is no value to locating high tech business in Davis? As others have pointed out, locating high tech business in Davis can generate more property tax revenue if nothing else. Additionally anchor businesses have a tendency to attract other business that does generate sales tax revenue. For instance, a high tech business will have workers that need to eat lunch out, buy groceries and purchase other goods in town. It will most likely draw new businesses to serve its workers needs in the immediate area surrounding it.
And while you may criticize auto sales, it is essentially the main sales tax revenue generator in Davis. But putting the city’s eggs all in one sales tax revenue basket is not a good business strategy, which the business community recognizes. But if the city wants to attract business to Davis, the city has to make it worth while for a business to locate here. Anti-business tactics like the Borders war, the grocery store wars, the anti-Target campaign, the problems Carlton Plaza Davis assisted living facility had to get a fair hearing are all examples of why Davis is rightly perceived to have an anti-business climate.
The criticisms of Agraquest seem to be misplaced from what some of the commenters have said. And how many startups at some time or another are “aligned” in some way with multinational corporations – the business world is not pure just as the gov’t is not. But does that mean we throw the baby out with the bath water? No business at all in Davis if it does not pass some kind of rigorous “environmental smell test”? Right now the economy needs to support private business, bc private business is what provides jobs in this country.
dmg: “The problem is that much of the federal money increase is not due to anything special that the university is doing, but rather has to do with the influx of money from the stimulus plan and much of that money is about to run out.
In fact, of the $678 million, $550 million came from the Federal and State sources and a lot of that was driven by stimulus money. By contrast, private business only contributed $44 million.
So the idea that Davis’ research boom is going to become the labratory for new business startups is perhaps fleeting.”
While this is a very valid observation, UCD is not the only game in town. We can certainly support UCD startups wherever possible/practical, but we should also be encouraging other high tech business to locate here. An example of this is DTL (Digital Technologies Laboratory), which has located in Davis and seems to be thriving, and wants to expand but doesn’t have the room.
dmg: “While it makes sense to plan during economic downturns, the reality is the economy, while technically out of recession, is still badly teetering. There was a report last week on the slow and almost non-existent jobs market rebound. The city’s reliance on the university and state jobs, which are strained by a still unpassed budget and likely continuations of furloughs and deeper layoffs, suggests that any prospect of economic recovery is far in the distance.”
All the more reason to support business, to jump start the economy. So far, the federal and state gov’t’s policies haven’t worked very well to get our economy going again. Instead it has instilled fear in the business sector, causing it to hoard its money rather than hire new employees. I can’t blame business for feeling that way…
dmg: “Moreover, as we mentioned further, the types of jobs and business Davis is promoting is not likely to bring in much-needed sales tax and local revenue.”
So what type of business would you suggest the city promote, if any?
dmg: “Furthermore, while we have been supportive of Davis’ slow growth policies, it should also be pointed out that any benefits would be diminished if there is no housing to accommodate these proposed new jobs.”
If citizens saw that a business was serious about locating in Davis, and that it would be to the city’s benefit, they might be more willing to approve new workforce housing…
I would gladly support workforce housing and would love to see a “really green” development containing housing, work space and some small retail (enough to stop people from driving to get milk, bread eggs, tylenol). WE have a good site at Hunt Wesson.
But the first issue is to create more jobs. There are plenty of empty commercial retail spaces in Davis right now. Like retail, other commercial space is in excess supply all over the country. Like it or not Davis will have to sell itself to some extent. I’d prefer it if Saylor were not the salesperson, but that’s life.
Monsanto is not a perfect company (btw Dupont, the folks who gave us napalm, is also moving into Ag tech) but I don’t see it as productive to slam a local company for teaming up with Monsanto–you have to do that these days.
correction: I meant commercial office spaces
Dr. Wu: We are on the verge of a revolution in bio/Ag tech Do we want to be part of it?
That was what they were saying in the 1970’s when I was in college. The upshot: Plant Genetics, CalGene, and AgraQuest. Trace the histories of those companies. I think the bloom may be off bio/agtech.
ERM:
1) The city has tended to put its eggs all in one basket with auto retail, and needs to diversify what varieties of business its sales tax revenue comes from.
2) There is also a sales tax leakage problem to neighboring communities like Woodland, West Sac, Dixon and beyond.
Retail is completely saturated in this region. There is no way to diversify or solve this problem. Nobody in their right mind would develop a retail site here within the next 5 – 10 years, if ever, if there was even a place to do so that had appropriate traffic and visibility. Which there isn’t.
5) Start-ups have difficulty establishing in Davis and expanding because of the anti-growth policies that preclude anything but infill development of business.
Startup businesses don’t need much space. Hunt-Wesson would probably provide sufficient space for several. There is commercial land undeveloped along Second Street. Mostly this argument is being put forward as a way to justify larger peripheral development on land that isn’t currently zoned for it.
Anti-business tactics like the Borders war, the grocery store wars, the anti-Target campaign, the problems Carlton Plaza Davis assisted living facility had to get a fair hearing are all examples of why Davis is rightly perceived to have an anti-business climate.
The difference is that Davis residents are involved in the planning process. In other cities, councilmembers just make decisions directly. That is the reason Davis is perceived as having an anti-business climate: the citizenry discusses and votes on projects. Unlike, say, Vacaville, where housing development continues unabated, and retail projects are built and stand 15 – 20% empty. Developers don’t like commissions and really don’t like direct voting by the public on their projects.
The problem I have with this conference and the report that preceded it is that it was set up with a series of dubious premises: that there is a shortage of commercial space here, that there are companies clamoring to develop here, that the city business climate is inhibiting all of that. The process seems to be one of trying to build a political consensus for growth.
Right now, Davis does not have a clear vision of what it wants to be or how it wants to grow if at all.
I think the voters have spoken pretty clearly on the issue of high-end housing. They approved big-box retail that was outside the General Plan. They haven’t been given any opportunity to weigh in on moderate-priced housing or commercial development.
