The Davis City Council likely will not make a final decision this evening about the Nishi project, as the staff recommendation calls for a public hearing on the project including staff responses to councilmember questions, public testimony and then preliminary policy direction on Baseline Project Features and Development Agreement provisions. The final vote will not come until February 2.
Staff is “requesting the City Council provide policy direction on the concepts for Baseline Project Features and Development Agreement provisions at this meeting, so that documents can be prepared for action on the meeting of February 2, 2016.”
A key question is whether the council is going to keep Nishi on track for a June vote or push the project toward November. While there are a number of concerns, the Vanguard’s discussions with various councilmembers over the last week leads to a belief that, at this point, the project will go on the ballot in June.
As one councilmember told the Vanguard, there are clearly concerns with the project and work to be done, but there is a belief that those hurdles are not insurmountable.
Two weeks ago, the Davis Planning Commission pushed the project toward the city council, with a 7-0 vote to certify the Environmental Impact Report (EIR) and a 5-2 vote on the development agreement and the General Plan Amendment for the Nishi Property, including provisions that the Nishi Project should not be occupied until connections to both UC Davis and West Olive Drive/Richards Boulevard interchange improvements are constructed. Second was that residential units cannot be sold (but may be rented) until the outside air quality improves to acceptable levels to a standard to be determined.
These votes occurred despite concerns expressed by commissioners, particularly on air quality issues.
From the view of the Vanguard, there are still areas of concern that need to be shored up before the project goes on the ballot.
First, the Finance and Budget Commission “recommends that the city council does not approve development of innovation center projects until the economic analyses are complete and accurate.”
The EPS report showed about a $78,000 net negative fiscal analysis, however that number increased to about $106,000 in the negative when some other considerations were factored in.
Dan Carson, in reanalyzing the fiscal data, believes that the project will be a net $2 million positive for the city. He writes, “My independent analysis finds that Nishi Gateway would achieve a significant direct net fiscal benefit to the city that, in the long term at build-out, could reach $2 million annually, with one-time benefits in the millions of dollars.”
The developer, for his part, has pledged in the baseline features to make the project “net fiscal positive with or without hotel.” Tim Ruff suggests provisions could include a make-whole provision for UC leases, landscaping and lighting assessment district, a CFD (Community Facilities District), and negotiations with the county.
In a back-of-the-envelop analysis, it was suggested to the Vanguard that if we start with the EPS assumption of a negative $106,000, we can see a relatively easy path to fiscal positive. We start with the assumption that the county tax share is worse than the EPS estimate, costing another $101 to $207 thousand each year.
Next, we assume that we keep not all but just half of the sales tax increases of recent years. That will add about $127 thousand. If the developer makes good on his promise to not lose tax from UC Davis renting or owning part of Nishi, that would add about $100,000.
Then if we require private rather than public maintenance of the open space, we add about $184,000.
As was pointed out to the Vanguard, just these reasonable changes, many of which are already agreed to by the applicant, would put Nishi into the black by $181,000. And that doesn’t even include a CFD.
Next comes the question of air quality. The city has recognized this issue through the EIR, where they believe that they can reduce the impact by planting trees to create a barrier of sorts.
Mayor Pro Tem Robb Davis argued that if we examine the actual risk of the air quality issues, it is not as great as we might think. He explained, “What we’re hearing about this property is one in 4500 people will over the course of an entire lifetime contract a certain form of cancer. That’s not annually, that’s one in 4500 over the course of a lifetime. We’re talking about magnitudes of difference.”
He said, “These are minuscule risks compared to the risks that we face every day in our lives.”
That leaves us with three remaining issues.
First, there are concerns that the baseline features lack specificity. It has been suggested that this lack of specificity might result in legal action.
In the Vanguard analysis, we noted that Measure J, in order to have teeth, required the “Establishment of baseline project features and requirements such as recreation facilities, public facilities, significant project design features, sequencing or phasing, or similar features and requirements as shown on project exhibits and plans submitted for voter approval, which cannot be eliminated, significantly modified or reduced without subsequent voter approval.”
When the city renewed Measure J, the city developed “Parameters for Evaluating Proposed Project Modification for Consistency with Baseline Features and Master Plan.” In the city’s analysis small adjustments do not require a new vote, but major changes do, including, “A reduction or increase in the density or total number of housing units within the overall project below or in excess of the established minimum or maximum number of units set out in Base Line Project Features.”
What is not clear from the text and analysis is how specific the baseline features have to be. For instance, for Nishi, baseline features call for “up to 650” units and “up to 325,000 square feet of office/R&D.” It also suggests, “Hotel or extended stay hotel may be added,” and “additional 20% residential units may be added.”
Is that specific enough or does the city need to add more certainty to those numbers?
Finally, there are the provisions that there can be no project on the site until the second crossing is approved. We have reason to believe that this may be agreed to but not finalized because of the UC Davis process.
Second, is the provision that no occupancy can occur until the Richards Boulevard interchange improvements are complete. That would delay occupancy until perhaps 2021 or 2022. Clearly, they are attempting to mitigate traffic impacts on an already-congested Richards Blvd., but we believe there are other work-arounds.
