Analysis: What Do Minicozzi’s Ideas Bring to Davis?

Minicozzi-3d

Joe Minicozzi brought a very slick presentation to Davis on Tuesday night, along with some interesting ideas for measuring the impact of development and planning decisions. The question is how practical is his model.

From discussions I have had with a variety of people, there are some good ideas in there, but there are some practicalities that would make implementation very difficult.

Here are my thoughts and please feel free to share yours in the comment section.

First, I do not think we take into account enough the efficiency of a revenue model. Looking at net revenue (which takes into account the cost of service for a given site) per acre is a different way of thinking about revenue for our community. I don’t think we’ve paid sufficient attention to that.

Second, I’m an admitted opponent of big box development, so I absolutely loved his Walmart riff and he’s correct. The business model of Walmart is horrendous for the community. They build cheap buildings – as cheap as they can get them. They are large, spread-out units with huge parking lots. And so they are naturally going to produce less net revenue per acre than other types of development. Of course, Mr. Minicozzi isn’t even looking at the transaction costs and the loss of other business predicated in the model

Along those lines, those who looked at where Target was on the map, saw it barely registered on the map. A lot of people have pointed out over the years that the city allowed Target to get away with the lowest level LEED (Leadership in Energy and Environmental Design) design possible, but it also has a wasted space parking lot. Imagine having a parking structure on top – we could have the same revenue with less than half the footprint, which could have allowed more of an open space buffer zone between Target and the nearby residents, or more retail space.

Some will want to argue that this model shows that we should not attempt to do innovation parks. I disagree. The first thing that we have to acknowledge here is that Mr. Minicozzi is only showing us one piece of the puzzle. It is an important piece, but it’s not the only one.

With respect to an innovation park, Schilling Robotics, to cite a rather obvious example, is not going to move into a dense five-story building in downtown. So, while the efficient use of space and better utilization of the downtown core are models we should continue to push, that doesn’t mean we don’t have a need for more space for a research park.

What it might mean, however, is that a development with a .5 FAR (floor area ratio) is not a good utilization of space. I have been arguing this for some time. Mace Ranch Innovation Center is looking at perhaps 2.4 million square feet of space which is conservatively estimated to generate $2.1 million in revenue, but what happens if we push that density and bring it up to 4 million square feet of space?

That would be a more efficient project. One of the good things about the presentation that we didn’t get a chance to discuss enough is that he demonstrated why expanding borders adds costs, because you need to bring the services out to the new areas. That means water lines, gas lines, electricity and roads. All of those things are expensive. By densifying even the peripheral projects, you reduce that expense through economy of scale.

The other critical point that Mr. Minicozzi raises by implication is the large number of single-story units in the core area. There are very inefficient land use practices right in the heart of our most productive zone.

At the same time, there are shortcomings here. First, his example in Asheville is not an example of redevelopment but rather of repurposing of existing buildings. In Davis, we would have to knock down single-story buildings and build more densely.

One of the problems with that approach is cost. Trackside has been roundly criticized for proposing a six-story building. However, going over the numbers with a few people, it might take something that high to enable the costs of the new construction to pencil out.

Developers are going have trouble financing that kind of redevelopment. That is why for years we had the RDAs (redevelopment agencies), which, despite a lot of flaws, at least gave the cities the ability to publicly finance redevelopment and new density.

But with RDAs gone and the legislature struggling to find a replacement, we are left with the possibility of public financing – which would greatly cut into any revenue stream advantage the city would have.

Joe Krovoza rightly cited another problem we had in Davis, where we actually had the RDA funds in place for a redevelopment of the huge city block between E and F Streets and Third and Fourth Streets. The landowner would not go for it, the community had strong opposition, and the money ended up disappearing.

Finally, while stacking retail and creating a more efficient big box or shopping center is something that has a great appeal to a lot of people, there are flaws with that as well. But, as one person pointed out, Davis probably does not have the retail base to support such development. We have about 75,000 people, maybe a little more when you account for students and people who work in Davis during the day, but is that going to support an expensive building model?

