Guest Commentary: What Kind of Development Would Actually Improve Davis?

by Mark Dempsey

The Davis Vanguard recently published Davis Teeters with an Unsustainable Economic and Fiscal Situation, describing the difficulty in getting sustainable, good development, and the good jobs that accompany it, in the nearby University town, Davis. There, elected officials and the voting public often reject development proposals from the city’s largest employer, the University of California, and even those proposed by environmentally friendly developers like Mike Corbett.

As one consequence, residents often commute to nearby Sacramento and Woodland since they can’t get good-paying local jobs. And those employed locally are often not paid enough to live in Davis, so they have to commute too. Just the traffic congestion generated by this arrangement is enough to make one question it, but it’s clearly less-than-optimum in many respects.

To me, it looks like Davis public policy makers and voters have succumbed to the dark side of environmentalism, consistently choosing a mirage of sustainability over profitable, environmentally-friendly development. Limiting development as they have is not really a favor for the environment since everyone has to commute (and pollute), and, when done correctly, environmentally-friendly development can be more valuable, and even more profitable, than business as usual.

Environmentalists harm their own cause when they blindly oppose development. The worst say things like “let’s just make this proposed development into a park.” Developers could, but do not answer “OK, we’ll make this parcel into a park, and your bank account into my retirement money…” to the environmentalists.

Primed by community meetings that seldom discuss costs and consequences, naive “environmentalists” making such one-sided requests is a commonplace. Perhaps the worst example I witnessed was a woman in a Sacramento County transportation planning meeting who asked the county to build a subway from near her suburban house to near her job downtown. It’s an understatement to say a subway would be handy for her commute, but it would be prohibitively expensive.

To be economically feasible, transit requires enough riders be within a comfortable walk of the stops, proportional to the expense of the transit. Bus and light rail require at least 11 units per acre (a little more than duplexes), but a subway is not viable in neighborhoods with less than 30 units per acre (three story apartments). The woman lived in suburban Carmichael–a location that did not qualify for even viable, unsubsidized bus transit.

So how can Davis, and other cities, reconcile economics and environmental responsibility?

1. Revise the Civic Design Process – Zoning practice common throughout California designates parcels by use (residential, commercial, etc.), often decades in advance of actual development. California’s cities could designate development intensity instead, and let the market sort out what use works when building actually occurs. This is called “form-based” (as opposed to “use-based”) zoning. Hercules, California, and McKinney Texas among other towns employ this planning method, so Davis would not have to reinvent the wheel.

Form-based planning is simpler, and less prone to arbitrary changes (rezones). At the height of the housing bubble in 2004, 35,000 acres in the region were proposed for rezone. A plan that requires so many changes is barely a suggestion, not a plan. The arbitrary susceptibility to rezoning stokes voters’ suspicions about development, and requires unnecessarily expensive revamps of infrastructure not suited to the final development intensity, too.

2. Quash Land Speculation – Land speculation is perhaps the sorest subject in all of California’s civic design process. Speculators can purchase–or, more likely option–outlying agricultural land for a few thousand dollars an acre, then, once they receive the entitlement to develop it more intensely, sell it to builders for 50 – 100 times more than they paid for it. That 5,000% – 10,000% profit remains immune to even income tax, too, if they exchange that development-approved real estate for income-producing property.

This dynamic also means speculators try to develop the worst possible land–one example would be the floodplain called “North Natomas”–because it is even cheaper to purchase and consequently more profitable. Never mind the invitation to corruption this offers local governments, the final product of such speculation is often a less-than-desirable mess. North Natomas residents were recently informed they would have to pay even more to shore up the pre-Katrina levees that protect them from flooding, for just one example.

Is there an alternative? Yes! In Germany, the developers have to sell the outlying land to the local government at the agricultural land price, then re-purchase it at the upzoned price. Not only does this discourage sprawling, commute-extending, edge-city development, it means all of that enormous profit–called the “unearned increment”–accrues to the benefit of the public, not the developers’ bank accounts. And Germany has a very nice public realm, too. It has excellent infrastructure, free college tuition even for foreigners, and the arts budget for just the City of Berlin exceeds the National Endowment for the Arts for the United States of America.

So what kind of development should Davis encourage?

1. Include Social Justice – Social justice considerations should guide development. This means “inclusionary zoning” that requires builders to build low-cost housing as a certain percentage of their development. It also means building more compactly, at transit-friendy densities, since the same amount of land can house more people. The trouble with good development is that it tends to gentrify, removing lower income residents gradually, so policy makers must take care to avoid that.

2. Mandate Mixed-Use – In the nicest neighborhoods, one can go to work, shop or eat after walking or biking from one’s residence. The idea of building sprawl (single use) is an environmental non-starter that mandates a) everyone must own an auto, and b) everyone must commute to every significant destination. Simply mixing commerce, offices and even light industry within residential areas cuts congestion, and when done properly can even cut vehicle miles traveled by one to two thirds.

3. Mandate Pedestrian- and Bicycle-Friendly Street design – Streets that invite all kinds of access–called “Complete Streets”–are now the standard for all new development in California. Davis can model how to integrate these into the community.

4. Start a Public Bank – It’s common for half the cost of large projects to be financing, just as two thirds of mortgage payments are interest. With a public “Bank of Davis,” this profit could be recycled into the community, rather than being sent to Wall Street. The state just authorized local and regional public banking, so such an institution could be a win for both innovative developers who cannot find financing from conventional sources, and for the City itself as an additional revenue stream.

In short, Davis needs to encourage and finance pedestrian-friendly, mixed-use, mixed income neighborhoods. This means increasing the number of multi-family units, perhaps even building residences over retail in shopping centers, until it achieves transit friendly densities (11 units per acre or more).

What it does not mean is requiring builders and developers to give away the store. In fact, market acceptance for such development is very good. People pay premiums to live in such neighborhoods, and “Lifestyle Centers” that mix residences within shopping centers report as much as 50% more income per square foot as conventional, single-use commerce. This means builders would be building something valuable, not just something profitable.

One final note of caution: low-density, sprawling development is the epitome of what is unsustainable in civic design. It’s more than twice as expensive to maintain its infrastructure compared to more compact development, and California’s tax policy does nothing to help, since residential neighborhoods cannot pay enough in taxes to cover the expenses for their schools and infrastructure right now.

Davis has a unique opportunity to revise its development practices so that enlightened planning guides environmentally-friendly building. This could be a beacon of hope to the rest of the state. It would also set an example for how enlightened public policy can provide what is both profitable and environmentally sound.

Originally published on It’s simpler than it looks blog.

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