One thing we have suggested is a reduction in parking spaces and reduced car ownership in the residential sector. That could be coupled with a university-only access point for residential and businesses or it could include some sort of restriction for peak time access to West Olive through a metering system.
At times the Vanguard has suggested that the project add density to the residential component and then further reduce the ability for people to drive to and from the property. The developer, however, does not believe they can go beyond about 780 residential units.
They cite the open space requirements for 14-16 acres of open space. There are also technical needs for setbacks, underpass and roadways. They have already mostly eliminated surface parking. They do not believe they can lose the R&D (Research and Development) and business components.
So they end up with 10 acres for residential units and they do not believe they can go above five stories due to the costs of moving from stick frame to steel framing.
The bottom line here is that there is still work to be done and agreements to be made, but it appears that the project will go forward in June with those agreements and the voters can decide whether the advantages of the project – the added 325,000 square feet of R&D space and the perhaps 780 units of housing with 1500 or so beds – outweighs the drawbacks in terms of congestion and potential air quality concerns.
Council will decide what agreements and parameters to put on the project, and the voters will decide whether to approve the project in the end.
—David M. Greenwald reporting
That’s about the cost of the city hiring let’s say a new asst. Innovation Officer. Is that really what we had in mind when we were being told that we needed the innovation centers for the tax revenue? We have a great opportunity for some real revenue so are we really thinking of settling for basically the cost of one overpaid city employee?
I do think that it is unfortunate that Nishi got wrapped up in the Innovation Center talk. The RFEI process identified two large innovation centers – Mace and Davis, both of which were between 2.5 and 3 million square feet of R&D. By contrast Nishi, which was already in progress pre-RFEI has an research component, but it was always smaller at 325,000 square feet. If you look at the Studio 30 report, it clearly identified NW Quadrant and East Mace as locations for innovation centers over and above Nishi.
http://nishigateway.org/news-and-updates/frequently-asked-questions/
So once again, is the cost of basically one city employee what we had in mind for revenue generation to support city services?
BP said . . . “So once again, is the cost of basically one city employee what we had in mind for revenue generation to support city services?”
BP, you have your terms all mixed up. Table 1 on page 3 of the revised EPS analysis issued November 12th 2015 shows $1,245,000 of annual revenue for Nishi at full buildout. I suspect $1,245,000 will pay for a lot more than one city employee.
With that said, if you “Think Like an Income Statement” the term you are looking for is margin rather than revenue. Margin is revenues less costs.
i’m willing to support nishi if they can fix the roads impacts, reducing cars and vehicle trips, and push most of the traffic to uc davis.
Matt:
You state that Nishi would generate $1,245,000 in annual revenue, and that this would pay for a “lot more than one city employee”. However, the table that you’re referring to shows a series of expenditures that result in a $106,000/annual deficit. ($530,000 of these costs are for police services.) I’m not sure how you’d be able to pay for any additional employees (beyond what’s required for the development itself), if the “margin” shows a $106,000 annual deficit.
The $181,000 (that was mentioned by David and BP) was apparently intended to show the margin, under a different set of assumptions/calculations.
isn’t part of the costs employee compensation?
DP:
I assume so. But, if I’m not mistaken, the point that Barack Palin was making is that even under more positive assumptions/calculations, a possible net surplus of $181,000 wouldn’t go very far.
Again, the basic project is projected to cause a $106,000 annual deficit.
Was outside unplugging an eave drain, drought and the end of the world might be at an end. I just viewed the document and don’t see $1,245,000 in the black anywhere. Maybe Matt can post the the document page. Yes Matt, since you’re being a stickler “margin” would be the proper term. But I think everyone already knew that when I was referring to David’s $181,000 in the black figure.
okay, but what about dan carson’s numbers? are they plausible? the $181K doesn’t even come with a cfd – isn’t that a reasonable assumption to add into the model? how much more does the city get with a cfd? what about a $2 per square foot tax for r&d? that would generate another $650K a year? there’s a lot missing from this fiscal analysis?
Is the CFD a sure thing? I thought that was being fought against. Too many question marks.
If the developer agrees to the CFD, it’s a sure thing and I think he has already agreed to do one. Someone can correct me if I’m wrong.
Have we really sunk this low as a community – that we would seriously consider taxing students and tech startups via a CFD to provide money to the General Fund so a Whitcombe mutifamily complex will “pencil out?” Really?
“What we’re hearing about this property is 1 in 4500 people will over the course of an entire lifetime contract a certain form of cancer. That’s not annually, that’s 1 in 4500 over the course of lifetime. We’re talking about magnitudes of difference.”
After an electronic communication with the county health statistician, I would like to clarify a little on the health risks associated with the location of the Nishi site.
First the quote from Robb Davis is only with regard to cancer risk and I agree that the increased risk is very small. What this does not address is the risk of the chronic respiratory diseases of asthma and COPD as well as the probably greatest increased risk, that of cardiovascular disease due to small particulate damage to the endothelial ( inner) lining of the small blood vessels. According to the Yolo County statistician there is no spike in ER visits from the Olive Drive area in Davis but there is an increase seen in West Sacramento, the speculation being that we are likely relatively protected by distance from Sacramento and the prevailing wind patterns.
