A fascinating discussion broke out on Facebook late yesterday when Bernie Goldsmith revisited the city council’s late 2010 decision to bank with Wells Fargo rather than more local banking institutions. The decision ultimately came down to hard numbers, something that Mr. Goldsmith disputes.
He writes, “I think it is a core value of this town that we should support our local businesses, institutions, and service providers, even when it’s a little more expensive.” He adds, “This is because we know that the value of shopping locally is not always reflected directly in dollars and cents or a bottom line; dollars spent locally recirculate and multiply more than dollars spent elsewhere, enriching businesses and government alike. This issue is deeper than a simple bottom line; it reaches to the bedrock of our community’s values, and what makes Davis unique.”
He writes, “But just be clear and complete re how much more this would cost the city, and that none of the banks considered were Davis or even Yolo County-based. The closest to local of those that bid were regional banks from Sacramento or Solano with a branch in Davis.”
This exchange reminds me exactly why I got involved in being a budget hawk in the first place. It reminds me of an article I once read on Ron Dellums. Long before he became the Mayor of Oakland, he was a powerful chair of the Armed Services Committee. Now why would a liberal and civil rights leaders from Oakland end up becoming a powerful member of committee that helps to determine funding for weapons during the height of the Cold War?
Mr. Dellums believed that if he could become an expert on military spending, he would find ways to free up money for social programs.
When I started to take a look at the city’s budget, it was an eye-opener. I saw how much of the city’s budget went to compensation, just how many people were making over $100,000 a year in the city, and the costs of pensions.
The worst is that all of the money we owe for pensions and unfunded retirement has not come due. Moreover, the city’s infrastructure is literally crumbling. We have $15 to $25 million in deferred maintenance on roads and an emerging crisis on water infrastructure that will be part of the massive water plan.
In terms of employee compensation, we are looking at, at the very least, $7 million in additional costs to employee compensation. That is about 20% of our general fund.
The money we owe for these things means we cannot do the right thing and invest city money in local or regional banks, which, as Mr. Goldsmith correctly points out, would help the economy. Right now, money that goes to a national bank essentially exits our region. It is much like the impact of dollars spent on Target versus dollars spent on Davis Ace.
We have a modest proposal of $14,000 for an EIR, but a councilmember rightly pointed out that we are closing down a pool – a move I support in part because the community needs to get the message it is not business as usual.
However, I still think people do not understand the magnitude of the impact of these crises.
Proposals I hear are for increased efficiency. I am not going to argue about increased efficiency, as I think we can always improve. But we are not going to make much headway, simply through improving our efficiency.
Likewise, I have heard the proposal that city employees should take up their full share for their benefits – that is undoubtedly true, and my guess is that would be the low-hanging fruit for the first round of negotiations.
However, that will not fix this crisis either.
Nor will the proposed pension reform – again, that I support – from the governor. Most of the savings achieved from that will be down the line, not immediate.
The business community has jumped on the economic development wagon. However, once again, while it is something we should all support, we have to recognize that we are not going to grow our way out of this mess, in the short term. A lot of the businesses that make the most sense for Davis do not offer the point of sales or revenue-generating taxes that we need.
Retail is limited. Target was touted to bring in $600,000. I’m not sure it has come close to that in net revenue. Even if it has, that’s a drop in the bucket, and the additional retail we bring in will have diminishing marginal impacts.
The bottom line is that there are two ways we are going to solve it, and both are going to hurt a lot. The first option is with city employee concessions, over the next three years on a range of issues, to help reduce costs.
The second option is that we will have to cut services, which means the dreaded layoff word. I understand no one wants to lay people off, and I certainly do not. I also do not want to see a loss of city services, but I see little other way.
We have made too many mistakes in the last decade. We enhanced benefits, creating huge unfunded liabilities. We exploded city salaries over the last decade, relying on a one-time bump in sales tax and the real estate bubble to fund these.
We underfunded retirement health. We relied on one-time monies for infrastructure. We shielded responsibility through creating categories of unmet needs off the budget, but that built in huge and growing deferred maintenance costs.
At this point, we are one bad thing away, perhaps, from catastrophe.
And we have had setbacks for over a year, despite a city council that, unlike previous councils, is very much aware of these problems. We had the impasse with DCEA that blew up in our face. We have failed on the fire merger (although as I will report later this week, the numbers there are not huge).
The worst thing is that we failed to implement the budget passed in June of 2011.
That $2.5 million is going to haunt us. It was a 3-2 vote, and two of the councilmembers up for election this time voted against it, arguing that we need to do it in conjunction with the MOUs.
The problem with doing it in conjunction with the MOUs is that we rely on the MOUs to get us to $2.5 million. That may be doable if you consider the option of four or five impasses.
But guess what, we have started to act as though that $2.5 million is in fact the end game. It’s not. It was the first of three increments.
So, if we get to $2.5 million this time, where do we get the other $5 million? And more importantly, when?
Moreover, we have now failed to fund road maintenance for this fiscal year, for the most part. That means the price tag is rising and not falling.
This is what we face in this community. Everyone wants to be for fiscal conservatism, but no one wants to take an honest and open look at these numbers. This campaign needs to be about that. We’ll see if we get there.
—David M. Greenwald reporting
David Greenwald said . . .
[i]”So if we get to $2.5 million this time, where do we get the other $5 million? And more importantly, when?”[/i]
Perhaps it is time for Davis to take steps to help itself. One of the fastest ways to add revenues to the City’s coffers to fund needed maintenance is to increase Sales Tax. Every $100.00 increase in taxable sales adds $1.00 of Sales Tax revenues to the City.
In an earlier thread Jeff Boone posted the following, [i]“But, here is the real kicker… Berkeley retail sales per capita is $12,700 (about the state average). Davis’s retail sales per capita is $7,752.”[/i]
What can we do about that $5,000 disparity?
Does every Davis resident have a vested interest in doing something about that $5,000 disparity?
Bottom-line, the answers to those two questions are YES and YES. I encourage everyone in Davis to go to the http://www.BuyLocalBerkeley.com website. One of the key questions posed there is, [b]Why Buy Local?[/b]
[b]Ten Reasons to Buy in Davis[/b]
1. [u][b]It keeps dollars in our economy[/b][/u] – For every $100 you spend at one of our local businesses, $68 will stay in the community.
2. [b][u]It fosters what makes us unique[/u][/b] – You wouldn’t want your house to look like everyone else’s in the U.S. So why would you want your community to look that way?
3. [u][b]It creates local jobs[/b][/u] – Local businesses are better at creating higher-paying jobs for our neighbors.
4. [u][b]It helps the environment[/b][/u] – Buying from a local business conserves energy and resources in the form of less fuel for transportation, less packaging, and products that you know are safe and well made, because our neighbors stand behind them.
5. [u][b]It nurtures our community[/b][/u] – We know you, and you know us. Studies have shown that local businesses donate to community causes at more than twice the rate of chains.
6. [u][b]It conserves tax dollars[/b][/u] – Shopping in a local business district means less infrastructure, less maintenance, and more money available to beautify our community. Also, spending locally instead of online ensures that your sales taxes are reinvested where they belong—right here in your community!
7. [u][b]It creates more choice[/b][/u] – Local businesses pick the items to sell based on what you like and want. Local businesses carry a wider array of unique products because we buy for our own individual market.
8. [u][b]It takes advantage of local expertise[/b][/u] – You are our friends and neighbors, and we have a vested interest in knowing how to serve you. We’re passionate about what we do. Why not take advantage of it?
9. [u][b]It invests in entrepreneurship[/b][/u] – Creativity and entrepreneurship are what the American economy is founded upon. Nurturing local business en-sures a strong community.
10. [u][b]It makes us a destination[/b][/u] – The more interesting and unique we are as a community, the more we attract tourists, shoppers and others who want to visit Davis. This benefits everyone!
[b]And based on your article today David, it appears we should add . . .[/b]
11. It would help us eliminate potholes in the street – More sales tax revenues mean fewer unfunded City projects like street maintenance.
. . . continued from above
[u][b]Why Don’t Davis Residents Buy in Davis?[/b][/u]
1. [u][b]At an individual purchaser level, we really don’t know the magnitude of the impact of our non-Davis purchases.[/b][/u] – I would start by asking each Davis household to look at their monthly expenditures and identify the purchases that if purchased in Davis would have contributed to raising our $7,752 sales per capita closer to Berkeley’s $12,700. $5,000 per person per year would be $325 million per year in our city of 65,000 residents . . . more if you include the capture of more purchases from UCD students who live on campus and UCD employees who don’t live in Davis. Lets hereafter collectively call all those groups “Davis Consumers.”
2. [u][b]At an individual purchaser level, we really don’t know what our own Davis businesses offer.[/b][/u] – Armed with the list of non-Davis purchases, we can ask ourselves the simple question, “Could I have purchased each of these items locally?” Sometimes the answer is truly going to be “No.” However, even more often the answer is going to be “I honestly don’t know.” We need to immediately begin a BuyLocalDavis education campaign that helps Davis Consumers know more about their local Davis options for purchasing the items on that $325 million list.
3. [u][b]At an individual purchaser level we don’t know how easy buying local can be.[/b][/u] – Bellingham, Washington area residents initiated a “Local First” education campaign with (and for) their residents, and as a result have seen significant changes in their purchasing behavior because of it. Nearly 3 in 5 households attribute a behavior change to the campaign.
