By Zohd Khan
DAVIS — Speakers at Tuesday’s Davis Economic Development Webinar highlighted the dire circumstances facing small businesses during the COVID-19 crisis, as well as the underwhelming economic development in Davis due to obsolete infrastructure and the inability of Davis’ downtown to combat climate change.
The meeting began with Greater Sacramento Economic Council Leader Barry Broome outlining a brief summary of the economic standings for Davis. Broome reported that, among our region, the Sacramento MSA has ranked 84th in “Inclusion,” 71st in “Prosperity” and 67th in “Growth.”
In addition, Broome addressed the troubles among social minorities within our region, detailing how about 47 percent of African Americans and 42 percent of Latinos are struggling financially. Broome indicated that these concerning statistics were the ramifications of “the curse of the anti-growth/slow growth mindset that we’ve suffered under.”
Broome continued by reassuring that the economy is not an obstacle exclusive to Davis, as he attributed the nationwide social unrest to the “50 percent [of Americans] living paycheck to paycheck” and the fact that “we’ve eradicated the middle class.”
In contrast to the disappointing data Broome shared, he also highlighted the nine percent unemployment rate in the region, which is below the state unemployment rate of 11.5 percent. Broome further explained how our region’s unemployment rate in 2012 of 12 percent served as another positive takeaway, as we have dropped substantially since that year.
Broome also acknowledged “the new moonshot” of our nation during climate change, referring to its plausible solution as a “technology strategy.” For example, Broome praised Governor Gavin Newsom’s new order for banning all new combustible engines by 2035 as a step in the right direction. Broome mentioned that this order helps create new economic opportunities through the increased reliance on electric vehicles.
In an effort to echo policies similar to Newsom’s order, Broome introduced the concept of “Davis 2050,” an idea that UC Davis’ technologies are the key to fostering a positive environmental impact as we strive to increase food production by 70 percent.
This idea coincided with the aspiration that Aggie Square will eventually become a “world-renown[ed]” sensation, rivaling the prominence of the “Golden Gate Bridge” and “Seattle Space Needle.” Additionally, Broome emphasized the need for action in the private sector, with public-private partnerships serving as the “standard practice to solve these problems.”
One specific implementation to help decrease the town’s carbon footprint will be the addition of a 50,000 square feet lab in Davis, which will be provided by DISC (Davis Innovation Sustainability Campus, if the voters approve it in November), which will serve as an effective means in developing the technologies to address climate change, solar energy, and electric vehicles.
Broome concluded his presentation by covering the traffic problems in our region. He explained how 30 percent of all our jobs are in a handful of communities, which creates a traffic dilemma where many people are forced to drive around our region, thereby increasing the carbon footprint.
Broome then proposed that if we build more real estate within our communities, more workers can travel by foot, which will not only improve the environment, but also generate more jobs in Davis and improve tax income in the city.
The next speaker in the webinar was Joe Dinunzio of the Davis Chamber, who emphasized the struggle among local businesses to adapt to the burdensome effects of the pandemic.
Dinunzio began by pointing out how the absence of many of UC Davis’ staff and students has had a detrimental impact on the businesses’ income. He reported that 70 percent of businesses have noted reduced income, with two-thirds of that being significant. Among the worst hits in this regard have been nonprofits.
Furthermore, over one-third of local businesses have either temporarily or permanently laid off staff. As a result of these shortcomings, 75 percent of these businesses have applied for some sort of federal/state aid, although any of those successful in receiving such funds are witnessing their own aid diminish now.
Dinunzio also mentioned new local business grants of 236,000 dollars being open for applications.
Dinunzio commended city officials for finding methods to enable outdoor dining and modifying rules to allow owners to adapt to the environment. Nevertheless, some businesses cannot afford to adapt due to the nature of their operations and procedures.
Another speaker, Jim Gray of Commercial Real Estate, passionately described the incompatibility of Davis’ downtown infrastructure, as he tried to “bring a moment’s worth of reality to the myth that we’re going to have lots of opportunities in Downtown.”
