The issue of the parking garage to be built with redevelopment money was pushed back, at least temporarily, as the council passed staff recommendations to implement focused parking and access improvements in the downtown, commission streetscape improvement and return to council by the end of 2012 with an updated comprehensive utilization analysis and conceptual plans for downtown streetscape improvements and preliminary designs for the mixed-use structure in the 34EF block.
Many representatives from the business community came forward last night asking for the council to resolve issues of parking for downtown businesses.
The new Davis Downtown Business Association director, Melanie Glover, read a statement from previous director Joy Cohan, where she told the council that one of the highest priorities in the last few years has been a new downtown parking structure.
“The access to and management of parking in the downtown area was the single biggest issue among local shoppers and business owners alike,” she said. “Creatively combining increased parking availability with the opportunity to provide high quality modern retail space to appeal to top tier tenants, is a win-win concept for the economic vitality of downtown.”
“At the same time the potential for streetscape improvements to develop into something akin to at least a trial promenade creates a newsworthy buzz about downtown Davis,” she continued. “I have always believed that a promenade on E Street allowing for an enhanced pedestrian and bike experience downtown would create a visitor attraction in the heart of the retail core, benefitting businesses both on and off the promenade.”
DDBA Co-President Michael Bisch added on Tuesday that last year the DDBA, at the invitation of then-Mayor Don Saylor, developed a bold action plan to revitalize and modernize the downtown. One of the centerpieces of their proposal was the construction of a new downtown parking structure.
He said that as recently as June, the council and city reaffirmed their support of the DDBA’s downtown vision by putting forth an exclusive negotiating agreement with the Yackzan Group to explore developing a city-owned parking structure.
“It is disconcerting that since July, the public debate over the retail and parking project has focused exclusively on the implications for parking without taking the overall context into account,” he said.
Councilmember Sue Greenwald affirmed her strong support for the downtown, saying, “It’s working, don’t break it.”
She made the point that there has been a lot of side switching and at one time, she was for a downtown parking structure project at a time when the DDBA was against it.
“The reason I’m against it now,” she said, is “there’s always tradeoffs in these things.”
The old project took up most of the block or all of the block, she continued. “That would have allowed for some major anchors in the downtown, and we could have controlled that if we owned it.”
“Something that would really [provide] major retail draws to the downtown,” she said. “It has now shrunk to the point where it’s the size of two fast food restaurants. That’s not going to help us. The retail component is so small now that it’s just simply not useful.”
With the entire block, it would only need to be two stories of parking and it would still increase the parking allotment. Now the project requires a five-story building, which “would be very damaging to the character downtown without the advantages of the additional anchor retail space.”
“I just don’t think the tradeoffs now make sense anymore,” she said.
She also expressed concern about the large number of empty spaces in existing garages, the cost of the project, and the fact that the project actually displaces existing parking, which reduces the net amount of parking that the project adds.
For Councilmember Stephen Souza, the issue came down to the vision that we have for our downtown and our community.
He said, “It would be a pretty cool thing to live in the downtown, but we don’t have that opportunity and we probably won’t have that opportunity until we get to the point where you don’t have to commit a lot of your lot to parking.”
He called it for the community good, to try to bring more people to live close to the downtown rather than on the periphery of our town, and he is willing to subsidize parking to allow that to happen.
Mr. Souza described the existing garages as poorly-designed and dangerous.
“I don’t know how many of you tried to park in the garages,” he said, “I hope if we get to the point of seeing a design, we do not implement the same problems that are existing in both of the existing garages.”
“It’s a scary thing,” he said, trying to get in or out when there is another car coming at the same time. “It’s a terrible design.”
“That’s a main reason people don’t park in those garages,” he cited, along with the small size of spaces, where even his small car has gotten dinged up.
He wants to avoid the ugly-looking concrete structural design of the parking garage.
“The third [reason people don’t park in garages] is they don’t know where they are,” he continued. “But the vast majority of the people in this community, they know where the garages are. It’s folks that come to this community who don’t know where the garages are.”
Councilmember Dan Wolk said of the downtown that it took decades to build it up to what it is today, that it’s wonderful, but he thinks it can be even better.
He shares a vision of the downtown as a dynamic mixed-use urban center.
To do what he sees as necessary for the downtown and his vision, he said, “I get that you need parking.”
“At the same time, I recognize the issues that surround this specific project,” he said. “I recognize the need for long term parking, but on this site, I think we need to do more homework.”
“That’s sort of the issue that I’m wrestling with – I see the need for parking but I want to be sure that it’s the right project,” he added.
Mayor Joe Krovoza said, “I don’t see how we’ve gone through so much work on parking but we have so many unfixed parking problems with regard to our downtown that seem to be low-hanging fruit while at the same time we look to be building an $11 million net and $14 million gross lot.”
He wants to ensure that we utilize existing resources downtown before he would be behind building a new parking structure which he called “such a large investment.”
“No matter how I look at it, it seems we’re spending money when we have existing resources that we’re not utilizing,” he said.
