Listening to Judge Samuel McAdam during oral arguments in April, it seemed like there was a chance, albeit remote, that he might change his opinion which invalidates the council’s 2017 approval of Trackside. That was not to be – and I think most unfortunately.
As it turns out, I come down in a very similar position as Mayor Brett Lee.
“Although I voted against the Trackside project, I believe the City Council does have discretion to decide as it did on this development issue,” said Davis Mayor Brett Lee. “I am surprised that the court felt otherwise.”
Like the mayor, I opposed Trackside in the fall of 2017. Like the mayor, I do not believe that Judge McAdam got this one right.
As the judge explained in his own ruling (see link): “The proper standard of review is abuse of discretion.”
He wrote, “Under this standard, the Court must defer to the factual findings on consistency of the City unless no reasonable person could have reached the same conclusion on the evidence before it.”
“No reasonable person” is the standard. So that means four of the five Davis City Councilmembers were unreasonable in granting this (and even the fifth, Brett Lee, believes that the city had the discretion here). That means none of the city staff were reasonable. None of the dozens of community members who supported this project.
The problem I have with this decision is that it seems subjective. For Judge McAdam it comes down to size.
He wrote that “the failure here is that the mass and scale of the proposed project is not reasonable under the current law and factual circumstances.”
He adds, “There simply is not a logical and reasoned case to be made that Trackside is a ‘transition’ from the Core Area to the Old East Davis neighborhood. Trackside would overwhelm the existing 
residential neighborhood. It would not respect the traditional scale and character of the neighborhood. The record lacks evidentiary support for the City’s decision.”
He pointed out: “Trackside is not consistent with the City of Davis planning provisions governing the transition between the Core Area to the Old East Davis neighborhood. Trackside is twice the size of the nearby Chen Building. It is significantly larger than the McCormick Building and the Roe Building. These smaller buildings are all in the Core Commercial Area, where densification shall occur first. Trackside is four times larger than the current on-site buildings. There are no buildings inside the Core on the Third Street Corridor remotely similar in size.”
My problem here is that the judge is basically deciding what is reasonable, and that in the end is a subjective view.
The city presents what I think is a compelling argument that basically this is a larger lot than usual and therefore, instead of mass and scale, we should be looking at floor area ratio (FAR).
Floor area ratio is the relationship between the total usable floor area and the size of the lot on which the building is located. A higher ratio means that the building is more dense. Higher buildings are going to have a higher ratio.
What the city is arguing here is that the FAR of Trackside is within the guidelines specified in planning documents and the only the reason that the mass and scale are larger than other buildings is that Trackside sits on a larger lot.
The FAR of the building is 1.59. The limits in the zoning are 1.5 – however, with density bonuses for having a plaza and underground parking, it could raise the limit up to as high as 2.0. Without the underground parking, it is at 1.7.
But Judge McAdam rejected that argument. He wrote that “the FAR like the designation of the site as an opportunity site does not change or satisfy the fundamental planning policy that the project’ must be a transition from the Core Commercial Area to the Old East Davis neighborhood.”
He adds, “All of the necessary zoning amendments for the project must be consistent with the fundamental policies set forth in the general plan and the CASP [Core Area Specific Plan].”
The city wants to go about appealing its decision. I get that impulse. But I think they should pause and think about how to move forward.
There were a lot of problems with this process that I think the city needs to re-think in light of this decision. Ultimately I opposed the project not because I thought a four-story building would be inappropriate for this location but rather because I thought the approval ahead of the Downtown Planning process was premature and the housing usage was non-essential.
The city is going through an elaborate planning process for the core that will ultimately result in a new Core Area Specific Plan. The current plan which puts heights in the downtown at two to three stories seems badly out of date.
The ultimate plan will reset the heights not only in the core but also in the transition area. If we think about it this way, if the bulk of buildings in the downtown area are still one to two stories, with a few at three and four, why are we approving a four-story building in the transition area?
However, if we are ultimately looking at the downtown having five- to six-story buildings, suddenly three to four stories makes some sense. That was my thinking in 2017.
Right now, it looks like the DPAC ( Downtown Plan Advisory Committee) is looking at three-story maximum heights in the edge transition areas next to existing neighborhoods.
