The passage of Measure O does not end the budget discussion. In fact, all Measure O really does is temporarily stop the bleeding. Staff will introduce, this week, the annual 2014-15 budget. Measure O shores up the $5 million deficit, but does not completely close it.
In April, the Davis City Council authorized $1.2 million in cuts that produced no layoffs to close the remaining hole in the deficit. That works for the short term.
Staff notes that over the last five months “there has been considerable outreach with six public meetings and more than two dozen meetings with community and business leaders.”
They report that the consensus was “that the city needs to have long-term financial strategy which would include, but not be limited to, continuing to pursue cost-control measures; investigating alternative revenue sources and supporting economic development activities which are compatible with community values.”
The long-term projections are not good. The staff writes, “Assuming the base budget proposed for FY14/15 is maintained throughout the 5 year projection period, and including the new sales tax revenue, the current $5.2 million reserve will be virtually extinguished in the 5th year of the projection.”
They continue, “It must be noted that this assumes that the base budget going into the FY14/15 is maintained as is throughout the course of the projection period. The projection doesn’t contemplate new revenue sources, increased level of service or increased funding for maintenance or capital projects. Nor does it contemplate reductions in operating costs, reductions of service levels or changes in discretionary allocations. To a degree, some of these changes are likely to occur over the projection period but they are not predictable.”
From our standpoint, the longer term strategy must include a parcel tax this fall, an economic development strategy, and additional employee concessions.
While the city is floating the idea of a general tax in 2016 which would be a 50% tax, we would strongly urge that only as a fallback alternative, given that waiting two years to address roads will add millions if not tens of millions to the already-overwhelming cost.
The real question is what we can do in the short term to shore up the budget.
It is clear that the council has no real appetite at this point to lay off additional city employees. The $1.2 million in cuts are designed with the idea in mind of no additional layoffs. Obviously, had Measure O failed, we would have a different story on our hands as the 12.5 or 25 percent cuts would have produced a heavy string of layoffs.
The key to remember is that on June 30, 2015, the current MOUs expire. However, the city does not have to wait until then to gain additional savings. Fire and DCEA (Davis City Employees Association) failed to reach agreement on contracts in 2012 and at the end of 2013 had their terms and conditions imposed on them. However, that was not a contract, they are not under contract and that gives the city additional flexibility to negotiate further contracts.
Going forward, the 2015 MOUs will be critical. We have expressed this view before – the current council in 2012 and 2013 was hamstrung by the 2009 MOUs that contained only marginal fixes for the future.
As Rich Rifkin wrote in January of 2010 regarding the firefighters’ MOU, “The chagrin is that the fire contract ignores our future reality. As a short-term document, it is not bad. The concept of capping the growth of total compensation is commendable. But the reason two of the five members of the council gave it a thumbs-down is because it has no long-term reform.”
He would add, “By putting off a solution for at least three more years, the current council is guaranteeing that when the crisis comes in 2017, it will be far more difficult to disentangle.”
“Saylor and Souza point out, before the city started negotiating with the union, council members agreed to ‘guiding principles’ that they would follow. One of those tenets was: ‘Strive to reduce the long-term liability of retiree medical costs, while retaining progressive elements of the city’s retiree medical insurance benefit,’” he would add. However, “We did not reduce the city’s share of this expense… In short, the council dropped the ball. And the ball is going to land on the heads of the taxpayers in a few years.”
This is critical to understanding the problem now. I agree with critics that the current MOUs are not sustainable. Compensation or at least the cost to compensate employees continues to rise at a faster rate than the growth of city revenues.
However, how much further could the council have gone when the previous council left all of the heavy lifting on benefits to the current council?
The council’s approach was to get the employees to accept concessions on cafeteria cash outs, OPEB (Other Post-Employment Benefits), PERS (Public Employees’ Retirement System), and health care and then give them a below-inflation wage increase in exchange for it. That came with a modest cost, but, interestingly enough, the city measures that 2% COLA as costing $360,000 whereas the cost of just two bargaining units holding out was $447,000.
In other words, it was more cost-effective for the city to give a small concession for a COLA than it was for the city to go to impasse.
Just two bargaining units holding out cost the city half a million. The city was able to get five of the seven units under contract by December 2012 by offering those offsets.