Councilmember Souza argued with the Mayor that staff recommendation number three, to “continue with preliminary design efforts for a mixed-use structure on the City parking lot in the 34EF, isn’t committing us to an $11 million net or a $14 million gross project.”
“It’s committing us to $25,000 to figure out what a structure would look like,” he said. “It’s not a commitment.”
The Mayor responded, “I understand completely,”
This is a typical device used by Councilmember Souza to move forward projects, claiming that the interim steps do not represent full commitments, and yet, as we know so often, such steps make a full commitment easier for the council to ultimately decide to do.
“I understand what you’re saying and I get it,” Mr. Souza said. “I wanted just to be clear that we’re not committing, nor am I, I may not either. That’s the whole thing, I may look at this after a private developer puts up half the money, their own money, and we put up redevelopment agency money, and we say, you know what, this is god-awful ugly, it’s not the right fit, it’s not the right spot.”
On this night, neither the Mayor nor Mr. Souza’s colleagues would bite.
“Until 4a is done,” the Mayor explained, “I’m not comfortable with three.” 4a is the updated comprehensive utilization analysis that will evaluate the impact of new measures by the end of 2012. “Because I don’t know what downtown parking looks like and where we need it. I still feel that three is putting the project before the policy.”
The Mayor said he would be more supportive of a broader study to look at four different spots for parking structures.
The bottom line on this night is that the council, now that it has the luxury of more time for reflection, wants to make sure we need the parking and in this location, before it goes forward. No longer will they build this project while at the same time studying the issue, which never made a lot of sense.
—David M. Greenwald reporting
Why not take advantage of the rotten economy, and acquire the whole block? We could have more parking, limit the height of the structure while providing much more parking, and increase the ground floor square footage.
Good decision by the council. Back off and study it longer. There’s no rush.
Yeah take the whole block condemn the banks by eminent domain. That will show them. Oh wait, that is my bank. Oh never mind.
[quote]”Until 4a is done,” the Mayor explained, “I’m not comfortable with three.” 4a is the updated comprehensive utilization analysis that will evaluate the impact of new measures by the end of 2012. “Because I don’t know what downtown parking looks like and where we need it. I still feel that three is putting the project before the policy.”
The Mayor said he would be more supportive of a broader study to look at four different spots for parking structures.[/quote]
The Mayor has this exactly right, and it is the position the TAG/TCIP group has taken – let’s not put the cart before the horse. It seems to make more sense to develop a Downtown Parking & Access Plan first and foremost, then decide the need for a parking garage, based on actual data gathered that illustrates a well defined need. Right now, it is not even clear there is a need for a new parking garage as much as there is a need for a comprehensive Downtown Parking & Access Plan that better utilizes existing resources.
Also the argument that some are putting forward that this proposed garage is also for the purpose of “increasing downtown retail” is somewhat suspect, since the retail component is so small. So it would seem to me if there is going to be such a huge garage in the middle of downtown, at the very least there should be some thought to increasing the retail component. But then I wonder if that is something the DDBA would really want, since it could represent new competition for already existing businesses that are having a hard enough time surviving as it is?
Again, it would seem to me all of these issues need to be fleshed out more BEFORE the parking garage project proceeds farther…
I have lived and worked as an owner-occupied resident and business on the 400 block of E/D since 1995. I see most everything that goes on in the downtown core, and all of it directly impacts me and my family.
I think Michael Bisch’s passion for improving the downtown is compendable. I know his time spent on things is mostly, or all, as a volunteer, and it takes time away from parenting which is the most important job any of us will ever have.
I commend the CC for taking time to find solutions for the age-old parking problem. I have always thought that the 3/4 and E/F block was a huge opportunity to improve shopping and parking. Let’s get it right. The retail needs to be far more prominent than the parking focus.
Again, thanks to Michael for working on this.
And thanks alo to Steve Tracy and friends for everything they have done on this issue.
“This is a typical device used by Councilmember Souza to move forward projects claiming that the interim steps do not represent full commitments..”
Valuable observation. This was EXACTLY what transpired with the surface water project over the past decade,led by Saylor and Souza.
[quote]Valuable observation. This was EXACTLY what transpired with the surface water project over the past decade,led by Saylor and Souza.[/quote]
Except for the “tiny detail” that Council member Greenwald was able to convince the city to bring in two UCD experts that insisted the surface water project should be implemented first and foremost…
Surface water? Wrong thread. That one is down a couple on the page.
DT aka Michael, I think you can write this project off. It will die a death of a thousand cuts until the developer gives up. Time to establish a broader committee to work on parking and transportation issues, and just find out what the other interest groups want first. DDBA simply doesn’t have the clout to get a council majority, even on downtown issues.
[i]”I think you can write this project off. It will die a death of a thousand cuts until the developer gives up.”[/i]
Don is probably right. What is a big, open question is what the Council is going to do with the $10,534,580 in bond money that was to have gone into this project?
