By David M. Greenwald
Executive Editor
I think veteran Sacramento columnist Dan Walters summarized the problem well: “California enters the new year with its existential issues still unresolved, and a new one — an immense budget deficit — threatens to make dealing with them even more difficult.”
We are going to see this problem played out at multiple levels of government this year. The budget situation at the state level—which will trickle down to local levels—will force state and local governments to address the budget issue rather than, I hesitate to say it, the real “existential issues” that we are facing.
As Walters put it, “California has made very little progress, if any, on narrowing its shortage of housing, its levels of homelessness and poverty remain among the nation’s 
highest, and its population is declining as hundreds of thousands of Californians decamp for other states.”
To me, this is the real problem. We need to address housing, homelessness, and poverty in California. These problems are leading to declining population which is making the problems even more difficult to address.
Let’s now bring this down to Davis.
This is what Davis continues to face—the council has decided this year to prioritize the budget issue and will put a tax measure on the ballot, presumably in November. They have decided to defer any of the housing projects until spring 2025. And it’s not clear if they will dare to attempt to broach a Measure J revision.
The problem that Davis faces is that all of these problems are actually interrelated.
At this point, Measure J has prevented the city from pursuing peripheral solutions to economic development.
It has also put a strain on available land in the city, because the city is now scrambling to find enough housing that can get its current Housing Element certified. That means that not only is the margin thin on housing, the possibility of addressing economic development and thus increasing the tax base without raising taxes is going to be strained.
The local housing crisis is another problem.
Again there are layers to this.
Over the last 25 years, the number of single-family homes built in Davis has plummeted. That has led to declining enrollment in our schools—a huge existential problem for our local schools.
Many people have argued that we need to focus on affordable and missing middle housing. I couldn’t agree more. The question is how to do that.
I’ve argued that the clearest way to do just that is build market rate housing and then leverage off that to get your low income and missing middle housing.
There are those who have argued that Davis doesn’t need more “unaffordable housing” and by that they mean market rate, single-family housing. But without building those type of houses—how do we get the housing many say we do need?
Moreover, I would argue against that view anyway. If you look at the data, the availability of housing in general, Davis doesn’t have enough available housing for purchase—period. Regardless of the cost.
The budget crisis just punctuates this problem (with an exclamation mark). Some of have argued that the state is imposing unfunded liabilities on the local communities by compelling the construction of affordable housing without actually providing the funding for it.
I don’t disagree with that criticism of the state. I have been arguing for several years that we need a new RDA program that can fund affordable housing.
The problem now is, with a yawning budget gap, it is clear that the money is not going to be forthcoming from the state to fund housing any time soon. In fact, the budget deficit is likely to mean that existing money is threatened. It seems logical that the state will not want to cut back on money for housing and homelessness, but they may well have no other choice.
Do you then argue that the state needs to back off on the housing demands? That doesn’t seem like a viable option as the unaffordability of housing in the state is driving a lot of the budgetary and economic problems.
It’s a vicious circle.
At the end of the day, I think we can assume that the state will not back off on housing demands—and will not be providing more money at this time.
In the meantime, in Davis, I think the council needs to re-examine what our priorities actually are.
The council I think recognizes that we need housing. The council and school board recognize that the housing crisis is rapidly leading to the schools crisis.
But, at least in 2024, it’s not clear what is actually going to happen to address this.
I look forward to the city—FINALLY—launching the General Plan update. Frankly it is probably four years later than it should be (you could argue more than four years, but I would argue that had the pandemic not struck, the Downtown Plan would have been certified in 2020 and thus we should have launched the General Plan update at that point).
The General Plan update is likely to take two to three years—at the fastest—to complete and is likely to be highly contentious.
Second, will the city council dare to put a Measure J revision on the ballot for the end of 2024? And if they do, will the citizens approve it?
Third, the city is waiting until 2025 for the first of the Measure J projects to go forward.
The city is going to have to figure out a lot in the next year, and probably must do so under increasing budgetary pressures.
So here we are—the pressure is ramping up and our resources are ever more limited.
To me it looks like someone that had to go and beg for money to pay off their immediate bills. And that’s fine I suppose as a first immediate step. But the next step and concurrent planning step should be economic development. In real estate and land planning terms that’s commercial retail and industrial planning and development. Tertiary and also concurrently planned should be adding more costs to the city by adding more housing. AND…once again we’re back to being hindered by the brilliance of direct democracy that is Measure J.
The voters of Davis have apparently decided they prefer taxation to economic development. I can’t think of anything in the realm of economic development planning that hasn’t been tried already. I would think any site for development would have to be pre-annexed and pre-zoned before any commercial developer would even bother to consider siting here.
You know way more about this than I do. What could the city do that might actually cause commercial developers to take an interest in the Davis market?
Due to the tyranny of Measure J and its [edited] supporters, the ship for commercial development in Davis has long since passed. The owners of existing Davis commercial developments know they can continue to command high rents because they don’t have to concern themselves with very much competition. A while ago I found a quote in the Davis Enterprise about why the current owner of the Oakshade Town Center decided to buy that development. They don’t have to worry much about competition because as long as Davis thumbs its noses at brand new development, they have it made in the shade.