Key findings:
• 58% of Bellingham residents reported that as a result of the program they are more deliberate than they were before the program began about choosing local, independently owned businesses first.
• 92% of business participants would recommend the program to other businesses in their industry.
4. [u][b]At a community level we are not doing enough to help ourselves.[/b][/u] – Davis has not created a resource to A) find out what people want from Davis’ independent purveyors, and/or B) provide a conduit for Davis Consumers to easily show their support for the amazing businesses and organizations that make Davis one-of-a-kind!
5. [u][b]We simply haven’t collaborated enough.[/b][/u] – We don’t have to reinvent the wheel. The BuyLocalBerkeley effort grew out of the Berkeley Business District Network meetings that coordinated promotional efforts of a number of shopping areas in Berkeley. In 2007, the Business Alliance for Local Living Economies hosted their annual conference at UC Berkeley and a number Berkeley Community members were inspired by the Buy Local movement active in a number of cities across the nation.Since then, the BuyLocalBerkeley group has formalized itself through a Memorandum of Understanding, a fiscal sponsor (Downtown Berkeley Association) and a steering committee. Currently, they have a contract with the City of Berkeley to conduct a niche marketing campaign to promote our community’s locally owned, independent businesses.
[b]Can Davis Do the Same?[/b]
Not only can Davis do the same, but a group of four Davis residents have started the process . . . and ironically enough it all started here on the Vanguard.
We have met, collaborated, built consensus, reached out to the City of Davis to begin the process of building a database of Davis retail and service businesses.
Getting back to how that would help us address potholes, a substantial portion of that $325 million generates Sales Tax. At 1% that could mean as much as $3 million added into the City of Davis’ Budget each year. Armed with those kinds of dollars, a lot of potholes could be fixed.
[quote]In terms of employee compensation, we are looking at, at the very least $7 million in [b]additional[/b] costs to employee compensation. That is about 20% of our general fund.[/quote]Please clarify… is the & M ‘all-funds’ or GF only? if the latter, what is the split between GF & ‘all-funds’?
[quote]Likewise I have heard the proposal that city employees should take up [b]their full share[/b] for their benefits[/quote]Again, for the sake of discussion, what does ‘full share’ mean? … 100% of ’employee share’ (8% for non-safety)? 50-100% of any increases in ’employer’s share’ of PERS? 50-100% of any increases in the cost of medical/dental,etc.? 50-100% of the TOTAL cost of med/dental (including portion now paid by city)? 50-100% of retiree medical?
How much would those “concessions” save in GF/’all-funds’? Even if no one has the answers now, it would be good information to base a policy discussion on, that has less rhetoric than has typified the discussion to date.
There is a notice in this morning’s Enterprise that states – “The City of Davis is currently preparing a Feasibility Study to evaluate the cost-benefit analysis for the planning, constructing, and operating of a new 50 meter competitive pool complex, or that of a multiuse recreational complex. The Feasibility Study is designed to provide the Recreation and Park Commission and the City of Davis with more detailed information as the City makes its final determination on the future of Community Pool and/or other related aquatic facilities.”
Huh! The number of days the City’s pools are open has been shrinking yearly and the cost to swim has been increasing. The City cancelled its Lap Swim program. The City is asking residents to renew the Parks tax. But they are contemplating a 50 meter competitive pool complex or a multiuse, recreational complex?????????
[i]”In terms of employee compensation, we are looking at, at the very least, $7 million in additional costs to employee compensation. That is about 20% of our general fund.”[/i]
This statement assumes that nothing will change in the next round of labor contracts. I think that is a bad assumption.
Most of the current cost of the city’s workforce is composed of three parts: salary, medical benefits and pension funding. Added together (plus a few other items like overtime, vacation or management leave cash-outs, workers comp insurance, MediCare funding, life insurance, etc.) you get total compensation.
Based on exchanges I have had with a majority of the people now on the City Council, I believe the next round of contracts will greatly reduce the City’s cost of medical benefits by capping the medical cash-outs for all employees at $500 per month. That is currently what we have for new hires. But for old hires, they can cash-out as much as $18,000 per year, and most who take the City’s medical benefits get some amount of cash-out in addition to the benefit. That will end once the new contracts are in place. This will represent a substantial cost savings for the City.
The cost of pension funding is going to go up substantially in the next few years. Part of that is due to the gradual increase in rates imposed by CalPERS in the wake of its poor portfolio performance in 2008 and 2009. And part is due to the reduction in CalPERS’s assumed rate of return.
However, the new contracts will include some substantial changes. Currently, the sworn police are paying the max employee contribtution of 9% plus 3% of the employer contribution. Fire, however, only pays 9%. With the new fire contracts, I expect that the fire personnel will go from 9% to 12%.
Most non-public safety employees in Davis now pay either 3% or 5% toward their pension funding. Department heads now pay the max of 8%. I think all non-safety will be paying the full 8% come the next contracts.
These changes will probably not fully off-set the increased costs imposed by CalPERS. But they will make a big difference [i]ceteris paribus.[/i]
What I would like to see the Council employ as a tool to control labor costs is to [b]cap the growth of total compensation[/b] at the rate revenues into the City grow. So if revenues go up by 1%, then total comp can grow no faster than 1%. What that means is if medical premiums go up by 2% and pension costs go up by 5%, then salary has to stay flat or even fall to the point where total comp goes up only by 1%.
Capping the growth of total comp has precedent in one of the current contracts: the firefighters now have this. I don’t know if the Council will go in this direction for every contract. I have been prodding them to do so. But if they do, then what David writes about this $7 million problem will essentially not be a problem and we won’t have to lay off dozens more employees.
Most of the non-current cost of the city’s workforce is composed of two parts: retiree medical and backfilling underfunded pensions.
There is nothing we can do to reduce the cost of backfilling underfunded pensions. Believe it or not, we will be paying tens of thousands of dollars per year to backfill the pension of our former city manager, Bill Emlen, because he got a much more lucrative pension plan from Solano County!
But there is a plan–my plan–to vastly lower our medical retiree liability. I think a majority of the Council supports my idea: For any fully vested employee who retires from the City of Davis before age 65, the City will only pay the minimum required amount (now $115/month) for that retiree’s medical plan until he is 65 and the retiree will have to cover the rest; after any retiree reaches age 65, the City will pay the full freight of his medical premiums less the amount covered by MediCare.
That change will reduce the City’s costs by around 95% for all young retirees. And it will reduce our retiree medical liability from about $60 million to a manageable $15 million.
“This statement assumes that nothing will change in the next round of labor contracts. I think that is a bad assumption.”
No that number is before the next round of labor negotiations BUT assumes we will not be able to gain much more than $2.5 million in savings this round.
[quote]It is much like the impact of dollars spent on Target versus dollars spent on Davis Ace.[/quote]
Ace Hardware is a national chain, much like Target. I am confused as to your distinction here…
Davis Ace has local ownership
[quote]Retail is limited. Target was touted to bring in $600,000. I’m not sure it has come close to that in net revenue. Even if it has, that’s a drop in the bucket, and the additional retail we bring in will have diminishing marginal impacts.[/quote]
$600K (or whatever it is) is $600K (or whatever it is). Every dollar helps…
Ace Hardware is not a national chain. Ace is a buying co-op. Davis Ace Hardware, aka Davis Lumber, is owned by the Anderson family, always has been. It is not part of a national chain, nor is it a franchise. Every store you see that uses the Ace logo and includes Ace in its name is an independently-owned business that belongs to the Ace buying co-op. It is much like the IGA program for independently-owned grocery stores.
[quote]There is a notice in this morning’s Enterprise that states – “The City of Davis is currently preparing a Feasibility Study to evaluate the cost-benefit analysis for the planning, constructing, and operating of a new 50 meter competitive pool complex, or that of a multiuse recreational complex. The Feasibility Study is designed to provide the Recreation and Park Commission and the City of Davis with more detailed information as the City makes its final determination on the future of Community Pool and/or other related aquatic facilities.” [/quote]
If true, this is absolutely outrageous, unless PRIVATELY FUNDED…
“$600K (or whatever it is) is $600K (or whatever it is). Every dollar helps…”
That wasn’t the point. The point is that we need to find away to close the gap and its not going to happen even if we open ten Targets.
Rich Rifkin’s suggestions seem to make a lot of sense. The multi-million dollar question is will the current City Council and its independent negotiator be able to pull it off…
ERM. Ace Hardware is a national chain, much like Target. I am confused as to your distinction here…
Clarifications.
ACE is a national cooperative organization owned by itse 4,400 shareholder members who are local family owned hardware stores. The family owned stores elect the board members of ACE. Without ACE, True Value, Do it Best and other cooperatives the locally owned hardware stored would have succumbed to the Home Depots of the world. ACE owns numerous distribution centers around the country and provides numerous extra services for the owner members such as advertizing.
The annual profits of ACE are shared with each of its members in proportion to their purchases from ACE. So all of the profits of ACE flow back to the individual family owned store. And that strengthens the local ACE.
A number of years ago Jennifer Anderson (of Davis ACE)was elected and served on the board of ACE for a couple of terms.
So it is a very different form of corporation from Target where all profits flow back to its shareholders wherever they may be.
The Associated Press is a similar cooperative, of whom one of the owners is the Davis Enterprise. AP was started as a newspaper cooperative in 1848.