Gray explained how many of the buildings don’t comply with the Title 24 California requirement to reduce the carbon footprint, and that those buildings are far too small to attract startup companies. This includes biotech companies who could work to address climate change in our area.
Gray then pleaded that “we need to think about modern office facilities that serve the workforce that can be dynamic and serve the community.”
Dinunzio added to Gray’s concerns, stating that “our downtown just wasn’t built for that” and proceeded to compare Davis to Madison, Wisconsin, where the research area is surrounded by serviceable roads, internet, and even water. However, Dinunzio maintained a positive mindset, stating that we can improve infrastructure if we prioritize the issue and work together to redevelop downtown.
The meeting concluded with the participants agreeing that they should not allow political differences or emotions to obstruct their economic goals, and that methods must be data-centric, with the ultimate goal to be “guiding future successes” rather than “picking winners and losers.”
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It isn’t clear to me whether 2035 will bring a ban on the sale of cars with combustible engines, or a ban on the use of cars with combustible engines. Can anyone enlighten me?
A ban on the sales of combustible engines. If you own one you can still operate it after 2035. But I have to think that finding gas stations will become somewhat harder as time goes by if this really happens. I don’t think Newsom’s order is going to happen by 2035. It a good soundbite though and somewhat pacifies the climate alarmists in the meantime.
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Can we get a LINK to the source data/report?
The cite is the Brookings Market Assessment
Probably this: https://www.brookings.edu/wp-content/uploads/2018/04/sacramentoregioneconomicprosperity_fullreport.pdf
This report does not have a SINGLE mention of Davis, so Broome’s allusion is to the Sacramento Region. The article should be corrected (unless he actually said that, in which case the article should show a fact check.) That’s not significantly germane to what we are doing in Davis. UC Davis has 17 mentions in the report which links it as an expected economic engine for the region. I found that too much of Broome’s discussion was generically about the region rather than specific to Davis. He didn’t make a compelling case as to why DAVIS should be pursuing these opportunities versus somewhere else. (I believe a case can be made, but he didn’t make that one.)
It looks like it should be corrected, on the slideshow it said Sacramento MSA
Thank you for that perspective and context Richard.
Are there any concrete evidence that this lab space will be filled with developers of technologies to address climate change, solar energy, and electric vehicles?
Did you read the article I did where I interviewed people in Woodland on the lab space issue?
Horses . . . the horses from the phrase ‘if wishes were horses’.
David, you should post a link to your article here. (BTW, it should be easier to find past articles so that we can link them in.)
Barry’s slide show
Zohd’s article
I much agree with Jim Gray about downtown. What I don’t understand is why he didn’t point out the main obstacle to this – Prop. 13 and the resulting dis-incentive to redevelop commercial properties, especially in light of the upcoming state vote on this matter.
In an effort to echo policies similar to Newsom’s order, Broome introduced the concept of “Davis 2050,” an idea that UC Davis’ technologies are the key to fostering a positive environmental impact as we strive to increase food production by 70 percent.
I agree with that concept, and that concept depends a great deal on UCD’s ability to transfer the technology produced by its research out to the private sector. My worry is that UCD has not demonstrated a commitment to making that happen at the DISC project.
Instead of Chancellor Gary May penning and publishing a letter of support for DISC’s stated mission, Mabel Salon, who is at least two levels down the UCD Orginization Chart below the Chancellor, penned and distributed a letter that did not say that UCD supported the DISC project, but rather stated that UCD does not oppose the DISC project.
Not only is that an example of “damning with faint praise” but it also stands in stark contrast to Chancellor May’s highly visible recurring support for Aggie Square.
I found the panel didn’t seem to be able to imagine a future that might be radically different than our recent past due what the pandemic has wrought. Yelp reports that 60% of its restaurant closures are permanent. Extrapolating, at least 10% of all restaurants are now closed permanently. Companies have discovered that they can be as productive with a work-from-home (WFH) workforce and many are already closing offices permanently, which will lead to more restaurant and retail closures in business districts. The lingering effects of the pandemic itself will likely limit social interaction for some time, which will change our habits regardless. It’s hard to believe that Davis, with the recent emptying out, can be immune from these apparent trends.