The reality is that Davis can do virtually nothing to expand the retail base right now, or likely ever. Property tax revenues are likely to be flat for some time, and housing development would be a net cost to the city. Office space is way overbuilt in the region, with millions of square feet standing empty in Natomas. Commercial development is unlikely. So this time would have been far better spent figuring out how to live within the current revenue constraints, rather than trying to increase city revenues.
I think I may be living on a different planet from some folks here. We are in the midst of a massive revolution in biotech which probably will ranks with the discovery of fire, settled agriculture and Newtonian Physics in human history.
We are now in the Brave New World of decoding DNA, synthesizing organs, genetic testing, etc. Ag biotech is only part of it but its the part where UC Davis fits in and Davis and UC Davis are inextricably linked.
Not all the ramifications of this revolution are benign–does that mean we become Luddites and bury our head in the sand, praying we get more sales tax dollars from the sale of a few more Jettas (maybe biodiesel)? I hope not.
Dr. Wu, I’m just saying there is nothing new about what you’re saying. Gene-spliced crops were the wave of the future in the 1970’s. Ag students who wanted to make money were going into biotech. Opposition to genetic engineering only came from the fringe. But now, entire agricultural markets such as Europe are off-limits to engineered crops. Opposition has become organized and vocal. More to the point, I don’t see any likely explosion of commercial ventures in this realm clamoring for space. It’s fine to encourage start-ups and provide commercial venues, but I really think the whole prospect is being oversold.
Don:
I guess we disagree to some extent (which is ok). There will be controversy over Ag tech but I think its still a growth industry. Monsanto’s stock fell today on the possibility that the EU may further tighten restrictions on GMOs, but the world will need more food as people become richer (and want to eat more meat–ok that’s bad but I’m not a vegetarian).
The price of wheat and cotton are soaring this year. Fertilizer prices are rising, Potash just had a huge buyout bid, etc. The growth is in Asia, not Europe, and I haven’t heard that China or India are worried about GMOs. They want a better life and they see that involving Ag tech (whether we agree or not).
I like green tech and renewable energy better and I’d like us to pursue that, but Davis’ clear advantage is in Ag.
[quote]
So what are you saying, that there is no value to locating high tech business in Davis? [/quote]
I am actually saying something closer to you, that we cannot simply rely on high tech as the way to go in Davis because while it might produce business, it is not going to produce additional tax revenue.
[quote]While this is a very valid observation, UCD is not the only game in town[/quote]
In two respects it is. Even the companies cited, what drew them to Davis? UC Davis. Secondly, when you are dealing with hundreds of millions in research dollars, that is the draw.
More business brings in more spending, more commercial space (or healthier commercial retail space) more business travel etc so indirectly it does generate taxes and there will be some direct tax effects as well. It also may raise property prices a bit (which some won’t like) and ultimately leads to somewhat higher property tax revenues. A few small businesses won’t make a huge difference but if we are talking about a number of businesses or one big business (or a small one that becomes big) it could make a huge difference.
dmg: “I am actually saying something closer to you, that we cannot simply rely on high tech as the way to go in Davis because while it might produce business, it is not going to produce additional tax revenue.”
Agreed.
dmg: “In two respects it is. Even the companies cited, what drew them to Davis? UC Davis. Secondly, when you are dealing with hundreds of millions in research dollars, that is the draw.”
I didn’t get the impression UCD had anything to do with DTL locating here in Davis. Do you know something I don’t? Was UCD involved?
Don Shor: “So this time would have been far better spent figuring out how to live within the current revenue constraints, rather than trying to increase city revenues.”
Why not do both?
Dr. Wu: “I think I may be living on a different planet from some folks here. We are in the midst of a massive revolution in biotech which probably will ranks with the discovery of fire, settled agriculture and Newtonian Physics in human history.”
I agree. Look at how are the entire computer industry has come in a few short years – you can carry a computer in the palm of your hand literally. We are developing technologies by leaps and bounds if given half the chance… and it will create JOBS, JOBS, JOBS…
Correction: “Look how FAR the entire computer industry…”
Government, and its many forms of committees will never have an answer to the problems GOVERNMENT brings to the table.
Entrepreneurs start businesses, government THINKS it knows something about it but it is totally clueless. Anyone who has dealt with city government in Davis would have grave reservations about starting ANYTHING in this town.
Sure its a nice town to ‘live’ in, but thats about it. Any business that really develops into something would relocate. Why? The political class in Davis is impossible to deal with.. and they are full of themselves and act like kryptonite to the business minded individuals.
We could do real practical things like eliminate business license expenses, but instead, we get a council that wants to spend money restriping parking spaces.
The only business to have in this town is virtual, so it can be moved out whenever necessary.
Interesting, unknown fact:
Unfortunately, high-tech industry will no longer bring much net revenue to the local jurisdictions, if any, because of new tax breaks for high-tech industry that the State has recently enacted. The League of California Cities opposed these tax breaks, to no avail.
Astonishingly, Don Saylor recently signed a letter in the name of the City asking the legislature to extend these tax breaks even further during its deliberations on implementation of the rules, with special tax exemptions that would apply to a named local industry. His request could have opened up an entire new loophole for high-tech business, even further eroding the ability for local government to gain any meaningful amount of revenue from high-tech business growth.
This had never been discussed, and he did not have council permission to do this.
Being totally against the rule for a council member or mayor to act unilaterally, and also being against the policies that local governments and members of our staff had been fighting for in conjuction with the League of California Cities, I contacted staff. Staff had been working with the League to moderate this high-tech tax break legislation.
City Staff had to scramble to retract the letter signed by Don Saylor, which had already been sent to our State legislator.
Sue illustrates one of the problems with these sorts of business development sessions: they often lead to cities and other governments providing tax “incentives” (read: tax breaks) to certain types of businesses to entice them to locate locally. Thus undermining the value of bringing the business in the first place.