Hi Walter,
We’ve edited your comment. We won’t allow ‘NIMBY’ any more.
Walter, the Oakshade Town Center has lost two of its three major tenants and several of its smaller tenants. The loss of cash flow from those leases makes paying the interest on the loan they took out to purchase the property difficult, especially after the cost of maintenance, upkeep and operations is paid.
On Friday you leveled another of your “tyranny” accusations at the Congregation Bet Haverim Social Justice Committee in response to their letter to Davis Council on the widening of I-80 freeway. Your comment was “This amounts to both false and hypocritical environmentalism.”
In response to you I asked the following, “Walter, how is it false? How is it hypocritical? Instead of just throwing out an insult, please explain why you believe the insult is warranted.”
So far you have chosen not to answer those questions, so I ask them again here.
Matt Williams continues to attempt to ‘hold the line’ on Measure J. Matt further exhibits the tendencies of an obstructionist Measure J zealot. You neglected to mention the whole story as to why both stores closed. That’s frequently the pattern with zealots. Zealots want you to believe the partial pictures they present constitute the entire stories.
The 2 examples you cited in OfficeMax and Rite Aid are poor ones. The closures really had little to do with the amount of rent they were paying. With OfficeMax retail office supplies has been a declining business for several years due to mounting Internet price competition and the tech revolution. The Office Depot in Woodland also closed. They are essentially 2 brand names under the same parent corporation after merging in 2013. In the case of Rite Aid the parent company is currently in bankruptcy. They have to cut back immediately as much as they can before their entire corporation goes completely under. If Rite Aid considered their rent to be excessive, they could have closed years ago, but instead waited until after declaring bankruptcy.
Walter, the reason why the stores closed is irrelevant to the monthly cash flow the Oak Shade owner gets from the property. When those two stores were open the rent checks came in every month. Now that those stores are closed the rent checks no longer come in.
Also, whether the rent was excessive is also irrelevant. The closings had much broader causes than the level of the rent. With that said, where did you impute the belief that the rent was excessive. That appears to be a leap of faith on your part.
Also Walter, how a you possibly know my position on Measure J unless you have actually asked me? If the City and the developers can remedy the massive lack of trust and ill will that they have accumulated over the years, then Measure J would not be needed.
Keith Echols is correct when he says “Well you gotta get enough people on board behind leaders willing to sell them on economic growth to fix the fiscal problems. That takes translating fiscal problems into how it effects the voter’s lives (traffic, roads, city programs, parks, rec, police service…etc..). What I’m saying is someone needs to connect the dots for the voters. Sure I think the average voter knows there are somethings not quite getting done as much as needed in Davis; road work, parks…etc… But I don’t think they are really aware of the fiscal hole Davis is in…it really hasn’t hit them yet.” If we had those things then Measure J more than likely wouldn’t be needed. Unfortunately we do not have any of those things.
You’re basically correct about everything. But there’s no magical or deep experienced real estate developer solution. Put simply; stuff gets built on the foundation of relationships and confidence. Confidence developers have in being able to work with a community…confidence banks/financiers have in the developers and their team to get something done (mitigate risk). Who do you know that will help or get things done in Davis? That usually comes in the form of city councilmen, business leaders, local developers…etc…
Essentially Davis needs to provide an environment that is open to real estate and business development. That means accommodating most of whatever new businesses want, streamlining requirements (like forcing environmental and community amenities on new commercial/industrial development). Size restrictions…etc.. You want the rep of “you want it, you got it” (within reason). We’ve talked in the past about the potential for East Davis development close to the freeway near Chiles.
The one clarification I want to make to your statement about residents of Davis choosing taxation. I don’t think voters DIRECTLY chose taxation as the answer to the city’s fiscal problems. I think the picture that has been painted for the voters is that they’re backed into a corner a nd have no choice but to raise taxes. Almost completely separate from the issue (for most voters) is city growth in terms of economic and real estate development. I think if you asked most residents of Davis they’d say they’re against higher taxes (with the possible exception of the school parcel tax…to a degree) and are also against anything that creates more traffic, pollution…etc.
So where does that leave us? Well you gotta get enough people on board behind leaders willing to sell them on economic growth to fix the fiscal problems. That takes translating fiscal problems into how it effects the voter’s lives (traffic, roads, city programs, parks, rec, police service…etc..). What I’m saying is someone needs to connect the dots for the voters. Sure I think the average voter knows there are somethings not quite getting done as much as needed in Davis; road work, parks…etc… But I don’t think they are really aware of the fiscal hole Davis is in…it really hasn’t hit them yet.
1. Show/convince the voters of how the city’s current fiscal situation effects them.
2. Show/convince how improvements will make life better for them
3. Show/convince them that the only way to pay for the current if not better quality of life is to raise taxes OR expand.
4. Present an economic plan that shows expansion and directly connect it to quality of life in Davis for residents.
5. Create peripheral zones in city limits and in the sphere of influence (or expand the sphere) to create prepared areas for future development. Maybe even work with the county to get entitlements with the expectation of annexation.
6. Implement a vacancy tax on commercial properties downtown…say…I dunno after 3 months.
7. Waive all fees for the first year for any new business that moves downtown (into a designated economic development zone).