The bottom line is that, when we analyze fiscal models, we should take into account the efficiency of design, but realistically Davis is not going to be able to solve its fiscal problem through densification of the downtown in a post-RDA world. We still need to look toward peripheral innovation parks to generate more revenue. However, we should look at doing so efficiently and preserving as much land as possible.

—David M. Greenwald reporting

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  • David Greenwald

    Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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86 comments

  1. David

    The bottom line is that we when analyze fiscal models, we should take into account the efficiency of design, but realistically Davis is not going to be able to solve its fiscal problem through densification of the downtown in a post-RDA world.:

    I agree with your statement as it implies to the way that developers and investors currently do business. However, I do not believe that it would be impossible if we were to think outside the existing box of “what pencil’s out” and for whom. A couple of thoughts from someone who is not well versed in business, but is very well versed in collaborative decision making ( ten years on an administrative team that works on this basis for a very large department of doctors, NPs, PAs, Nurse Midwives, nurses and support staff).

    So taking Trackside as an example:

    1. The investor group is quite small and does not include any of those who will be most directly impacted by the proposed development. The invited group largely consists of those who are either friends, colleagues or political or social “insiders”. Who were not apparently invited to participate were any of the 35 or so members of the Old East Davis Neighborhood Association that I have spoken with directly nor any of the businesses that currently rent in the existing buildings. What if these folks who have a direct stake in the environmental if not financial outcome had been asked if they would like to participate both in design and/or in financing a new project ?  Yes, yes, I know that this is not how we traditionally do things, and it would not be the most financially beneficial to the current investors, but could we not at least consider the possibility of doing something differently from our usual model ?

    2. “going over the numbers with a few people, it might take something that high to enable the costs of the new construction to pencil out.” 

    While this statement may well be true, it is based on the assumption that the highest priority should be what “pencils out” for one particular set of investors and developers regardless of how this affects other members of the community. I do not believe that you will achieve universal, or even majority, advocacy for this initial premise.

    3. “Davis is not going to be able to solve its fiscal problem through densification of the downtown in a post-RDA world.:”

    I believe that this statement is true as written, but is based on a false premise. I do not believe that anyone believes that densification is a panacea. I believe that many of us feel that it is one essential component of the promotion of financial sustainability but that a comprehensive approach with advance planning and visioning of the entire city is what is called for.

    4. “With respect to an innovation park, Schilling Robotics, to cite a rather obvious example is not going to move into a dense five story building in downtown. So while the efficient use of space and better utilization of the downtown core are models we should continue to push, that doesn’t mean we don’t have a need for more space for a research park.”

    Also true as written. But what if Schilling and the other businesses located along 2nd street across from the tracks were willing to build up on their currently existing buildings or sites and offer those spaces for start ups from the University thus providing the kind of “innovation spaces” vertically in areas  already developed that would have minimal impact of the existing residential neighborhoods. Would that not be at least worth considering ?

    1. Tia: I respectfully disagree with a lot of this. Financing is a huge issue. Even if Schilling could expand their current building, the financing of it would be prohibitive. Especially if there is cheap land and space elsewhere. That’s a reason we lost Bayer. We are competing with other communities where land and space is far cheaper. But Schilling has also indicated that their need is for mostly single story. On the broader issue, you haven’t offered an alternative fiscal model that will enable the densification to occur.

        1. Lots of costs for the provision of municipal services by the City . . . but no revenue to cover those costs.

          Lots of additional demand for housing within the City Limits.

          Lots of questions by City of Davis residents about why the University wasn’t providing enough housing for either its students or the innovation park employees.

        2. they already are considering doing that.  two implications are that davis would not get the taxes and it would completely change the nature of the i-80 corridor

        3. They’ve already set aside acreage for a small tech park south of I-80 and west of Old Davis Road (in Solano County). I assume it’s still in the Long Range Development Plan. They don’t need any infrastructure from the City of Davis (e.g. they have their own water and sewage systems) to move forward. They came close to pulling the trigger on this development during the last business cycle.