So we need to ask the most important question before we move on to addressing regional needs for a business park: is our downtown core at risk and what do we need to do to mitigate that risk? The panelist talked as though the current buildings and infrastructure are immutable. Isn’t the point of the Downtown Specific Plan to direct how to change these elements? And we have an opportunity to modify that Plan NOW if need be given our changed circumstances.
The panelist seemed to be implicitly advocating for abandoning Downtown because they didn’t offer an alternative vision that captured the likely new reality. Instead they were focused on the question of whether a proposed project fit into the old, probably obsolete, reality. What we need is to pause on the question about the new project, ask whether it will compete with or complement the Downtown, and develop a larger economic vision that looks at where we might be headed and want to be headed.
There is an actual plan on the table for the DISC site. It would be privately funded. By comparison, the Downtown Davis Specific Plan carries a price tag of about $60 million dollars for Phases 1 and 2, and while the plan lists a number of potential fund sources I am unaware of any that are actually presently available or even under consideration. Moreover, that plan hasn’t even been finalized yet. So any call for reconsideration of the DISC site while we await (1) General Plan update and/or (2) the finalization and implementation of the Downtown Davis Specific Plan just ends up delaying development and reduces or delays fiscal benefits to the city.
No, I don’t believe Davis is immune to the impact of COVID-19 on commercial real estate, but the businesses downtown are increasingly student-oriented food businesses. The students will not stay away forever. 50% of the undergraduates and 70% of the graduate students are back already, and we don’t even have a vaccine yet. So I suggest we not overstate the long-term impact of the pandemic on the Davis downtown core. The current iteration of DISC doesn’t compete with the downtown retail. Is your concern about the commercial buildings providing insufficient foot traffic for the retailers? How do you propose going about this re-set you seem to be advocating?
Don raises very important questions that I believe it is very important to deal with them, both short term with respect to DISC and Measure B and long term.
I believe a recent letter to the editor in the Enterprise captured the long-term challenge very well in the words that I have bolded.
Based on his comments, I suspect that Don would say that the letter writer goes a step too far in applying the long term perspective to the short term decisions our community faces, but it is very hard to argue with the final sentence because “patch, patch, patch” is a very good description of the last decade of “disjointed results” that have “adversely affected us all.”
Don makes a direct comparison between DISC and the Downtown Specific Plan, citing his belief that “there is an actual plan on the table for the DISC site.” What is the actual DISC plan? Has the DISC plan shown the voters examples of actual jobs it will bring to Davis? So far the answer to that question is “No, no actual jobs have been discussed.”
The DISC plan talks about building buildings. Although they have avoided actually saying these words, all they have provided is the hopeful slogan “Build it and they will come.”
The DISC plan talks a lot about technology transfer from UC Davis, but instead of UCD Chancellor Gary May penning and publishing a letter of support for DISC’s plan, Mabel Salon, who is at least two levels down the UCD Organization Chart below the Chancellor, penned and distributed a letter that did not say that UCD supported the DISC project, but rather stated that UCD does not oppose the DISC project. Not only is that an example of “damning with faint praise” but it also stands in stark contrast to Chancellor May’s highly visible recurring support for Aggie Square.
The DISC plan describes a lot of the square footage that it will build as Office/Flex Space. As Richard McCann and others have pointed out, with numerous citations, COVID has wrought havoc with the nationwide demand for Office/Flex space, because of the high levels of productivity that companies have experienced from the work from home business model they have had to go to because of COVID. If that COVID-created reduction in Office/Flex space is a permanent change, four phases of the DISC plan may never get to either Phase Three or Phase Four, and without those two final phases, the fiscal benefit to the City of the project vanishes. So there would be no fiscal benefits to delay related to the “just ends up delaying development” point that Don ends his first paragraph with.
Another aspect of the DISC plan is that it was put together pre-COVID, and the arrival of COVID has blown huge holes in that plan … and as a result the DISC team is busily and very quietly trying to patch, patch, patch those holes so that they don’t get disjointed results that can adversely affect their bottom line.