ERM gives the example of the computer industry. So here are the current statistics for Silicon Valley:
Unemployment: 11.5% (Yolo County is at 11.7%).
Commercial office vacancy rate: 20%.
Sorry folks. This dog won’t hunt.
[quote]Next, the DSIDE steering committee will develop an action plan based on notes from the workshop. The strategy would undergo further fine-tuning by the Business and Economic Development Commission and the Davis Chamber of Commerce before final approval by the City Council.— Davis Enterpise[/quote]
However, the Davis Enterprise reported Don Saylor’s proposal for the process; not the process that the council adopted.
Saylor had described the workshop process as follows:
A Chamber of Commerce workshop would be held at the UCD campus, with representatives of the Campus and “others” present. The workshop would come up with comprehensive economic development polities, action items and a timeline for implementation. A “task force” would be picked at the conference that would organize these policies. The City Business and Economic development commission (traditionally carefully chosen and vey influenced by Don Saylor himself) would then “refine” these policies, and they would come for to the council for “adoption”.
When Saylor brought this process to council for adoption, I pointed out that a comprehensive economic development policy would involve land use and fiscal decisions that affect the entire city, and should be decided by the council as a whole – not only by a Chamber of Commerce and BEDSE commission — with input from all interest groups and from unaffiliated citizens.
A council majority agreed with me, and changed the working to simply “a workshop will be held”.
I attended the workshop. The two speakers from Davis High Tech businesses pretty much contradicted the “Business and Economic Prosperity Report” conclusions, which stated that Davis one of the most expensive places to do business and that our approval process was a deterrent to business. Rather, they said that Davis was a good place to set up a business and that costs were not out of line, etc.
IMHO, the conference was agenda-ridden and not fact-based. A giant screen kept flashing out-of context sentences from the “Business and Economic Prosperity Report” which indicated that Davis needed more housing lower developer impact fees (even though our fees are lower than average), etc.
Each table had an assigned “question”. The question at my table was “how to we provide enough housing for employees at the new industries”. Obviously, this is a loaded question, because it implies that if we build new housing, the new housing we build will go to people who work in the new industries.
One individual at my table, who did not appear to live in Davis, asked me aggressively: “Are Davis citizens no growth, or are they willing to see Davis become a city of 200,000?”. No one at the table was given any real facts or background about housing. For example, one participant assumed that housing makes a big profit for the city, and that we can solve our fiscal problems by building new housing.
Myth was encouraged, facts ignored.
When the policy recommendations came in, the business park group simply recommended that “new land be annexed for a business park near or adjacent to the city.” There was no discussion at all of our already-zoned business park within the city.
The workshop showcased Don Saylor to the business community. It was extraordinarily expensive for the city. Just about every management-level non-safety employee spent most of the day there. You can add up the cost — and that doesn’t count the amount of time they spent organizing it.
Actually Sue, it is more than a bit disengenuous to suggest that you attended. As I recall, you missed the entire morning session when the bulk of the audience attended, and came in for the last hour or so of the afternoon session. Pardon me, if I misremember the exact time you walked in, but it was quite late, most of the people had already left and you missed the entire first panel, so it’s hard I think for you to judge the worth of the workshop when you missed the majority of it.
Brian,
I attended the entire workshop session where “policy” was made.
In addition to the talks by the two actual high-tech businesspeople.
I pretty much agree with Don Shor on the biotech issue. Ag biotech is a nice little niche, and I am proud of Davis’ accomplishments in this area, am but I am not sure that it is going to be a huge growth industry.
In terms of medical biotech, there is a very interesting blog which I follow on the pharmaceutical industry. Here is the link: http://www.corante.com/pipeline/ The ongoing discussion is that most of the low-hanging fruit has been picked, and that, in desperation, the pharmaceutical companies acquiring (and overpaying) for bio-tech companies which rarely turn a profit. I suspect that insurance companies will become less and less willing to pay for expensive new drugs with marginal results, which will ultimately decrease the potential payback for investors and concomitant retrenchment of research programs in both biotech startups and mainstream pharmaceutical companies.
This all makes me sad, since I think that advances in medical science are about the best thing that civilization has brought us (my great-grandmother was one of three children who survived to adulthood out of 13, and my great grandfather died of appendicitis at the age of 33, leaving two young children and a pregnant wife. Just close your eyes and try to imagine how the pervasive presence of death and disease must have effected every aspect of the psychological and social structures of those times).
However, I am not confident that biotech is a major growth industry at this point in time, although I hope I am wrong.
I have to comment. First, Marrone Bio Innovations is not a spin off of AgraQuest. When I could not get the IPO done due to 9/11, rather than lay of 75% of the employees and to weather through the downturn, I took money from new large investors and we did not agree on the strategy going forward so I had to leave. When the new investors took over, my founder stock ownership was pretty much wiped out. Current company is a separate start up, not a spin off – I had to start from scratch all over again. Second, our industry is highly regulated by the EPA, USDA-APHIS, CAL-DPR, CDFA and CAL-OSHA, among others. We need permits for everything, must report any pathogens we find (which we don’t find since we are not working on any pathogens), and are inspected regularly. Our products replace toxic chemicals and they do not cause illness in people, or any non target organisms. Our products are not genetically engineered in any way. They go through a large battery of required toxicology tests to prove safety to mammals and non target organisms. Biopesticides are growing rapidly around the world as replacements for chemicals as consumers demand safer produce with less chemical residues and as governments restrict and ban toxic pesticides.
How is our planet going to feed itself without Ag biotech? It may be a niche but its our niche.
There seem to be a number of issues in contention:
1.Is Ag biotech for real or a niche?
Frankly I don’t see how it’s a niche. There are several billion people on the planet moving into the middle class over the next two decades who will want to eat more (mostly meat which requires grains, soybeans, etc). Additional arable land on our planet is limited and climate change will make some places less hospitable to agriculture and weather will be less predictable (though some places, like Canada will likely have more productive agriculture). Give that proposition I don’t see how one can argue that there won’t be some expansion of Ag biotech. There are only a few places in the world with the skill set Davis has.
