As we have been discussing, the Davis City Council will now weigh in on June 29 as to whether to amendment the Development Agreement approved in July of 2008 by the Davis City Council in conjunction with the Verona Subdivision, an 83 unit single family subdivision to developed on a vacant 8.55 acre parcel located at the southwest corner of Fifth Street and Alhambra.
As we have reported, of issue in this revision to the Development Agreement is the elimination of the middle income affordable requirement of 17 units per the city’s amendment policy that suspends that ordinance, the reduction of Supplemental Fees from $12,000 to $5,000 per unit, the elimination of the Parkland Dedication, the imposition of a park in-lieu fee and change in the timing of the water/ sewer connection fee.
Staff recommended that the Commission concur that (1) the net annual fiscal impact to the General Fund of the project is “slightly improved” over the original project and (2) “the level of Supplement Fee negotiated as part of the original development agreement is unrelated (they changed this to “has no effect) to the fiscal analysis performed to evaluate the project relative to the City Council’s goal of “fiscal neutrality” but rather represents one-time discretionary funding available to the city.” Therefore the City Council is in the best position to determine the appropriate level of supplemental fee to apply to this project.
However, the commission also added to that they did not see the need to change the fee schedule and they do not see action as necessary without a clear set of policies and guidance with regard to supplemental fees.
There were a number of concerns raised about the precedent that this would set in terms of renegotiating a developer agreement after the fact.
However, after further inquiry and insight, it became very clear what was happening here. Cathy Camacho, the Planner in charge of this project acknowledged toward the end, what we had suspected all along, the change from a Supplemental Fee to a Quimby Fees in the form of the park in-lieu fee does have a huge impact on the fiscal impact of the project. The development impact fee is not technically a general fund fee, but it might as well be as the money can go to any purpose. On the other hand, Quimby Fees according to Cathy Camacho and confirmed by Paul Navazio can only be used to get and acquire new parkland.
It is true that the city has no need given the abatement of the owl issue for that specific parkland, however, it has still traded the one acre of land that it would be getting for the park for $600,000 that can only be used to acquire parkland elsewhere in the city. In other words, while it appears that the city is getting $600,000 in this deal from the developers, it is really trading parkland in one spot for parkland in another spot. In other words, that is a neutral trade off in terms of assets for the city.
On the other hand, the developer now can likely take that acre of land and if approved by council put 10 to 17 additional units on it, making far and above more than the city is gaining from the exchange.
So while the city appears to be gaining money in this exchange, in point of fact it is not. It would forgo money in Supplemental fees that could be used for any purpose and exchanges parkland that it does not need for parkland that it may think it does need.
And while it is true that the city may gain modestly from the waiving of the middle income affordable units, it is a modest gain at best and more than offset by other factors in the deal.
For the developer this is a plum deal, they will eventually get to increase the density despite the negotiations with the neighbors, they will make more money on the elimination of the middle income affordable, they will have their risk abated by the delay in the sewer connection fee timing, they will pay less in impact fees, and while they will pay in-lieu fees, that is what they wanted in the beginning because that would allow them to utilize 8.55 acres rather than 7.47 acres that was approved.
There is little clear benefit to the city to renegotiate this deal despite the claims of fiscal neutrality, and even benefit, the fact of the matter is that the city loses on the exchange. They get less flexibility in the use of the money. And they simply swapping parkland dedication for restricted use money.
The precedent this sets is poor from the city’s perspective as it allows any developer to sit on their property, renegotiate a better deal from the city, and then wait for the market to improve before commencing construction.
Given the economic and fiscal realities this does not make sense from the city’s standpoint. There is no reason that this project needs to be built now, the city can simply tell the developer to wait until they find the market conducive to building at the agreed upon rate.
Finally, the city’s intended use of the fees is problematic at this time. The city intends to use the supplemental fees for the EIR of a Sports Complex that it does not seem prudent to build at this time. The money would be far better used going into the reserve as a buffer against declining revenues below the projected rate. Moreover, the parkland fees are going largely to the Mace Ranch Park, again, perhaps a good project, but again, the city would be better off putting that money into reserves, unfortunately, the city in this deal loses that ability as the money would be in restricted use.
The problem at this point is that council has insisted on continuing to push forth projects despite the fact that the economic climate is such that projects are not going to be built in a timely fashion. The developer for Verona spoke before council a few weeks ago to say that they were ready to build if these changes are approved. But I do not see the rush that would necessitate the council giving huge chunks of money back to the developers – and make no mistake, no matter how the city does the math here, the developer is getting far larger benefits from this deal than the city. Why not allow the market to rebound and the developer can build the project then?
To me Verona sets all sorts of different and potentially harmful precedents that needs to be left to the new council to create their own new policy direction. While staff took great pains to explain that this was not a shell game, several on the commission privately suggested that there was something very fishy about this deal and they went forward with a good deal of skepticism about the need.
In the end, they did not feel like they had enough information to truly evaluate the fiscal impacts and therefore left this up to council to decide.
—David M. Greenwald reporting
Given all you say, I am confused as to why the Commission passed this through. Did they ask probing questions? How will density be increased if it has already been negotiated with neighbors?
Part of the answer is that a lot of what I found out, was discovered at the end and I had to question the finance director after the vote.