I support the concept that is behind the DISC rhetoric. Davis clearly needs high paying high technology jobs, and we also need to do a better job of transferring technological advances out of UCD, but in the current uncertain environment, neither the DISC plan nor UCD’s “damning with faint praise” has shown anything that would give voters any confidence that it will deliver a reality that is matched to the rhetoric.
DISC may be competing with potential alternative uses of what may be empty office and retail space downtown. I disagree that that the downtown retail can be supported entirely by students. Neither of us have the statistics to support our position, but I will say that students typically are less than half of most of the places we go. In addition, it’s likely that distance learning will have a much bigger role in education at UCD. It was already happening at other universities such as Arizona State. And you are ignoring my other point that much of the downtown office space could be empty which will lead to a decline in downtown vitality.
The Downtown Plan talks about R&D space along G St, and Ray Salomon on FBC has noted that there may be sufficient land space along 2nd St in a couple of years once the Frontier site clean up is finished. It’s not that we need to have a set of commitments for these areas, but we need MUCH more than a couple of offhand remarks from those who have a stake in using the current infrastructure to make a determination about what is the best way forward. Here’s our best and most important opportunity to apply the transparency in government proposal we’ve made.
Don’t use the “bird in the hand” principle–we already saw quite recently about how that turned out to be a boondoggle. There really is no rush. This vote is only about the entitlements. The developers don’t seem to be in a rush since they are rolling this out over 25 years.
“Ray Salomon on FBC has noted that there may be sufficient land space along 2nd St in a couple of years once the Frontier site clean up is finished.”
There is about 30 acres there. But the problem is that we are still looking at – according to people in the know – a lot time before that land is usable. Decades probably.
I would go further than just “downtown” and say all across the town. The graphic below shows signs for the 32 plus different available commercial locations that are currently available. To ensure the maximum possible timeliness of this survey of the commercial space market I drove through all the various commercial districts in the City Limits. The 32 locations do not include any locations that do not have a sign … the location at the corner of Mace and Alhambra is one that we do know about that doesn’t have a sign … and at least one of the 32 appears to have a tenant.
I also created an index of the 32 locations organized by Council Member district, which appears at the end of this comment.
Yes. That is why the downtown businesses are experiencing 50 – 75% loss of business right now. That is directly COVID-related. Once UCD is back at full enrollment, and Yolo County allows businesses to resume, that should change. What is your expectation about the duration of the drop-off in downtown retail from COVID?
There is no basis for this assertion. UCD has already taken measures to keep their enrollment up: reach down further into the wait-list, and expand enrollment in the graduate and professional programs. UC Davis has many competitive advantages.
Davis has a very compact downtown and seems very unlikely to me to have the same issues that San Francisco does. But I’m not a commercial real estate expert. Maybe one will weigh in here. If commercial properties show high vacancies, maybe they can be retrofitted for residential. I sense many people are over-stating the long-term impact of this pandemic, particularly on a small city that has had relatively low commercial vacancy rates.
My main question is what exactly you are proposing. That consideration of peripheral development be held off until the General Plan is fully updated?
Frontier Fertilizer site is not “a couple of years” away from being clean enough for development.
Pretty tough to ignore the signs/list put forth by Matt, above.
Barry’s slide show
“In addition, Broome addressed the troubles among social minorities within our region, detailing how about 47 percent of African Americans and 42 percent of Latinos are struggling financially. Broome indicated that these concerning statistics were the ramifications of ‘the curse of the anti-growth/slow growth mindset that we’ve suffered under.’”
Remember this when people are opposed to economic development.
San Francisco’s office vacancy rate has risen to over 14% in short order, which is the highest rate since 2011 at the end of the Great Recession. And SF hasn’t yet seen the roll off of annual lease agreements. This is what Davis will also see. We’re foolish to proceed as though the future will be the same as the past.
https://www.sfchronicle.com/business/article/S-F-hits-highest-office-vacancy-rate-in-nearly-a-15613639.php