Best Western is a cooperative also (not a franchise) operating just the same as ACE.
2012 was declared by the United Nations as the International Year of Cooperatives.
David
Re: the limited issue of the cafeteria cash-out… my personal belief is that the cash-out should never have been put in place… I do understand why others feel differently. It’s one thing to tell a prospective employee that their cash out is limited to $500/mo. It’s another thing entirely, in my opinion, to tell an existing employee, making $48k/year, who had coverage thru a spouse and was therefore taking the full cashout, that they must absorb a 27% reduction in income in a single year, and add another 8-9% (employee contribution + state/federal taxes which would apply) reduction on the PERS side. Perhaps the reduction in available cash-out for existing employees should be phased over a 3-5 year period, so someone doesn’t lose their house.
My oops… if they still cash out $500/month, it would be an 18% reduction, not 27%… still, think it should be phased, not all at once.
[quote]Believe it or not, we will be paying tens of thousands of dollars per year to backfill the pension of our former city manager, Bill Emlen, because he got a much more lucrative pension plan from Solano County! [/quote]The only ‘backfill’ the city would be on the hook for are his years of Davis service, @ 2.5 @ 55, and perhaps his increased salary. City is not liable (nor will he benefit) from counting his Davis time toward a 2.7% @ 55 formula. It doesn’t work that way.
[quote]”There is a notice in this morning’s Enterprise that states – “The City of Davis is currently preparing a Feasibility Study to evaluate the cost-benefit analysis for the planning, constructing, and operating of a new 50 meter competitive pool complex, or that of a multiuse recreational complex.”[/quote]I’d hope we’ll have the contractor give advice about how far away our new facility should be from the Schaal Aquatics Center, “the largest competitive swimming pool in the UC system….”
Yes, sir, we’re spending money on this–as well as environmental studies on bag ban ordinance that we’ve been assured won’t look anything like the one on which staff’s spending time–more wasteful undertakings.
Sue, Stephen, Mayor: Why did you approve this use of taxpayer money?
[i]”The multi-million dollar question is will the current City Council and its independent negotiator be able to pull it off …”[/i]
I don’t expect to get all of the reforms the City needs by way of “collective bargaining.” I think most of the bargaining units for the employees are resistant to real reforms. Some will give way on the margins–allowing things like a few furlough days. Some are militantly opposed to anything which feels like “a give back” to them. Most don’t really care if their positions means that the City will have to lay off dozens of employees.
My expectation is that, if the needed reforms will be achieved, that will be done through the impasse procedures. They are not all that unreasonable, even with the recent changes in state law pushed through by the labor unions which own the Democratic Party.
I hope the Council learned a lesson from the DCEA fiasco: They have to follow the letter of the law as written in our ordinance, and state law. I blame Harriet Steiner for giving them bad advice last time. I hope Harriet knows now what she did wrong and does better, this time.
[i]”The only ‘backfill’ the city would be on the hook for are his years of Davis service, @ 2.5 @ 55, and perhaps his increased salary. City is not liable (nor will he benefit) from counting his Davis time toward a 2.7% @ 55 formula. It doesn’t work that way.”[/i]
Sorry, HP, you have it wrong. I got my information from the legal department at CalPERS.
Bill’s entire pension will be based on 2.7%. For 28 of his 30 years in public employment, his pension was underfunded because he was on lower formulas (2.5% at 55 for some of his years in Davis; and 2% at 60 for most of his career).
In cases like Bill’s PERS assigns shares of responsibility to the agencies he worked for. If he retires now, after 30 years, Solano County will be assigned 2 out of 30 shares. If he worked in Davis for 14 years–I am not sure what the exact number of years he worked here–Davis will be assigned 14 out of 30 shares. The rest will be assigned to affiliated agencies he worked for prior to coming to Davis.
I first learned of this assignment of shares for underfunding when the City of Bell fiasco unfolded. The guy who was the city manager there–I forget his name–had some ungodly huge pension coming to him (though I think that has been reduced substantially since his crimes were revealed), and the L.A. Times reported that even though his prior employers had nothing to do with that guy’s huge pension, they would be assigned shares of the underfunding based on how many years he worked for each.
After reading that, I got the legal office at CalPERS to confirm that is how the system works.
[quote]Ace Hardware is not a national chain. Ace is a buying co-op. Davis Ace Hardware, aka Davis Lumber, is owned by the Anderson family, always has been. It is not part of a national chain, nor is it a franchise. Every store you see that uses the Ace logo and includes Ace in its name is an independently-owned business that belongs to the Ace buying co-op. It is much like the IGA program for independently-owned grocery stores.[/quote]
To Don Shor and David Thompson, thanks for the explanation. I did not realize this…
Doesn’t change my position that I think Target was a good choice for Davis: to prevent sales tax leakage; to provide tax revenues to the city; and to provide more options for Davis residents so they don’t have to travel outside Davis for certain basics…
[quote]…we need to find away to close the gap and its not going to happen even if we open ten Targets.[/quote]
We are in total agreement here…
Elaine: But wouldn’t have a local business that would have kept more of the money locally have been a better option?
[i]”Doesn’t change my position that I think Target was a good choice for Davis: to prevent sales tax leakage …”[/i]
I agree. On Friday I bought a side table at Target for $99. I paid the state sales tax on that, a share of which goes to Davis and I paid the Davis tax. If that Target were not there, I would have simply driven over to Woodland’s Target to the WalMart in Dixon.
[i]”Sorry, HP, you have it wrong.”[/i]
I just looked up this article from the Associated Press ([url]http://cnsnews.com/news/article/other-cities-pay-lavish-bell-calif-pensions[/url]) regarding the City of Bell and Robert Rizzo, their corrupt city manager. The numbers quoted are wrong, because after the scandal broke, PERS determined that Rizzo’s pension would “only” be $500,000 per year, not $650,000 as originally reported. And because of that change, the amount his pension was underfunded was much less. Nonetheless, the principle of PERS assigning shares of responsibility to past employers based on years of service at each is well explained in the verbiage: [quote]Cities across Southern California will be on the hook for the pensions paid to municipal officials in Bell, where excessive salaries led to a recent purge of city leaders, according to pension experts.
The Los Angeles Times reports that more than half of former city manager Robert Rizzo’s $600,000-a-year pension will be paid by taxpayers in 140 small cities and special districts that are in the same pension liability pool. This includes Glendale, Simi Valley, Ventura, Norco, La Canada Flintridge and Goleta, as well as Rizzo’s former employers, Hesperia and Rancho Cucamonga.
In the case of Bell’s former police chief, Randy Adams, the city is only responsible for 3 percent of his estimated $411,300-a-year pension under CalPERS, the state’s public employee retirement plan. Taxpayers in Glendale, Simi Valley and Ventura would have to pick up the rest. …
Even though Rizzo and Adam’s salaries were relatively modest until they were hired in Bell, other cities will be responsible for much of their pension costs. When they resigned last week, Rizzo was making nearly $800,000 a year and Adams was making $457,000.
Bell hired Adams at more than double the salary he was making in Glendale. That salary spike also doubled his eligible pension amount under CalPERS. City managers in Glendale and Simi Valley, where Adams previously worked, estimate they’ll have to come up with an extra $40,000 in taxpayer dollars each year to cover the pension costs. Ventura’s tab could go much higher.
“We had no control over his final year’s salary,” said Glendale City Manager Jim Starbird. “Yet the rest of us will be bearing the brunt of Bell’s decision.” [/quote]
[i]”But wouldn’t have a local business that would have kept more of the money locally have been a better option?”[/i]
Consider this example David: I bought a couple of pairs of Saucony running shoes at Big 5 last week. Each cost $40 plus tax, on sale from about $60 each. I don’t think any shoe stores owned by Davis residents sell those same shoes. But some sell equally good shoes for 50% to 100% more. Big 5 offers me great value for the price. That’s why I shop there.
But if I had instead spent $150 instead of $80, I would have been out $70; and without that $70, I wouldn’t be buying excellent beer from Aggie Liquor (at $16 for a six-pack of Sculpin IPA!!!); I wouldn’t have the money to pay for two tickets to a matinee at the Varsity Theatre ($16); I wouldn’t have the money for two coffees plus tip at Mishka’s ($5); I would not have the money for my new pepper mill I bought at Davis Ace ($15); I would not have the money I spent at the Farmer’s Market for tomato cultivars ($10); and I would not have the money for the bread I bought from Upper Crust ($8).
Just because a Davis resident buys his Sauconys from a locally owned shoe store, for example, does not mean he is helping the economy any more than if he bought at Big 5. The owners of the local store and its employees don’t pocket all that difference in price. A lot of the price difference is due to other factors, including much better service at the local store (which I may not need) and the volume purchasing power of the national chain. But when I save $70, I have the ability to spend all of my savings on products and services which are in fact local.
Jennifer Anderson was in the Enterprise today for participating at a local fundraiser for child abuse prevention. When was the last time you saw the owner of Target or Big Five give back to the community like that so there is something nice about buying local. Having said that there is also something to be said for competition reducing prices. Davis could reduce prices and increase tax revenue by allowing in more retail that reduces sales tax dollars from going to other communities while lowering prices with more choices.