8. Cut sales tax (I dunno by ⅓ to ½ ?) for a year for businesses in the downtown development area (new businesses get their first year discounted).
I think these last two items would be good compromises with the downtown businesses to get them onboard with peripheral expansion.
So I think the most important thing for Davis to move forward is for leaders to connect the fiscal issues with the voters. Show voters a vision for how to move forward. I think a vision that everyone can get behind is growth to the point where Davis can at least pay for the status quo (to alleviate fears of endless urban sprawl)
Keith
I agree with your characterization of the situation.
Neither Sacramento nor Vacaville has a slow growth ordinance nor hordes of hardline obstructionists. UCD knows what the real deal is with Davis. Davis has put out the “You are not wanted here” sign for decades.
There is no such thing as “endless urban sprawl.”
Don
We have not tried economic development focused on Davis’ core competencies. The single idea closest to that was to build “tech” business parks. Woodland has decided focus on agtech. Anya and I wrote an article here in 2018 calling for a focus on sustainable food in several dimensions. It will take a creative economic development director to put such a strategy in place, but that’s a solvable problem if we have the right personnel employment process.
There are other strategies out there as well to be pursued. Davis really hasn’t scratched the surface yet.
Ag tech related to seed breeding, animal husbandry/livestock production, and biotechnology are the Davis core competencies. Sustainable ag is a small component of that, but certainly a niche within the broader category. Nearly all of those firms go to Woodland. Why? Because they made places for them. IMO it doesn’t have to do with personnel. They have no place to locate here and Davis has a reputation for being hard to work with. If a large ag tech firm wanted to build a facility on the Mace curve via annexation, how likely do you think it would be for that to occur here? It would have to go to a vote. No reasonable economic development related to Davis core competencies will occur without peripheral annexation. No company would bother to start the planning process without a site available. Voters hold the reins.
Yes, I think the real issue that while we have tried economic development focused on Davis’ core competencies, we have not done so at scale necessary to succeed.
David Greenwald said … “I think the real issue that while we have tried economic development focused on Davis’ core competencies, we have not done so at scale necessary to succeed.”
I agree 100% with your bolded assessment, and would add that all our efforts have been reactive rather than proactive. Mori Seki came to Davis … Davis didn’t come to MoriSeki. Schilling Robotics came to Davis … Davis didn’t come to Schilling. The list goes on and on and on.
Proactively drilling down into each of the markets related to their aggregate core competencies is exactly what a collaboration of the City, County and UCD ought to be doing. Running around in circles when a company comes out of the blue and expresses an interest is reactive, not proactive … and it is not planning
UCD has no particular reason or incentive to collaborate with the City on anything. Economic development isn’t really a core mission of the university. Their economic and political outlook is regional, not local.
When Vacaville embarked on an economic development strategy a couple of decades ago (“Vacaville is open for business!” sort of thing), they:
— went to trade shows and conventions, which is how that kind of recruiting was done in those days, and sought out companies
— promised them streamlined permitting and rapid approval of projects
— were able to offer zoned, subdivided land for larger projects.
In watching how it all played out, I can observe that they didn’t make any real concern about whether it was retail, warehousing, industrial, etc. It was mostly freeway-centered business opportunities that would take advantage of passing traffic (Nut Tree redevelopment, factory stores, every chain restaurant you can think of), proximity to the Bay Area (big wholesale warehouses near trucking and freeway access), and sites for tech firms and their ilk.
Their big selling points were the accessible location, lower cost land, and cooperative city officials, available lower-cost housing and schools that were perceived as being better than in the Bay Area. That approach has even spilled over into Dixon, as you’ll see if you’ve been driving down N. First Street over many years.
I don’t know if you can discern anything about core competencies and how they would have informed that planning process. However, it is safe to say their tax revenues per capita are much greater than Davis. Unfortunately, Davis has a reputation for being a difficult place to develop that goes back decades. So in the absence of dedicated space that’s already zoned in sufficient sizes for the greatest range of business types, city staff has little to offer.
Don Shor said … “UCD has no particular reason or incentive to collaborate with the City on anything. Economic development isn’t really a core mission of the university”
Steve Jobs and Walter Isaacson would disagree with you Don. Research universities do not conduct research just for the sake of simply going through the steps of actually conducting the research. They conduct the research in order to discover ways (and things) that can be used in society at large to make all our lives better. They are very explicit about that in their book “Jobs” … and they state it right at the beginning of their book.
I don’t really agree with Don, UCD is engaging in economic development, they have just chosen to not do with the city of Davis… for obvious reasons
Matt, I think Don meant that UCD doesn’t have a core mission for the economic development of the city of Davis. I think your quote sort of proves that’s the case for most Universities.
Stanford is not in Palo Alto’s city limits….much like UCD is the city of Davis’ city limits. So all benefits of those companies at that industrial park don’t directly benefit the city of Palo Alto.
Now I’m all for working with UCD in some fashion for economic development. But it’s been my experience that seed stage companies that come out of universities often don’t directly help their host city.
You’re right Universities are always trying to capitalize on their research. I used to meet with seed stage companies coming out of Stanford. I knew the guy that ran the Haas Business School Technology Incubator at Berkeley…about 25 years ago. So yeah, tech companies come from universities. Most of them are turn out to be useless…but that’s start ups for ya.
