By David M. Greenwald
Executive Editor
Davis, CA – The city is in a bind. Twice HCD has rejected the city’s Housing Element. With the loss of University Commons, the city had a shortfall of projected units to meet their RHNA allocation of nearly 2100 total units and over 900 affordable units.
It’s worse than that, because the state requires the city to actually rezone the land that could accommodate the housing, and while that does not mean they have to build it, there are two provisions—first it has to be a realistic location, and, second, they have to actually rezone the land which means that if they chose peripheral land, they would have to do a Measure J vote first before the land could count.
At some point, as the Vanguard has been warning for some time, Davis will have to go peripheral to meet its housing needs. Clearly the city has attempted to avoid that in this cycle—for obvious reasons.
As reported last week, the city issued a notice of a public meeting for November 8 in front of the planning commission.
The city is planning to issue a negative declaration for rezoning 16 additional sites.
“The proposed project does not include any actual physical development of housing identified in the Housing Element,” the city writes. “(T)he City proposes to revise its site inventory to identify additional sites to accommodate the (revised) shortfall of 496 lower income housing units, as discussed in the Housing Element.”
The City also proposes to “rezone 16 sites and has identified a 753-unit capacity that exceeds the 496 dwelling unit shortfall requirement.”
The 16 sites would be zoned to a high density residential or mixed use, with a required 20 units per acre in order to meet density requirements.
Immediately, a number of apparent problems of arise here.
The city is counting on these 16 units to provide 496 low and very low-income housing units. The city believes that those 16 properties have a capacity for 753 units. But is that 753 total units or 753 low and very low-income units?
This is not a small feat, as it represents more than half of the city’s low-income requirement for the entire RHNA period. Obviously, this will be more thoroughly reviewed by the Planning Commission and the City Council before it becomes part of the Housing Element proposal, but at least to start, I’m skeptical that the city can meet its low-income housing needs in this manner.
Second, if they are rezoning these properties to meet the city’s housing needs, that means in many cases they are converting commercial land to residential. It appears nearly half of these would remain at least mixed use, but that again calls into question affordable housing capacity.
Third, while the Vanguard tended to take a more pragmatic approach on the issue of planning, noting the housing crisis and the crunch the city is now under to get housing sites onto a map to get a RHNA certified, it is striking how bad this process actually is at this point.
In essence, there is no plan. There is no vision. Again, in fairness to the city, at this point they have no choice. But the very voices that have been calling for better community planning for housing have a point, and criticism’s only going to get stronger.
As we have seen in Elk Grove, Huntington Beach, and this week Coronado, the state is not just going to go away. Davis may well avoid this type of litigation from the state since they seem to be legitimately attempting to address their housing allotments.
But the 800-pound gorilla is sitting in the back of the room. Will Measure J be a barrier to the city being able to address its RHNA requirements going forward? It’s already causing the city to take steps that do not appear to be particularly conducive to good planning.
This is clearly an area that the city needs to confront and perhaps the Housing Element process will allow finally for that kind of discussion.
There’s also a fourth point here and we alluded to it with the article we ran this week on commercial space—and it is amplified with articles that we ran a few years ago noting the lack of commercial space overall in the city.
In August, I noted a key point, that the city is reaching out to commercial property owners looking for some that are willing to pursue rezoning in order to build residential.
But this process is robbing Peter to pay Paul—and Paul is now backed by the HCD and the California Attorney General, but Peter is the one that pays the local bills.
On paper, the city may solve its immediate housing problem—but at considerable cost in long-term planning and commercial development.
It is dishearetning. This city has its act together in a variety of different relams… planning it is absolutely FAILING at.
As one person I talked to recently put it “we have significant policy gaps”… thats just about the most polite way to say it.
I feel this same way about our peripheral development proposals… it is SHOCKING to me how bad our process is and how completely off-base the development proposals we are seeing are as a result. Are we really going to keep building car-centric suburban developments which we KNOW are the absolute worst way to build housing from every measure we have? Are we really just watching that happen?
But in the city’s defense… look at DiSC: a decade of needs-finding, and then a RFP proposal, and STILL even the best planned push by the city was defeated by Nimbys at the ballot box.
The problem is still Measure J.