Even if it is a niche, it’s our niche. A few hundred jobs in Davis might be nice. I just don’t see how intelligent people can say there will not be opportunities in Davis for Ag biotech.
2.Is Don Saylor a scumbag?
Yes.
3.Will bringing in more business help Davis?
I think the answer is yes provided we make reasonable arrangements. Business development makes far more sense than building homes, which often costs cities more (in service costs). If we have a highly paid hi-tech workforce some more housing may be necessary but the City needs to ensure we do not lose out. Even if business taxes are low there are positive spillover effects (unlike housing).
4.Should Davis remain a sleepy town or try to grow jobs?
This is really a value judgment and people have a right to their own views. I favor growth in hi-tech intellectually intense businesses. I think this will be good for Davis but people can disagree here.
People are going to do what they want to do. If you want to start a business in this town go ahead.
The notion that any one of you or I are ‘going to do something to make Davis develop economically’, only extends to looking at ourselves in the mirror. You can only ‘do’ it yourself. So everybody reading this.. if you dont have a business, start one !
The best thing the city can do is lower/eliminate taxation that impedes business creation.
I attended the afternoon session. One critique I would have is that the focus was only on conventional business. My table did agree that there should be an equal emphasis and resource allocation to alternative local businesses. Let’s not neglect the power and contribution of local?
I brought up for example, how proud we should be of Unitrans, Communicare and the Davis Food Co-op. They were all homegrown enterprises that today play a major role in meeting the needs of many of our citizens, in transportation, healthcare and food. They have each created many jobs here in town. We have the best transportation system of any town our size in California (perhpas the USA), we have the best health care system for those truly in need in our county, and we have one of the few small city downtowns with a supermarket in California.
Don Shor Gives a Big Dose of Reality
And correct analysis…
“Retail is completely saturated in this region.”
“Developers don’t like commissions and really don’t like direct voting by the public on their projects.”
“Hunt-Wesson would probably provide sufficient space …There is commercial land undeveloped along Second Street.”
“Mostly this argument is being put forward as a way to justify larger peripheral development on land that isn’t currently zoned for it.”
“Unlike, say, Vacaville, where housing development continues unabated, and retail projects are built and stand 15 – 20% empty.”
“So this time would have been far better spent figuring out how to live within the current revenue constraints, rather than trying to increase city revenues.”
I like this guy…
Don Shor: “ERM gives the example of the computer industry. So here are the current statistics for Silicon Valley:
Unemployment: 11.5% (Yolo County is at 11.7%).
Commercial office vacancy rate: 20%.
Sorry folks. This dog won’t hunt.”
I gather you don’t welcome more business in Davis and want to keep it “as is”?
How do you read that in my analysis?
To Sue Greenwald: My experience was much different than yours. Both our groups were pretty down to earth, not particularly agenda driven, and willing to say the tough words. Some in our group expressed pleasure with Measure J for keeping “smart growth”. Others thought it impinged on what they perceived as necessary growth. We agreed to disagree. I thought it was an interesting and unexpected dichotomy. As you know, I was a strong and vociferous supporter of Measure J. Our group acknowledged that this town lacks an overall vision for what Davis wants to be. And our group spoke about not assuming UCD or high tech industry is the only game in town, as David Thompson above has noted with respect to organizations like Unitrans, Communicare, and the Davis Food Co-op. But bringing more business to town will mean providing more JOBS, JOBS, JOBS. The Carlton Plaza Davis assisted living facility will bring 100 new jobs to Davis. Its employees will probably lunch at Konditerei or shop at the strip mall down the street. Business breeds more business and ecomonic vitality to the city in various ways…
“The Carlton Plaza Davis assisted living facility will bring 100 new jobs to Davis.”
Precisely. Do a Google Earth view of Davis. There are several undeveloped lots along Second Street. If those property owners wish to come forward with development proposals, fine.
There is no need for any peripheral development to encourage new businesses. I seriously question the premise that Davis lacks commercial sites right now. I also question the view that city officials or policies somehow inhibit business development here.
There is no shortage of places. There is simply a lack of demand. Are you aware of the present state of commercial real estate in the region? Ask any commercial real estate broker how things are moving right now, and how he or she thinks they will be moving in the next 5 – 10 years.
The only people who would benefit from development proposals right now are land developers. Commercial developers aren’t going to be doing anything soon. Housing developers aren’t going to be doing anything soon. So any talk about encouraging development, somehow based on illusory prospects of luring ag or bio tech businesses, or green energy businesses, simply helps build pressure for land development.
In fact, the city has done a detailed analysis of commercial sites, which you can see here:
[url]http://cityofdavis.org/CDD/Business_Park_Land_Strategy/pdfs/Draft_BPLS_Site_Evaluations.pdf[/url]
I am a bit confused by Sue Greenwald and Don Shor’s take on tech and bio tech. After water and energy, feeding the world’s population has to be one of the pressing issues for the coming 20 years. Ag biotech advances will improve productivity and help develop varieties and crops that will be more drought tolerant, grow on our increasingly saline soils and potentially, help solve energy problems. It seem implausible that this doesn’t have the potential to be an industry of significant growth. And while these businesses may not add directly to sales taxes, they will add high paying jobs located in Davis, which will lead to increased sales and more viable local businesses.
And Sue, I’m pretty sure that you have a long stated position that the Hunt Wesson property is best used as a technology park. I remember you arguing that the reason it hasn’t already been developed as a technology park is that the owners (now former owners) were ignoring the opportunity to develop the property as a tech park because they wanted to develop Hunt Wesson as a residential property. How should I reconcile your view stated in this column with your previously state positions about Hunt Wesson?