Just to add to Rich’s very valid point about the secondary value of resident shoppers having more discretionary cash to spend when competition keeps prices low, we have another problem with the half-baked logic for ONLY supporting local business. If we really analyze the hard numbers, there really isn’t that big of a difference between a national chain store or branch, a franchise, or a locally-owned business. All three would require property and pay property taxes. All three would generate sales tax revenue for the city. All three would employ residents. All three buy their wholesale products from the same manufactures and distributors. The ONLY tangible financial difference is the income going to ownership. Assuming these owners live in and spend their shopping dollars in Davis, the actual financial benefit to the community is negligible and is probably offset by the sales leakage from local shoppers seeking lower-priced goods in other communities.
One way to decipher the “buy-local” message is that you, the shopper, need to pay more for your goods and services to support the compensation of store owners. Now, I have many friends that are local small business owners and I want them all to be well-compensated. However, I also have many friends that are local shoppers, and I want them all to pay a fair price for their goods and services. Lastly, I am a 34-year resident of the city and I want our streets maintained and our schools high-quality and adequately funded. The challenge is balancing all these things.
But Davis is way out of balance. Our sales per capita is embarrassingly low… especially given our relatively high per-capita income and our ready supply of captive customer shoppers. We have gone way too far protecting local merchants at the same time we have failed to expand the business local merchants. We are wanting all our cake and wanting to eat it to.
There is nothing evil about larger business and competition. As long as we are smart and HONEST about the cost benefit to the entire community, we should allow a healthy mix of ALL types of business, and be happy doing business with any company providing high value products and services. Wells Fargo is a quality bank. So is First Northern Bank. First Northern causes the local Wells Fargo branch to have to be on their game providing top-level customer service. Wells Fargo causes First Northern Bank to have keep their operation lean to compete on rates. The end result is greater choice and value… thus keeping more of our local shopping dollars in town.
The goal here isn’t to ensure the income of local business owners; the goal is to provide needed quality and services to residents while maximizing our tax revenue.
Toad: You need to do some research on how much Target does for local communities throughout the country. Jennifer Anderson’s work is commendable, but Target has a very good track record for giving back.
[quote]Elaine: But wouldn’t have a local business that would have kept more of the money locally have been a better option?[/quote]
No. See Rich Rifkin’s explanation above.
[quote]Jennifer Anderson was in the Enterprise today for participating at a local fundraiser for child abuse prevention. When was the last time you saw the owner of Target or Big Five give back to the community like that so there is something nice about buying local.[/quote]
It is my understanding that Target has given charitable donations locally…
[quote]Target has a long-standing tradition of strengthening families and communities through innovative programs and partnerships. Since 1946, we have contributed 5 percent of our annual income to support families and communities, and today we remain one of very few companies that maintains this level of sustained giving. Target gives more than $3 million each week to the communities in which we do business. Our giving is directed both by Target and by the Target Foundation, each with specific areas of focus and commitment.[/quote]
Target had the “Script” program that pays a percentage of sales to local schools.
Jeff: [i]All three buy their wholesale products from the same manufacturers and distributors.[/i]
At least in our industry, that is not true at all.
[i]The ONLY tangible financial difference is the income going to ownership.[/i]
No, locally owned businesses tend to do their business with locally owned professionals such as accounting, legal, banking, and insurance services.
[i]You need to do some research on how much Target does for local communities throughout the country. Jennifer Anderson’s work is commendable, but Target has a very good track record for giving back.[/i]
As a percentage of sales, the big box stores give far less to their local communities than do locally owned stores. The donations also tend to be, IMO, more locally directed. As shown in the article in the Enterprise.
ERM: [i]It is my understanding that Target has given charitable donations locally… [/i]
See above. But if you like, since local store owners will have less income if Jeff’s policies are adopted, we can just let Target make the donations to schools and charities that we give.
Here’s a chart:
[img]http://davismerchants.org/vanguard/15.jpg[/img]
And another:
[img]http://davismerchants.org/vanguard/29.jpg[/img]
Back to David’s point. More retail won’t solve the city’s current or near-term budget problems. The council needs to focus on reducing expenses.
“Wells Fargo is a quality bank.”
Wells Fargo is a horrible institution responsible for some of the worst abuses of the mortgage business that recently had to participate in the Justice Department’s multi-billion settlement of claims for abusing their mortgage holders.
Ultimately, given a choice, most customers are going to shop at the stores where they find the most value. That may be price for some. It may be proximity to their home or place of work. It may be service or the expertise of the seller. It may be a personal connection*. It may be a specific brand or overall selection or some other convenience, such as a store which offers a full service supermarket and a full service pharmacy operation in one building. It might be a philosophical preference for locally owned. It might be a product which is completely unique to one business, like the flavor and quality of their food. In the end, we are utilitarians as shoppers, and utility explains shopping patterns. I shop at Target for certain things, because they offer me the best value. I shop at other stores in Davis for other things, again for what I value. If some sort of “big box” store drives other companies out of business, it is (normally) a result of shoppers finding the most value at the big box.
*This is not a perfect example of a “personal connection,” but it is an example of why I will do business in the future with Kelly’s Sew & Vac, which is in the old Davis Manor shopping center near Symposium. A few weeks back, I needed a small motor for my range hood fan. I was against buying a replacement online, because I felt there was a good chance that what I would buy would not work in my system. I checked at Hibbert’s, and they don’t carry these motors. I went to Davis Ace, and they had one, but it was the wrong model. A friend of mine suggest I check Kelly’s Sew & Vac. They specialize in repairing sewing machines and vacuums, but my friend said the man there also repairs small appliances. But when I got to the store, the man (Kelly?) said that he couldn’t help me himself. However, he pointed me in the direction of an appliance parts store on S Street in Sacramento. He was nice to me and looked up the address for me of the appliance parts store. I ended up getting what I needed there and fixed my range fan. Just little things like pointing me in the right direction makes me want to give him business the next time I need my vacuum repaired, or makes me want to suggest him to others.
[i]”No, locally owned businesses tend to do their business with locally owned professionals such as accounting, legal, banking, and insurance services.[/i]
Sure Don: So then how does that explain the fact that Davis, without anywhere near the common number of those evil large businesses per capita, gets about 60% sales per capita compared to the rest of the state?
Of course we need to reduce spending, but to ignore the revenue side of the balance sheet is just plain foolish.
Rifkin: [i]”Ultimately, given a choice, most customers are going to shop at the stores where they find the most value.”[/i]
Absolutely. “Value” is where small business owners make their bed. There is a lot of room to sell value other than price. Small business owners should be able to compete on service, but they cannot get sloppy on price or selection. Conveneience is also a big deal, because for many of us time is our most valueable asset. Time plays into price because we might have to work more hours to make more money to pay for higher-priced goods.
I go see Ralph at Davis Home Trends for most of my painting needs. He and his staff are very knowledgable and seem to have answers for everything. I can get my paint cheaper at Home Depot in Woodland, but the people working in the paint department at Home Depot generally are less knowledgeable than I am about the products they carry. However, Ralph’s prices are not that much more expensive than Home Depot. And, he is closer to my West Davis house (although close in driving time), and he has a lot of parking. One downer is that he is not open as many hours. That is one of my beefs with Davis Ace and Hibbert too… they are not open as early or as late as Home Depot.
“Value” is all inclusive and different people weigh different criteria that contribute to their sense of value. Davis downtown merchants can compete on many of those critera. If they cannot, then they do not deserve to remain in business. Blocking competition just serves to prop up weak business and sends all but the captive customers to their cars to shop in other communities.
[i]”Of course we need to reduce spending, but to ignore the revenue side of the balance sheet is just plain foolish”[/i]
Should have said: “to ignore the revenue end of the profit and loss statement is just plain foolish”
Don: “No, locally owned businesses tend to do their business with locally owned professionals such as accounting, legal, banking, and insurance services.”
Jeff: [i]“Sure Don: So then how does that explain the fact that Davis, without anywhere near the common number of those evil large businesses per capita, gets about 60% sales per capita compared to the rest of the state?”[/i]
My statement was intended to refute [i]your[/i] statement that “The ONLY tangible financial difference is the income going to ownership.” No, a tangible financial difference is that local businesses hire local professionals. I doubt if any local accounting firms or insurance agents have Target as an account.
I assume your “60% sales per capita” should read “60% sales tax per capita.” Professional services aren’t taxable (they should be). But to answer your question: I doubt that the % sales tax per capita has changed much over the last 50 years here. It has to do with demographics, particularly the age spread of the Davis population; geography (lack of retail-appropriate frontage), and historic patterns of development (Woodland has always been the retail hub here).
There’s no place to build a lot of retail. The only way I can see more sales tax revenue in the near term is getting more shops downtown; i.e., build the parking/retail structure. Other than that, there isn’t going to be an increase in income except as the economy recovers.
Any council candidate who emphasizes revenue in discussing budget issues had better identify where and when it could possibly happen. Otherwise, they’re just dodging the question.
[i]”Any council candidate who emphasizes revenue in discussing budget issues had better identify where and when it could possibly happen. Otherwise, they’re just dodging the question.”[/i]
They are also “just dodging the question” if they don’t address our dismal tax revenue from lack of economic development and anti-business stances.
I was in Napa this weekend. Napa gets $15,286 in sales revenue per capita… about twice what we get.
A few pictures. Note the downtown hotel and the off-street mini-malls.