Should they have gone to the mat and forced the concessions? How much would they have saved? How much more would it have cost the city to go to impasse? And what would the political cost have been?
Remember, these would not have been three-year contracts imposed, it would have been a one-year contract, they would have had to go back to the bargaining table and the relations at that point would have been poisoned.
And what would they have gained? It’s hard to know, but from this it appears very little.
We also have to understand that the contracts expired after June 2012. The bulk of the contracts were agreed to by December 2012. While we knew things were bad in that stretch of time, we did not recognize just how bad the roads would be until March 2013, we only discovered the impact of water rates last spring, and we had not been hammered yet by PERS, though we expected that to be on its way.
We still have not evaluated the park infrastructure needs, though we are now estimating it would take a $200 per parcel tax to deal with the park maintenance backlog.
We knew we had road problems, but did not realize until March 2013 that it would take $5 to $8 million per year, rather than $3 million, to solve that.
This is not to put the city off the hook for their failure to study the critical needs prior to 2012, nor is it to put the city off the hook for their lack of transparency or failure to communicate with the public.
But at the end of the day, I believe that the council in the 2012 MOUs got about what they could get without creating a huge mess of impasses and angry employees.
We get another bite at the apple in June of 2015. I think at that point we have to look at salary concessions, complete the structural changes to pensions and OPEB, create the second tier for DCEA and fire (hopefully getting them under contract), and look into a mechanism to cap the growth of total compensation.
It took an extra three years to accomplish this precisely because we did so little in 2009 and had to play catch up three years later.
—David M. Greenwald reporting
David wrote:
> What We Can Do to Put City on Road to Sustainability?
It is important for everyone to understand that for the past 50 years Davis (like the state of California) has not been on the “Road to Sustainability” but the “Road to Bankruptcy”. Davis (like California) has been making promises it can’t keep. The only reason that we have not “hit the wall” is that the “Ponzi” has been hidden by MASSIVE growth.
Davis is about seven (7) times more people today than it had 50 years ago. If we were to keep going and grow seven times bigger (to over 400,000 people) over the next 50 years (basically having more than FIVE (5) developments the size of the Cannery open EVERY YEAR for 50 years) we will be fine, if not we need to make some BIG changes…
P.S. Very few people understand exponential growth, most people are blown away when you tell them that if you double a penny every day for just 30 days you will have $5 million (500 MILLION pennies). Since the growth of pay and OEPB costs has been more than income (and almost no one in the system wants to change this this) it is only a matter of time before we are in BK…
“Davis is about seven (7) times more people today than it had 50 years ago”
Setting aside the problems induced by attempting to compare population growth to economic growth, I think that you are making a good point. Growth in itself, whether population or economic, is neither good nor bad. It entails a number of advantages and disadvantages that need to be carefully weighed when making a decision to make any change. The idea that there is either growth or there is stagnations is completely fallacious. As I can tell you in the medical field, and I am sure that Don can attest in landscaping, there is also the concept of equilibrium.
Obviously, there are communities that thrive without continuous growth. Sometimes a community does this by necessity as in when available land is all utilized as when the community abuts a neighboring community or when it is backed against a feature of nature such as towns between the ocean and a cliff or mountain. Sometimes these decisions are made for communities, preferably the community has some say in how large it wants to be.
This is what I would like to see in Davis. An honest conversation about our vision for the future free of name calling ( “NIMBY”or “greedy developers”), and second guessing other individuals motives.
I see the Vanguard as one venue for such discussions about the future of our city.
“Obviously, there are communities that thrive without continuous growth.”
Name them please.
When we first opened in 1981, I had a long and interesting conversation with the owner of a garden center in Burlingame. That city has no way or place to grow. I just did a quick search and found they’ve issued less than 24 building permits most years in the last two decades; only 14 issued in 2012. Yet their budget appears to be stable, at least from a quick review. There are lots of reasons they don’t compare directly to Davis (no two cities are alike). But there are communities in the Bay Area that are financially stable without housing growth. They repurpose existing buildings to get different retail options. Most coastal cities have very creative use of commercial sites because the land has such high value and they can’t expand outward.
