It is a stunning factoid when Marrone Bio Innovations, Inc., a Davis biotech company that made its debut this week as a public company trading its shares on Nasdaq, became the first IPO in the Sacramento region since 2006.
Think about that for a while – the first IPO in the Sacramento region in seven years.
The Sacramento Bee notes that this is expected to raise about $57 million to make the company more attractive to employees and to bring more of its chemical-free farm pesticides to the market.
“We have a big pipeline,” said founder and Chief Executive Pam Marrone to the Bee. “We’re submitting products to the (Environmental Protection Agency) and launching them.”
“The IPO is a vindication for Marrone, 56, who founded another successful Davis biotech company, AgraQuest, years earlier but didn’t get to taste the fruits of cashing in,” the Bee reports. “AgraQuest’s attempt to go public in 2001 was shelved when the stock market faltered after 9/11. And Marrone was long gone, with her ownership stake diluted to next to nothing, when AgraQuest was sold to Bayer CropScience last summer for $425 million.”
The Bee writes, “The shortage of IPOs in Sacramento is partly a function of the region’s difficult climate for entrepreneurs. Although Sacramento has had some success lately in breeding clean-tech companies, the area suffers from a scarcity of investment dollars and other key attributes for startups. Promising young companies often get lured to the more established and richer tech climate of the Bay Area.”
The Bee quotes Andrew Hargadon, an expert on entrepreneurship at UC Davis, who said, “The success stories, including AgraQuest and Marrone Bio, show that entrepreneurs can prosper in the Sacramento area anyway.”
For Davis, the nexus is interesting since it comes a week after the bad news that AgraQuest, who was bought out by Bayer last summer, is moving to West Sacramento.
That move has reignited a debate that was already flourishing earlier this year, when the city of Davis hired Rob White as its Chief Innovation Officer – the question that Davis faces is one of available space for startups like AgraQuest and Marrone Bio to grow and expand.
As the article by Mark Glover in the Sacramento Bee last week noted, “West Sacramento scored a major gain at the expense of nearby neighbor Davis on Thursday” when “Germany-based agrochemical company Bayer CropScience announced that it will move its U.S.-based research and development operations for vegetable seed and crop-protection products into an existing 164,000-square-foot facility in West Sacramento.”
“We’re thrilled with Bayer’s decision to locate in West Sacramento. The location will bring new jobs, revenue and opportunities for other businesses and industry sectors in the area,” West Sacramento Mayor Christopher Cabaldon told the Bee.
The Bee would call it a day of “mixed emotions” for Davis.
While Executive Director of the Davis Chamber of Commerce Kemble Pope said that he was “proud to have hosted AgraQuest from tiny start-up in the 1990’s to a 250 employee, $425 million company purchased by Bayer CropScience in 2012. This local success story proves that UC Davis, the City of Davis and the Davis business community will continue to be the economic engine and fount of innovation in many knowledge-based business sectors for the greater Sacramento region. We’re glad that this Davis-incubated company will be able to expand its footprint five-fold (30k to 160k sq.ft.) in Yolo County.”
He raised some eyebrows locally when he told the Bee, “The city and UCD ‘are great for small- and medium-size businesses, but we’re never going to be able to accommodate wildly successful’ companies that outgrow the area’s ‘smart, slow’ approach to development.”
From the perspective of some, the tone of the Bee’s article and the quotes by the executive director of the Chamber fanned flames that did not need to be fanned.
Mayor Cabaldon struck a conciliatory tone on Mayor Krovoza’s Facebook posting, calling the tone of the Bee article “infuriating,” arguing that “our two towns don’t poach each other’s economic development assets.”
He added, “If not a quick trip across the causeway, the company would have likely left the region altogether, stranding employees with the choice of leaving the greater Davis metro area or finding new jobs and severing the company’s synergistic ties with other local companies and, of course, the campus. We’re glad that we had an option available that made it possible to stay here in Yolo.”
“Though I know that seeing a locally-grown enterprise succeed wildly and then leave the city limits is as heart-wrenchingly bittersweet as sending a child off to college,” the mayor added. “Sometimes land/facility availability doesn’t match up with every need every time, but Davis is a great place for innovative companies to launch, grow, and prosper.”