          There are also discussions of redeveloping Solano Park (north of Nishi) as another small tech park. Under this scenario, Davis gets the housing/traffic and UCD gets the high -value tech companies. In addition, the Solano Park land would be in direct competition with the residual 20+ acres from the Nishi housing project that the developers have proposed to dedicate to the City for the actual innovation park component of the Nishi Innovation Park.

  2. I respect your view. And I believe that it is based on a firm belief that the way we do things now is how things must be done. I respectfully am advocating for a different way of looking at how business might be conducted rather than whether or not it is deemed to be feasible under our current, obviously inadequate ways of financing change.

    I can only present ideas and potential alternative ways of looking at things because as you well know, my expertise lies in a very different area. However, I do know that years ago, we could not possibly imagine doing surgery through a laparoscope let alone via a robot. I know that years ago we would not have believed that a self driving car would be a possibility. It took individuals looking beyond what was believed to be possible to develop these innovations which are now our reality. I am encouraging our current businesses, financial and development experts to “look outside the box” for solutions. Is that really something that we want to discourage ?

    1. Many of your ideas on this topic are fanciful and lacking feasibility if not also lacking sufficient business clarity.  You would be advised to take some classes on general business and/or spend some time in discussions with others that can help improve your understanding of this subject matter.

      But you and others that supported the state politicians and legislation that killed RDA need to look in the mirror for having participated in reducing one of the key tools we had for more creative development financing ideas.  And by supporting the politicians that have given away the store to public employee unions, you participated in eliminating our ability to creatively partner in development financing.   Because we lack adequate public financing sources to help fund the type of projects we desire, we are left having to rely on private investors.  And private investors do not invest unless they can expect a reasonable return on their money in consideration of risks.

      If you don’t want to be so reliant on private capital and don’t want to be so constrained in creative development solutions that better meet your desires but don’t provide adequate private investment returns, the first thing I would recommend is to pay attention to how you vote and what policies and politician behaviors you support at a local, state and national level.

    2. I am encouraging our current businesses, financial and development experts to “look outside the box” for solutions. Is that really something that we want to discourage?

      Yes. We definitely want to discourage that. When we encourage business people to “look outside the box” we are actually encouraging them to “look outside the county.”

  3. One of the problems with that approach is cost. Trackside has been roundly criticized for proposing a six-story building. However, going over the numbers with a few people, it might take something that high to enable the costs of the new construction to pencil out.

    What if Trackside needed to be 8, 10 or 12 stories to pencil out?  Should they be allowed to build whatever height it takes to “pencil out”?

    1. Excellent point.  How high is too high?  If we take Mincozzi and his densification model to its logical conclusion, we should have 30 story skyscrapers downtown.  Yet because of other considerations such as aesthetics, historical preservation, the costs of providing fire protection for a building that steep, such a proposal would never fly.

    2. BP, I think you are putting the cart in front of the horse. Or should I say, putting the end result in front of the planning process. 8, 10 or 12 stories is a hypothetical in your mind, but at least for the moment, it is not a reality that is on the planning process table.

      One of the ways that I felt Minicozzi’s presentation and methodologies applied to Trackside was that to date none of the discussions about Trackside have included any dollar value per acre assessment. It would be very interesting to see that kind of information enter into the actual conversation. If you personally want to extrapolate that value for the proposed project up to a hypothetical 8, 10 or 12 story project, I’m sure no one will stop you.

      1. Okay, so let’s talk about the proposed 6 story Trackside project and the other one being proposed at the Families First site on 5th Street.  Many folks think 6 stories is too high for the downtown, which up until now has had not permitted more than 4 stories.  So I think it is logical to ask how high is too high?  Once you allow 6 stories, what is to stop the next developers from proposing a project that is 8 stories high, or 10, or 12, or 20?  Some years ago, a 4 story building downtown would have been unheard of!