Tim, you and I have had this discussion numerous times. It wasn’t NIMBYs who defeated the 2022 DiSC project … it was the project team itself in concert with the City that defeated it (Dan Carson’s antics didn’t help either and those had nothing to do with NIMBYism).
The project lost because (1) its “plan” was nothing more than the Emperor’s New Clothes. There was no effort to show what kind of companies and what kind of jobs would fill the project. Once the entitlements were granted, the developer would walk away with 108 acres times $100,000 per acre of land valuation increase. If they had been smart they would have proposed that somewhere between 80% and 100% of the land valuation increase money be put into a performance bond with provisions for release of the bond money in stages as the kind of companies and kind of jobs forecasted actually came to fruition.
The project also lost because (2) the City does not have a Economic Development Plan that matches the community’s core competencies with the market segments that value those competencies. Said another way, there is no intelligence on what the ‘target” market segments for expanding the davis economy should/can be.
The project also lost because (3) UCD never showed any interest in the transfer of technology developed on the Davis campus to the broader Davis community.
It wasn’t NIMBY that killed DiSC it was NWAUP.
One problem with your analysis: the same things could be written about the Woodland project, except it’s going forward and Davis’ isn’t. Why is that?
One of the projects is in Matt’s backyard.
And that proposal is the best thought out, best executed, and best financed one that the City has received. I am the Chair of the Yolo County General Plan Advisory Committee for South Davis (“the CAC”), and as such must be scrupulously neutral.
Since I’m only a renter, not a homeowner, it isn’t technically my back yard, but in principle it is. The next hearing of the CAC will be with the AKT team presenting their reasons why the proposal is in the best interests of the Davis community … probably in early November, or early December, or early January. The timing will be determined by the AKT team’s readiness to make such a presentation.
David, that is an easy question to answer. Unlike Davis, Woodland actually has an Economic Development Plan that has evaluated market segments that match the core competencies of their community and existing local economy.
That really was an obtuse (dare I say stupid) question.
I would argue that the real difference is that Woodland’s City Council is the decider for the Woodland project whereas Davis’ had to go through the voters.
David, that is indeed a significant difference, but it also points out a significant commonality between Woodland and Davis … neither of their City Councils have any members who are trained or experienced in Urban Planning. They are amateurs doing their very best to complete a task that they are I’ll-equipped to do at the same level as an experienced Urban Planning professional.
The point is without Measure J, MRIC, Davis Innovation Center and more just get approved by council.
If you want to argue that Woodland has also done a better job of planning, that just demonstrates more fully that Measure J doesn’t produce good planning.
Matt,
I tried to explain back during the DISC debate that no company is going to commit to commercial space to an idea that is still a field adjacent to a community that is notoriously difficult to work with and that has no track record of getting any sort of commercial real estate project of the type approved. You’re essentially asking someone that just drew up an idea for a new product on a napkin who the customers they’ve signed up and for how much.
And no developer would in their right mind would agree to a bond worth value of the land? The reason the land value goes up so drastically after entitlements is because it’s essentially worthless before that (or simply worth whatever ag land is worth). Land development is a HUGE RISK. It doesn’t get done without the huge upside…which is essentially what you’re asking to take away.
What you’re asking for isn’t reasonable.
Keith, you have indeed explained that … and I have heard you … and modified my point accordingly. I agree with you that individual companies are not going to make a commitment, and what I have asked for is neither at the individual company level, nor at the evidence of a commitment level. What I believe any venture capital firm will ask for from a business/economic development plan before they invest money in the proposer is (A) an analysis of the target market segment(s) that will provide the demand that can be translated into revenue streams, and (B) an analysis of the core competencies that the economic plan will leverage/build on, and (C) how those core competencies match the needs of the identified target market segment(s).
Wharton, Stanford, Harvard, Berkeley, MIT, Northwestern, Chicago, and even UCD teach that in Business Planning 101.
How does a performance bond increase the risk or decrease the upside return? The only way the developer makes their upside money is by actually performing … which means filling their project with employer tenants and lots of employees with jobs.
Matt,
As you know, I worked in venture capital for a few years. It was my job to review those business plans.
Again, you’re asking for a business plan for an idea drawn up on a napkin. In general, I believe DISC was targeting the bio and ag markets…..because…well…those tend to be core competencies of UCD/Davis and the region in general. But yeah, you’re not going to get a company to commit even verbally to a vaporware commercial space.