But the mayor’s point, while classy, still gets us to the heart of the matter – can Davis become more than the great location that develops opportunities for startups to incubate and grow, but ultimately move on?
Part of the frustration that local officials have had is not only that Davis lacks the space for companies to grow, but that Davis actually had a few suitable landing spots that local property owners were unwilling to cede, to accommodate a company like Bayer staying put in the community.
Jim Gray in the Enterprise today argues that Davis should not beat itself up over losing Bayer.
“The building was vacant and available because a global company, Affymetrix, moved its operations to Singapore. In other words, Bayer got the existing building for 18 cents on the dollar. No way could a new building be built this cheaply,” he wrote noting that Bayer jumped on the opportunity after the other company left West Sacramento for Singapore. He called this an “opportunistic capital investment that Bayer was able to make on a relatively new, high-tech building with expansion space that was sitting vacant only 15 minutes from its current Davis operations. Bayer acquired a building for approximately $11 million, approximately $67 per square foot, in which the former occupant reportedly had invested more than $60 million, or $365 per square foot.”
“Let’s not beat ourselves up and let’s not misdiagnose the reason that Bayer chose West Sacramento. Bayer’s decision does not reflect poorly on the community of Davis and its desirability to technology or agricultural firms. Before rushing to cause and effect such as ‘not enough big buildings,’ ‘not enough zoned land,’ the old and untrue stereotype that the city of Davis ‘planning and zoning requirements are too tough,’ that there is a ‘lack of competiveness’ or some other speculation, I would encourage Davis residents and civic leaders to acknowledge that Bayer made a screaming deal for pennies on the dollar,” he writes.
“There are clearly unintended consequences of the growth control measures that were designed to slow the community’s residential growth. We do need additional state-of-the-art buildings with competitive business infrastructure so we can compete effectively on the global stage. We need to continue to work collaboratively and competitively to attract and win our fair share of great jobs and world-class companies. Our planning policies can continually be enhanced so that we can react nimbly and positively to compete when good companies come along,” he writes. “Those are matters for the community to work on and will make us even more competitive. But with regards to the Bayer decision, Bayer made a great buy and the region is a winner as a result.”
But that is the key question. The city’s growth control measures are not going to change much in the near future. The key is for the city to be able to work within that framework to carve out some locations where companies can grow and expand.
These discussion are already ongoing, as Rob White told us this week in his weekly Vanguard column.
“In light of the Bayer CropScience announcement last week to relocate to West Sacramento, the City leadership has had many conversations, internal and external, about what are the next steps and would an Innovation Park have made the difference,” Mr. White writes.
“Even more compelling is that this last week the City was informed by more technology companies in Davis that they are experiencing similar growth and making plans for expansion. This is likely due to the Bayer announcement as the timing is too coincidental,” he continues. “The good news is that they have reached out and are asking to meet with the City staff. The bad news is that at least one has already decided to leave and several of the others are struggling to see facility options in Davis as a viable alternative.”
This is the challenge that we have. Davis is a prime location for university spin offs – the success of both Agraquest and Marrone proves that. But Davis is not the ultimate landing place for many of these companies.
The challenges of the region suggest that perhaps that will never be the case. After all, the Bay Area represents a more enticing location that is not geographically far away, and the Sacramento region has struggled as a whole – with and without land use policies similar to Davis – to retain major high-tech companies.
But, at the same time, the hope is that Davis can retain at least some of its capital. Bayer will be making major contributions to West Sacramento, and not just in terms of workforce and taxes. The question is whether Davis can do it within its current confines and limitations, and that will be the subject of the next great debate in this community.
—David M. Greenwald reporting
“The challenges of the region suggest that perhaps that will never be the case.”
No, many companies would like to be near UCD. The challenge is to stop our self inflicted counter productive limits to growth policies.
I saw an interview with Marrone she is building a factory in Michigan. C’est la vie in Davis.
