Learning the Lessons From Cannery

There was a time when it seemed highly unlikely we would reach this point – there was a threat of a referendum, strong criticism from community groups, and the revelations about a $2 million donation to Capital Corridor Ventures.  However, in the end, the council would, by the narrowest of margins, approve Cannery 3-2 and there appears no sign of a referendum.

In an op-ed this week, Councilmember Brett Lee, Council Candidate and Bicycle Advocate Robb Davis, and Michael Bisch, a Commercial Real Estate Broker and Chamber leader, ask what comes next.

The passage of Cannery marks the start of a new era, because Cannery was the last major parcel that was undeveloped within the city limits.  Right now, it appears that the chances for a housing development to pass a Measure J/R vote is a long shot.

As the authors note, “While it is unlikely that Davis will have another development of its size and type (500-plus housing units with a commercial component) in the near future, we are likely to have other types of development proposals before us.”

They ask, “What useful lessons about how development decisions should be made in Davis can we derive from our experience with The Cannery?”  They note that this was a developer-driven project, rather than one driven “by a clear articulation of community needs and how the project might meet those needs.”

In their column, they “put forward five interrelated ideas for how negotiations between the city and an applicant should be conducted in any future developments to assure that projects fill community needs and are driven by community goals.”

As we have discussed at various points during the last six months, they authors argue, “The city must proactively state what types of projects the community needs and in what locations.”

“This could be viewed as a very general request for proposals. Local property owners could come forward if they believe they have a proposal that fills the city’s identified need,” they write. “To do this, city staff must receive clear guidance from the City Council on specific project priorities that meet community needs, be they for housing or commercial/industrial development.”

Their key concept is “mutual benefit” where “the city’s stance must be to clearly define what it needs and seek to join that need with a project that will benefit the property owner/developer as well. The city is not ‘dictating’ anything here but offering an opportunity to discuss how the interests and needs of both parties might be met through a project.”

They add, “Obviously, there are challenges in this process, especially if the project involves peripheral development that might require annexation and zoning changes.”

In the future, all of these major projects will be subject to a citizen vote and the authors suggest, “The issue of how costs and risks will be shared must be part of the initial conversations.”

They add, “In the case of The Cannery, it is not clear that the city — either City Council or staff — clearly articulated at the outset the needs that the project might help to fill for the city. Rather, staff and city commissions (which advise the City Council) were largely reacting to developer proposals and engaged in a process of trying to move them closer to city goals.”

They bring forward a second concept, that “City staff must begin discussions with the applicant on the basis of ‘non-negotiable’ standards that must be upheld if the project is to move forward. This may seem like an obvious point but, again, The Cannery teaches us that it is not a given.”

“The city of Davis has a variety of foundational planning and policy documents that speak directly to goals it seeks to or is required to accomplish,” they write, including the Climate Action and Bicycle Plans, the Innovation Task Force Report, the Comprehensive Economic Development Strategy, the General Plan and “especially the Housing Element, which includes affordable housing goals.”

They argue, “When discussions about a project begin, these goals should be front and center as foundational. If they are not part of initial negotiations, they risk becoming ‘bargaining chips’ as negotiations proceed.”

In the case of The Cannery, they again argue, “It is unclear why pedestrian and bicycling connectivity goals were not given importance initially.”

“Why is it that city commissions had to strive to uphold these goals in hearings about the planned community? Why was transportation mode share the object of so much debate when the city’s goals concerning it are so clear?” they ask, noting, “Similar questions could be asked about carbon emission reductions (was The Cannery’s impacts on carbon emissions ever discussed or modeled?), affordable housing and the small builder requirement.”

“It is important to note that the engagement of various commissions is a good thing, and in the case of The Cannery they played an important ‘watchdog’ role to assure that community goals are upheld,” they continue, arguing, “Foundational city goals, however, are not negotiable. They should never be part of the negotiation of a project. They should be assumed and the onus should be on the applicant to demonstrate how the proposed project will uphold them.”

Their third point is that we must estimate the value being created for the applicant.

Tradeoffs among city goals happen and are necessary to move forward.

“We acknowledge that in most projects there may be tradeoffs among city goals, and accomplishing all of them fully may make a project too costly. Indeed, it is likely that the developer will argue for some relief on the basis of cost during negotiations,” they write.

The authors add, “Evaluating the merit of such requests requires utilization of a third key idea to assure that the city maintains a realistic stance: Once a general agreement on a project of mutual interest and benefit is established, we need to estimate the value being created for the applicant by the project.”

“The city must hire a development consultant to determine the likely benefit to the applicant from the project. This information is not meant to prevent the applicant from earning its share — after all, the applicant is taking on risks and paying out-of-pocket to bring to fruition a project from which the community will benefit — but rather to enable us to negotiate from an informed position,” Mr. Bisch and the others argue.

They add, “The key point here is that the city must seek to diminish information asymmetries that place it at a disadvantage in negotiations. By having a clear estimate and making that information public, the city can engage in more fruitful negotiations and make realistic demands concerning the achievement of city goals.”

They note, “We also must use a clearly defined fiscal model to estimate the revenue and cost streams of the project going forward. This was done in the case of The Cannery but will be critical in future ‘economic development’ projects that are undertaken to provide a net positive revenue stream to the city over the long term.”

Fourth, the authors posit, “The city must request the applicant to fully mitigate all negative impacts of the project. Here we are not talking about mitigation that flows from the EIR process but rather that required by the land-use changes requested that will allow the project to go forward.”

They write, “In the case of The Cannery, that would include mitigation related to losing 85 acres of land zoned for commercial/industrial activities. Even if a case can be made that there is no immediate need for land to be used in this way, negotiated mitigation requirements should consider the long-term needs of the permanent loss of these 85 acres of commercial land.

“In the case of peripheral development, Davis already has a robust 2-to-1 mitigation requirement in place for land converted from agriculture to other uses. However, does that mitigation fully capture the long-term loss to agricultural output that accompanies development on such land? The point is that negotiations with an applicant should seek to tease out all costs and losses to the city and how those impacts should be mitigated.”

Finally, they argue we should master-plan future developments.

The authors write, “Future developments must be master-planned with and for the surrounding area and its existing and future infrastructure. Correcting planning errors due to lack of foresight after the fact is cost-prohibitive. We should not be transferring those costs to future generations. We simply cannot afford to allow short-term political calculations to trump sound planning.”

Again, they are critical that this process failed in Cannery.

They write, “It is not clear to us that any of the foregoing characterized the negotiations around The Cannery project. We are not arguing that The Cannery decision should be reversed. Rather, we are using it to examine how we might better approach development projects going forward to assure that our community derives the maximum benefit from them and that they are consistent with community goals.”

“Our City Council bears primary responsibility for assuring that staff undertakes the five actions described here. It must draw upon and uphold the foundational policies and documents that lay out the city’s goals and challenge staff to engage in broad (“non-siloed”) discussions internally and to enable the various commissions concerned with the project to do the same.”

“The city of Davis holds the power to define its priorities and, throughout the process, to grant or deny an application. It must use this power to achieve the maximum benefit for the city,” they continue. “It must fully arm itself with information, assure the integrity of its own foundational documents and fully account for the costs and losses incurred from a project.”

Michael Bisch, Brett Lee and Robb Davis conclude, “Only then can it fully derive the benefits of a project. Only then will we be able to say that we have created a community-driven project.”

—David M. Greenwald reporting

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