DAVIS, Calif. — Faced with a projected structural deficit and long-term fiscal strain, the City of Davis is attempting something it has historically approached with caution: a comprehensive economic development strategy explicitly designed to grow its tax base.
At Tuesday’s City Council meeting, Economic Development Director Katie Yancey will present the Economic Development Strategic Plan, a document that seeks to reconcile two long-standing Davis commitments that have not always sat comfortably together — preserving the city’s small-city, university-oriented identity while generating sufficient revenue to sustain services, infrastructure and community priorities.
The plan describes itself as “most useful when it’s treated as a living guide, not a static document,” and positions economic development not as growth for growth’s sake, but as a necessary response to deteriorating fiscal forecasts.
Davis is currently operating with “an approximate $3 million structural deficit in its General Fund,” and long-range projections indicate deficits by fiscal year 2031.
The city acknowledges, “Growing the property and sales tax base is often the primary reason cities pursue economic development programs and activities,” but cautions that “increasing revenue” does not qualify as a vision statement.
Instead, the strategy attempts to embed revenue growth within the city’s existing values — environmental stewardship, pedestrian-oriented design, cultural vitality and a strong downtown core.
The plan is rooted in Davis’s General Plan vision statements, which aspire to “a high quality of life for Davis’ individuals, families, and youth,” to “foster a safe, sustainable, healthy, diverse, and stimulating environment for all in the community,” and to preserve a “compact, university-oriented small-city feel and maintaining a strong, pedestrian-oriented, and dynamic downtown.”
Economic development is present less about expansion than stabilization.
The plan reflects that balancing effort in both its structure and priorities.
It is built on four interconnected pillars: community development, business development, outreach and partnerships, and financial best practices.
Community development addresses land-use readiness, long-range planning and infrastructure capacity.
Business development focuses on attraction, retention, expansion and entrepreneurship.
Outreach formalizes collaboration with UC Davis and regional organizations.
Financial best practices encompass fee collection, development impact fee updates and revenue capture strategies.
If Davis’s identity has long revolved around its university and environmental ethos, the plan argues that the city has not fully converted those assets into economic return. The SWOT analysis — examining strengths, weaknesses, opportunities and threats — makes that case in clarity.
On the strengths side, UC Davis is identified as the city’s economic engine, generating “more than $13.2 billion in total annual economic activity” and supporting over 30,000 jobs regionally.
The city boasts a highly educated population, with more than 72 percent of adults holding a bachelor’s degree. Its civic engagement, bicycle infrastructure and environmental leadership are described as defining characteristics that contribute to its quality of life.
But weaknesses are equally pronounced. Davis lacks “a clearer, unified economic development brand.”
Much of its office stock consists of older Class B and C buildings, limiting its ability to attract high-end tenants.
It controls zoning primarily through more than 250 Planned Development overlays, a level of regulatory layering far exceeding neighboring cities. Permitting processes are described as slow and uncertain. Housing constraints have pushed a large share of the workforce to live outside the city, weakening daytime economic activity and reducing multiplier effects.
The plan does not explicitly describe prior economic development efforts as failures. It offers no formal post-mortem.
But the implication is clear: Davis has struggled to capture the spillover benefits of a world-class research university while competitors in Woodland, Sacramento, West Sacramento and beyond have moved more quickly and marketed themselves more aggressively.
The opportunities outlined are largely derivative of the university’s strengths.
The plan proposes leveraging UC Davis’s commercialization pipeline, aligning with statewide innovation priorities and capturing Bay Area spillover from firms seeking lower costs and high-quality living environments.
It also emphasizes reducing retail leakage — currently estimated to be significant — and modernizing zoning and permitting systems to unlock underutilized infill sites.
Threats include neighboring cities offering cheaper space and faster approvals, and the risk that research-driven innovation will cluster elsewhere, including projects such as Aggie Square in Sacramento.
High housing costs and workforce leakage are identified as structural constraints that undermine economic capture.
To respond, the strategy outlines six core objectives through 2031: strengthening the business climate; attracting investment and growing key industries; supporting small businesses; advancing strategic development and infrastructure; building a skilled workforce; and fostering collaborative partnerships.
Under the business climate objective, staff propose publishing permitting timelines, establishing a business outreach program and modernizing digital systems to increase clarity and predictability. Under investment attraction, the plan calls for targeted recruitment aligned with regional industry clusters identified by the Greater Sacramento Economic Council — business services, precision manufacturing, working lands and research and development in agriculture and biotech — and for launching a branding initiative known as “Elevate Davis.”
Entrepreneurship is positioned as central. The strategy calls for strengthening support for Inventopia and expanding incubators and accelerators to retain university spinoffs locally. Small business support includes expanded training and technical assistance, year-round “Shop Local” campaigns and closer coordination with Visit Davis and the Downtown Davis Business Association.
Strategic development efforts would involve identifying stalled projects and removing barriers, upgrading public infrastructure in targeted infill areas and reviewing impact fees to balance infrastructure funding with competitiveness. The plan also contemplates evaluating underutilized public properties for sale, repurposing or redevelopment.