[img]http://www.cscdc.org/miscjeff/napa2.jpg[/img]
[img]http://www.cscdc.org/miscjeff/napa1.jpg[/img]
[img]http://www.cscdc.org/miscjeff/napa3.jpg[/img]
[img]http://www.cscdc.org/miscjeff/napa4.jpg[/img]
What do you propose Davis do to increase sales (tax, again, I assume you mean) per capita? By the way, Napa has a much lower percentage of its population under 24 than Davis does, and is in the center of a major tourist destination.
Bring in Best Buy, Apple, Lowe’s and Orchard Supply.
[i]By the way, Napa has a much lower percentage of its population under 24 than Davis does, and is in the center of a major tourist destination. [/i]
Napa does have an advantage relative to Davis with tourism, but Davis has a huge advantage with the 35,000 students who should be shopping here, but don’t count in the denominator of our per capita spending.
“…don’t count in the denominator of our per capita spending.”
I assume most of them do count, since a relatively small percentage lives on campus. But I don’t know where Jeff is getting his statistics. The percentage of the city under 24 is a big factor due to lower buying power.
Population under 24:
Davis: 50%
Berkeley: 40%
SLO: 47%
Napa: 36%
So if we’re going to look to any community to see what might be achievable, it would be SLO.
But again, geography and historical patterns are a big factor.
Napa Valley is a huge international tourist draw, far overriding any other factors of comparison. Five million visitors a year.
Don – I don’t know about the statistics either, but students are generally not counted in the Davis population of 65,000. The only ones who count are the ones who have permanently live in Davis, not the part timers.
TOAD: [i]”Bring in [b]Best Buy[/b], Apple, Lowe’s and Orchard Supply.”[/i]
Best Buy is not doing well ([url]http://www.examiner.com/pop-culture-in-portland/best-buy-closures-which-50-stores-will-be-closing[/url]). [quote]On Thursday the company announced [b]it will close 50 big-box stores[/b] and lay off 400 employees. [/quote] Don: [i]”There’s no place to build a lot of retail. The only way I can see more sales tax revenue in the near term is getting more shops downtown; i.e., build the parking/retail structure.”[/i]
Seems like there is room for more retail along E. Second Street, not far from Target, if any big sales tax generators actually want to open in Davis … and speaking of sales tax generators: Morei Seiki expects that 15% of the products they make at their new plant will be sold in California. That industrial machinery is expensive stuff, and it is taxed when sold in-state. (I am less sure about out-of-state sales. I think what happens is Morei Seiki ships the goods to a sales office out-of-state, and that office sells the goods, and they are taxed at that point of sale.)
Here is where I am getting my information.
[url]http://quickfacts.census.gov/qfd/states/06/0650258.html[/url]
This site is one example of of where we are getting a return on our tax dollar.
Make sure you select the correct state. Then you can look at the US Census Bureau stats for every state and most cities in the country.
Downtown Napa does provide some examples of how our downtown can be much stronger. Of course Napa also has a Home Depot.
It was interesting to me that number of pedestrians and shoppers in downtown Napa this weekend was MUCH less than what I see in downtown Davis. We were told that we were at the tail end of the “off” season. I think we could look at Davis as having an “off season” in the summer when the students leave. That is a smaller off season.
Note… Napa does have a bit higher household income than Davis: $62,767 to $59,517. That is probably due to what Don points about Davis having a slightly larger population of people under 24… typical for a college town. However, the difference in per capita sales is not supported by this slight difference in household income. I would guess that the Napa household income is a bit skewed by a large population of mega-rich.
[i]Five…million….tourists…a….year[/i]. No comparison to Davis is reasonable. Ever been in Napa during the summer?
Anyway, back to the question: what do you think Davis should do to increase sales per capita?
Rich: “[i]Seems like there is room for more retail along E. Second Street, not far from Target, if any big sales tax generators actually want to open in Davis…”[/i]
Only the specific Target site is zoned for that specific large retail zoning that was created for Target.
[quote]Back to David’s point. More retail won’t solve the city’s current or near-term budget problems. The council needs to focus on reducing expenses.[/quote]
I don’t disagree that bringing in a whole host of big box retail is probably not a good idea for most small towns. However, your overt antagonism to Target seems somewhat misplaced. I think Davis has need of a big box retail store like Target to fill a niche that other stores in Davis are not addressing. Read the comment section of Target on the internet – it is clearly a big draw for students who want to purchase cheap furniture, plastic bins, and the like. It is a store that students are familiar with and it is well within their price range. It also provides grocery shopping at that end of town for the folks who live there.
Bottom line, is that the Target in Davis prevents sales tax leakage out of town, to the Target in Woodland or elsewhere. I think every town needs to strike the appropriate balance, of local and big box stores. Personally, I very much miss Gottchalks and Borders. I like Target, altho I don’t shop there a great deal. But when I do, it is nice to shop in Davis rather than to have to go all the way to Woodland. For some items, I make a trip to Walmart – bc at least one item I must get on a regular basis for my health is priced $6 cheaper there than any store here ($20 versus $14). I buy 3 at a time for a total savings of $18 in one shopping trip for that item alone.
And just as an aside, Target does give locally for charitable causes; and a majority of Davis citizens voted to have Target here.
I enjoy all the ideas about what might improve our situation in Davis. Does anyone know who shops here and why? Does anyone know what students buy from local businesses? Or, why outsiders drive to Davis and what they buy while they’re here? Seems as though it would help to have such data when we’re deciding whether “old and funky” really is the destiny we should demand to have success in our downtown.
[quote]I enjoy all the ideas about what might improve our situation in Davis. Does anyone know who shops here and why? Does anyone know what students buy from local businesses? Or, why outsiders drive to Davis and what they buy while they’re here? Seems as though it would help to have such data when we’re deciding whether “old and funky” really is the destiny we should demand to have success in our downtown.[/quote]
The university (I think) did a shopping survey, mainly focused on transportation. It was that survey, referred to in the Davis Enterprise, that indicated Target was not a detriment to downtown businesses. I am not quite sure what other information they collected about shopping, but you can always inquire…
I remember the story. Thanks for the tip, Elaine. It seems as though this type of information would be the basis for lots of generalizations about what happens in downtown Davis and what we should do to “improve” its role in our future.
The story that Elaine refers to, which was also incorrectly described by Jeff in a previous thread, stated that there was a 9+% reduction in shopping trips to the downtown among those surveyed. No dollar amount was attached to that reduction in car trips downtown. It stated, but did not give details on, more adverse impact from Target on neighborhood shopping centers. As I noted before, I’ve requested the specific sales tax data regarding key categories of retail sales.
[b]WHY WE LACK THE MONEY TO DO THE RIGHT THING…[/b]
[img]http://www.cscdc.org/miscjeff/folsomdavis.jpg[/img]
Again: what do you think Davis should do to increase sales per capita?
First step… elect genuine pro-business, pro-economic development candidates to city council.
Don, I am already on record for what I would do. I think a better set of questions is directed at you and other that maintain a level of hostility against larger retailers and reject ideas for peripheral retail. For example:
– Do you see this difference in sales tax revenue as a problem for Davis?
– What do you think we should do to bring our city finances in balance?
[i]First step… elect genuine pro-business, pro-economic development candidates to city council.[/i]
Which ones are those?
[i]Don, I am already on record for what I would do. I think a better set of questions is directed at you and other that maintain a level of hostility against larger retailers and reject ideas for peripheral retail. For example: - Do you see this difference in sales tax revenue as a problem for Davis? - [/i]
I see it as relatively unsolvable due to the constraints I’ve mentioned many times (retail saturation, geography, demographics). But I think the parking/retail structure should go forward, the irrational landlords that own the neighborhood centers should be encouraged to fill their vacancies, and Target should be held to the development agreement that they are currently in violation of regarding the pace of development of Pads A and B.
[i]What do you think we should do to bring our city finances in balance?[/i]
Cut expenses.
Your peripheral annexation for retail development is about as likely as Sue’s desire to develop the PG&E site. And her proposal would be better planning.
Don, Cities annex undeveloped county land all the time. Folsom has done it a few times.
The latest:
[quote]On Feb. 28 Folsom leaders rode the historical “Skagit” railroad car from Hampton Station, near the Hampton Inn, on railroad tracks alongside Placerville Road to just north of White Rock Road. There, a new sign was posted that reads, “Folsom City Limits, Population 72,203, Elevation 287.”
As the sun broke through gray clouds, Mayor Kerri Howell posed at the sign with her Folsom City Council members. “This is a great day for Folsom,” she said. Howell has been working on this project for 18 years, beginning with four years on the Folsom Planning Commission followed by 14 years on the Folsom City Council.
The occasion marked a milestone in Folsom’s acquisition of 3,585 acres bounded by Highway 50, the Sacramento-El Dorado County line, White Rock Road and Prairie City Road.
Folsom City Councils in recent years have been adamant that there is only one Folsom — not a North Folsom, when the city annexed the American River Canyon area and land north to Granite Bay; not a South Folsom, when the city grew south from Bidwell Street to Blue Ravine Road, then again to Highway 50; and not an East Folsom, when it expanded to the El Dorado County line from Folsom Lake to Highway 50. Someday the Folsom annexation area or Folsom Plan area will just be Folsom, with many different neighborhoods like the rest of the city.
Road and trail connections are part of the plan to join the area south of Highway 50 with the existing city.