As for the Bond? If you take away one of my business exits; I’m not going to bother with the venture in the first place. It’s like telling someone that plays roulette that they have to play 10 times…even if you win after the 2 time. Banks that fund the development company putting in infrastructure…etc… would probably balk at that too.
Keith, I don’t think you read my comment the same way I wrote it. I certainly hope the City of Davis’ Economic/Business Development Plan isn’t “an idea drawn up on a napkin.”
I agree with you that a developer isn’t going to create the City’s Economic Development Plan for them; however, it is not at all unreasonable to expect the developer to devote time and effort to clearly delineate how their napkin-based idea meshes with and leverages the City’s published Plan. That will be good communication with the community stakeholders. That will be good communication with the lenders the developer is working with. That will be good communication with the prospective tenants of the project.
The City’s Plan (not any individual developer’s plan) is where the market analysis needs to be done.
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You have clearly articulated in the above quote the worst nightmare for the community and its stakeholders and residents … a project that extracts ten(s) of millions of dollars out of the community and delivers an early exit, leaving urban blight in its wake, and adds no meaningful amount of additional jobs to the local employment base.
The “published plan”? I cut and pasted a part of the published (General) plan. The plan that says no to peripheral development and preserving those ag fields. As I said, I recall the DISC project targeted the Ag and Bio science…which seems to be roughly what Davis’ (by way of UCD) core business competence is (outside of academia).
No. More than half the time the initial developer isn’t the one that finishes the project. Something comes up either related to the project or about the company itself and the developer can’t finish the project. Maybe it’s a construction thing. Maybe it’s a legal thing. But the project get’s strung out and past the comfort of the developers and/or their financers. So the developer gets out of the project and sells it to someone else or partners someone (and sells off some equity) to get the project done. It’s not likely a project gets built and is left as a ghost town. If it doesn’t happen it’ll be at the risky land entitlement stage and it’ll be left as ag land….so little risk to the community. But you take away early exits and it’s likely a no go from the start.
Keith, thank you for bringing the voice of experience into these conversations. I can see how “that is how it has been historically done” applies, but my Wharton training also sees an opportunity to tweak that historical method and still achieve the goal, which is to add high-paying Innovation jobs to the local economy (ideally in collaboration with UCD tech transfer). Specifically, the performance bond is an asset on the books of the developer with a very specific financial value. As such it is transferable from the original developer to the succession developer in the scenario you described. The original developer’s exit “package” would include a payment from the succession developer for the “ownership” of the performance bond asset.
For the developer(s) it is all about money. For the community it is all about adding jobs and avoiding urban blight. If there are no actual jobs and we are left with urban blight then the project isn’t worth approving. We need look no further than Chiles Ranch to seed that in action here in Davis. The parcel on the west side of Pole Line across from Rancho Yolo is another more recent example of urban blight.
The majority of Davis voters have allowed Measure J to substitute for any comprehensive short and long term planning process. Since I have never voted for Measure J or its successors, I disawow all of the negative ramifications of said decision. You bet there will be more awful consequences to come.
Walter, you are 100% correct. Without an economic development plan that is accessible and understandable by Davis residents/voters AND a project plan that ties directly to that community economic development plan, there will indeed be awful consequences.
For all the talk about limiting sprawl I find it interesting that the Covell Village site is closer to downtown than most of the City infill sites.
Is there any evidence that these property owners wish to have their properties rezoned or that they would be interested in moving forward with any kind of development?
My understanding is that the city was reaching out to pretty much everyone to gauge interest in rezoning. Given that it took them several months, I believe they at least did that.
The City took both the easiest and quickest way out. I can’t blame them considering that HCD is breathing down their necks. This is the only way the City can hope to comply with State mandates before 2025. Village Farms will get picked apart to death before it might appear on the ballot. That’s the planning process Davis voters apparently desire. Letting developers make the first moves.
The City of Woodland has a General Plan Update that projects out to 2035. Coincidentally the City of West Sacramento also has a General Plan that goes until 2035. Those cities don’t have slow growth/almost zero growth ordinances like Davis. Get the picture.
I mean at this point the city is taking the only option they have to get into compliance with the HCD requirements. It’s forcing square pegs into round holes planning.