Also, the focus on capitalizing on the region’s educated workforce seems slick, intelligent and sexy. But much effort and resources go into those start up companies and most of them are busts. The rest get bought out and moved. Very few stick around and grow significantly. Maybe if there was more venture capital in the area it might work better (if Davis had a Sandhill Road). Most ag/bio tech companies don’t bootstrap themselves too well. To my knowledge most ag/bio start ups are just waiting to be acquired by one of the larger established companies. What I’m saying is that I wouldn’t put all my eggs in the tech ag/bio start up basket. Again, I’m all for developing what we can. But startups by their nature are longshots.
Again I want to thank Don, Keith and Tim for the constructive, positively focused dialogue in this thread. The dialogue here continues to be an example of the whole is greater than the sum of its parts. We need more of that if we are going to find our way out of the wilderness that we currently find ourselves in.
Keith’s highlighting “on University land” is important with respect to taxing authority, but I do not believe it is important with respect to the impact of the innovation park on the economy of the community … and in Stanford’s case, the many surrounding communities. The impact is very clearly seen when one looks at the difference in population of the City of Palo Alto versus its population at night. The daytime population is over 100,000 people larger than the night time population. That is in large part because of Stanford’s innovation park. Keith is absolutely correct that startups fail much more frequently than they succeed. He is also correct that the ones that succeed are often acquired, but as we have seen with Schilling Robotics being acquired by FMC, as well as Digital Technology Laboratory (DTL) being acquired by DMG-Mori the acquisition does not always mean the company leaves the local economy. SunPower is in Davis as a direct result of its acquisition of a local startup.
The key to keeping the successful startups, and attracting specific R&D units of existing large corporations is having a plan for where you want to go and how you are going to get there … and most importantly what companies are operating in the desired market niche so that you know who to talk to and attract.
Having that plan is also going to make discussions with the local Davis residents/constituents much easier.
And for UCD a clearly articulated community economic development plan is a Win-Win.
Matt,
Actually upon further review; your info/quote about the Stanford Industrial Research Park is incorrect. But the misinformation actually partially supports yours and Tim’s ideas about working with UCD to develop and retain businesses coming out of UCD. The Stanford Research Park is actually a joint venture between Stanford and Palo Alto. It was eating at me that something was wrong about our exchange. I lived in Palo Alto at one time. I used to work frequently in Palo Alto. It struck me, the Research Park is on Page Mill Road near HP and the tech/startup lawyers I used to go see sometimes. Most of the area around Page Mill Road is part of Palo Alto. So yeah, the Stanford Research is exactly the kind of partnership the city of Davis and UCD should make.
But let me be clear, I still do not advocate putting all of the proverbial eggs (effort and resources) in this basket. I still stick to what I said about the volatility of start up companies. Also Palo Alto is also has foundations to support tech innovation start up businesses with surrounding larger companies like HP (which is actually in Palo Alto), Google and Apple near by. The other major part of the foundation is venture capital being close by and available on Sand Hill Road. So there are a lot of other factors that go into creating a local factory of start up companies to fuel the local economy. Again, these companies are longshots.
So let me double down on my stance that the most immediate need for the Davis community is the development of retail commercial expansion. This provides the most immediate revenue for the city through sales tax. In my first comment I mentioned multiple times CONCURRENT planning. That means that planning for retail expansion, industrial expansion and residential expansion need to be made at the same time. For optimal results, I’d probably have all three planned separately and then try to integrate what we can but with the idea that nothing we plan to integrate should interfere or hinder the prime objective of each area of planned expansion. This plan needs to be sold to the voters of Davis as the power source for jobs and quality of life for Davis now and into the future. Better roads, better traffic management, safer community (more police, more community outreach and support programs), better parks and more housing, more affordable housing for people like teachers. We want all these great things and this LIMITED expansion is how we plan to pay for it.
I personally don’t agree with Don’s statement that “The voters of Davis have apparently decided they prefer taxation to economic development.”
I also believe that Keith’s statement, “… economic development. In real estate and land planning terms that’s commercial retail and industrial planning and development” is too general, I do believe that economic development can be successful in Davis if it builds off of the core competencies of our community. Let’s start by asking ourselves “What are those core competencies?”
In successful commercial retail, one of the key core competencies is having a marketplace where there is an abundance of retail demand looking to purchase retail products and services. Does the Davis marketplace have an abundance of internally-generated demand for retail purchases? The simple answer to that question is that Davis does not. The reason for that is simple the demographic makeup of Davis has over 21% of its population who are in the 55+ age cohort. For the most part when a person gets to age 55 they have already made the bulk of their retail purchases of “things.” Specialty retail like Don Shor’s Redwood Barn Nursery and art galleries still get a considerable amount of their demand from Davis residents 55+ years old, but the kind of mainstream retail Keith is referring to gets very, very little demand from people who have reached or are soon to reach retirement. The demographic cohort aged 20-24 accounts for over 25% of the population. They haven’t yet reached the stage of life where they are buying a broad range of things. They do buy clothes and housewares for the apartment they moved into after Freshman year, but a substantial proportion of the things they buy retail comes from internet retailers and/or retail businesses in their non-Davis hometown. After you back out the over 22% of the population that is between zero and 19 years of age, you are left with only 30% of the Davis population that is in the prime retail purchases cohort between 25 and 54 years of age … only 21,000 souls.