[quote]And Sue, I’m pretty sure that you have a long stated position that the Hunt Wesson property is best used as a technology park. I remember you arguing that the reason it hasn’t already been developed as a technology park is that the owners (now former owners) were ignoring the opportunity to develop the property as a tech park because they wanted to develop Hunt Wesson as a residential property. How should I reconcile your view stated in this column with your previously state positions about Hunt Wesson? [/quote]I don’t understand what you are driving at. Much of the recent high-tech business in town has been centered around the field of mechanical engineering.
I was only making an observation about one small sector of high-tech industry, which is the field of bio-technolgy.
Roberts Musser: The vast majority of people at my table were very thoughtful as well. I only felt that they were not given any relevant background information, and that the question itself was loaded. I also question whether a random group of individuals should be tasked with “developing a comprehensive economic policy for the City of Davis”, and whether the results of this workshop were worth the cost in terms of the huge amount of management time that was devoted to it.
Two final comments –and some may call me an elitist.
First, the type of job matters.
Retail, nursing homes and many other service sector jobs employ primarily relatively low paid service sector workers. A few Drs and RNs at a nursing home or other health care facility will be well paid but LPNs and others will be lower paid. Retail workers will be lower paid still Many of these folks will live in Woodland, Dixon, West Sac. Though we obviously need these types of jobs I don’t consider that the type of growth we should be looking at. Palo Alto did not do well growing nursing homes. Hi tech jobs pay well and bring in an educated workforce. I don’t see Roseville as our goal, I see Menlo Park or Palo Alto. Am I the only one?
Second, I also think local government can play a role in marketing the City, finding out what businesses need, etc. Entrepreneurs have choices as well on where they will locate. Davis has advantages over silicon valley in that our rents are lower, but Austin Texas is cheaper still (though that is changing rapidly). WE shouldn’t give business anything they want but we should try and attract high paying jobs imho.
What disturbs me a bit is that I see two types of people involved politically– Saylor types who want more development even if the City loses out and people who have been fighting the Saylor types for so long that they don’t see that some growth can actually help this town and help us keep our small businesses and coops.
Its a tough economy and assuming that Davis will just mosey along in the same way it has for decades is dangerous. That won’t happen. I think some growth in hi-tech is necessary to preserve the quality of life that Davis residents have taken for granted.
I have always been an advocate of high-tech industry. However, we have to be careful not to over-promise. The recent tax-breaks for high-tech industry enacted by the legislature mean that have to carefully reassess whether the city can expect to gain any net revenue from this type of economic development.
Also, salaries in biotech are not very high. I expect that biotech research salaries are about equal to RN salaries. The data is available.
Sue Greenwald: “Roberts Musser: The vast majority of people at my table were very thoughtful as well. I only felt that they were not given any relevant background information, and that the question itself was loaded. I also question whether a random group of individuals should be tasked with “developing a comprehensive economic policy for the City of Davis”, and whether the results of this workshop were worth the cost in terms of the huge amount of management time that was devoted to it.”
I certainly was not under the impression the people sitting at those tables were expected to be “developing a comprehensive economic policy”. We are not elected, do not have that kind of power, and did not go to the seminar with that in mind. I assumed (and perhaps naively so) that it was a brainstorming session, that will give BEDC and City Staff some fresh ideas of where to go from here. Wouldn’t BEDC working with City Staff come up with any comprehensive economic policy proposals, then present them to the CC for final approval? Whether this workshop was worth the money remains to be seen, depending on what outcome results from it…
erm: “I gather you don’t welcome more business in Davis and want to keep it “as is”?
Don Shor: “How do you read that in my analysis?”
Previous comments by Don Shor: “I think the bloom may be off bio/agtech.
Retail is completely saturated in this region.
Office space is way overbuilt in the region, with millions of square feet standing empty in Natomas. Commercial development is unlikely. So this time would have been far better spent figuring out how to live within the current revenue constraints, rather than trying to increase city revenues.
But now, entire agricultural markets such as Europe are off-limits to engineered crops. Opposition has become organized and vocal. More to the point, I don’t see any likely explosion of commercial ventures in this realm clamoring for space.
ERM gives the example of the computer industry. So here are the current statistics for Silicon Valley:
Unemployment: 11.5% (Yolo County is at 11.7%).
Commercial office vacancy rate: 20%.
Sorry folks. This dog won’t hunt.”
So, if you are not against business coming to Davis, what type of business do you want to come here then, if I have somehow misconstrued your words? Seems from your own negative statements you don’t see any retail coming here, or bio/agtech, or computers, or commercial development? Also, Dr. Wu makes a really good point, which I do not consider elitist in the least – but realistic. Too often the businesses we are attracting to Davis that create jobs are those that offer only minimum wage jobs, which are often taken up by college students. What a shame…
And by the way, I do NOT discount some of your concerns such as: “Mostly this argument is being put forward as a way to justify larger peripheral development on land that isn’t currently zoned for it.” That is why I think to a certain extent many of us who were attending the conference have a wait and see attitude, to find out if this is a sincere effort or agenda driven. Only time will tell…
And we can agree to disagree on this point, but I do believe there is a perception that Davis is anti-business. And that perception IMHO has been fostered by tactics like the Borders War, the grocery store wars, the anti-Target campaign, and the refusal to give Carlton Plaza Davis facility a fair hearing. Just my opinion, but one shared by many others in the DSIDE conference and among many of my friends and acquaintances.
Sue Greenwald: “I have always been an advocate of high-tech industry. However, we have to be careful not to over-promise. The recent tax-breaks for high-tech industry enacted by the legislature mean that have to carefully reassess whether the city can expect to gain any net revenue from this type of economic development.”
Agreed. And you have been a stellar advocate at watching out for the interests of Davis taxpayers.
Sue Greenwald: “Also, salaries in biotech are not very high. I expect that biotech research salaries are about equal to RN salaries. The data is available.”
RN’s and biotech researchers make respectable salaries, and certainly way more than someone making minimum wage…
[quote]RN’s and biotech researchers make respectable salaries, and certainly way more than someone making minimum wage…[/quote]
Define respectable. $57,000- $70,000 qualifies for low income housing in Davis.