The other answer is that they are basically leaving it up to the hands of the council but are recommending no change to the Development Agreement.
Why? This doesn’t strengthen the argument for strong logical assessment and recommendations by our commissions do you think?
The process described above is as good an example as one could hope for to illustrate mayor-pro-tem-elect Krovoza’s stated first priority on the Council,i.e.,the reshaping of the process whereby citizen commissions are allowed the time and resources to adequately evaluate staff recommendations along with Emlen’s staff working in-good-faith to collaborate with citizen commissions to shape the staff recommendations that are brought to the Council.
Without projects to plan, city Planners sit idly behind their desks all day. In these economic times and the city’s budget crisis, their potential conflict of interest is apparent and critical “outside” oversight is prudent and necessary.
“the reshaping of the process whereby citizen commissions are allowed the time and resources to adequately evaluate staff recommendations along with Emlen’s staff working in-good-faith to collaborate with citizen commissions to shape the staff recommendations that are brought to the Council. “
That is certainly a concern. The only reason that this info came out was I asked the question as a member of the public and Cathy Camcho answered it almost in passing. It was only after the meeting when it dawned on me and I pointed out an discrepancy to the chair.
This smells bad.
Only hope is that public and neighbors go to CC and beg for it to be left for new CC.
‘….Only hope”
Any Councilmember(Sue Greenwald) who votes aye tonight can bring it back for reconsideration by the new Council at their first meeting.
true? great.
This commission only had the night before to consider this city staff proposal to change the development agreement. The commission felt city staff’s recommendation probably did not pass the smell test. Furthermore, the City Manager was instructed by the City Council to bring development issues to the appropriate commissions in a timely manner. The City Manager clearly is ignoring this mandate, a circumvention of proper process. This change in a developer agreement without proper process sets a dangerous precedent… it will essentially vitiate the gains made that demand the City Manager include commissions in the development process in a timely manner.
davisite2: “Any Councilmember(Sue Greenwald) who votes aye tonight can bring it back for reconsideration by the new Council at their first meeting.”
How does this work?
David, three important facts you left out of your fiscal analysis, which I would imagine the F&B Commissioner discussed:
1. The original projection for this project was that it would cause an annual deficit to the city of about $14,000/year. That, given the size of the city’s budget, is not very large. However, in Present Value terms, that is equal to a one time payment of $280,000; and
2. By getting rid of the 1 acre of burrowing owl habitat, the city will save $7,000/year. That’s half of the original projected red ink; and
3. By allowing the developer to charge full market prices for the 17 middle income units, the property tax revenues paid to the city will increase by some amount. How much was this increase estimated to be?
[i]” The development impact fee is not technically a general fund fee, but it might as well be as the money can go to any purpose. On the other hand, Quimby Fees according to Cathy Camacho and confirmed by Paul Navazio can only be used to get and acquire new parkland.”[/i]
I just looked up AB2936 ([url]http://info.sen.ca.gov/pub/01-02/bill/asm/ab_2901-2950/ab_2936_cfa_20020530_124919_sen_comm.html[/url]), which was the latest (2002) substantial amendment to Quimby (1965). “AB 2936 authorizes Quimby funds to be used for the planning of new parks and for community master planning purposes.”
Yet even if the money can be used for “community master planning purposes,” that still throws a big wrinkle into the notion that this change in the fee structure amounts to a net positive for the city’s finances.
Yet I wonder, why not do this:
1) allow the developer to keep his 1.08 strigine acres;
2) let him build 95 units (83 + 12) on the entire 8.55 acre parcel; and
3) instead of the city collecting that $606,907 from a “parkland in-lieu fee,” charge an additional $6,388.50 “development impact fee” per unit.
That would, again, make NO DIFFERENCE to the developer. It still costs him $606,907. It’s a complete wash. And it allows the city’s fees to be used for general purposes. Under that formulation, this project is not a money loser for the city of Davis.
[i]”The precedent this sets is poor from the city’s perspective as it allows any developer to sit on their property, renegotiate a better deal from the city, and then wait for the market to improve before commencing construction.”[/i]
I basically agree with you here. I don’t think the city should renegotiate its fees based on a soft housing market. However, in this case, it’s not accurate to say this plan — especially the alternative I outline in #3, which obviously the developer would be fine with — harms the city’s interests.
Rich:
The original project was not bad from the city’s standpoint. I agree your first three points, they did not elaborate on how much that would generate for the city. The problem I have is the swap of Parkland and Supplemental Fees for Quimby Fees, I don’t think that’s a one-for-one swap for the city and I think it’s a huge boon for the developer.
“How does this work?”
It is my understanding that only those who vote yes can bring that motion back up for reconsideration. We saw this when Don Saylor voted yes for a motion that he obviously did not support so that he could bring it back up for reconsideration when, as I recall, Ruth Asmundson would return to the Council dais from vacation.
“The City Manager clearly is ignoring this mandate, a circumvention of proper process.”
Our city manager has a long history of dissing our citizen commissions.
As you may remember, when he brought the Covell Village proposal to the Planning Commission, as Planning Department Director, he ordered them to make their decision THAT evening in spite of several serious outstanding questions that the Planning Commission declared that they needed additional information to resolve to their satisfaction. This was denied and,in response, the Planning Commission voted to withhold their approval of the Covell Village proposal before them.