      2. Sheesh Matt, I was making a point (maybe a bit sarcastic) on projects pencilling out.   No I don’t need to “extrapolate”, as you say, because 8, 10 or 12 stories really isn’t the point.  The point is we shouldn’t have to as a community let developers build whatever they need to pencil out.  Six stories in that area is already ridiculous in my mind and in the minds of many the residents who will have it towering over them.

        Matt, you have a way of muddling what people write.

        1. BP said: “The point is we shouldn’t have to as a community let developers build whatever they need to pencil out.”

          BP, in the current reality we live in, where does it say that “we as a community have to let developers build whatever they need to pencil out”?  We have planning processes and regulations.  Those processes and regulations allow the citizens to voice their concerns and objections to proposed projects, as well as their support.  Each citizen is wholly and completely unconstrained in their right and ability to provide that input.

          My question in my original post asked you why you wanted to abandon the process and only focus on the end result?  Some people would say that it is too much work to participate in the process.  Some people would say that they don’t have time to participate in the process.  Some people would say that they don’t care enough to participate in the process.  My question to you was an attempt to redirect your focus from the end result to the process . . . and especially to your thoughts on how we can make the process work better.  If that is muddling your written words, then so be it.

           

        2. Matt, if you follow the conversation, my comment was in response to what David wrote:

          One of the problems with that approach is cost. Trackside has been roundly criticized for proposing a six-story building. However, going over the numbers with a few people, it might take something that high to enable the costs of the new construction to pencil out.

          So yes, pencilling out has entered into the equation as David pointed out.  In fact, living in Wildhorse we’ve been subject to another developer wanting to build more houses in Paso Fino so that his project can also pencil out.

           

          1. BP, can you name for me a single financial transaction where “penciling out” is not part of the process?

        3. There’s nice buildings all over town that aren’t 6 stories tall and somehow those developers I’m sure found a way to make it pencil out.  So why now does it take 6 stories towering over a residential neighborhood in order for it to pencil out?  I’m not buying into it.

          1. Rather than saying “I’m not buying into it” which is rather absolute, wouldn’t it be better to say “You haven’t given me enough data to make an informed decision to say yes, so my default answer absent that additional data is “No.”

            That conveys the same message without slamming the door in the other person’s face.

        4. BP, can you name for me a single financial transaction where “penciling out” is not part of the process?

          Once again Matt you miss the point.  Question to you, should we let someone build 6 stories towering over a residential neighborhood so it can pencil out when the City of Davis has no other 6 story buildings that I know of?

          1. Only if the applicant goes through all the steps of the planning process successfully . . . and with active community participation . . . the kind of participation we are currently seeing in the case of the Trackside application.

            Another way to answer your question is that for the 65,000 residents of Davis some would answer your question with a “Yes” and some with a “No” and some with a “Maybe” and some with an “I don’t know” and some with an “I don’t care” Listening to all those responses and gathering them together will ultimately give us the answer to your question.

          2. From my perspective, I think the neighbors need to be honest about what would be acceptable to them, the developers should show their math, and the council then makes the call.

          1. I think what Matt is trying to say is we need to have the proper data to analyze the situation. What happens is our choice right now is between the current usage or six stories, which is better?

          2. Barack Palin asked . . . Matt, are you personally okay with the Trackside project being built to 6 stories in that location?

            I do not believe I have enough information to make an informed decision BP, and some of the information I have been exposed to is either second-hand and/or contradictory. Further, I do not believe the details of the project have been finalized, nor do I believe the details of the Old East Davis Neighborhood have been finalized. I have dug into the City website and find that the Core Area Specific Plan applies to the parcel, and that that Plan, passed in 1996 has been amended numerous times since. Alan Miller has repeatedly referred to a “transition zone” that has different requirements than those found in the Core Area Specific Plan, but I have yet to personally find such a reference.

            So bottom-line, if I were to provide you with a yes or no answer to your question, it would be a political calculation rather than an evidence-based decision. I strongly believe this city needs more evidence-based decision making and less political calculation, and as such I will wait for the rest of the evidence to come in.