The Folsom Plan is about six square miles, a 25 percent increase in the city’s size. The plan is designed to create 1,053 acres of open space, 30 percent of the total; 300 acres of parks and schools; 1,474 acres of residential construction, with 10,000 housing units; and 511 acres of commercial, industrial and office space.
Development is expected to occur gradually over the next 20 to 30 years. It is forecast to generate 13,000 jobs.
The transportation plan provides for rapid bus transit and ease of access by bicycle or walking from one neighborhood to another. Community Development Director David Miller pointed out that a key factor is attention to the jobs-housing balance. “The goal is to keep as many people working in the area where they live and off the commuter lanes.”
Vice Mayor Miklos said the next step is that “the city and the landowners get together to prepare specific plans.” Miklos and fellow Councilmember Jeff Starsky are the council subcommittee for that purpose. “There will be public hearings, community involvement and planning,” he said./quote]
Folsom’s proposal is terrible urban planning.
Annexing peripheral land to build retail would continue to harm the neighborhood shopping centers.
Recipe for blight:
Kill your downtown to build malls.
Kill your malls to build peripheral retail.
Peripheral retail, which is terrible urban planning, is the next dinosaur.
Since your proposal is DOA, what’s your Plan B?
Which candidates are “genuine pro-business, pro-economic development candidates?”
[i]”what’s your Plan B?”[/i]
To overwhelm the NIMBYs, statists, and dinosaurs with public demand for more robust economic development based on solid factual comparisons and reason.
Then go back to Plan A.
[i]”Which candidates are “genuine pro-business, pro-economic development candidates?”[/i]
I’m not there yet. I will offer an informed opinion when i think I have one.
[i]Folsom’s proposal is terrible urban planning.
Annexing peripheral land to build retail would continue to harm the neighborhood shopping centers.
Recipe for blight:
Kill your downtown to build malls.
Kill your malls to build peripheral retail.
Peripheral retail, which is terrible urban planning, is the next dinosaur.[/i]
Don, most of this is just extreme alarmist stuff. Look up “example of urban planning that is unsustainable” and Davis is the poster child. If it is unsustainable then it is bad, wrong, broken… no matter how wonderful you keep telling yourself it is.
There is plenty of room for a middle ground that keeps Davis a great little city that can pay it’s bills while also serving it’s residents’ retail needs. It is doing neither at this point.
You put forth an example that would increase a city’s population by 10,000 housing units, which equals 20 – 30000 population increase, and you are looking for a “middle ground”?
I’ve studied urban planning, albeit briefly. What Folsom is doing is terrible urban planning. What I describe, by the way, is exactly what Woodland has done. And Vacaville. And here we go again.
Don, Folsom’s property values are in good shape for a city that actually grows a bit. People like to live there and want to live there. So, what is your basis for this “terrible” label?
Don: [i]”Annexing peripheral land to build retail would continue to harm the neighborhood shopping centers. Recipe for blight: Kill your downtown to build malls. Kill your malls to build peripheral retail.”[/i]
Isn’t that killing spree only the case if your customers prefer to do business with the peripheral sellers in place of the neighborhood sellers? And if that is the case, then the shoppers are saying, in effect, “We get more value from the stores on the periphery. We really don’t like the neighborhood stores very much.”
If I am right, that gets to the question: Why do we have commerce? Is it to keep old businesses in place for the benefit of those who opened shop years ago? Or is it to bring value to shoppers?
I think my question, Why do we have commerce, has a parallel in public schools policies: Do we have public schools in order that we please the teachers? In order that we make their lives better? That we pay them a ‘professional’ wage? Or do we have schools in order to provide an education to students, and when or if that conflicts* with the interests of the teachers, should we not err on the side of the students and overlook the interests of the teachers?
*It’s debatable whether these actually ever conflict. But perhaps an example would be in tough budgetary times, do we increase class sizes and keep all veteran teachers employed at full pay? or should we reduce teacher pay and keep all veteran and rookie teachers in order to keep class sizes small?
Jeff: talk to any urban planner. Seriously. “…grows a bit”? Adding 20,000+ people is “a bit?”
It only takes a 20 – 30% reduction in sales to kill a business, Rich. Not a majority vote. Some shoppers will prefer the peripheral stores. Then, when that minority of shoppers causes the neighborhood centers to lose tenants, the peripheral stores are all that are left. Big retailers have deeper pockets and longer staying power in the face of a downturn. See Woodland and Vacaville (yes, Adam Smith, I continue to use those examples).
By the way, these same arguments have all played out in San Luis Obispo. About the time we were voting on Target, they were voting on a massive peripheral big-box developer-driven proposal there. They voted it down.
How about if you all who want to push for more retail development suggest how to do it within the city limits? Urge Target to allow a department store on Pads A and B? Urge some retailers to locate on Second Street, within the store size limits that are in place? Push for the parking/retail structure?
Don Shor: “By the way, Napa has a much lower percentage of its population under 24 than Davis does, and is in the center of a major tourist destination.”
Napa was the ‘blue collar’ town in the valley on the periphery of the ‘major tourist destination’ known as the Napa Valley. Tourism, and the lives of the ‘mega-rich’ were all focused up-valley, not in the town of Napa.
Over the past 20 years Napa redeveloped its funky, walkable downtown, into a more interesting, funky, walkable downtown, that now draws tourists into town. The retail/tourist center of the town is complimented by a wide variety of regional shopping centers containing a mix of small, medium and large stores. The town has lost much of its manufacturing base, but maintains a strong retail environment, and now with planning, has added a tourism component as well. In the same time span Davis has just gotten more funky.
[i]Is it to keep old businesses in place for the benefit of those who opened shop years ago? [/i]
The goal of growth policies and store-size limits isn’t to protect particular stores. It is to create a marketplace where more diverse, smaller shops can exist. There is a much greater likelihood of small locally-owned stores existing and thriving in an environment where the larger retailers have to compete on the same terms. The simplest tools for creating that marketplace are zoning rules and store-size limits.
Big 5 and OfficeMax opened stores within the store-size limits established in Davis, in a location created within the community-consensus General Plan. They compete on the same terms as Fleet Feet. Those national chain stores are an integral part of the business community, functioning within the same marketplace as the locally owned stores.
The biggest retailers don’t want to abide by the rules everyone else follows. They want to build whatever they want, wherever they want, regardless of the community’s growth plan.
Don Shor: “[i]How about if you all who want to push for more retail development suggest how to do it within the city limits? Urge Target to allow a department store on Pads A and B? Urge some retailers to locate on Second Street, within the store size limits that are in place? Push for the parking/retail structure?[/i]”
You start by removing all restrictions on the types of retail establishments allowed in the regional shopping centers (i.e. no requirement for a grocery store anchor). You continue by taking every commercial building within 1 block of an existing regional center and changing the zoning to allow for retail, thus expanding the possible locations for new stores, and then you add retail as a conditional use on all vacant land zoned commercial within the City limits. Then you get out of the way and allow the ‘market’ to decide what works.
[i]”The goal of growth policies and store-size limits isn’t to protect particular stores.”[/i]
There are public justifications for doing something, and the behind-the-scenes reasons that drive the process. Those two things are often not the same. You are welcome to believe whatever you want, but if anyone here believes that the quoted statement above is true, then I have a bridge I am willing to sell you.
Jeff: let’s keep this simple. You want to increase Davis sales revenues by adding shopping on the edge of town. Unless you expand the housing market at about the same pace you expand the shopping options, you are just cannibalizing existing retail sales. So to sustain your new shopping center, you’ll need a lot more houses and people. Davis voters have not shown a propensity for increasing peripheral housing.
So what do you realistically propose to do that would increase sales revenues that would be in keeping with the philosophy of Davis residents as expressed in recent elections?
Don Shor: “[i]Jeff: let’s keep this simple. You want to increase Davis sales revenues by adding shopping on the edge of town. Unless you expand the housing market at about the same pace you expand the shopping options, you are just cannibalizing existing retail sales.[/i]”
Why do you think that is true Don? Jeff has shown previously that Davis residents spend less money per capita within their local market than do the residents of other cities. More retail choice in Davis will increase the sales in Davis, reducing the sales tax leakage today. We don’t necessarily need more housing too.
“You start by removing all restrictions on the types of retail establishments allowed in the regional shopping centers (i.e. no requirement for a grocery store anchor). You continue by taking every commercial building within 1 block of an existing regional center and changing the zoning to allow for retail, thus expanding the possible locations for new stores, and then you add retail as a conditional use on all vacant land zoned commercial within the City limits. Then you get out of the way and allow the ‘market’ to decide what works.”
As before, I agree. This would be a good thing to pose to council candidates in the form of a question.
[i]There are public justifications for doing something, and the behind-the-scenes reasons that drive the process. Those two things are often not the same. You are welcome to believe whatever you want, but if anyone here believes that the quoted statement above is true, then I have a bridge I am willing to sell you. [/i]
I don’t have any particular businesses I’m trying to protect, and I don’t operate behind the scenes.
Don Shor: [i]”I don’t have any particular businesses I’m trying to protect, and I don’t operate behind the scenes.” [/i]
Don – I never thought you were the one who developed the policy so I have no reason to believe you are the one responsible. The fact remains that the justification for the policy is not the same as the reason behind it.
By the way…why are we still arguing about Target? That election was 5 1/2 years ago. Can’t we move on?