A further mitigating point would be as others have stated the anticipated young and relatively transient nature of most of those anticipated to be living on the Nishi site.
For these reasons, I am in agreement with Robb and David that the health issues identified are probably not a large factor in moving forward with what is essentially a student targeted project.
good analysis tia.
Even though 1 in 4500 might get cancer or it might lead to a few more respiratory cases Nishi is worth the risk. From the health standpoint that I can agree on.
But my question is why is a soda tax with very questionable possible benefits considered worth it if it even stops one person from getting diabetes as some have said?
BP
Off topic. If you really want to review my reasoning with regard to the soda tax, please go back and review my multiple posts on the issue.
It just comes off as so hypocritical to me that 1 in 4500 cancer deaths or respiratory illnesses are considered acceptable but in turn a soda tax should be put forward if it even saves one person from diabetes. Does anyone else see the irony?
I guess I don’t see it the same way as you. There is a small increased cancer risk in the air quality issue. There is a much larger risk of obesity and therefore diabetes with poor diet. Davis is lower than surrounding areas and you still have 1 in 4 kids at risk of diabetes. That’s a far cry from 1 in 4500.
But the soda tax will do basically nothing to alleviate any child diabetes in Davis and as I pointed out some think if it even saves one it will be worth it. Why isn’t it then worth it to save one from cancer or respiratory illness because of the freeway air?
Perhaps the more important risk that is not being talked about would be an accident and toxic material spill either on the highway or on the railroad. It’s a very small probability but could potentially be large damage if it ever happened.
isn’t that a risk anywhere along the train lines or freeway?
ANSWER: YES! Just like respiratory risks.
Topcat
According to my previous conversation shortly after his assumption of joint responsibilities, Chief Trauernicht confirmed that the East/West trains are a major concern for a toxic material spill. That is of course as relevant to the downtown as it is to Olive Drive and to Nishi. At the time , all of the university firefighters were undergoing specialized training in dealing with hazardous material disasters and the Chief’s intention was to have this specialized accreditation also achieved by every member of both city and university fire departments. I have not followed up on this with him, but even though we have not been discussing it on the Vanguard, I know from direct contact that it is very much on the Chief’s radar.
It would be extremely irresponsible for the City Council to put this incomplete mess on the June ballot – a complete dereliction of duty.
Staff is proposing that the Council approve the project now and let them pin down the details later. The three biggest problems are (1) the squishy language regarding informal commitments with the developers that have not been locked down in a development agreement, (2) baseline project features with deceptive language that don’t guarantee what the public is being led to believe they guarantee, and (3) numerous substantive questions about the fiscal analysis (including the FBC recommendation that additional analyses be performed before Council action, and credible testimony from experts that both the property tax revenue and sales tax revenue were significantly overstated in the EPS fiscal models).
Any Council member that votes to advance this will abrogate their responsibility to the community, and effectively assign their decision making authority to staff.
Are you really comfortable letting Hess/Steiner/Tschudin (a contract planner on Covell Village) cut a deal with Ruff/Whitcombe for a project that carries a very real risk of destroying the usability of the Richards corridor?
Is “Yes” an acceptable answer?
Although I should add — in the spirit of full disclosure — that I stopped beating my wife on Thursday.
“Although I should add — in the spirit of full disclosure — that I stopped beating my wife on Thursday.”
i was hoping you had.
tschudin is a contract planner on a lot of projects and a ceqa expert. a lot of good people vouch for her work, so i’m told.
And, of course, that is what staff is supposed to do. Work out the details, with oversight from the council. So my answer would be yes, I am comfortable with staff doing staff’s job, and council reviewing it in public. Plus, I have no hostility to John Whitcombe or Tim Ruff coloring my perception of this project.
there were a lot of problems with covell village, that doesn’t mean they can’t fix the problems with nishi before putting it on the ballot.
How about the problems get fixed before it gets a council green light?
“And, of course, that is what staff is supposed to do. Work out the details, with oversight from the council. So my answer would be yes, I am comfortable with staff doing staff’s job, and council reviewing it in public.” DS
We are unequivocally 100% in agreement on this.
That’s why I am so concerned about the City Council granting the entitlements tonight – or next week – or before the February Measure J/R deadline There is too much detail that is still being worked out by staff. Once the ity Council votes “yes” they don’t get a do-over. The entitlements are granted.
The biggest problem is that we don’t have a substantially complete Development Agreement for public review or, in your words, “oversight from the council.”
All that is in the Staff Report is a bunch of non-binding verbiage describing what might wind up in the agreement. As for the agreement itself, Staff has just attached the City’s boiler plate that has had minimal work done to adapt it to this major entitlement action.
This was also a problem with Measure P, and in my opinion an important contributor to its 25/75 defeat.
That 25/75 might rear its ugly head again. I doubt it will even be a fair fight.
Solid post CalAg.