Workforce development focuses on partnerships with UC Davis, Sacramento City College and regional workforce boards to better align training programs with industry needs and to expand internships and apprenticeships.
The implementation timeline is deliberately phased. Immediate actions within the next 18 months include publishing permitting guidance, conducting a business needs assessment, launching the branding initiative and developing a revenue recapture plan for business licenses. Mid-term steps between 2027 and 2029 envision digital permitting upgrades, a permit navigator service and a retail attraction strategy. Long-term actions beyond 2030 include full permitting modernization, reducing entitlement-to-construction timelines and delivering key downtown revitalization projects.
Staff asks the City Council to approve the plan and to provide guidance on whether additional policies should be developed. They also seek confirmation on whether the council wants a detailed analysis of the property and sales tax base to establish measurable growth targets, potentially incorporated into a broader financial modeling exercise.
The document frames success not as a single transformative project, but as a shift toward measurable performance and sustained implementation.
It prioritizes quarterly reporting, integration into the biennial budget and alignment with fiscal targets.
By embedding economic development into budgeting and administrative processes, staff appear intent on avoiding the pattern of aspirational planning unmoored from operational follow-through.
The plan’s eventual effectiveness will depend on regulatory reform, housing policy alignment and sustained political commitment.
Davis’s longstanding tension between growth and preservation remains unresolved.
Whether the city can modernize its permitting systems, adjust zoning overlays and compete regionally without eroding the character residents value will define the plan’s trajectory.
Meanwhile, the fiscal clock is ticking.
With deficits projected by 2031 and little appetite for dramatic service cuts, Davis has chosen to approach economic development not as an afterthought, but as a structural response.
The question now is whether the framework, disciplined as it appears, can translate the city’s academic prowess and civic identity into durable fiscal stability.
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“Meanwhile, the fiscal clock is ticking.”
The clock has been ticking for decades. When I see H Street and J Street and the increasing potholes in downtown paved and smooth, I’ll believe it. Measure Q before “we’ll fix your roads” and after “WHAT? We never promised that!” makes the city council appear as fiscal coneheads on a dais ski vacation, skiing off a fiscal cliff. And to prevent that, City not spending fast enough on what all of us want, be us car or cycle oriented – smooth roads. This is not only the fault of those on the dais today, but of all those that came before them, S-ing perpetually on the fiscal future they themselves would never have to deal with.
“But the implication is clear: Davis has struggled to capture the spillover benefits of a world-class research university while competitors in Woodland, Sacramento, West Sacramento and beyond have moved more quickly and marketed themselves more aggressively.”
The “technology center” in Woodland (the one that “escaped” from Davis years ago and added 1,600 housing units) still consists of nothing but farmland.
On another note, there are towns (such as retirement centers and other cities) which don’t have much business activity at all (but apparently do pretty well). Maybe the city should start looking into the reason for that. Some cities (such as Atherton, possibly places like Santa Monica) go OUT OF THEIR WAY to discourage commercial development.
I have no idea of what “retirement center” you’re talking about which isn’t a giant planned development with large services job force. Lincoln might fit that but they are centered around a Sun City development.
Atherton is a one off unicorn with multi-million dollar homes. It’s essentially a gated city (having lived next door several years). On the other hand, Menlo Park next door is an economic powerhouse Meta and others HQ’d there.
Apparently you haven’t been to Santa Monica for a while. I go there several times a year (my in-laws live nearby). The Third Street Promenade has plunged to a death spiral over the last couple years. The city is deep fiscal trouble: https://www.governing.com/finance/how-santa-monicas-beachfront-boomtown-slid-into-fiscal-distress
https://www.smdp.com/city-manager-outlines-brazen-plan-to-reshape-santa-monicas-culture-economy-government-and-landscape-as-he-says-the-city-stands-at-a-crossroads-between-ruin-and-revitalization/
San Francisco, Sacramento, and San Jose, Los Angeles, and San Diego are in deep fiscal trouble despite having a substantial commercial base.
https://californiapolicycenter.org/twelve-out-of-fifteen-california-cities-dont-have-money-to-pay-their-bills-according-to-accounting-study/#:~:text=Part%20of%20this%20surplus%20could,healthcare%20bills%20and%20other%20liabilities.
There’s retirement communities across the entire country – are all of them facing more “fiscal challenges” than places where economic development was actively pursued?
Also, if more economic development was actually pursued for Davis, the next thing that would happen is that there’d be more pressure to add money-losing housing (with someone like Tim Keller – whose business is specifically mentioned in the Vanguard article as needing more financial support from the city – leading the way to 120,000 Davis residents – as Tim himself stated as a goal).
The state itself considers the number of jobs in a given community, in regard to their fake RHNA housing “mandates”.
This looks like a good approach. I hope the City provides sufficient funding to make it effective. Given that Davis appears to have half the retail sales per capita of Woodland and West Sac we need to bring more of that home. We’re need to revitalize our relationship with UCD. The potential payback could be enormous, but it’s going to take some early fiscal pain for those rewards.