Monday 24th of February 2020 02:57:59 PM GMT

City Of Berkeley Underestimates Impact Of UC Berkeley On Its Economy

(Last Updated On: May 9, 2019)

In learning about the dispute between the City Of Berkeley and the University of California at Berkeley (UC Berkeley) regarding the Upper Hearst Development Project, and the City’s claim that greater student enrollment should not be considered, I was reminded of a project I was hired to do for the East Bay Express in 1994.

As an urban economic consultant at the time, and with a specialization in system dynamics modeling, I was asked by then-East Bay Express Editor John Raeside to build a model that analyzed the impact of a proposed reduction in UC Berkeley salaries by 5 percent. The result was a 926-equation system dynamics model (created with the resources and review provided by Chester McQuire and McQuire & Company Economics Consulting in Oakland) and a report that was given both to the Express and to the Library of the Metropolitan Transportation Commission.

What I learned was that the proposed reduction in UC Berkeley salaries by 5 percent actually had no impact on the overall tax revenue coming in to the City of Berkeley, and for a specific reason: only 1 of every four Cal employees lived in Berkeley. By contrast, the student population of 33,000 was such that it heavily impacted spending around town, and that would be curtailed by something else: a then-proposed increase in tuition that marked the beginning of a trend of increasing the cost to attend Cal to levels that would have been unheard of during the rein of Clark Kerr as University President (1958–1967).

In turn, that downturn in student spending in my model caused a drop in sales tax revenue to the City of Berkeley – to the tune of about 12 percent year-to-year. The result was upsetting to The Express’ John Raeside, who had a preconcieved notion that the salary drop would hurt the City of Berkeley. Raeside threatened to not pay me for the work I did, or publish the results.

My counter to Mr. Raeside was that the model outcomes were unexpected, thus reflective of an effort not to fix numbers, but to really represent economic and monetary flows in Berkeley because of Cal. The model outputs, I argued, reflected an accurate representation of the impact of where Cal students and Cal employees lived, as well as their in-Berkeley spending habits. Students out-numbered Cal employees, who basically took money made at the University back to where-ever their home was. Students spent their money in Berkeley – period. Off-campus and outside-of-Berkeley commuting wasn’t as great in numbers and percentage then, as it is today. Fast forward to today and the Upper Hearst Development Project.

The City of Berkeley and the Mayor have said that student enrollment projections of over 44,000 should not be counted in an environmental impact report regarding the Upper Hearst Development Project – which is a housing project. Actually, and not to offend the City of Berkeley or Mayor Jesse Arreguín, the fact is since the Upper Hearst Development Project is being built, in part, in anticipation of such an increase, and is a housing project for students, it has to be considered. And since student enrollment projections matter, then how those students impact overall revenues to the City of Berkeley must be considered as well.

Yes, this view comes from a Berkeley Planning School Alum who sat on the Board of Directors of the Cal Alumni Association – I admit my bias. But I’m also against fixing numbers to fit a desired economic impact assumption. The City of Berkeley should simply analyze the true impact of students and proposed developments using a realistic representation of true urban economic and fiscal behavior, and not one that’s tainted with a political ideology that tends to work against the University.

Stay tuned.

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About the author: Zennie Abraham
Zennie Abraham is the CEO of Zennie62Media

About the Author

Zennie Abraham
Zennie Abraham is the CEO of Zennie62Media

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