[quote]I saw an interview with Marrone she is building a factory in Michigan. C’est la vie in Davis. [/quote]
To me that has nothing to do with leaving Davis but more about leaving the state and the high Democrat inflicted state business tax rates.
More likely it has to do with proximity to the corn belt where her biggest product is used.
[quote] “the city and UCD “are great for small- and medium-size businesses, but we’re never going to be able to accommodate wildly successful” companies that outgrow the area’s “smart, slow” approach to development.”[/quote]
I completely agree with Kemble Pope.
“(Kemble Pope) raised some eyebrows locally when he told the Bee, the city and UCD ‘are great for small- and medium-size businesses, but we’re never going to be able to accommodate wildly successful” companies that outgrow the area’s ‘smart, slow’ approach to development.’
From the perspective of some, the tone of the…quotes by the Executive Director of the Chamber fanned the flames that did not need to be fanned.”
And, who might these people with their raised eyebrows be? And, what did they have to say about Pope’s insightful comments?
It’s pretty clear that a lot of people generally are just fine with Davis staying just as it is–with no additional housing or business development inside the city or even slightly expanding the city limits.
Our ugly Auto Row, for example, is tolerated because of its sales tax revenues and distance from the town proper–but it never would pass muster in today’s vocal no-growth atmosphere.
The departure of start-ups joins the other negative impacts of our present policies (deteriorating school populations, unaffordable housing, loss of sales tax revenues to surrounding towns, reductions in city services and facilities, increasing fossil fuel use in traveling to other locations for routine shopping, UCD’s increasing “go it alone” development initiatives, reduced community family diversity, etc.)
And, it’s not just intentional actions that adversely affect our community’s future. The idea that Davis is a no-growth or anti-growth city has taken hold. Perceptions count when people are making business decisions.
Those of us who remain here can afford the increasing costs of these policies and perceptions. We’re happy to keep our quaint little town the way it is.
But, it’s a little selfish and shortsighted to keep on a track that assures that our children and grandchildren won’t be able to afford to live in Davis.
Pope’s observations are accurate and modest. Who are you quoting in criticizing his realistic views? Raised eyebrows aside, what do they say that makes you report that they don’t like his tone?
[quote]”West Sacramento scored a major gain at the expense of nearby neighbor Davis on Thursday”[/quote]
This is where people who value competition over cooperation are missing the bigger picture.
We have a region that has a major asset: UC Davis. That region is comprised of Davis, Woodland, West Sacramento, and Dixon. Each of the cities within that region brings its own assets, and some weaknesses. Taken together, they provide everything a growing business needs. The region benefited in terms of jobs and revenues when Bayer AgroScience decided to keep the operations here — ‘here’ meaning, within the region.
But if you only see things in terms of individual cities winning or losing, you won’t consider that a benefit. All you’ll see is a company moving fifteen miles somehow being a ‘loss’.
Some companies will need a large footprint at low cost. Some will need cheap water. Some will want nearby homes in a good school district. Some will prefer very close proximity to the university and won’t be as concerned about the square-foot cost of the land. There will be any number of reasons for a business locating in one of the cities in our region. So it is the cooperation between the cities that will benefit all of us.
“So it is the cooperation between the cities that will benefit all of us. “
Yeah, like with the water project…lol
[i”This is where people who value competition over cooperation are missing the bigger picture.
We have a region that has a major asset: UC Davis. That region is comprised of Davis, Woodland, West Sacramento, and Dixon. Each of the cities within that region brings its own assets, and some weaknesses. Taken together, they provide everything a growing business needs. The region benefited in terms of jobs and revenues when Bayer AgroScience decided to keep the operations here — ‘here’ meaning, within the region.”[/i]
This is no-growth twaddle substituting for logic. And it is easy to prove my point by simply pointing out that the same people supporting this type of argument would fight tooth and nail to compete for regional resources that would make or break their precious myth of fantastic public schools.
Davis’s “weakness” is simply its stubborn NIMBY-statist positions related to economic development and growth.
And given the lack of job growth in this Obama-Brown jobless “recovery”, we should clearly and honestly convict Davis as being guilty of not doing enough to help.