In order to thrive retail businesses need to attract enough “other people’s money” to have a resilient/sustainable retail clientele. Is attracting “other people’s money” one of Davis’ core competencies? Other than the five hours on Saturday morning at the Farmer’s Market, the answer is “no.” Stop and think about what attractions Davis has that can cause people to come to Davis. Then take that one step further and expand it to not only come to Davis, but also spend their money here. For me there is one very significant attraction … the University … but there is virtually no collaboration between the University and the City and the community that capitalizes on that attraction.
Bottom-line, as things exist now, Davis does not have the core competencies or sufficient local demand to support a commercial retail economy. That can change, but it will take the kind of economic development planning that Keith refers to in his comment.
That brings us to industrial. I strongly believe that Davis does have the leverageable core competencies needed to succeed, and even thrive, in the industrial economy … especially the agricultural and food economy. The challenge we face is that no one has done any market research to identify the niches of that agricultural and food marketplace to know what (1) its potential is and (2) who are the identifiable companies in the niche(s).
The reason I disagree with Don’s characterization of what the voters have said is that there has not been any effort to tell the voters what the success factors were/are that will bring good paying jobs to Davis. The developers’ message was “grant us the entitlements on the land so that we can add tens of millions of dollars to our personal wealth” but when asked about how they would bring jobs to Davis that adds wealth and new residents to the community they said “We can’t be bothered with that now. We will figure that out later.” The voters wouldn’t/couldn’t buy that one-sided proposition.
I don’t Matt. I think most people who voted against the project did so because they were concerned about traffic.
Certainly a substantial portion David, but I don’t believe it is “most” (over 50%) of the no votes. In addition to traffic there were over half a dozen different reasons people voted no.
(1) A substantial portion voted no because they believed the Dan Carson “had lost his way.”
(2) Another portion voted no because of their distrust of the developer.
(3) A meaningful portion voted no because of the huge addition (if actually ever built out) the project would add to Davis’ carbon footprint.
(4) Another portion voted no because of the shenanigans that happened with the effort to move commitments from the Baseline Features to the Development Agreement.
(5) Some voters feared it would cause Urban Blight both in the Downtown (if DiSC actually was built out) and/or on the DiSC site (if it wasn’t actually built out).
(6) Some others voted no because there were no guarantees for the City, while the developer was guaranteed tens of million dollars of profit regardless.
(7) Some voted no because of the uncertain bike connections.
I think Matt has captured the multi dimensional aspect of the DiSC defeat in 2022. Remember that DiSC would have likely passed in 2020 if the UCD students had been in town. The project didn’t change that much in the interim and the “no” vote went up 10 percentage points. Carson’s thumping in the City Council race confirmed how is unpopularity pulled down the DiSC vote.
A note on Davis demographics. I don’t know about over 55, but the % of over 65 reported for Davis is actually below the state average (and Woodland’s). There’s not an unusually group of older residents reducing local demand. The issue is the “donut hole” of 30-55 households. Those are the families that can’t afford to buy into the Davis market and instead commute into town. In addition a large portion of that group commute to Sacramento and probably shop there as well. We have an overly large proportion of under 30s who are low income students who are not buying.
Matt is correct that our core competency will be food and ag, as Anya and I wrote about in 2018. That’s where we should be focusing–we have really failed to do that to date.
Matt, I disagree with your assessment of the Davis retail potential. I’m not sure how you got your data but according to the most recent census data about 67% of the population is above 18 and under 65 years of age. That equates to 44,750 people in their prime spending years. There’s also population that can be marketed to….students. Now I’ve always said that students didn’t have any money…or much money…but they do have money for beer, burgers and burritos. And that’s fine. I’m all for creating a student quarter that has those things to sell them (and generate sales tax). But the other thing is if you go to Target or the Woodland Costco on the weekend, almost half of the customers appear to be college students. 15% of the undergraduate students live on campus so that’s about another 5,000 as part of the overall retail market. The other target market are drivers off of I80. If you had any destination retail to attract them; you’ve got the potential locations down Chiles or possibly County Road 32A.
And while I like the idea of harnessing core competencies. The city of Davis needs tax revenue and they need it yesterday. The fastest way to get that is through retail sales tax. The quickest and most efficient way to raise that would be luring retailers with desirable locations and the lucrative Davis market (I believe Davis has one if not the highest per capita income per family in the region).
Keith, the numbers are the numbers. The slicing and dicing of them is different. You have included the 55 to 64 year old cohort in your 44,750. I would argue that very few of the Davis residents in that 10 year age category are in their prime spending years. They are for the most part empty nesters who already own most of the “things” they might buy.
Your 44,750 also includes all the UCD students in the 20-24 year old cohort, and I agree with you that their spending power is quite low.
In addition, beer, burgers and burritos are not retail. Your observation about the weekend student activity at Target and Costco is interesting. I suspect a large portion of their purchases are food and other consumables … again not retail.
i find it hard to believe Davis has one of the highest per capita incomes in the area with all the UCD students having very little income, and all the retirees having no job. But the level of income is not as relevant as the proportion of the revenue being spent … especially spent on the acquisition of things.