I think the part that gets missed is the FISCAL impact this will have. If any or some of these rezoned areas actually get built; it’s going to hit the city in terms of services and infrastructure upgrades. You can’t just drop an apartment building of 150 units/250 people on a spot that previously was a commercial building for office or retail. That requires more police, more fire services….and TRAFFIC management. Yes there will be some mixed use in these newly planned zones. And that’s nice for the community development…. But let’s get real; adding all these new residential units SHOULD HAVE STARTED with the planning and development of commercial retail and office to generate tax revenue to pay for those services for all those newly planned residential units.
I mean, I get the necessity of ready, fire, aim for back against the wall (due to the state) for residential planning. But city’s focus should be on generating more tax revenue to pay for things now and planned in the future.
There is currently a major glut of empty commercial space available not just in California, but in other states as well. The forced return to office trend won’t last because workers in the end hold the cards, not management. Return to office is also just plain bad for the environment. The highly experienced and qualified workforce segment will just leave rather than submit to unreasonable demands. Smart employers will take the opportunity to hire these people and accommodate reasonable requests. For instance, my employer is 100% remote, therefore we are able to attract top talent from across the West irregardless of location, including from Oregon, New Mexico and Arizona. Some cities realize there will be a glut for awhile and are converting commercial space in to housing rather than keep their cities barren and lifeless. It will take awhile, but eventually the added residents will stimulate commercial demand. This same phenomena could also occur in Davis if it is allowed to.
There is not a glut of commercial lab space in Davis.
Added residents will stimulate commercial demand? WHY? HOW? There are plenty options in neighboring cities for retail and office space. There’s no reason that shouldn’t continue. Davis has to fight with itself to get anything even remotely approved for any kind of growth. Davis has grown by about 7,000 people in the past 20 years. What retail has it gotten out of that growth? A Target? That’s a pretty low bar. That’s like getting a Starbucks or a McDonalds. Meanwhile, Woodland grew by about 10K and has a much greater commercial real estate offering. That’s not simply because of population growth. That’s due to sane growth policies (lack of stupid restrictions) and a community that embraces some form of growth (they’re growth is my preferable kind but it is growth).
So no, simply adding residential units and people to a community is no way to be fiscally responsible. Even in a city without Davis’ idiotic restrictions; adding residential units is a cost to a city.
Notice I never specified “lab” space. Are there really commercial lab businesses wanting to locate in Davis?
More residential will increase demand for retail and other commercial enterprises. Is that so difficult to understand? Without added commercial and/or industrial the fiscal challenges that the City currently experiences will continue indefinitely unless drastic steps are take like shutting down Parkes and Rec. It’s current residents and people like you and I that are dragging down the City’s finances. In other words, existing residents are costing the City more money than it takes in. Is that also a difficult concept to understand? Your argument against adding residential sounds a lot like typical NIMBY arguments.
Walter
I generally agree with your sentiments on the broader growth issue, but I side with Keith E on the need to get balanced growth. Keith is implicitly calling for adding peripheral development that accommodates both residential and commercial space in a balance manner, rather than trying to squeeze all of the needed residential development into the existing vacant space. We will be cannibalizing our economic future if we pursue the full Housing Element plan, which I think is Keith’s point.
I was trying to explain that balanced growth is necessary. You and I would prefer peripheral development, but the majority of Davis voters apparently don’t share our view. Additional commercial development is unsustainable without added demand in the form of more residents from with this City or people traveling from other cities. Now I am unsure what kinds of growth Keith wants in Davis. He seems to say that no growth of any kind is needed in Davis. Am I incorrect in my understanding Keith?
I disagree. It is primarily due to population growth. You can’t have one without the other. If you desired to prove your point, you could have left out the part about Woodland adding 10K residents.
I find it hysterical to be accused of NIMBYism considering I’ve either directly or indirectly added more homes in CA than most of the rest of Davis community combined.
How? By magic? Will it automatically make people agree to let Davis grow in a sane manner? Raise your virtual hand if you’ve ever developed residential and/or commercial real estate. I’ll wait…….okay after raising my own hand and looking around at all the vast number of people here including yourself that have developed real estate….I’ll try to explain things to you and hope you understand.
No ALL residents current and future cost the city more than it takes in. The reason isn’t because of the current residents. It’s because of Davis’ stupid growth restrictions (I suppose you could say some of the existing residents voted in those growth restrictions).