“The biosciences industry pays, on average, 68 percent higher salaries than the average private-sector job at approximately $71,000 as compared with the average annual wage of $42,000 for the total private sector.”
Source: “State Legislative Best Practices in Support of Bioscience Industry Development” published by Bio (Biotechnology Industry Association)
http://www.bio.org/local/industryDev/
I would add that biotechnology salaries in California are significantly higher than the national average.
As a point of reference, my recollection is that entry level salaries for new Assistant Professors are around $50,000.
Will comment more after I’ve read the entire report.
dmg: “Define respectable. $57,000- $70,000 qualifies for low income housing in Davis.”
Point 1) If mom and dad both have jobs at $57,000 per year, that translates to over $114,000 a year for that family.
Point 2) $57,000 a year is certainly far more than a minimum wage job which would pay approx. $16,000 per year, if you can even get a full time minimum wage job. I would say that is a significant difference.
Point 3) According to staff report, MODERATE AFFORDABLE housing in Davis requirements for a family of FIVE is $56,750 as of 2008. So there is a built in assumption that ONE PARENT IS NOT WORKING, and there are FOUR CHILDREN IN THE HOUSEHOLD. And it is MODERATE AFFORDABLE housing, NOT LOW INCOME housing.
I think there is a real disconnect with reality for people who somehow believe making $60,000 per year (which is about what a public school teacher makes) is not a respectable income, especially if a household has two income earners – which is a necessity these days. If you cannot afford to live in San Francisco, but work there, then you live in an area you can afford and commute. It would be physically impossible for everyone who worked in San Francisco to live there. Not everyone can afford to live in Davis that works here, so many commute from towns where costs of housing are more within their budget. Not everyone can have everything they want, just because they want it. The country cannot afford this sort of largesse, as you yourself should know…
[quote]I certainly was not under the impression the people sitting at those tables were expected to be “developing a comprehensive economic policy”.–E.Roberts Musser[/quote]Yes, the point I made earlier was that Don Saylor had said that the people at these tables would be coming up with action items that would be refined by BDCE and then “be adopted by council”, and that these policies would form the basis for a comprehensive city economic development policy.
And that is exactly how the Enterprise reported it, and is why I expressed concerned.
[quote]“The biosciences industry pays, on average, 68 percent higher salaries than the average private-sector job at approximately $71,000 as compared with the average annual wage of $42,000 for the total private sector.” [/quote]And that is about what registered nurses make, on the average in the high-tech California cities. I was addressing a specific comment which said that biotech workers are higher paid than nurses.
Sue,
I was there for the entire day. Your characterization of what Don Saylor said re: adoption of action items by the council is not accurate (and misleading). Why the pejorative spin on everything?
According to the US Bureau of Labor Statistics, in 2006 (the same year as the average biosciences salary statistic quoted above) there were 2,417,150 registered nurses in the US making an average salary of $59,730.
I think most working people would not consider $71,000 to be about the same as $60,000. In many two income families in our community, an $11,000 spread per income would be enough to cover a big chunk (if not all) of the mortgage.
And why even compare biotech salaries to nursing salaries in the first place? I don’t see the relevance.[quote]I think there is a real disconnect with reality for people who somehow believe making $60,000 per year (which is about what a public school teacher makes) is not a respectable income, especially if a household has two income earners – which is a necessity these days. If you cannot afford to live in San Francisco, but work there, then you live in an area you can afford and commute. It would be physically impossible for everyone who worked in San Francisco to live there. Not everyone can afford to live in Davis that works here, so many commute from towns where costs of housing are more within their budget. Not everyone can have everything they want, just because they want it. The country cannot afford this sort of largesse, as you yourself should know…[/quote]ERM: You are spot on. Great post.
local: the following is from the consent calendar when the council was asked to sponsor this event:
The goal of the workshop is not merely a discussion, it is an “action” workshop that will “Articulate a community vision for Davis’ future economy.” It will “Create a timeline for specific actions to be taken by the City, the business community, and other partners.” “The Steering Committee is comprised of representatives of UC Davis, the City, and a broad base of business interests.”
“The Steering Committee will guide the strategy through formal City Council consideration and its implementation.”
“Total budget for the workshop is estimated at $5,000″. The University of California, Davis, has generously agreed to provide the Conference and Visitors Center as a location for the workshop. We are requesting business owners to give us one of their workdays to make the workshop a success.”
Don Shor: “local: the following is from the consent calendar when the council was asked to sponsor this event:
The goal of the workshop is not merely a discussion, it is an “action” workshop that will “Articulate a community vision for Davis’ future economy.” It will “Create a timeline for specific actions to be taken by the City, the business community, and other partners.” “The Steering Committee is comprised of representatives of UC Davis, the City, and a broad base of business interests.”
“The Steering Committee will guide the strategy through formal City Council consideration and its implementation.”
“Total budget for the workshop is estimated at $5,000″. The University of California, Davis, has generously agreed to provide the Conference and Visitors Center as a location for the workshop. We are requesting business owners to give us one of their workdays to make the workshop a success.””
As a participant in the workshop, I can assure you that no timeline for specific actions was created. Nor was a consensus arrived at for the articulation of a community vision for Davis’s future economy. A lot of good conversation took place in identifying strengths and weaknesses of Davis with respect to its ability to attract new business, but that was about it. At the end of the meeting, Don Saylor asked how many wanted to “continue the conversation”, and just about everyone raised their hand. That was the upshot of the workshop, pure and simple. If the promoters of this workshop expected to get an “action plan” out of this workshop, it did not happen. But then it was impractical to expect one, since it takes time to identify and agree on problems and how to fix them. You don’t do that in a one day workshop. But the BEDC representative seemed to have a pretty realistic grasp on what he expected to be accomplished from the workshop – to start the discussion, and move it forward.