Burlingame is a wealthy community, 30,000 population 3% unemployment. It has Caltrain and BART, and few single-parent households. It has a thriving car sales, and airline support businesses. (It is near SFO.) Therefore, my guess is that it has above-average revenues and bottom-of-the-barrel social costs.
Ok – but aren’t you comparing us to dense urban areas that are already fully developed?
Note that in 2007 Burlingame’s retails sales per capita was $30,154 compared to Davis’s measly $7,752.
And Burlingame’s budget was a mess beginning after the Great Recession. The city had to cut service. It is only the last couple of years that the city has gotten back to fiscal stability. Three reasons: the primary one is the explosion in bay area property values, the other is the improved local economy and the increase in business tax revenue. The third is a transient occupancy tax increase… Burlington has many more hotels than does Davis… it is right next to SFO. Burlingame is affluent – 70% white and 20% Asian (more white, but less Asian than Davis) – with $77,661 average household income compared to $61,353 in Davis (about the state average).
The bottom line here is that you confirmed what I have been pointing out… that Davis is a mess because of the NYMBY, no-growth impacts on economic development
I need to go on record here to point out that you keep working to deflect and obfuscate to prevent yourself from having to admit facts you don’t like.
“The bottom line here is that you confirmed what I have been pointing out… that Davis is a mess because of the NYMBY, no-growth impacts on economic development”
you have it half correct – davis is a mess because it’s employee compensation and provisions of service are not compatible with a city that has not developed its economy to the extent that davis has failed to do so.
you have it half correct – davis is a mess because it’s employee compensation and provisions of service are not compatible with a city that has not developed its economy to the extent that davis has failed to do so.
I agree… it is both sides of the balance sheet.
Tia said = ““Obviously, there are communities that thrive without continuous growth.”
Don mentions Burlingame which has retail and other business tax revenue orders of magnitude greater than Davis.
The cities that “thrive” without growth do so with a much greater per capita tax revenue inflow and a budget that is not overcommitted. That is it… it is the per-capita tax revenue inflow combined with prudence in managing city expenses, are the key to thriving without needing constant growth.
The problem is that Davis has fallen way behind. We need to grow our business sector to a level where our per-capita tax inflows are adequate.
I don’t have time right now, but it seems that we are missing reporting on this point of Davis not comparing to anywhere else. What city do we want to model? We can’t just keep saying that we want to stay the way we are when our finances are a mess. The way we are is not sustainable. What is the vision? Where are the examples to help us understand what is “bad for us” different and what is “good for us” different?
When challenged this way, some of my favorite debaters on the topic point to some northern European countries. I think we can and should use those examples for developing amenities and with respect to ongoing city design… but we cannot and should not expect them to work as complete models for us because we face so many differences in governance. Our federal and state rules, taxes, revenue, etc. We have no control over them, and they dictate that we behave like an American/California city.
We need to look within the US and we need to look in CA. And we need to find other comparable cities that have sustainable finances and we need to copy the things they are doing.
I absolutely do not think we are smarter than these other cities. In fact, I think we are facing a deficit in emotional intelligence that is ultimately causing us to make many tremendous mistakes in judgement.
You asked for an example. I gave you one. There are no “facts that (I) don’t like.” You know what economic development I support. But I knew you’d do this, which is why I don’t usually rise to your bait any more on this topic.
You asked for an example. I gave you one.
Sure Don. There are some Italian and French villages that thrive without growth. Carmel thrives without growth. I can go all around the world to come up with non-nonsensical false comparisons.
I didn’t think I needed to qualify all the key criteria for making a reasonable comparison.
The facts are that Davis does not compare because of our measly local economy. And folks like you that jump up and down and demand that we complete the farmland moat… including that $50-$100 million dollar city asset Mace 391 that you agreed should be sold off for a $500,000 loss to that end… are directly to blame.
All you have to do is say: “Yes, Davis does not compare with any other city that I can find. Those cities that do thrive without growth have already developed their local economy to a level that supports sustainable budgets.”
Hey, Frankly. You asked for an example. I gave you one. You didn’t ask for a detailed, side by side, “reasonable”-by-
Frankly’s-definition comparison. I will await your examples of cities that Davis can emulate.