I take a more balanced and nuanced view of community growth (both residential and economic). NIMBYism isn’t necessarily bad. At the heart of it is the desire to maintain a certain quality of life. If someone wants to live in a rural area or a small town…or wherever; why should we hold that against them and then insist that what they want is wrong? However those desires have to be weighed against the need for long term management of resources and adaptation to a changing environment. As a community we’re trying to get to what is best for everybody.
I do not believe in growth for growth’s sake. I do not believe people have a right to live where ever they feel like (otherwise I’d move to Hawaii without any job prospects). The goal of the city government is to maintain or better the quality of life in the existing community. That may or may not include growth. Reasons for growth: 1. RHNA. 2. to better the existing community (support local industry, generate tax revenue).
Residential growth by itself is a cost to the community. It also detracts from the existing community by using infrastructure, causing traffic…etc… So when evaluating potential residential growth consider the cost to the existing community in terms of life style (more crowds, traffic…less availability of services). When you add residential units to a community it needs to be paired with something that gives it upside for the existing community. Upside like a business park, destination retail shopping centers….etc..
The only way to make residential growth a benefit to the community is with planned commercial growth that provides tax revenue to at least pay for the new growth and hopefully provide benefits for the existing community (like helping the city’s current fiscal problems).
In Davis there are growth restrictions for commercial real estate…particularly retail that hinders and limits what can be built that would help capture more much needed sales tax revenue from existing residents and those new/future residents (that the HCD requires us to plan for). So things like Measure J and restrictions on the size of retail space prevent and hinder economic development and make future residential growth a drain on an already fiscally strained city. So as I said, if you simply build more residential units. Those people are going to work and shop elsewhere; their hard earned money generating business and sales tax elsewhere for other communities.
So as long as those restrictions are in place like Measure J and the retail growth restrictions; simply adding residential units will continue to turn Davis into a decaying bedroom community. Take care of the HCD requirements but other than that; there’s no reason for Davis to residentially grow until these economic growth restrictions are removed.
How many homes have you added in Davis and if so when? We aren’t talking about anywhere else.
I prefer to allow market forces to determine development and growth. Cities like Woodland and West Sacramento understand this concept. If you want to live in a small town indefinitely, don’t choose one adjacent to a major university, near a big city and around a major freeway. Choose a town literally in the middle of nowhere and without a large employer. I have visited just such small towns in California. Those towns are in no danger of growing substantially unless their is future demand from somewhere. If my history is correct, Davis grew north and south of Interstate 80, not the other way around.
The point is that I’m vastly more qualified to discuss this topic than you are.
Being a small college town is LITERALLY WRITTEN INTO THE DAVIS GENERAL PLAN. It’s what the people originally wanted and what they intended. From section III of the General Plan:
So pardon the NIMBYs for wanting to live in the town they all agreed to live in 40 years ago. Again, I’m pro economic growth. But I’m objective enough to understand that there’s a cost to growth that has to be acknowledged and accounted for. I don’t simplistically label NIMBYs as bad others in self righteous glee.
Well, I’ve tried to explain it to you. I’ll try one more time but so far it’s all been limited understanding on your part. If you simply let market forces play out, economic growth (commercial development) will continue in near by communities while Davis continues to rot as a bedroom community. WHY because of the growth restrictions in Davis. IT’S NOT A LEVEL PLAYING FIELD. Sure, in theory you could let the market play all the way out and continue to let Davis grow with new residents and little to no commercial development. The city would be come a broken husk of financial insolvency and that would force the residents to change their anti-growth policies. But until then you’re left with the urban carnage that would result if the city did not address it’s near economic insolvency by removing it’s growth restrictions.
That’s simply not true. You don’t need to be a developer or builder to know a NIMBY when you see one. For instance, neither David or Richard are housing experts. Just because you are responsible for housing in other areas doesn’t necessarily mean you can’t be a NIMBY where you actually reside. That could be called out as hypocracy though if you happen to be both a developer and NIMBY.
So Walter, does Davis need to rid itself of its current residents in order to save itself financially!!!
It needs to either cut city services or raise taxes so residents fully pay for what they receive. The fact remains that current residents aren’t paying their full costs.
So…uh…how exactly are current residents any different than future residents in terms of city revenue? I know Walter! Did you curse the new residents and force them to pay more taxes than current residents??? I must know your secret eldritch tax magicks!