The fact is that we have a responsibility to do our [b]fair share[/b] of economic development within our region and within our state. We benefit gloriously from having a world-class research university in our midst, and it should come with a need to pay-it-back. It is in fact selfish of us to prevent certain economic development when that development would be synergistic in relation to UCD business. Because otherwise we contribute to fewer jobs in the region and state and country. We also damage our ability to enhance and diversify our tax base.
Yes we are lucky that Bayer located in the region, but how many other companies would locate out of the region and state because there are too many communities like Davis that do no welcome them? And although the region benefits, I think it is a big fat lie coming from most Davisites on the no-growth and slow-growth platform that they really give a rat’s ass about these communities outside of Davis.
[quote]This is no-growth twaddle substituting for logic.[/quote]
Stop calling my positions ‘no-growth’.
[quote]The fact is that we have a responsibility to do our fair share of economic development within our region[/quote]
Davis does more than it’s fair share. It is home to the university that drives much of the economic development. Bayer wouldn’t be in West Sac if it weren’t for UCD.
[quote] I think it is a big fat lie coming from most Davisites on the no-growth and slow-growth platform that they really give a rat’s ass about these communities outside of Davis.[/quote]
Really. A big fat lie. Rat’s ass. Thus ends another conversation with Frankly, because he is incapable of having a discussion without denigrating those he disagrees with and insulting everyone.
Nice job.
Ok – I just read Jim Gray’s piece in today’s Enterprise. I didn’t know that they acquired the building at a fire-sale rate. I also did not know how much effort and collaboration had gone into trying to keep the company in Davis.
However, in the end, the lack of viable commercial properties and land in Davis largely contributed to the relocation decision.
We may have lost Bayer primarily because of the bad luck of an over-supply of commercial property in adjacent communities; but that back luck was exacerbated by our under-supply.
I used to tell my students that they should go into biotechnology because we were at the beginning of a revolution that would bring great wealth to our region. With UCD as an anchor this area is home to Marrone Bio innovations, Genentech/Roche, Agriquest/Bayer, Semenis/Monsanto, Syngenta, Alza/JNJ, Novo Nordisk, Pioneer/Dupont and others. The question for Davis is whether we want to be more than a place for research and development or do we want to embrace the wealth from the products that will greatly benefit humanity. We are going to be the Silicon Valley of biotech in this area. In my mind we should be planning to capture that prosperity instead of fighting over every inch. The longer we wait to plan for the needed infrastructure the more we will lose.
Don wrote:
> Stop calling my positions ‘no-growth’
Over the years I have read that Don supports developing Nishi and near the hospital (and preserving all other ag land around Davis). Please correct me if I am wrong but unless Don can name at least another dozen sites bordering Davis that he wants to develop we will have to call him “no growth”.
He reminds me of a person that says they are “pro choice” since they will let the President “and” Vice President’s daughters have abortions (but no one else) or a guy who says he does not support restrictions on gun ownership because he will let the Army “and” Marines have guns (but no one else)…
Mr. Toad wrote:
> The question for Davis is whether we want to be
> more than a place for research and development
I have spent a lot of time in the area around UC San Diego over the years and seen the growth (and good jobs and money it brings)related to biotech around the university and I can only hope that Davis follows a similar path…
Frankly: It seems the loss of Bayer was a perfect storm. That said, I’m more interested in policy going forward to prevent the next loss. So how can we build capacity while still staying true to our slow growth roots that the majority of the community is strongly behind?
[quote]unless Don can name at least another dozen sites bordering Davis that he wants to develop we will have to Really? That’s your definition of “no-growth”?
That is ridiculous.
How about if we said almost no-growth? You seem to be a little thin skinned about the use of the term no-growth yet you are a ferocious advocate for the preservation of ag land and recently had a ho hum attitude about the loss of a 400 million dollar business from town. You have advocated for companies needing to scale up moving out of town instead of building infrastructure to keep them here arguing that they can be replaced by other start ups. Those positions make you an opponent of growth whether you are willing to admit it or insulted by it you need to get over it and own it.