Since you will never stop repeating this, I will never stop replying: there is zero chance Mace 391 would have passed a Measure R vote. There are three other properties in consideration for development now. Mace 391 would never have happened. The other sites may be a tough sell, but could happen. It was never, ever a “$50 – 100 million dollar asset” because it would never have been developed and built. It was no more of an actual, actionable asset to the city than Howatt Ranch or Central Park. Both of which I am sure you would be happy to develop also, if you could. But you can’t.
“there is zero chance Mace 391 would have passed a Measure R vote. “
Let’s take a trip to Vegas. I can make some money off someone that can see the future with such clarity and absolutism.
No, Frankly, just go ahead and ask anybody who has been active in Davis politics. Craig Reynolds, Maynard Skinner, Dick Livingston, Don Saylor — I don’t care who you choose. Then please report back to me what chances they would give a Measure R vote on Mace 391.
agreed with don – zero chance for mace 391. but more importantly it’s over, let’s focus on the possible.
Sorry for the disjointed responses. Am on vacation with my family and checking in sporadically. Frankly and Don have provided examples so I do not feel the need to do that.
“We need to look within the US and we need to look in CA”
I disagree. The United States and even California have as much diversity within their borders as do many European countries. So why are we arbitrarily limiting our look to these geographic locations. Why not take a look around the world and see what is being done in other locations that might be productively modified for use here ? I see no need to arbitrarily place blinders on ourselves.
Don wrote:
> When we first opened in 1981, I had a long and interesting
> conversation with the owner of a garden center in Burlingame.
> That city has no way or place to grow. I just did a quick search
> and found they’ve issued less than 24 building permits most
> years in the last two decades; only 14 issued in 2012. Yet their
> budget appears to be stable, at least from a quick review.
Burlingame has the same structural problems as Davis but they are just hidden for now due to the sales tax income of $315 per person vs. $174 for Davis (according to city-data.com) and the average home price of TRIPLE Davis at $1.6 Million vs. $533K (according to Zillow.com).
The Burlingame Cops and Firefighters retire (at ~50) with on average even more money than Davis Cops and Firefighters (most guys retiring in recent years are getting more than $10K a month) and the big problem is that when the overall growth of the state slows (and the retired cops and firefighters figure out that they won’t get paid when CalPers runs out of money) there will have to be a MASSIVE increase in payments to CalPers from EVERY city.
The CalPers site says they are assuming a 7.5% rate of return. That does sound real big but it means that $1 needs to turn in to $8.75 in 40 years (if you don’t believe me it is simple to have Excel give you the same number. The problem is that almost NOTHING (with rare exceptions like Burlingame real estate, 60’s Ferraris, and Warhol paintings) increases in value by over 8.75X over 40 years.
CalPers is able to hide the fact that the assumed “rate of return” is not even close to where it needs to be due to growth in the number of workers paying in to the system (Bernie Madoff did the same thing while his “fund” was “growing”)…
CALPERS assumes a 3.8% rate of growth if you want to exit the program. That is closer to the actual return than the current 7.25%. The city needs to disclose the true cost of labor!
The term “bleeding red ink” is a common term used in business to add actionable definition to the situation of negative cash flow. The inference is that the business is like a body of life that will die unless the bleeding is stopped and returned to a healthy situation of positive cash flow. Successful business leaders plan and execute their responsibility largely to prevent this very problem. Reserves and debt are supposed to be used for business expansion and investment in value-add opportunity… and to balance the monetary balances of seasonality or other normal ebbs and flows of business… not to shore up a negative structural imbalance of inflows and outflows.
The key here is that once it is clear that the organization is bleeding red ink from a structural imbalance, the required corrections become the most urgent leadership agenda item. And for the leaders of the organization, the times are not fun. Even more so in a new globally competitive world… because just cutting a labor force can result in service and product quality impacts that can further damage the business.
But rarely does that need to happen. The reason is the tendency during periods of growth for business systems/processes to bloat and expand inefficiency.
The catalyst for this is two-fold: system and human. As problems happen or new services are added the system grows in complexity. Then employees that feel increasingly overworked and demand greater compensation and help, managers that respond to these demands and also respond to their own interest to grow their “empire”. Pay increases and new employees are hired. The cost structure increases.
Ideally the organization will have implemented a constant improvement management process to perpetually combat this tendency for bureaucratic bloat. This is the best-practice for the best-managed companies. Lacking this practice the company will find itself enduring the painful periods of re-engineering and re-organization to push the pendulum back to center after swinging too far from growth. Doing neither would mean the company would soon cease to exist from too much bleeding.