Clearly that standard is not finalized yet – but, if that’s the case, why are we rushing to approve this project ahead of the DPAC making a determination and the council approving a new CASP?
This never made sense to me. We can make an argument that four stories here makes sense, but it’s harder to do so outside of the planning discussion.
As I have pointed out numerous times before, my other objection to Trackside is high-end luxury apartments do not seem to be our greatest and highest need. Ordinarily I would be disinclined to attempt to micro-manage what a private developer builds – but they have created a huge impact on a neighborhood, they planned poorly and proposed something originally greatly out of proportion with the rest of the downtown, and then backed off to something only marginally so.
This is not a neighborhood fighting against all proposals, as they indicated once again in their latest statement to the Vanguard.
As they said in their statement from President Rhonda Reed, “It was never the neighborhood’s intention to prevent redevelopment of this site. We support infill.”
At this point the city has a choice. They can continue to attempt to pound a square peg into a round hole, double down and appeal the decision – a decision that I agree was wrongly decided – or they can take a new tack.
In my view, they should approve the new downtown plan, invite a new planning proposal, and ask the developers and neighbors to come up with a plan they can both live with. If there is no path forward at this point, then do nothing.
What is emerging from the DPAC at this point does not support four stories at this location. So why are we trying to force a project of this sort that will not solve fundamental housing problems in the city? That has been my question from the start, and, with this court decision, it should be a question that we revisit before pouring more resources after failed policies.
—David M. Greenwald reporting
While saying that the judge got it “wrong,” this article leaves out multiple key parts of the actual decision.
In his decision, the judge strongly states “There is simply not a logical and reasoned case to be made that Trackside is a “transition” from the Core Area to the Old East Davis neighborhood.” (p. 20).
Greenwald states that the judge made a “mistake.” But—just like the City—he does not make a “logical and reasoned case” why Traackside is a “transition.”
Its a weird editorial. It claims the judge made mistakes but then suggests moving forward with a compromise with the neighbors who are the plaintiffs. Why continue to question the judge here? Only in an appeal does that matter anyway.
The decision leaves the developers and the city two options. They can continue to fight or they can seek compromise. Fighting wastes money and time that detracts from the profitability of the project in the end anyway, not to mention the legal fees of the plaintiffs, fees that will be much higher then now if the decision is upheld. It seems the prudent next step is to figure out if a path forward exists without more litigation.
“Why continue to question the judge here?”
Because I think the judge is in error and exceeds his authority. But ultimately I don’t think it’s worth the city attempting to appeal.
Actually Ron Glick… you raise a good point…
The only two choices the City appears to really have control over, is to appeal the decision, or vacate the approvals (they technically have a third choice which is to do absolutely nothing — no appeal, no processing of applications, nothing).
Any other option is pretty much solely in the control of the property owner/developer to initiate… and why would they? They may well cut their losses, without risking more, with no certainty of approvals, and take tax deductions for what they’ve spent to date. They have no obligation to redevelop the property. Leave it just as it is. Which has its own implications for the downtown, the adjacent neighborhood, the community. Status quo. ‘No action’ is a choice, and an ‘action’.
10-20 years from now, the site might appear and function just as it does now. Everyone happy?
Just remember the Second Law of Thermodynamics… not subject to reversal by a YC judge…
The feasibility study provided to the DPAC says that three-story mixed-use construction is not financially feasible in the core under current regulations. If we demand three-story construction, we will likely end up with nothing.
Yep.
And some folk appear to desire that.
That would seem like an important point to be raised in this process, Mark.
Perhaps it should be noted that there is “something” there (which appears to be partially vacated, as a result of the developer’s plans).
Finding an immediate “solution” should not be viewed as an “emergency”, from either the city’s point of view, or the view of neighbors.
David – Feasibility is the only point that matters, both here and with the new CASP. If we set standards that are not financially feasible we are virtually guaranteeing that we will see no changes other than the continuing deterioration of the existing structures.
Mark: Things change, over time.
What’s not “feasible” today may very well be feasible, tomorrow. More than one factor impacts this.
One might question what the assumptions and goals are in the first place. (In fact, there’s quite a bit of disagreement regarding that, as you’ve witnessed.)
Wow.
Mark – I think feasibility is an important point that must be considered. But it’s not the only thing that counts.