DG: “[i]So how can we build capacity while still staying true to our slow growth roots that the majority of the community is strongly behind?[/i]”
This is an excellent question, and from my perspective the simple answer is we can’t.
Functionally, slow growth in Davis has become no growth, and we have no hope of creating significant economic development and maintaining Davis as a vibrant, prosperous city, unless we accept some level of growth (both commercial and residential).
The biggest problem is that for the most vocal faction of the slow growth advocates in town, the [b]only[/b] alternative to the current policy is developer driven sprawl. Are those really the only alternatives we can think of?
I think we need to stop arguing this false dichotomy and instead begin the serious work of planned, [b]smart growth[/b]. The first step of that process is to acknowledge that some level of growth is necessary for our future. The second is to accept that we can have this necessary growth without inducing sprawl.
Until those two concepts are incorporated into our collective conscience however, we will continue to spin our wheels, call each other names, and accuse each side of conspiring to ruin our quaint little town (The ongoing kerfuffle between Frankly and Don is just the latest example of this ‘spinning wheels’ syndrome).
You also have argued that we don’t need jobs as much as we need affordable housing. Of course we need both because affordable housing doesn’t generate the tax base to be self supporting. Someone pointed out to me that first you need jobs that support families that can afford homes. When you have that you get healthy property and sales tax revenue that allows you to build affordable housing. Allowing the continued leakage of jobs to other communities by not providing the infrastructure required to attract and retain the biotech giants of tomorrow is foolish for many reasons, but one of those reasons is it undermines your ability to build affordable housing.
[quote]I think we need to stop arguing this false dichotomy and instead begin the serious work of planned, smart growth. The first step of that process is to acknowledge that some level of growth is necessary for our future. The second is to accept that we can have this necessary growth without inducing sprawl. [/quote]
I agree with all that.
Mark: I agree with your comments. Part of the problem from my perspective is that for a time the term smart growth became a buzz word for developer driven growth. ConAgra driving the discussion on Cannery is bad news as well.
[quote]I have spent a lot of time in the area around UC San Diego over the years and seen the growth (and good jobs and money it brings)related to biotech around the university and I can only hope that Davis follows a similar path…[/quote]
Interestingly, I used to hike around in the canyons in that area before all that growth occurred. Sorrento Valley, believe it or not, actually had farms and a (seasonal) stream. It was quite beautiful. Much of the growth that you see now, though, was on old eucalyptus land (from a long-ago failed timber scheme) and military property that was used in WWII. As a kid in school, we had people come in to warn us about what to do if we found unexploded ammunition or grenades. Some of the older kids found an old outbuilding, broke in, and found a bazooka and ammunition. So they took it, loaded it, and went out and blew up a cow.
This community could begin the process of looking at the closer-in parts of the Northwest Quadrant. Now that I’ve seen on a map what exactly is meant by that term.
I would say the southern part of the Parlin property would be the first to consider.
As I’ve said before, Covell Village site could be planned and developed under some circumstances — but the issue there is probably largely what the owners are willing to do.
The property on the northeast corner of Mace could be carefully planned in a manner that preserves a major ag component while allowing some development.
The big one is ConAgra, which should be developed with a substantial business component and could also have some high-density housing.
It is fine if the university develops some of their land for housing with space for smaller startups and move-up companies. Some of that would be in Solano County. That’s also fine.
West Village is likely to expand further as time goes by. The city and the university should work together to eventually annex that. There will be some retail component there, and there would be nothing wrong with some commercial as well.
There are likely properties in South Davis that could be developed. There is still some property along Second Street.
All of that should be done in a steady, moderate manner that keeps the growth from getting ahead of the infrastructure, that doesn’t cause us to need rapid expansion of city services, and that retains the character of Davis while preserving as much ag land as possible.
[quote]You also have argued that we don’t need jobs as much as we need affordable housing.[/quote]
That is absolutely true.
[quote] Of course we need both because affordable housing doesn’t generate the tax base to be self supporting.[/quote]
We may mean two different things by ‘affordable housing’ then. Young adults who work and live in Davis need rental housing.