If they’re intended to be consumed on premises, they’re taxable. So from the standpoint of city revenues, it doesn’t really matter if it’s a restaurant or a retailer.
Target is supposed to only have 10% of their store devoted to grocery products, and even some of those are taxable.
Students do spend a lot of money in certain categories. They are a substantial part of our business.
Keith, one way to assess the retail potential of Davis would be to contact one of the national retailers and get them to run the numbers for Davis through their modeling software. I don’t know off the top of my head anyone who works for a national retailer, but you might.
Don, Keith’s original comment wasn’t about tax revenue, but rather about building commercial retail. In my follow-up comment I specifically noted that your specialty retail business has a broader demographic pull than the kind of commercial retail that Keith was referring to. However, even with the broader demographic reach that Redwood Barn has, I suspect that you would agree that the overall demand in your market niche doesn’t reach the level of robust, but rather is probably more accurately described as sufficient.
A good test of how robust the local demand is in you niche is by asking the question, “Would you expect a second garden center like yours to do well in Davis if one were to open?”
The main category with students is houseplants and their associated products. A specialty houseplant store (The Growing Groves) opened in downtown Davis just over a year ago and appears to be doing fine without having adversely affected our sales. There were two other nurseries in Davis when we opened, which closed when their owners retired. My answer to your question is yes, I’d expect another garden center could do well, assuming they read the market demographics right and find their niche.
Also worth noting that we get a lot of customers from Woodland.
I’d say that recent (55-65) empty nesters have the most disposable income because they’re still earning (and often times at their peak incomes) without the costs of paying for kids. They’re buying that new car, RV, new skis, boat, 2nd home, TV, tablet…they’re fixing up the home (lots of trips to home depot)…
Yolo County Per Capita Income (PCI) $41,703
Yolo County Median Household Income (MHI) $85,097
Davis PCI $46, 899
Davis MHI $83,592
Dixon PCI $40,095
Dixon MHI $92,138
Woodland PCI $37,368
Woodland MHI $84,949
Winters PCI $51,244
Winters MHI $128, 679
West Sac PCI $40,553
West Sac MHI $87,044
Vacaville PCI $44,147
Vacaville MHI $106,674
What this shows that yes, Davis has a student population that drags down it’s Median numbers. But Davis’ working population earns significantly enough bring the total earnings numbers up to or beyond the per capita earning numbers of surrounding communities that aren’t burdened with low income students. This is supported as well by the high cost of housing in Davis. So IMO, yes Davis’ population can easily support more retail. Right now we all either order online or drive elsewhere to buy stuff. That’s not good for the economy.
I want to thank Don, Keith and Tim for the constructive, positively focused dialogue in this thread. I first came to the Vanguard back during the 2007-2008 Housing Element Steering Committee process. The Vanguard was then a “dialogue space” where discussions and brainstorming (like Don, keith, Tim and I have done here) was the rule rather than the exception. It was definitely a situation of the whole is greater than the sum of its parts. We need more of that if we are going to find our way out of the wilderness that we currently find ourselves in.
Keith Echols said … “I’d say that recent (55-65) empty nesters have the most disposable income because they’re still earning (and often times at their peak incomes) without the costs of paying for kids.”
Most of the empty nesters I know are doing two things (1) paying off the accumulated debt of the university education of their children, (2) contributing to their children’s post=graduate, professional education, and (3) building as much financial equity as possible to pass on to their next generation … their personal legacy in this world and in history.
Keith Echols continued … “They’re buying that new car, RV, new skis, boat, 2nd home, TV, tablet…they’re fixing up the home (lots of trips to home depot)…”
New car I can see. RV and/or boat? New TV and/or tablet?
The Davis automobile retail scene is already saturated, so there isn’t a lot of incremental commercial retail opportunity in that segment. The existing car sales businesses may push more product through their existing facilities, but new dealerships are unlikely in my opinion. But I could be wrong.
It is interesting to see you list RVs, since the one significant RV dealer recently left Davis and moved to West Sacramento. It would be interesting to interview the Mesa RV management to get a better understanding why they left Davis with their sales component. What core competencies do you believe Davis brings to the RV marketplace?
I don’t see land-locked Davis being a likely place for a boat sales business, but again I could be wrong. I believe there is a boat sales establishment in Dixon. What core competencies do you believe Davis brings to the boat sales marketplace?
TV or tablet make a lot of sense … a lot. It would be interesting to contact Apple and ask them what their assessment of the retail demand that the Davis market generates. I know I go to Sacramento for my Apple needs. The core competencies of a highly educated tech savvy University town in the TV and tablet marketplace are pretty clear.
Drilling down into each of the markets is exactly what a collaboration of the City, County and UCD ought to be doing.
Sorry for being late to the game on this article, but I wanted to respond to this comment from Matt:
I agree that industrial is our obvious best-fit play when it comes to economic development. We arent just another small town, we are home to the #1 agricultural university in the world, and agriculture is the number 1 industry in the world… Its not a stretch to say that we have immense opportunity in the ag and food industries.
There is also the broader realm of automation (robotics) and of renewables where UCD has intellectual strengths and consequently there are already a number of off-campus companies in these sectors.