For our city, putting aside labor contract constraints and concerns about “angry employees”, here is roughly how to go about the remedy the bleeding problem:
1. Develop a prioritized list of primary services, and the administrative support resources required. Group them as “critical/strategic”, “essential” and “nice-to-have”.
2. Develop a cost model for the previous.
3. Do a market-study on labor costs… the level of pay and benefits required to attract and retain quality employees. Develop a plan for implementing necessary changes.
4. Decide what to cut from the nice-to-have group.
5. Develop a strategy plan and related re-organization plan including all the resources. Decide all the employee changes: lay-offs, early retirement offers, outsourcing, department mergers, job responsibility/role changes, reporting changes, etc.
6. Announce the general plan and re-organization and quickly execute all the employee changes.
7. Manage the transition with a positive message of remaining employees working for an ongoing viable, more efficient, successful, on-going concern.
Unfortunately public sector business is dysfunctional with respect to the ability to carry out this common business remedy to the bureaucratic bloat that occurs. The unions and the politicians they purchased have created a barrier to prevent correction. But this barrier is not absolute. There are solutions that the CC can pursue. The only REAL barrier is their will. If they lack the will to stop the bleeding, Davis will eventually bleed to death. And the negative reputation of every past CC member will pale in comparison to their contemporaries that failed in their wake to do the right things.
The alternative in front of the CC is to urgently develop our economy. Davis does not generate enough tax revenue from business activity. We are far below comparable cities. We are in fact living a lie of sustainability preventing development and building a farmland moat around the city. If the CC would focus on economic development as a primary effort, we might increase our revenue to prevent drastic cuts to city services and labor.
But again, there is the will thing. Does our CC have the will to face up to the NIMBY, no-growth, deniers of fiscal reality? Does the CC have the will to face up to the city labor groups?
Only time will tell.
Was Davis ever considered as a home for Costco?
Costco = Big Box = Satan
That is how the Davis NIMBY, no-growth activists have successful framed it.
Did CostCo ever consider locating in Davis?
Where? No, I don’t think so. No approved and zoned land to develop on and an anti big box front from the no-growth activists. Why even try?
CostCo could have gone on the site where Target is now. Do you know the history of how Target happened to come to Davis? They were invited by sitting council members.
Costco would have needed a larger footprint than the Target building size. There are a few small footprint Costco… for example like the one in Danville. However, as I understand Costco needs some specific economic circumstances before they will build one of those. Basically, it needs to be a very high sales volume location because their low margins require many, many square feet of floorspace for the econometrics to work.
If Ted Puntillo had wanted a CostCo, he and the other council members could have made that work just as readily as they made Target work. There was more land on Second Street available, big enough for any size footprint store.
I’m not sure about your store size comment. I thought CostCo stores were bigger as well. But I find CostCo at 143,000 and Target at 175,000. I know their strategies are changing as the big box model is fading for general merchandisers like Target. CostCo, on the other hand, will probably stick to their larger footprint model, because as a membership store it works for them.
“But I find CostCo at 143,000 and Target at 175,000.”
Interesting. I did not know that.
I guess since Costco is a warehouse style retail store, it stacks inventory vertical and so it makes sense that it can make a smaller footprint work. But I am still surprised and that difference.
You did not support the Target coming to town. Would you have supported Costco instead?
I would support (well, I would not oppose) any of those stores coming to town if they stayed within the store-size limit. WalMart could open one of their Neighborhood Market stores right now if they wanted to. They have two of them in Woodland.
I did not support large peripheral retail then, and I don’t support it now.
“Did CostCo ever consider locating in Davis?”
I don’t know the answer to that. However, looking at a map of where they have stores, my guess is that Woodland made more sense in terms of geographic coverage.
There are two Costcos in Sacramento, one on the north side, the other on the far south; there is also one in Citrus Heights and another in Rancho Cordova and another in Roseville; and there is a Costco in Vacaville near I-80.
By siting the Yolo County store in Woodland on I-5, they made Costco close and accessible to more shoppers in what could loosely be called the northwest part of the greater Sacramento region.