At one time Los Angeles County was the number 1 ag producing county in the nation. Of course world population was under 2 billion at the time. Things change and if we try to hang on to the past too hard we will miss the future. That is the danger Davis faces.
David wrote:
> So how can we build capacity while still staying
> true to our slow growth roots that the majority of
> the community is strongly behind?”
Then Mark wrote:
> This is an excellent question, and from my perspective
> the simple answer is we can’t.
Does Davis really have “slow growth roots”?
From 1960 to 2010 the Davis population grew by over 700% and from 1980 to 2010 Davis grew by over 80%.
I bet way less than 1% of the cities in America are seven times bigger than they were in 1960 and almost twice as big as they were in 1980.
From 1960 to 2010 the population of San Francisco grew by about 7% (Davis was over SEVEN HUNDRED percent).
From 1960 to 2010 Palo Alto (next to the “junior” university) grew by a little over 20% (from 1960 to 1980 Palo Alto added ~3,000 people and Davis added ~27,000).
P.S. If you want to look at a city that is really “slow growth” take a look at Hillsborough (half way between San Francisco and Palo Alto) that (according to the census) added just 400 people between 1980 and 2010 (adding 13 people a year is REAL slow growth, but will not work out well for Davis)…
so mr. toad in your world, la is a reason why we should grow faster?
[img]http://davismerchants.org/vanguard/growthratesDavisWdldWestSacsm.jpg[/img]
Population growth rates of Davis, West Sacramento, and Woodland.
[url]http://davismerchants.org/vanguard/growthratesDavisWdldWestSac.png[/url]
Don wrote:
> This community could begin the process of looking
> at the closer-in parts of the Northwest Quadrant.
> Now that I’ve seen on a map what exactly is meant
> by that term, I would say the southern part of the
> Parlin property would be the first to consider.
I have always called “Parlin-Wildhorse” the site next to Wildhorse (that was shot down by measure P) the “Parlin Property”. Does Parlin Development (that has shut down their web site and cancelled most of their LLCs) own another big piece of land in the Northwest Quadrant (does anyone know the roads that border it)?
P.S. To Don thanks for the growth chart and letting us know that you want to develop more than two sites in Davis…
This is the parcel I’m referring to (this is from the housing task force report):
[img]http://davismerchants.org/vanguard/ParlinpropertyWDavis.png[/img]
No DP,
Don was talking about the San Diego of his youth. I can remember driving to San Diego from LA in the early 60’s and it was open space with rolling hills and cows all the way from Santa Ana down. My point is things change and the world gets more crowded all the time.
Davis has grown fast because it was so small when it was spun off of Berkeley to be its own campus. Yes UCD itself is a spin off. Davis grew fast in the 60’s and 70’s but from such a small base. It is now a major world class university and the city of Davis as the host community that receives great wealth from that university ought to be a little more thankful and a little less selfish about sharing that wealth with others.
Davis doesn’t have ‘slow growth roots,’ we have is ‘dumb growth roots.’
We don’t build the housing we need; we build the housing that developers want to provide. We don’t build the retail options that we need; we look down our noses at the poor development decisions of our neighbors and wring our hands about the sales tax leakage. We don’t expand the job producing opportunities that we need; we argue that the University is a sufficient job source and find ways to justify losing yet another successful business.
I think it is time for a new approach. We need planned growth incorporating controlled expansion in housing, retail and commercial sectors in order to correct our current imbalances and create a sustainable and economically viable future. We need smart growth, not a continuation of our current slow, dumb growth.
Mark, I agree with part of what you are saying. What would be the specifics of “smart growth” in your vision for the creation of a “sustainable and economically viable future”?
To me, Davis is mostly a “company” town, the company being the 6 govts that provide most of the income to Davis residents: The City of Davis, Yolo County, UCD, DJUSD, Calif State Govt, and the Federal Govt. Anyone ever added up the combined payrolls, and then match that against private sector total payrolls?
Also, has anyone surveyed and added up the income to Davis residents from their investments elsewhere, such as the stock market, real estate investments?