I have written about this in these pages before… here is just one article:
https://davisvanguard.org/2022/10/guest-commentary-what-economic-development-looks-like-in-davis-and-what-it-doesnt/
The city just closed its most recent posting for an economic development director after coming up dry in their last two attempts. Its critical that the city hires for this role this time around and then lets that person help develop a real economic development plan… but guess what? No economic development plan is going to be complete without a HOUSING plan… that is really for me, the biggest thing I realized during DiSC…
As I mentioned in that article, the number one thing we have for us is TALENT… . If we cant provide housing for the talent we want to retain here, and force them to live in neighboring cities, like woodland, then why wouldn’t a company just set up shop in woodland instead?
The housing plan HAS to come before or with the economic development plan. Otherwise it doesnt make sense.
You don’t need competencies to buy and sell boats. I wasn’t thinking of competencies; it was an example of what people sometimes spend their money on when they have more disposable income because they don’t have kids in the nest. Davis is right off the free way and it’s on the way up to Lake Berryessa (you see boats turning off of 113 and on to Covell all the time going to and from Berryessa. As for land locked, I bought my boat in San Jose and 10 years later sold it to a boat dealer in Rippon. Again, my comment wasn’t that Davis should have a boat dealer but it could if it wanted to.
As far as retail goes. I don’t really care about “core competencies” I’m all for developing core competencies for industrial/commercial business. But retail is a the quickest way for the city to get much needed tax revenue to get all the nice things people in Davis want but don’t realize we can’t afford.
Retail along Chiles Road would be the simplest way to increase city revenues. There are thousands of cars passing by every day and it’s frustrating that Davis captures so little of the potential revenue from that. I’ve lived in or near Dixon for many years and have watched as Dixon has developed multiple retail/restaurant business sites along I-80. Unfortunately, UC Davis owns much of the land that could be developed, but the whole freeway frontage on Chiles east of town could potentially be annexed and developed for freeway-oriented businesses. There would likely be very little near-neighbor opposition. And ultimately a sports facility could be added as well, as there is already a sports venue down at the east end. Housing in those types of developments is pretty standard; there are apartments literally in and next to the freeway shopping centers in Vacaville. Evidently some people like to live next to malls.
The city could approach landowners along Chiles in the county to discuss their interest in annexation.
Don,
I think the area near Chiles is the next logical step for peripheral development; especially for retail. I think the closer it is to the Chiles exit would make it more palatable to the Davis residents because it wouldn’t impact local traffic as much. I think there might be play there to work with the county by getting that area into Davis’ sphere of influence and maybe even partially entitled in the county.
Which tells us a lot about Davis and how it’s perceived elsewhere.
I hate to be cynical, but that seems like an exercise in futility. A plan to do what? Where?
“Which tells us a lot about Davis and how it’s perceived elsewhere.”
A. Why bother after the way Rob White was treated?
B. Why bother after the city voted down three innovation centers?
David, the reason to bother is a personal one … by the applicant her/him self. Davis is a fabulous place for a young planner looking to accomplish something really noteworthy. Because of its core competencies, Davis has an immense upside … a very high ceiling, but with a very low floor. I suspect, but do not know, that there were some interesting candidates, but that the City felt they did not have the credentials and “creds” they were looking for.
Davis needs to look in the mirror and see itself for what it is … a community with a very, very bad track record with respect to planning. It has no current General Plan. Its out-of-date General Plan is out of compliance with State of California law. It has no Economic Development Plan. It is at odds with its greatest asset … UCD.
The kind of person willing to tackle that massive challenge is not going to be an inside the box thinker or inside the box actor. That probably means any viable candidate is dead on arrival at the interview … if he/she even gets to the interview.
There is a lot that can be done. The key is to see it as a building process than some immediate grand plan.
Rob white swung for the fences with an innovation park because that is what the city research said we should do.. people gravitate to big ideas like that.
But as I have said previously, the best form of a local industrial economy is going to be based around retaining home-grown companies. That is something that can be focused on in the short term, and we can make progress on it in the short term.
As for where? If we are focusing on base-hits in the immediate term, then we have ample sites to get things done. The city property behind redwood barn nursery in fact, has been earmarked for use in economic development for example, and would be great for flexible R&D space for intermediate-size companies that are emerging out of incubators like mine. That would be a big improvement. Using city-owned farm land outside the city limits for the creation of a research farm and greenhouses, and outdoor space for pilot plants of various types, renewable energy technologies etc… would also help cultivate and retain local startups that are aligned with our core competencies.
Yes, I do think that we still need something like DiSC, but that is mostly critical for making sure that our companies that grow here dont end up moving out to woodland in the long-term when they are mature, 1/3 of that land should be developed upon approval for less mature startups and the rest needs to be entitled as bare land with a “build to suit” sign on it so that mature companies can build their “forever homes” DMG Mori wouldnt be here if there wasnt land like that avaliable, and with the new building going up on faraday, there arent any spots like that left in the city at all.
It doesnt need to be an all or nothing blitz for an innovation park. To the contrary, I think if you rush to build an innovation park and you havent taken the time to fill the pipeline with the startups required to fill it, you are doing it wrong.