David – It is counterproductive to consider ‘solutions’ that are not feasible, unless your actual goal is to prevent change.
The City might choose to make other changes in the zoning or regulations that reduce the cost of development sufficiently enough to allow three-story construction to be feasible, but there is no evidence to suggest that is going to happen, especially in the current local political environment. If anything, the restrictions will be increased making any development even more expensive.
Mark… to paraphrase a reputed Bear Bryant quote, “Feasibility isn’t everything… but it beats anything that comes in second”… no matter how attractive, wonderful, desirable any project/strategy may be, if it’s not feasible, it ain’t happening any time soon… if ever…
Some think “what if things change”? True, but an if… how will things change, if they do? Climate (definitely changes over time, for whatever reason -millions of years of evidence of that, historically)? Change in economic feasibility? Perhaps, but you have to make a bunch of assumptions, none of which are ‘reasonably’/provably predictable…
But we’ve had a bunch of good, soaking, rain events recently in Davis… not characteristic…
Personally, I view any claims regarding feasibility with a high degree of skepticism – especially on the Vanguard.
Regardless, some of the factors impacting this might include the amount of expected rent (or sales price) – which definitely changes over time.
Other factors might include borrowing costs (if needed), comparisons with other investments, etc.
Not so long ago, it probably wasn’t “feasible” to residentialize any part of downtown, or transition areas. Regardless of how tall the proposed buildings might be.
If developers claim something isn’t feasible, than let’s see their actual analysis – including expected returns over time, etc.
Perhaps “doing nothing” (as some like to say) is a reasonable alternative, in some cases. Again, that doesn’t mean it will stay that way forever.
The only “urgency” seems to be coming from development activists.
The feasibility analysis/claims come from the DPAC and the BAE analysis – they did not originate with the Vanguard or the developer.
I believe I’ve seen some criticism of at least one of these documents, coming from someone who I wouldn’t consider to be a “development activist”. I haven’t analyzed them, myself.
Perhaps an entire article (or two) along with critical analysis is needed regarding these documents, as well as how it specifically relates to Trackside. (Note that Trackside is a large property, compared to some downtown.)
Let’s see the ACTUAL, SPECIFIC analysis that the developer no doubt performed for Trackside, if there’s claims that it doesn’t “pencil out”.
But again, “feasibility” changes over time, and isn’t even necessarily a primary factor – unless one is “dissatisfied” with the way things currently are.
If I remember Matt W’s post correctly, the City’s annual GF budget deficit is now greater than $10 million. How many more decades do you think we should wait before the City starts addressing this fiscal shortfall with meaningful actions (such as encouraging redevelopment)?
Mark remembers my post correctly.
In the recent State of the City presentation by Mayor Brett Lee and City Manager Mike Webb, the 20-year Budget Shortfall was reported as $199 million ($10 Million per year). That $199 Million is up from the $172 Million Shortfall reported in the FY 2018-19 Adopted Budget, and up from the $156 Million Shortfall reported in the FY 2017-18 Adopted Budget.
If anyone is interested in the fiscal feasibility assessment prepared by Bay Area Economics (BAE) for the DPAC, there is a joint meeting of the Planning Commission, Finance and Budget Commission and the Chair of the DPAC this Wednesday evening at Council Chambers (Agenda HERE). The Staff Report for the meeting can be accessed HERE and begins as follows:
The slides of Matt Kowta’s presentation can be accessed HERE.
If you are interested in the future of our Downtown, you should be in Council Chambers Wednesday. The meeting begins at 7:00pm and there are only two items on the agenda, a straightforward Conditional Use Permit for a home in far north Davis, and then the Fiscal Feasibility item. I suspect that item will start shortly before 7:30.
Bill, another option (which I doubt the developers will do) is to try and sell the property and recoup their costs.
Another option is to wait until some future bill akin to SB50 is passed by the State and then come back with a new six-eight story proposal. As Ron says…”feasibility changes over time…”
Ha! 😉
I understand that bill has essentially failed twice, now. Despite modifications intended to garner more support.
Perhaps Wiener and Newsom are under-estimating resistance, across the state (due to a wide range of concerns).
If it comes back a third time, perhaps it will limit height to 3 stories!
I wonder how many people voted for Newsom, primarily because they viewed his proposals regarding housing development as being somewhat less harmful than those of his opponents?