I do hope the conversations will continue. But just to reaffirm the original goal, this is from the Chamber of Commerce Chairman’s message:
“Designing a Sustainable and Innovative Davis Economy (D.S.I.D.E.) will be
an all day workshop on September 23rd, where we will have an opportunity
to create a vision and economic plan that will support the strategy being
promoted by the university. The outcome of this workshop can reinforce
Davis’s commitment to collaborate with the university and also to become
an incubator for new ideas and opportunities, or we can continue to keep a
blind eye and remain reticent to change. We have an opportunity to shape
our future. The workshop “Designing a Sustainable and Innovative Davis
Economy” will provide an opportunity to create a viable strategy for economic
development and will show others that Davis is open for business.”
Earlier in the message, William Alger notes:
“…there is also a responsibility for the Davis community to support this philosophy
and create its own environment conducive to business development and retention.”
and
“…it is just as important that the community of Davis change its current position and
philosophy by creating a process that will facilitate new business development
in our city.”
Read that, read the very leading questions that were posed in the report that laid the foundation for this meeting, and read the proposal put before the city council. It is easy to conclude that the agenda was to develop a consensus for growth and to lead to policy recommendations for the council. I thought the review of the General Plan was where such policies would be set.
As you say, “it takes time to identify and agree on problems and how to fix them.”
Unfortunately, it seems that the problems are being described, and the issues are being framed, by those who wish to annex and develop land for business development. Perhaps this conference demonstrated to the organizers that it isn’t going to be smooth sailing to get to the policy level. If so, then it served a purpose. But
I do believe that holding this during these economic times was very tone-deaf. This was not a sound use of tax funds (including the cost for staff to be present), nor of Chamber member dues (though they don’t care what I think, since I’m not a member). The economic realities I’ve mentioned earlier make most of the discussion moot. I think the BEDC could probably go on hiatus for a couple of years, given the unlikelihood of any investment or development of any kind in the near- to mid-future.
Please be cautious about becoming a booster for economic growth at this time. Annexation and subdivision of land for any purpose would almost certainly cost the city more than it would gain in fees, certainly over the long run. The pace of development would be very slow and entirely out of the hands of the city. There is no shortage of land available right now for small start-up companies, and Davis can’t compete with the vast amounts of unfilled office space sitting idle in Natomas.
DS: I can also assure you that there was absolutely no suggestion that we were creating policy.
There were over 150 participants sitting at roughly 15-20 tables. Each table had a facilitator (to keep the discussion on time and on track, and to make sure everyone was heard) and a recorder (that captured a running summary of the dialog in real time). It was a tremendously useful exercise that put diverse groups of people together (that would not normally have any dialog) and effectively memorialized the overall discussion in an open and transparent way.
The text in the consent calendar was obviously over the top, and it is my understanding that the council amended it. The Mayor also clearly disavowed this language from the podium at the conference.
“ … a high tech economic development strategy is not one likely to increase sales tax revenue to the city.”
That’s not the point. Cities around the globe are ferociously competing for high tech jobs because of the multiplier effect. Each high tech job creates additional jobs downstream, and this aggregate economic activity creates a flow of money into local ecosystems … benefiting schools, retailers, lawyers, accountants, local charities, restaurants, and so on.
A 2004 report from The Milken Institute pegs the multiplier for the biopharmaceutical industry at roughly 6.7.[quote] Biopharmaceuticals employed 406,700 people in 2003, and when the full multiplicative
impact is captured, is responsible for 2,724,800 jobs and 2.1 percent of total
employment in the nation. Each job in the industry creates another 5.7 jobs elsewhere
in the economy, substantially above the average for all industries.
• The biopharmaceutical industry paid an average annual wage of $72,600 in 2003 and is
among the most productive sectors in the U.S. economy with real output per worker of
$157,300.[/quote]This is relevant to Davis because Genentech (the flagship of the biopharmaceutical industry) just built a 140,000 sq ft cancer research facility in Dixon that will employ about 160 people when fully staffed. Davis was rejected as a potential site because of concerns about the local culture.
Clarification … when I do the math I get a 6.7 multiplier from the statistics cited by Milken. In the quote, they list the multiplier as 5.7. I don’t know where the discrepancy comes from.
The other point I should also make is that the high tech multiplier will be amplified as we come out of the recession. Biotech and green tech in particular are positioned to become two of the dominant growth industries going forward. Jobs with high multipliers in growth industries is the sweet spot.
local: “Genentech (the flagship of the biopharmaceutical industry) just built a 140,000 sq ft cancer research facility in Dixon that will employ about 160 people when fully staffed. Davis was rejected as a potential site because of concerns about the local culture.“
I assume you have more than anecdotal evidence that Davis was rejected for anything other than sound financial reasons? Dixon is closer to the Genentech headquarters in Vacaville. Land is cheaper in and around Dixon (and always will be). Dixon is close enough to UC Davis for Genentech to benefit from UCD assets.
“Each [u]high tech[/u] job creates additional jobs downstream, and this aggregate economic activity creates a flow of money into local ecosystems … benefiting schools, retailers, lawyers, accountants, local charities, restaurants, and so on.”
This is basic pro-growth boilerplate. It doesn’t matter if the jobs are high tech or otherwise. The argument is always that growth is entirely beneficial to the community. Orderly growth within the parameters of the General Plan can accommodate biotech businesses. Ag tech will more likely need greenhouse space and farmland to lease, so it seems like a more likely prospect for county sites.
I have no problem with making an effort to attract tech businesses to Davis to help fill the existing space available. There are very competent city staff available already to help streamline the application process, expedite paperwork, steer businesses to local commercial brokers. Land is available in various places already around town.
What more do you want the city to do to encourage tech businesses to locate here? How much effort should the city realistically expend on any business development at a time when there is excess capacity and zero demand? Do you really believe there are other multi-national corporations out there such as Roche (owner of Genentech) looking to expand in bio tech at the moment?
I assume you have more than anecdotal evidence that Davis was rejected for anything other than sound financial reasons?