Don, As Mark points out, we have plenty of capacity to support retail expansion in this town without doing a lot of residential development. Let’s just stop the sales leakage and we should be fine.
Mark also points out the only logical alternative to growing peripheral retail… that is expanding the commercial zoning of the downtown. I would add that we should also increase the density (taller buildings). I am in favor of both of these things to an extent. However, the vibrancy of the downtown is supported by having a solid population of residents. If we zone more commercial will serve to push the residents farther out of the core area. That is one thing I noticed about downtown Napa… the commercial area is void of residential properties. Also, higher density results in greater traffic problems. So, keeping it all downtown is not an urban planning panacea as you seem to conclude.
I’m just not sure why you think having another nursery to compete with downtown is so much better than having to compete with one on the periphery. I think there is less chance that another nursery would ever open downtown… but then we get to that other point about blocking competition.
[i]” Jeff has shown previously that Davis residents spend less money per capita within their local market than do the residents of other cities.”[/i]
No, he hasn’t shown that. He has shown that some communities have higher rates of spending per capita than Davis. The Census bureau numbers just come by dividing retail sales by population. Napa is a good example: I would bet that the majority of the difference there is people from outside of Napa spending money there due to the tourism draw. What is going to draw tourists to Davis to shop?
Folsom and Vacaville have freeway malls. Davis has no place for that, and the time for it is long past (see previous discussions about retail saturation) if there ever was one.
When you build new peripheral shopping, you capture some sales leakage. You also redirect internal shopping. I think that we will see that Target (just the example, because it is here) has drawn shoppers away from Marketplace and Oakshade. If the city’s population isn’t expanding, that impact can be acute, and can lead to blight; i.e., vacant storefronts in neighborhood centers. The city’s population isn’t going to expand.
I agree with all of your proposals. I would add, perhaps the Target development agreement could be revisited to allow greater flexibility on Pads A – D. Carrot and stick: allow them to merge pads if they will bring in a department store. Take legal action if they continue to delay. Caveat: if the problem is staff delays, council members should get involved to expedite retail on those pads. I may be unaware of where the real bottleneck is on getting those developed.
[i]I’m just not sure why you think having another nursery to compete with downtown is so much better than having to compete with one on the periphery.[/i]
This isn’t about me.
Don: [i]” This isn’t about me. “[/i]
I was speaking metaphorically. The same question applies no matter what the venue is. Two book stores compete with each other no matter if they are across the street or across town, right?
Borders didn’t kill eliminate the small bookstores in town.
[i]keeping it all downtown is not an urban planning panacea as you seem to conclude[/i]
I haven’t intended to convey that impression. The neighborhood shopping centers are a key part of the Davis General Plan. In fact, I think they are more vulnerable to blight than the downtown.
Borders caused an immediate, sustained loss of about 30% of sales to all of the existing bookstores when it opened.
Don Shor: “[i]Caveat: if the problem is staff delays, council members should get involved to expedite retail on those pads. I may be unaware of where the real bottleneck is on getting those developed.[/i]”
I don’t have any insider information, just a few comments here and there. Someone here previously intimated that the City staff had been dissuading certain retail establishments as being ‘inappropriate’ for Davis, and there have been a few other comments that lead me to believe that at least part (if not all) of the bottleneck is self inflicted. There is no doubt however that in the past the City has tried to micromanage retail growth and we are currently living the consequence of these actions. The question is are we going to continue this process, or will we learn from our history and do something better?
“Is it to keep old businesses in place for the benefit of those who opened shop years ago?”
“The goal of growth policies and store-size limits isn’t to protect particular stores. It is to create a marketplace where more diverse, smaller shops can exist. There is a much greater likelihood of small locally-owned stores existing and thriving in an environment where the larger retailers have to compete on the same terms. The simplest tools for creating that marketplace are zoning rules and store-size limits.”
I’d never thought of it that way, Don, probably because most of the discussion over the years has been about big stores killing off the down. I always thought that meant chains. I thought that a Border’s might squash a Bogey’s, a Long’s might overtake a Qussenberry’s, an Office Max might put under a Carousel, a Safeway might eliminate a State Market and a G St. butcher shop, a Stadium 5 might push out a Cinema II–stuff like that.
How did the Davis’ store-size limits serve as tools for these businesses. It might mean that this kind of zoning really hasn’t much to do with that issue at all. At this point, we kind of look back fondly but realize those were the old days. Maybe we’re we’re zoning for (and worrying about) things that aren’t such big disasters after all. Maybe it’s just, “times change.”
Notice how the big box stores are screaming about how it’s unfair that Internet businesses get an advantage not having to collect sales taxes? Times change.
“Borders caused an immediate, sustained loss of about 30% of sales to all of the existing bookstores when it opened.”
My older brother used to live in Palo Alto and whenever he came home he complained that Davis didn’t have a single decent bookstore (both pre- and post- Borders). Compared with what I experienced living in Berkeley, I had to agree with him. I don’t think the situation has really changed in the interim. Until recently, I did most of my shopping at Sweet Briar, but as much as I liked that store, it was still limited.
Good stores don’t worry about competition, in fact I think they thrive with it. Bad stores blame others for their failures.
“Mark also points out the only logical alternative to growing peripheral retail… that is expanding the commercial zoning of the downtown.”
Rich, what section of town could start becoming part of downtown without a big fight over bulldozing historical houses? Seems like we’ve locked ourselves in, what with the railroad tracks and North Davis historical district. It seems as though our zoning doesn’t encourage “improving” these adjacent areas unless for moderate offices that use the same old house.
Your brother didn’t like Orpheus, agAccess, Next Chapter, SweetBrier, Bogey’s, or The Avid Reader? He’s pretty particular.
Don: I liked and miss Bogey’s, but it really didn’t compare to Moe’s in Berkeley.
The best bookstore I ever patronized was called Four Corners in downtown Colo. Springs, which I’d go to when visiting my brother. It was oddly huge. Probably 30,000 sq. feet. But it was composed of dozens of small rooms, packed with new and used books, connected by open doorways. Often I would go from room to room looking around, and then I had a hard time figuring out how to get back to the front of the store.
I am not exactly sure what killed it off maybe 12 or 13 years ago. Colo. Springs has a nice downtown and Four Corners was near Colorado College. It was usually busy when I was in there. Yet it might have lost business as peripheral malls with Borders and Barnes & Noble sprang up in the 1990s. I don’t think the Internet sellers (like Amazon) killed Four Corners. If it was not the owners just deciding to close up shop, my guess is that declining American literacy played a big part. People don’t buy nearly as many books as they used to. They don’t read magazines or newspapers as much. This trend began in the mid-1980s and has continued apace. Our culture continues to get dumber and dumber.
[i]”Rich, what section of town could start becoming part of downtown without a big fight over bulldozing historical houses?”[/i]
I think there are good opportunities in the core area for denser development (though, as Don has smartly pointed out, all of these are privately owned properties and the owner have to want to spend a lot of money to change the status quo).
Start with G Street. I think an opportunity exists at the strip mall next to the Food Co-op. While I would leave the Food Co-op itself alone–anyone else remember when that was Safeway?–everything north of the Food Co-op is ripe for redevelopment. In my opinion, an ideal project would be to raze the strip mall; build a new building with a good sidewalk right on G Street all the way to Sweet Briar Lane (where it is now vacant); the ground floor of the building should all be retail; a second floor could all be office; and then, with maybe a 15 foot setback (so it does not feel quite so imposing from the street), there could be a third floor with office or residential. In the back, toward the rail spur, is where I would place the parking lot.
Another G Street opportunity is on the east side of the block from 3rd to 4th. That’s the block which has the Davis Enterprise printing plant on one corner, a public parking lot in the middle and Little Prague and other businesses heading toward 4th Street; and behind all of them is the Davis Ace lumber and hardware store plus its nursery and pet supply store.
Again, I am 99.9% sure that the property owners are not interested in redevelopment, but just saying …) My idea would again be to build new retail space which fronts the street. Ideally, it would front all of G from 3rd to 4th, and it would front 3rd and 4th almost back to the rail spur. Maybe a good use for upper floors would be a hotel or perhaps office space and maybe it could include some third or fourth story apartments. For this large new building, it would make sense to have a multi-story parking garage in the back, next to the rail spur.
A third opportunity on G Street is where the Davis Ace home store is. (A developer actually brought this plan to the City Council, seeking RDA money to fund his construction.) Even though the building at the corner of 3rd and G (where KetMoRee Thai restaurant now is) has some historical value, razing it and everything on that block other than the Chen Building would allow a much better retail site, fronting G Street all the way from the Chen Building to 3rd Street. Again, the parking would be a multi-story garage next to the rail spur. Over the retail would be a couple of stories of office space and a fourth story set back with residential apartments. Again, the owners of these properties are not interested in this.
The two big themes I think these sorts of proposals have are:
1. Parking should be in the back. Retail works much better if it has curb appeal. That usually means good windows on the street or something else which draws passersby in. Along G Street, we are wasting too much prime retail space with parking lots which front the street; and
2. If large parcels are or an entire block is redeveloped, Davis might be able to attract some more anchor businesses to the downtown which require a larger space for economies of scale. Many national chains which have 100,000 s.f. stores in peripheral malls now will build a 30,000 s.f. store in a downtown district, if that space is available. Maybe Davis could bring in a mini-Macy’s or a Best Buy or some other company which covers a segment where we are having sales tax leakage.