Mark West stated “The feasibility study provided to the DPAC says that three-story mixed-use construction is not financially feasible in the core under current regulations. If we demand three-story construction, we will likely end up with nothing.”
Mark: are you referring to the feasibility analysis in this document? [BAE Draft Economic Background Analysis – Downtown Davis Plan Prepared for the City of Davis, June 5, 2018]: https://cityofdavis.org/home/showdocument?id=10509&fbclid=IwAR2HVPhce-oRnJW-LgUITsUzdazuluNYEcltY0MTHksufV81uz8ivM6xUAI
It should be noted that your statement is somewhat deceptive and misleading when referenced against that BAE document.
1) There are a LOT of caveats described in the feasibility analysis, and as the report mentions, in some circumstances development would be feasible (as also indicated by the fact that it actually is still happening with several examples provided in the report).
2) The analysis did not reference the exact number of stories in the prototype developments and it did not say that going higher than three stories would make the development feasible. Indeed, some of the prototype developments being discussed appear to go to at least 5 stories already: the “Medium Lot MXD Retail/Office” development prototype is 12,000sf lot with 7,200sf on ground floor (with stacked parking on the remaining ground level lot area) and 30,000sf to 38,000sf on upper floors = apparently 5-6 stories total.
UPDATE/CORRECTION: the development prototypes already go to 4 stories as described in the 5/16/2019 presentation at the Planning Commission here:
http://documents.cityofdavis.org/Media/Default/Documents/PDF/CityCouncil/Planning-Commission/Agendas/20190522/05B-PC-slides-5-16-19.pdf
“Medium Lot Office Over Retail – Stacked Parking (3 to 4
floors): •12,000 sq. ft. lot; 7,200 sq. ft. retail and 32,000 to 40,000 sq.
ft. office”
Interesting thought, Robert… but to whom?
Someone who might buy it, as is, seeking tax deductions for depreciation (as they allow it to depreciate, and getting whatever rental revenue they can in the meantime)?
Someone who might buy it for its development potential (as long as they are willing to go through the process, including negotiating with abutters, and dealing with those demanding high contributions, to their pet interests)[and undergoing a second ‘process’ if others are not satisfied with their concessions]?
Maybe… we’ll see, in time, but not likely soon…
What an arrogant point of view. “Not liking” a decision is not a reason for armchair non-attorneys to question it on a legal basis.
Moderator: edited, off topic
As I said in response to a comment yesterday, this is a misleading characterization of the ruling. It’s not a determination that those in support of the project are unreasonable. It’s a finding that the city’s current planning provisions on what is meant by “transition” cannot reasonably be interpreted to authorize the proposed Trackside plan. That’s not to say another judge might not have ruled otherwise. But the underlying problem here is with the current planning provisions. Blame the drafters of the General Plan for unclear or inadequate standards, not the judge.
I agree. The judge stated very clearly in the decision “There is simply not a logical and reasoned case to be made that Trackside is a “transition” from the Core Area to the Old East Davis neighborhood.” (p. 20).
Rik, that is the same statement that Eric made yesterday (see HERE) and I concurred with (see HERE). I’m glad to see that your disagreement with Eric and me from yesterday has turned into agreement today. What changed your mind?
Mark… did the consultants look at a model for DT that would have “ownership” (aka ‘condos’) units on the upper floors, with retail/comm on floor level?
Am not asking you to research (unlike some), but don’t know where to look… just thinking that you or others might be able to point to info…
Am thinking ownership residential units in DT buildings (of whatever height) just might change feasibility… and might well be a stronger model for DT, where folk are truly ‘invested’ in DT, and its success/safety/viability… historically, many places, the owners of the ground floor business resided above… which raises a model that I have no clue as to being tried, but I throw it out for thought/discussion purposes… a model where we have ownership residential in the upper floors, and they all jointly own the retail/comm spaces, and use income from retail/comm as a revenue source… helping to pay off their mortgages, and a source of income thereafter…
Just a thought… and I’m just an engineer… not real estate/financial/economist…
That is a good point.