OK, just for fun, what would a Costco in Davis have meant for the city finances?
I read recently that their average store does $100M a year in sales. How would retail sales of that magnitude equate into tax dollars for the City of Davis?
That depends on the size and location of the store, and would also have to factor in the direct harm to all the existing grocery stores. A lot of CostCo’s product is non-taxable groceries. If you’re looking for maximum revenue and sales tax per square foot, you want boutiques.
“You did not support the Target coming to town. Would you have supported Costco instead?”
Unlike Don, I did not support Target coming to town and I would not support Costco coming to Davis. The reason is not that I think they are “evil”. I think it is redundant ( locations in Sacramento and Woodland and with Target, in Vacaville)and I think that these very big box stores are eventually doomed to go the way of Borders and Blockbuster due to the changes that Amazon and other large on line retailers are bringing, especially to the lives of our children. My kids are of course only one small example but are I believe quite representative of their generation. I have yet to hear either of my children, both living independently,
express an interest in going to Costco.
but costco at least pays its workers $21 an hour with medical insurance. walmart and target’s medical insurance is called medicaid.
Both of my kids who are in their 20’s and living in Davis go to Costco and Target all of the time.
Costco seems to treat its workers well, they offer great products, wonderful company ethos, and I can’t imagine buying paper towels, toilet paper, bread, eggs, milk, and plants online. Safeway or others take the biggest loss of sales, not Mom & Pops stores.
I’m just trying to pencil in what might get a Davis there. 30% from a Costco, 10% from an innovation center, 10% from 2-3-4 hotels, 10% others, and 30% reduction / slowed growth / trimming the waste.
people are always asking for lists, how do we know that we don’t already have one. whenever cuts come up, the city has a list of potential cuts, obviously those are lower priority than the list that of things that don’t end up there.
but at the end of the day, we know what we have to do here – reduce the cost of personnel, increase our revenue, and cut costs where needed.
“But at the end of the day, I believe that the council in the 2012 MOUs got about what they could get without creating a huge mess of impasses and angry employees.”
Why don’t you think the City Council would not have been able to illustrate that the City is unable to pay these wages? You can make it very simple, like “Our last contract offer will cost each homeowner an additional $1,800 per year as a parcel tax if the City paid 100% of the actual cost. The current union counter offer would require an additional $5,300 in parcel tax.” At least then the actual employee costs will be known.
aside from personnel laws, that’s not a bad idea.
DP wrote:
The courts have said the government needs to let taxpayers know how much people are paid (Davis still has not reported, but here is the Yolo County “top 5”:
Edward Prieto Sheriff-Coroner Total Pay & Benefits $288,459.00
Kevin Rosi Psychiatrist-Children’s Total Pay & Benefits $275,803.00
Robyn Drivon County Counsel Total Pay & Benefits $272,363.00
Arturo Villamor Psychiatrist-Med. Director Total Pay & Benefits $268,215.00
Patrick Blacklock County Administrator Total Pay & Benefits $262,065.00
http://transparentcalifornia.com/salaries/yolo-county/
One of the problems we are up against is a persistent and oft-repeated belief exemplified by Sue Greenwald’s comments on this article at the Enterprise:
http://www.davisenterprise.com/local-news/city-to-consider-placing-tax-on-ballot/
that’s a problem. she doesn’t consider the increase to property tax (including the huge increases from mori seiki because the capital equipment factors in) and the potential for point of sales tax.
“One of the problems we are up against is a persistent and oft-repeated belief exemplified by Sue Greenwald’s comments”
Lest we forget, Don has long been a supporter of Sue Greenwald and her particular view of the world, which is in part why I think his claims of support for economic development have always sounded hollow to me.
“there is zero chance Mace 391 would have passed a Measure R vote.”
But I must say we are fortunate to have him here to tell us all with certainty what will happen in the future so that we won’t go down the wrong path. Don is right, by never attempting to get a development through the Measure R process we have guaranteed that it would never pass (which is after all, exactly what he wanted).
That statement is completely false. I endorsed Sue for re-election because of her budget expertise. I have never supported her positions regarding peripheral growth, as you know, and disagreed with her strongly and over a very long period about the water project.