JS specifically asked about historic buildings: There are very few historic buildings from 1st & E to the rail spur at 5th Street. If land owners in that part of downtown wanted to go up, I don’t think there is much to stop them, if that is what the Council prefers.
[i]”There are very few historic buildings from 1st & E to the rail spur at 5th Street.”[/i]
These are ones I can think of off the top of my shiny bald head:
Old City Hall at 3rd & F (Bistro 33);
The Anderson Bank Building at 2nd & G;
The Brinley Block at 2nd & G;
The Dresbach Hunt Boyer at 2nd & E;
The Varsity Theatre on 2nd between E & F;
The Boy Scout Cabin at 1st & F;
The SP Depot at 2nd & H;
The Presbyterian Manse on 4th;
The Masonic Lodge on G between 2nd & 3rd;
The Bank of Yolo at 3rd & G;
[i]”There are very few historic buildings from 1st & E to the rail spur at 5th Street.”[/i]
When I was a graduate student in Baltimore I met a man from Germany who, commenting on his recent tour of the ‘historic’ sites in Boston, said “all of them were at least 100 years [b]younger[/b] than the home I grew up in.”
Historic is a relative term, but I think 100 years should be the minimum cutoff for ‘historic.’
[i]”Your brother didn’t like Orpheus, agAccess, Next Chapter, SweetBrier, Bogey’s, or The Avid Reader? He’s pretty particular.”[/i]
You are joking right? When you add them together those don’t add up to one good book store. I can think of three on Telegraph avenue in the late 70’s that individually were better than all of those you mentioned combined. The world has changed and book stores are not as important today as they once were, but you have very rosy colored glasses if you think Davis has ever had a good selection.
No, I’ve just never lived in a place like Berkeley. I grew up in La Jolla.
[i]”Historic is a relative term, but I think 100 years should be the minimum cutoff for ‘historic.'”[/i]
Nonsense.
The standard in California is normally 50 years. That means 1962. But just because something is very old does not mean it has historic value, and just because it is not very old does not mean that it cannot have historic value.
I imagine, for example, the home that Barack Obama grew up in in Hawaii, even if it was built in 1970, now has great historic value and should be preserved.
A Davis example is the Robert Arneson house on Alice Street. It’s just an ordinary tract house, built in the early ’60s, I would guess. But there are two important facets to keep in mind: Arneson was one of the most important residents of Davis in his time here. He was a world reknowned artist and he was also controversial in a number of respects; and that particular house was depicted by Arneson in a number of his works, including one of his greatest sculptures (now kept at the Nelson Gallery):
[img]http://www.verisimilitudo.com/arneson/alice/DSCN2114.jpg[/img]
[img]http://www.verisimilitudo.com/arneson/alice/alicewhole.jpg[/img]
Mark: [i]Good stores don’t worry about competition, in fact I think they thrive with it. Bad stores blame others for their failures.[/i]
Bingo!
Ex Intel CEO Andrew Grove’s book “Only the Paranoid Survive” provides this lesson (although extreme in the hyper-competitive IC technology market). It is really the same in most aspects of life… people settle back into comfortable patterns and then tend to dig their heels in when pushed to change. When they do this… or even if they just rest on their heels, the competition goes baseline and stuffs it in their face. If you are a retail business owner in this day and age of http://www.Amazon.com and http://www.LightInTheBox.com, you better be on your toes and on your game… all the time. You better be always thinking about how you can improve value and attract business. Always be creative with product selection, sales, displays, advertising, promotion and the overall “customer experience”. Always look for ways to make the operation lean while also improving service. It is usually all the little things that make a store successful. Product selection and price are important, but merchants need to ask and observe their customers constantly to adjust to exploit what brings them in, and brings them back.
Lack of competition in our city will allow our merchants to rest on their heels. Then Davis residents will get in their cars and drive elsewhere to shop. That is what’s happening today.
Rifkin: [i]”The standard in California is normally 50 years.”[/i]
Wow, I’m two years past being historically significant!
Seriously? 50-years? Doesn’t that seem a little desperate by global standards? I have pants that will be 50-years old in another decade. I think we may be hoarders of pseudo history only to prevent change.
[i]”Seriously? 50-years? Doesn’t that seem a little desperate by global standards?”[/i]
50 years means this: it’s time to see if this thing has any value at this point. Just take a look at it and see what you have. It does not mean that any building which reaches age 50 has any particular historical value.
In Davis, almost nothing built from 1945 to 1995 is a “historical resource.” Tract houses are not reall “architecture.” But a few properties might, either due to their unusual architectural values or due to an association with a person who played a big role in Davis, are either good candidates for designation or perhaps will someday become good candidates.
Also, keep this in mind: When the City Council decides to designate a historical resource, that does not mean the building can not be changed. In fact, if other priorities trump the history, a designated resource can be demolished. But short of demolition, historical resources can be changed, like any building, but hopefully those changes will be made so that the integrity of the building is not harmed or lost. Also note that in Davis, we have no review at all for interior changes to historical structures. So when a building is designated, anything done on the inside is the business of the property owner and no one else (though perhaps there could be an exception to this if some aspect of the interior was itself named in the designation, though that is not the case with any of our historical resources).
Something else to keep in mind if you ever want to buy a property which is a designated historical resource: You can get a 20% tax credit for rehabbing one of these buildings ([url]http://ohp.parks.ca.gov/pages/1074/files/fed.pdf[/url]). That is not a tax deduction. It’s a credit. That means if, say, you spend $200,000 rehabbing a designated historical resource, you can get a $40,000 tax credit. So if you have an annual income of $140,000 and you owe $40,000 in income tax, you can write off all of that, assuming you don’t run into Alternative Minimum Tax ([url]http://www.irs.gov/taxtopics/tc556.html[/url]) problems; and if the AMT gets you, you can spread your historic rehab tax credit over multiple years and thus get the full credit off your taxes.
[quote]I agree with all of your proposals. I would add, perhaps the Target development agreement could be revisited to allow greater flexibility on Pads A – D. Carrot and stick: allow them to merge pads if they will bring in a department store. Take legal action if they continue to delay. Caveat: if the problem is staff delays, council members should get involved to expedite retail on those pads. I may be unaware of where the real bottleneck is on getting those developed.[/quote]
My understanding is the problem is with STAFF deciding thus and such a business is not permitted to go there (I believe there were two solid offers already that were nixed by city staff), not Target…
Staff may be interpreting the development agreement that Target signed.
“The following uses are prohibited in PD #10-04:
(a) Discount superstores
(b) Entertainment uses
(c) Book stores, toy stores, music stores, art galleries,
hardware/building supply stores, paint stores, pool supply stores
(d) Adult book and novelty stores
(e) Arcades
(f) Convenience markets and mini-marts
(g) Weapon and/or ammunition sales
(h) Liquor stores
(i) Bicycle stores”
Also note:
“Developer, or its successors in interest for the Retail Building A and Retail Pad Building
B shall make good faith efforts to initiate construction of the building shell of the Retail
Building A and Retail Building B concurrent with the construction of the Target Store.
The Developer, or its successors in interest for the Retail Building A and Retail Building
B [b]shall submit full and complete building permit applications for the building shell[/b]
(interior tenant improvements shall not required as part of this application) [b]for the Retail
Building A and Retail Building B no later than two years after the Effective Date of this
Development Agreement,.[/b] “
And, for those who wonder about the possible size of anything on Pads A – D”
“The footprints of pads A, B, and C may be combined to create alternative building sizes and orientations provided they are consistent with the above setback requirements. In no event may the combination of pads A, B, C, and D, or any iteration thereof, exceed an aggregate of 46,000 square feet.”
[i]“The following uses are prohibited in PD #10-04:
(a) Discount superstores
(b) Entertainment uses
(c) Book stores, toy stores, music stores, art galleries,
hardware/building supply stores, paint stores, pool supply stores
(d) Adult book and novelty stores
(e) Arcades
(f) Convenience markets and mini-marts
(g) Weapon and/or ammunition sales
(h) Liquor stores
(i) Bicycle stores”[/i]
Why do we choose to micromanage everything?
[i]”Why do we choose to micromanage everything?”[/i]
With the exception of d and g and maybe h, I am quite certain that all of the other prohibited businesses are on the list in order to protect companies that were in operation downtown at the time Target was approved by the City Council.
[img]http://4.bp.blogspot.com/–0p7Skmkpwc/T3vQaBzSS-I/AAAAAAAAAko/jxAc7z1Y2sk/s1600/city-of-davis-logo.jpg[/img]
The exceptions, d and g and h, are likely prohibited because apparently no one in Davis likes porn, guns or booze.
Who comes up with these kinds of “prohibited” lists anyway? I agree with one, although it hampers the well-regulated South and West Davis militias. But, why should the city risk substantial sales tax leakage by requiring me to leave town to buy my “novelties.”
I’m sure this was negotiated in order to try to make the zoning change more acceptable to the council and the voters, since it was such a massive contravention of the General Plan. There was no requirement that it go to the voters, but there was enough controversy at the time that a vote of the public was a foregone conclusion — whether by referendum or by council decision to put it on the ballot.
Probably it was worked out by staff, possibly council members, working most likely with DDBA leadership of the time. Mike Webb would know.