        5. What happens is our choice right now is between the current usage or six stories, which is better?

          Why does it have to be a choice between 6 stories and current use?  Why not a choice between 3 stories and current use?  What if someone proposed and 8 story building there, then would it be a choice between an 8 story building and current use?

          1. It does not have to be that kind of Manichean choice. That is precisely what the process is for, to allow the citizens to weigh in on what they believe. it is a come one, come all proposition . . . everyone is welcome to both participate and speak and submit written material.

            The other answer to your question is that City staff has to process the application as submitted by the applicant. Staff can recommend changes in both their staff report(s) and in answer to questions in public hearings, but until the applicant changes the application, it stands as submitted.

        6. Why does it have to be a choice between 6 stories and current use?

          Because that is the project that the owner of the property has proposed.  Without an overall design plan for development in town, we are forced to look at every project in a piecemeal fashion, starting with what is proposed by the owner or developer. Nobody has said that the City has to accept the original proposal as submitted, but there have been those who correctly point out that we cannot force the developer to build an unprofitable project.

          1. Mark’s response to BP is spot on. In what Anon has christened “a politically charged and inequitably murky policy of ‘Densification via Zoning Variance’ (DZV),” the only choice is to process each application in a very narrow constricted silo.

        7. Because I get the impression that three does not pencil out

          Pencil out for what, all the investors to make a nice tidy profit?

          Once again, how have all the other investors managed to build and make a profit from all the 2 and 3 story buildings in town?

          So from now on all buildings built near the core are going to have to be 6 stories to pencil out?

          Once again, not buying it.

        8. but there have been those who correctly point out that we cannot force the developer to build an unprofitable project.

          And likewise I believe the developer shouldn’t be able to force the city to take on a plan that isn’t in conformity with the other buildings in its area or even the whole city just because it might not pencil out.  Nobody is forcing the developer to build an unprofitable project.  If they don’t feel they can make a profit with what the city eventually okays then they can always back out.

          1. BP, do you know whether the design proposed complies with the City’s currently adopted Core Area Specific Plan?

        9. “Who said they’re attempting to carry out any negotiations on this forum.  We’re all allowed our opinion and I feel this is one good way to get those opinions out.”

          The City isn’t, it is all the people harping about a project that hasn’t even reached the planning commission that are trying to ‘negotiate’ in advance.  There will be plenty of time for public input once the professionals have had their say.  Yes, this may well get to the CC and when it does, have at it. Until then, try working on a broader vision for the town rather than being blinded by a proposal that may never see the light of day – at least not in its current form.

           

          1. Well said Mark.

            Out of curiosity. and given the recent kerfuffles surrounding (A) the Villages at Willow Creek application vis-a-vis street safety on Koso Street, and (B) the Embassy Suites Hotel and Conference Center vis-a-vis street safety and energy sustainability and (possibly) historical resources, which, if any, of the City of Davis Commissions do you believe should review the Trackside application before it goes to the Planning Commission? Those Commissions are:

            Bicycling, Transportation, and Street Safety Commission
            Civic Arts Commission
            Finance and Budget Commission
            Historical Resources Management Commission
            Human Relations Commission
            Natural Resources Commission
            Open Space and Habitat Commission
            Planning Commission
            Recreation and Park Commission
            Senior Citizen Commission
            Social Services Commission
            Tree Commission

        10. we shouldn’t have to as a community let developers build whatever they need to pencil out.”  And (surprise, surprise!) we don’t.  Unless, or course, the land is already entitled for a given use, and in that case WE DO!  Has something to do with US and State Constitutions, but perhaps you believe those are bogus.  Unless you want the city to perform a “taking”.  You sure you’re even part “conservative”?

      3. “And likewise I believe the developer shouldn’t be able to force the city to take on a plan that isn’t in conformity with the other buildings in its area”

        The only reason to redevelop an area of the City is because that area of the City is not be utilized effectively.  What we have now does not bring in enough revenue to fund the City at the level we want.  In other words, it is not working.  Why would anyone propose building to that same standard again?