The short answer is yes, the longer answer is, go to the PC meeting on May 22nd and hear it directly from the consultant’s mouth.
https://cityofdavis.org/city-hall/commissions-and-committees/planning-commission/agendas
Among other things, that document states: “In current environment, owner-users may develop but returns are unattractive for investor/developers”.
http://documents.cityofdavis.org/Media/Default/Documents/PDF/CityCouncil/Planning-Commission/Agendas/20190522/05B-PC-slides-5-16-19.pdf
It should also be noted that in the analysis of the 3-4 story “Medium Lot MXD Retail/Office” prototype, going from 3 to 4 stories only increased the “Yield on Cost” figure from 7.10% to 7.30%, so there is no indication that going to 5-6 stories (along with the increased per square foot construction costs and parking costs when you start going that tall) would “pencil out” at all.
One of the things the City might do to make redevelopment more feasible is to get rid of parking minimums.
A primary reason for parking minimums is to ensure that new development does not unduly impact existing residents and businesses. (Parking is already an issue, downtown. Hence the reason that Davis ACE built its own solar-covered parking lot, for customers.)
Thank you, Mark… appreciated (and ‘reasonable’)
If I don’t attend will likely watch it on line, and read any staff reports on the topic.
Thx again…
Bill, here is a table of the ten (10) scenarios that BAE included in their 2018 report.
Thank you, Matt.
Appears my “gut” was correct…
I’m not aware of any analysis which shows the overall fiscal impact on the city over time, resulting from adding residential units downtown. In general, residential development is a money-loser, due to increased costs coupled with Proposition 13. (Actually, Proposition 13 impacts commercial development, as well.)
The city has repeatedly declined to thoroughly examine the impacts of various developments, over time. Nishi 2.0 is one such example. There was also a great deal of controversy regarding Nishi 1.0, with at least one council member disputing what a professional fiscal analyst disclosed.
There was an analysis performed for Sterling, which was never fully disclosed as to the source as I recall. But, it showed an ever-increasing loss to the city, after several years.
Also, the Vanguard itself “led the way”, regarding a more “optimistic view” of existing fiscal analyses. To the point of “disavowing” the impact of developments as soon as they were projected to start creating deficits for the city. (Essentially stating that the development was “then” part of the city, at the point that deficits arose.)
Another specialty of Vanguard (in particular David’s) “analyses” consists of stating that there are “no additional labor costs”, as developments are added.
This type of reasoning assumes that either existing workers have “free time” on their hands to take on additional work, OR – some undefined future development would be “assigned” all of the additional costs, when a tipping point is reached (and more personnel are needed).
This type of accounting is not legitimate, nor is claiming that a given development “belongs” to the city, at the point that deficits start to be created.
To clarify, that person was not a council member at the time this dispute arose.
Ron – Most of the buildings downtown are decades old and have had the same ownership for decades as well. That means that their tax basis is relatively low. If a building is redeveloped or a property changes ownership (or both) the City’s tax revenues will increase by virtue of the updated tax basis. That increase in revenues is independent of whether or not the new building includes housing, it is simply a fact that new construction (or new ownership) has a greater tax basis than the old.
If you are talking about the creation of a new neighborhood then residential development is at best a break-even proposition for the City, but that is not what we are discussing here. The incremental addition of housing to the existing downtown through redeveloping of old commercial buildings into new mixed-use construction will not add significant new costs to the City. Tax revenues will increase from the new construction, but there will be little or no increase in costs, which means a net increase in revenues. Your argument is false.
Mark… mixed use in the Core will also stimulate more retail options in the downtown… and more success for them (retail)… plus, more “eyes on the street”… some advantages/gains will be financial, others, still of value… like greater viability for local transit options… and/or more reliance on bike/ped travel… there is little ‘downside’…
And frankly, redevelopment of existing commercial space is not going to create additional property taxes for the city from equipment, if the resulting space is vacated by current commercial tenants, and replaced with NO commercial tenant – due to higher rental costs, less parking, etc.
Perhaps we also need a “refresher” regarding the total percentage of property taxes that the city actually receives, downtown. (I recall that it’s in the range of 20%, throughout the city.)
Again, an actual, complete analysis is needed to determine the possible range of fiscal impacts resulting from adding residences downtown. (At least, before putting forth unsupported claims that it will in any way resolve the city’s fiscal challenges.)