I don’t agree with her statement. You’ve made spurious assertions in the past about my positions on economic development. Faced with clear evidence to the contrary, you never retract them. Then you assert them again, fully aware they are not true. Which makes your assertions lies. Again: you repeatedly lie about my positions. It speaks very poorly about your character that you have done this repeatedly on the Vanguard over many months.
i thought you endorsed her in 2008 because she opposed target.
Nope.
So, what is Sue Greenwald’s expertise in this area? Why would anyone believe she knows enough about the topic to give any credibility to her ramblings on it?
Why do most cities in the world fall all over themselves to attract and retain more business?
Does Sue really not understand that ONLY business provided net positive tax inflows?
No wonder she lost her re-election bid. Seems like she just throws out random points of view and gets lucky every now and then with one of them comes true.
her expertise is she used to live in cambridge and remembers what business parks looked like there.
I supported her in 2012 because she was a strong fiscal conservative. As to the area of business park development, I think she is wrong in her analysis. I bring her up on this thread because she is actively arguing the point that I quoted and she has supporters who will believe her. She will not participate on the Vanguard, so if you want to debate it with her you’ll have to reply on the Enterprise.
so you didn’t support sue in 2008?
“Why do most cities in the world fall all over themselves to attract and retain more business?”
Perhaps one reason is because their leaders share a view that power, in the form of increased money, is a major value for them and they see, as you appear to also see economic values as the ones of most importance to you.
what do people see as an ideal way to move forward at this time? more cuts, outsourcing, more taxes, economic development?
I’d say that covers it. Problem is, you have one faction that says ‘business parks don’t make money for the city’ and another faction that says ‘no more taxes’.
you have one faction that says ‘business parks don’t make money for the city’ and another faction that says ‘no more taxes’.
I am not sure if there is really “a faction” saying that–perhaps just a few people with that opinion.
What I think is that we should not assume that a business park will or will not “make money for the city.” We should instead critically consider the likely future revenues and expenses it would entail; and we should not simply trust the numbers put forward by its promoters or detractors.
I don’t honestly recall, ever, when a business development was proposed–including Mace 391, for example–that reliable tax revenue numbers (from property tax, including equipment and from sales tax) were given for consideration. When there have been residential proposals, these numbers seem to be more commonly produced, and projections are made as to how much future services (usually police and fire coverage) will cost as a consequence of the residential development.
Without reliable revenue and expense numbers, I don’t think a rational decision can be made. I hear all the time how good it is for Davis to have Mori Seiki, for example. But has the City ever made public how much money each year it is collecting from that company? And, if any, is there an estimate of how much public expense is drawn for that company?
Some estimates can be made with a lot of assumptions. There are some studies available on research parks. And there are some for industrial and office business parks. It would seem a blend of these two would approximate the type if innovation park we are discussing in Davis. I am currently working on such an analysis. Again though, this is not exact science.
There are three types of growth that can return greater city revenues.
1. Residential growth… I think we know that the returns are short-lived… maybe 15-20 years and then the cost of providing services to the neighborhood exceed the tax revenue provides.
2. Then there is general business… that is the one that is difficult to quantify. A company like Mori Seiki buys expensive new equipment frequently and it generates property tax revenue. All companies generate secondary sales tax revenue since they purchase goods and services from local merchants. And of course all business property will pay tax on their real property.
3. Lastly there is retail which can do all of the above, plus pay tax on consumer goods sold.
Both residential and business supply new local consumers that buy things from local merchants and generate sales tax revenue.
The easiest to understand is retail. Davis has much less retail sales per capita than does all other comparable cities. I see retail as providing greater dollar per acre in net benefit to the city. However, there are a lot of people against peripheral retail.
So… coming back to this need to know the scope and scale of economic benefit provided by an innovation park… I say that we have no choice. Either we expand retail or we expand other business. The exact amount of economic benefit is irrelevant. We may need 1000 acres or more until we reach a point of adequate city revenue per capita… or we might need 500 acres… or we might need 391 acres that we own. We need to just go get it done.
“what do people see as an ideal way to move forward at this time? more cuts, outsourcing, more taxes, economic development?”
Yes ! All if done strategically with careful analysis of the pros and cons of each move rather than each side rooting exclusively for its own solution while vilifying the other side…..”NIMBY” calling, for example since it seems the predominant, no thought, just through something out there term for the day.