That is a correct assumption.
It doesn’t matter if the jobs are high tech or otherwise.
That is not correct from an economic development perspective. High tech jobs have a far greater positive economic impact on the community than, to pick Sue’s example, nursing jobs (no disrespect to nursing jobs – they just don’t have the same multiplier effect).
I have no problem with making an effort to attract tech businesses to Davis to help fill the existing space available.
Me neither. The sooner the better.
There are very competent city staff available already to help streamline the application process, expedite paperwork, steer businesses to local commercial brokers.
Perhaps … but the city’s track record speaks for itself. I’m hopeful things will begin to improve with the new City Council, City Manager, and Planning Director.
What more do you want the city to do to encourage tech businesses to locate here?
Smaller end-users can obviously be accommodated by the city already, and the process that was begun last week has the potential to have a big impact on recruitment and retention if momentum builds and there is some concrete outcome. In addition, we need entitled shovel-ready land large enough to accommodate end-users like Genentech – ready and waiting when these rare opportunities come along.
How much effort should the city realistically expend on any business development at a time when there is excess capacity and zero demand?
If Davis does not expeditiously adopt a credible economic development strategy, then the university will move forward without the city. Katehi made that crystal clear. IMO she is ready, willing, and capable of taking the university down a path that would be adverse to the city if she is convinced it is in the best interests of the institution. And we don’t have veto power.
Do you really believe there are other multi-national corporations out there such as Roche (owner of Genentech) looking to expand in bio tech at the moment?
There will be more out-migration/expansion of Bay Area companies along the I-80 corridor during the next economic expansion. The fact that the economy is currently in a downturn should not be used as an excuse for not planning. Once things heat up again, it will be too late to play catch-up.
If Chancellor Katehi indeed wants to move forward, the university can provide the land, negotiate a revenue-sharing agreement with the city and county, including provision of safety services and infrastructure if necessary. The only parcel within the city limits that was big enough to accommodate a very large firm was converted to retail when Target was built. Every other site I can think of would generate a justifiable firestorm of opposition. But there is plenty of land between West Village and the Primate Center.
The question is whether the Chancellor truly wishes to collaborate with the city and county, or wishes to try to pull a Ramos.
On what basis would the university be compelled to negotiate a revenue sharing agreement with the city? They already have safety services and infrastructure, and are not subject to the control of the city council.
And threatening a “firestorm of opposition” if certain political constituencies don’t get their way (assuming it can even be delivered) is not a particularly effective way to have a productive dialog with our closest partner – especially when the university holds all the cards.
local: Threatening? Then what did you mean by “…then the university will move forward without the city. Katehi made that crystal clear.…”?
A firestorm of opposition is certain to develop about any attempt to annex peripheral land to the city. I’m not threatening anything. It is a political reality that anyone would be foolish to ignore. LIke many of the economic realities that I have tried to point out here. It would be in conflict with standing growth policies, the General Plan, and it is my opinion that the city electorate has little taste for annexations. If you disagree with my analysis, I’d be curious on what basis.
You’re right: the university isn’t compelled to do anything. So just curious: what exactly is it you want? What property adjacent to the city limits do you want to annex?
Don: IMO UCD is looking at (1) Nishi, (2) their previously designated business park site along Old Davis Road, and (3) various options E of 113 and N of 80. If the city is going to lead on this, our only rational choices are (1) NE of Mace and I80 or (2) NW of Covell and 113.
There’s been some speculation about whether or not UCD could bypass Measure R by purchasing the Nishi property and settling for university only access if the city won’t allow a connection to Richards. Having listened carefully to Katehi, the Nishi option is the only one that syncs with her rhetoric. My bias is that this doesn’t solve the problem of how to attract large established end-users because the parcel is too small.
If UCD goes down a path that is independent of the city, are you OK with that?
Don Shor: “I have no problem with making an effort to attract tech businesses to Davis to help fill the existing space available. “
Don Shor: “The only parcel within the city limits that was big enough to accommodate a very large firm was converted to retail when Target was built. Every other site I can think of would generate a justifiable firestorm of opposition.”
Which is it, attract businesses to Davis to fill existing space or every available site will generate a justifiable firestorm of opposition?
Don Shor: ” I think the BEDC could probably go on hiatus for a couple of years, given the unlikelihood of any investment or development of any kind in the near- to mid-future.”
Sure sounds anti-business to any new business development to me…
ERM: Which is it, attract businesses to Davis to fill existing space or every available site will generate a justifiable firestorm of opposition?
Every other site is outside the city limits and would require annexation. See comments by ‘local’ above.
Sure sounds anti-business to any new business development to me…
Again, you are confusing analysis of current conditions with policy. I’m not saying there should be no new business development, I’m saying there will be none: current and near- to mid-term conditions make them unlikely. Nothing the city or others do is likely to affect market conditions, which preclude any development.
local: If UCD goes down a path that is independent of the city, are you OK with that?
Yes. I think UCD has the land to set aside for a larger business site. I agree Nishi is too small, and (unlike some others here) believe it could best be developed for housing. Of the other sites you mention, I think the Old Davis Rd site would be most suitable for ag tech; greenhouses and farmland could be nearby. Pretty much anything could go E of 113/N of 80.
Annexation and development of the parcels adjacent to the city would be much more problematic for political reasons, and I don’t think they would really pencil out in terms of providing revenues to the city that would genuinely cover the long-term costs of added services and infrastructure. They would be considered growth-inducing and probably wouldn’t pass with the electorate.
What’s the profit in bashing any effort to improve our community or for questioning the motives of anyone who proposes a community improvement, economic or otherwise? This incessant bashing, nitpicking, and paralysis of fear serves no purpose. Such a mindset leads to stagnation and malais. It seems far more productive to me to welcome suggestions for improvement and then discuss the merits or lack thereof in an analytical fashion. To do the opposite is a disservice to our community.
The community has plenty of opportunities to pursue, let’s get on with it.