The proposal is mixed use… retail/comm @ street level, residential above… pretty common around the world, and traditional in the US metropolitan areas… makes sense on “many levels”… at least 3 or 4 levels…
Remember also, the amounts of prop tax/sales tax, etc,. that goes to County and DJUSD… also taxpayer supported and serving taxpayers/residents… that ‘aggregate’ is important… part of “an actual, complete analysis is needed to determine the possible range of fiscal impacts resulting from adding residences downtown.”
Across the board…
Just saying… looking @ City revenues as an advantage, only, is “incomplete”, big time… not schooled in accounting, but, seems like there are more benefits/costs than are immediately apparent… but I’m just an engineer, and as I recall, you’re a finance/audit guy… so, will defer to your view…
Ron, I know of no such analysis performed for Sterling. Nothing ever came to the FBC for Sterling. What is your source for your belief that such an analysis was done?
Matt: You must have forgotten about it, since I’m pretty sure that you were aware of it (and possibly commented on it). David had posted it on the Vanguard, at least once (and I referenced it multiple times, after that).
I do not know the original source of it, but I was told by someone that it was an “official” analysis from the city. I believe I asked David as well, but I don’t recall a response.
But, I strongly suspect that David would remember this, as I challenged him multiple times regarding his interpretation of it. (Especially his “disavowing” of the negative fiscal impact, by year 15 as I recall. He essentially said that this is the point at which it “belonged” to the city, and that it’s impact was no longer relevant from that point forward.) I didn’t know whether to be amused, or outraged by that argument. 😉
By the way, it’s an “infill” development, which was projected to create an ever-increasing fiscal deficit.
Ron, chase it down. My memory is pretty good and I know that nothing from Sterling ever came to FBC for review, or as informational data. I also do not remember anything being posted on the Vanguard.
Looking at the Staff Report from the April 18, 2017 Council meeting where Sterling was approved (see HERE) the Fiscal Impact information is limited … far short of an an analysis. More like notes on a napkin or back of an envelope. Your own words in your 7:08 pm comment below appear to be well matched to the Sterling information.
Matt: It was just a little spreadsheet that David pasted into a Vanguard article, showing revenues and costs over the first 15 years. The source of the numbers weren’t supported by anything that David posted, at least.
Regardless, it showed a surplus for the first few years, but an increasing deficit by year 15. As I recall, David also argued that this deficit would not necessarily occur as quickly, if city salaries did not rise as fast as they are projected to in the spreadsheet. (Another issue that I challenged him on, I think.)
I’m confident that David would remember it, and could provide a link to it if he wants to do so.
It could be in the lengthy document that you referred to, but I haven’t searched through it so far.
Examining “revenues” without examining resulting “costs” over time is completely meaningless. As is stating that there will be no additional costs to the city, resulting from introducing residential development in a commercial area.
David, have you considered an intervention?
As I understand it, both revenues and costs are being evaluated… you are correct, it is the “net” that is important, on a financial basis… there are other ‘values’, as well, though…
Not sure why that’s under my comment in particular, since I was responding to someone else’s challenge to me.
Regardless, I don’t think there’s much more to be gained from continuing the debate here, so it probably is a good time to end it. I just take exception to anyone claiming that adding a massive amount of residential development downtown is a solution to the city’s fiscal challenges.
The pro-development argument seems to shift back-and-forth between the “need” for expensive housing downtown, vs. the “need” to resolve the city’s fiscal challenges by adding residential development, thereby creating additional challenges downtown – including higher rents for existing businesses, conflicts between businesses and new residences, more parking and traffic challenges, etc.
If the city is presumably pursuing this to get more money, exactly who is paying that increased bill? Existing customers of downtown? Wealthy new residents? New businesses (that the city is ALREADY having difficulty attracting, within its existing vacant space)?
As a side note, I cannot see Jim’s comments, unless I log out first. I must have accidentally used the “ignore commenter” feature, at some point.
The alternative to residential development downtown is densification elsewhere in the City, or development on the periphery. Any is acceptable to me, and they all have consequences, as does zero residential growth.
Bill: Allowing drastically more infill does not “prevent” sprawl. It might even encourage sprawl, as a result of the consequences of dense infill.
I just question any assumption that purposefully adding dense residential development downtown has no fiscal costs associated with it.
In reality, I suspect that downtown (and surrounding neighborhoods) will continue to change slowly, over time. As it already has been doing so.