        The City needs more tax revues, and the citizens need more jobs. Replacing old one story buildings with taller mixed use ones makes economic sense. What you are arguing, does not.

        As I said before, no one is forcing the City to accept the original proposal as all such projects are subject to negotiation. It would however, also be incredibly stupid for the City and the Developer to attempt to carry out that negotiation on a public forum such as this one.

        1.  It would however, also be incredibly stupid for the City and the Developer to attempt to carry out that negotiation on a public forum such as this one.

          Who said they’re attempting to carry out any negotiations on this forum.  We’re all allowed our opinion and I feel this is one good way to get those opinions out.  We know this council puts a lot of weight in what its citizenry says and writes so this is as good a way as any to get my and other’s thoughts heard.

        2. “And likewise I believe the developer shouldn’t be able to force the city to take on a plan that isn’t in conformity with…”  Are you really that ignorant/dense, BP?  The developer CAN’T force the City to approve any ‘discretionary’ entitlement, which Trackside would be.  They can’t even force the City to negotiate another plan.  The City can choose to work with the developer, to ‘negotiate’ a more acceptable plan, or just say yes or no. The City has no obligation to justify a “deny” decision.

          Or, do you just want to kiss off any ‘right’ for a property owner/optionee to “ask”?  So much for claiming any ‘conservative’ credentials.  No right to ask = no property/free speech rights.  Could be considered hypocritical.

  4. Along those lines, those who looked at where Target was on the map, saw it barely registered on the map. A lot of people have pointed out over the years that the city allowed Target to get away with the lowest level LEED (Leadership in Energy and Environmental Design) design possible, but it also has a wasted space parking lot. Imagine having a parking structure on top – we could have the same revenue with less than half the footprint, which could have allowed more of an open space buffer zone between Target and the nearby residents, or more retail space.

    For Target to put a parking lot above or below the building would have probably been prohibitively expensive.  Secondly, you concede you are/were anti-Target.  I get that.  But from a practical point of view, that land was vacant and not generating any sales tax and very little property tax.  Now at least it has increased property tax value and brings in at least $200,000 in sales tax revenue to the city’s General Fund.  Target has also donated to various causes in town.  It has also prevented sales tax leakage to Woodland’s Target.  In other words, Target has been a plus fiscally to the city.  Many Davis citizens find it a blessing.  Target does not seem to have displaced any other businesses in town.  And yet you still seem to be arguing somehow Target is not good enough, or should never have been approved?  I don’t want to put words in your mouth, but I am not understanding your logic here.

    1. i think you have to weigh a number of considerations here.  the point is yes, you can build a target that generates whatever tax revenue it does.  but now we have to build additional facilities to generate more tax revenue.  it is possible if we had built target correctly it would have generated more revenue, which would have helped us to avoid additional development in a community that values open space and ad land.

        1. Anon

          “Built Target correctly”?  Based on whose ideas of what is “correct”?”

          Since this was up for a citizens vote, and since anticipated revenue to the city was significantly overestimated resulting in a 51-49 vote, I would say that the idea of what was “correct”would have been an accurate assessment of the anticipated revenue, no “green wash” which allowed some people to feel good about the “green Target”, more efficient use of the land available in the form of less wasted parking space, and the hype associated with the new store as described to me by one banker who was a strong advocate of the store who I will paraphrase. He said to me, yes, he knew that there were already nine Target’s within a 30 minute radius of Davis, but just think of the enhanced shopping experience that you have at the new store. Subsequently, I went to the Davis Target, not to shop but to check it out. I am sorry, but I find the aesthetics of the “shopping experience” to be identical to any Target that I have ever shopped in.

          I speak as someone who does not hate Target. I have shopped many times at other Targets, but will not shop at the Davis Target which I believe was a major waste of land which could have had more valuable uses including availability of open space which still allows for the possibility of a better use which has now been pre-empted by the Target, which in my opinion did not deliver on its promises.