If you’re referring to something like AgStart, that doesn’t seem to need a big footprint. From their website it seems the wet lab and shared office space area is about 13,000 square feet, so it would be a very good candidate for infill (why did they go to Woodland?). The city corporation yard is coveted for housing, but there’s commercial property further down on 5th Street where CalGene and others used to be that could be repurposed or more likely replaced. Worth noting, in fact, that group of buildings originally housed a spinoff business from UCD called Plant Genetics which merged with CalGene in the 1980s.
Tim,
I really would like to see more R&D and an innovation park of some sort built here in Davis. But let me ask you this: How do these types of small to medium size innovation spaces or R&D spaces benefit the city of Davis? Sales tax revenue? It’s not like these small companies are buying office supplies from the local Office Depot anymore. How do these companies financially operate? Are there Angel/early VC investors? Are they boostrapping and getting along on early sales? Grants from the university or other sources? Some combo of the three?
My point is that I think these kind of industrial parks are either built through grants by the university (like UCD would have to pony up the cash and for some reason put the research park in the city and not their own land), state..etc… or it needs to be supported or anchored financially by things other than these start up companies….like bigger companies (kind of like an anchor in a shopping center), or commercial or even residential (for the owner developer….not so much for the city). I mean we sort of tried that with DISC. Maybe if something like DISC was moved further towards Chiles (the exit…less traffic impact on the city) and had more of a retail component it might be more successful?
Keith, the facility could be on UCD land and if the State and City of Davis agree on a special tax district that funnels sales tax revenues to the City also be a direct contributor to the fiscal health of the City as a municipal jurisdiction. That special tax district could also apply to food/meals purchases at the on-campus facilities.
Matt,
If a research business park is built on UCD land. Who builds it and why? If UCD pays to build it, if UCD puts up the land; why would they bother to enter into a services district pact with the city? UCD already has it’s own services. Why share sales tax revenue? The city is a freeloader in this scenario.
Good questions … and I don’t have any informed answers for you. I guess a good place to start is finding out how the Stanford research business park got built.
If the collaborative homework has been done to identify the market niches that match the community’s core competencies … and then assembling knowledge about the companies that inhabit those niches … what will have been created is a pipeline of potential demand for the space in the research business park.
Regarding the special tax district … not a services district … I’m not sure that the University currently gets a cut of the sales tax collected from sales on the campus. I could be wrong, but I believe that like all sales tax, the proceeds of sales on the campus are passed on in their entirety by the collecting entity to the Board of Equalization, which then distributes those proceeds to the various jurisdictions. I have sent an e-mail to Director Vartan Vartkessian at UCD to get clarity on whether UCD is only a sales tax collector or also a sales tax beneficiary.
Regardles of the base sales tax distribution, the 1% incremental tax passed by the City of Davis voters does not flow to UCD either now or in any possible future. Agreeing to a special mtax district so that the 1% incremental tax can apply to all the sales on the campus costs UCD not even a single penny. So I am not sure what the load is, or why it is free.
“In the 1950s, leaders within the City of Palo Alto and Stanford University forged a pioneering partnership by creating Stanford Research Park, agreeing to annex 700 acres of Stanford lands into the City of Palo Alto to generate significant tax revenues for the County, City, and Palo Alto Unified School District.”
Remember in 2008 UCD wanted the City to annex West Campus and provide services. However the City balked for several reasons. It didn’t help that it is predominantly residential.
What if instead UCD offered land in that area for annexation for an innovation park like Stanford did for Palo Alto? I don’t know what the deal is on Aggie Square in Sacramento but clearly UCD is interested in some type of partnership with a municipality. This is where creative thinking needs to come into play. But the City will have to initiate this.
Here is a more detailed description of what happened then:
https://davisvanguard.org/2010/02/council-discusses-the-issue-of-annexation-of-west-village/
Agstart is an identical service to what Inventopia does. They ended up in woodland because Ken Hiatt (city manager) invited them, funded them and supported them in finding other donors to build their facility. AgStart is an economic development program of woodland, full stop.
You are correct that such an operation doesnt need that much space. Inventopia should probably be 25-50k square feet eventually, and there are other sites where that makes sense. That kind of growth for inventopia is indeed on the menu, but the conversations around that have been on pause while the city hires an economic development director.
But that wasnt exactly what I was talking about with regards to the city property along 5th.
If we are going to keep startups in town, we need to provide space for them for the entirety of their growth curve. The next need as you move up the food chain is small-unit flex space: Easily demisable commercial space with big doors, tall ceilings and LOTS of electrical service. Unit sizes averaging 2000sqft.
Right now, inventopia is only 6000 sqft and once you start needing more than 6 lab benches you are too big for us… Some companies like Innerplant have been able to stay in Davis after out-growing inventopia, but others have moved to west-sac when they couldnt find something here.
We need that transitional kind of space as well as space for fully mature companies who are likely in the “build to suit” kind of catagory.
Let’s let the billionaires bail us out:
https://newrepublic.com/article/177733/billionaire-solano-california-tech-secession
California Forever sounds like something straight out of Atlas Shrugged. And just about as realistic as Ayn Rand’s fever dreams.
Well said Jim. Very well said.
It makes for a very good dog whistle though.