We are paying 8.65% interest on $985,000 of that and 7.25% interest on the other $9,549,580. That money is sitting in an interest-bearing account which (I guess) is earning roughly 0.02% interest (that is, the amount a 3-month t-bill is paying ([url]http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield[/url])). In other words, we bought very high and are selling very low.
Ideally, the Council will be able to find a use that the community backs and has some kind of return on investment, such as the hotel-conference center project is supposed to have. Alas, no other hoteliers in Davis were interested in borrowing RDA money. The City would benefit from more hotel guests paying the TOT (transient occupancy tax). But just building more rooms does not increase the demand for rooms.
One possible use that was proposed (and seemingly rejected by the Council) was to loan money to a developer who wants to buy the Davis Ace home store site and all other buildings but the Chen building on the block encompassing G, H, 2nd and 3rd Streets — I don’t know if the Anderson sisters or the other property owners have any interest in selling — in order to:
A) demolish all of those buildings;
B) construct a new, three story building which would run on G Street from the Chen Building to 3rd Street and on 3rd Street from G Street to H Street. It would have ground floor retail (in part where there is now a parking lot) and second story offices and set-bakc third story apartments; and
C) build a new, multi-story public and private parking garage on the H Street side.
As I understood this proposal, the new garage would not create net new parking spaces for the public. It would include enough spaces to replace all of those lost from the current G Street public lot; it would add more for the additional ground floor retail; it would provide parking for the office users; and it would have spaces for the apartment dwellers.
I think this would be a cool project. I think it would benefit G Street and 3rd Street by including more retail (or restaurant) space right on the street.
However, I am not sure why it makes sense for the RDA to fund this kind of private project. It would not be a significant money maker for the city (like auto sales or hotels are).
Also, unless the current property owners are willing participants, it has no future. Further, the Streamline Moderne building at 3rd and G has some historical value, though it is not a recognized historic resource. And if we end up losing the Davis Ace home store, that could harm the downtown in general, as it is one of the few anchor stores we have. (That factor could be ameliorated, depending on what new businesses move in.)
So if no E-F parking garage, and no G-H-2-3 project, where does the council “invest” that $10.5 million? It cannot be used anywhere outside of the RDA boundaries.
Yes, it will be interesting to be laying off employees, closing public pools, and letting the parks and roads deteriorate while there is $10 million dollars sitting in the bank. Plus, of course, there are project-worthy areas in east Davis. But I would be willing to be that [i]nothing[/i] will be done with that money for at least two years due to last night’s council decision.
[i]”I would be willing to bet that nothing will be done with that money for at least two years due to last night’s council decision.”[/i]
Two years of not employing the $10.5 million will mean $1,960,702 in interest and principal being paid to the RDA bondholders with no benefit to the City or the people of Davis.
“Yes, it will be interesting to be laying off employees, closing public pools, and letting the parks and roads deteriorate while there is $10 million dollars sitting in the bank.”
I guess, but going through with the project would not have changed any of that. I fail to see how a RDA decision impacts general fund expenditures.
12,000 square feet of retail would generate 100 to 200K annually in sales tax revenues, depending on the type of store and the configuration of the ground floor.
“(my youngest had to go to court alongside major criminals for failure to wear a bike helmet one time).”
How much retail space is already there? Is that subtracted from your calculations? How much revenue will be lost while the site is torn down and the stores displaced before the new unneeded garage is up and running?
There is zero retail space there, rusty. It is a parking lot.
So all of the businesses located next to the parking lot will be able to remain open while a new five story garage is erected right next to them? Just asking.
[i]”How much retail space is already there?”[/i]
Zero square feet.
I have given this some thought the last hour or so: I think the mayor and his Council need to call a special session, specifically to address what to do with this money for the public good. If it won’t be the E-F garage, then say that, now. Don’t wait two years while we lose another $1.96 million.
The special session should have the task of inviting proposals from members of the public or the council or business interests. Public input should be encouraged. And then as soon as practical, the council should come back and declare what a majority thinks: “We are interested in this; foregt that and the other idea.”
It is really bad public policy to borrow this money and do nothing for years, all the while we are paying high rates of interest for no public purpose.
[i]”So all of the businesses located next to the parking lot will be able to remain open while a new five story garage is erected right next to them?”[/i]
Yes. Part of the design consideration was going to be how to best integrate the Kinko’s/FedEx space and the south-facing banking and retail spaces for the properties along 4th Street. However, since the council rejected Stephen Souza’s motion to continue with design considerations, it is pretty obvious that this council will not go forward with the project ever.
I agree, rusty, that it is likely to inconvenience the neighboring businesses (likewise, the reconstruction of Fifth Street will inconvenience the businesses there for a time). But one of the things that has perplexed me about this whole debate is that we are talking about replacing a [i]parking lot[/i] with a [i]parking garage + retail[/i]. It’s not as though historic buildings are threatened, or a quaint neighborhood would be changed, or anything.
I strongly agree with Rich’s suggestion above.
Nice trees, the current parking lot has nice mature trees and owls in an owl box that add to the current ambiance of downtown.
[quote]Yes, it will be interesting to be laying off employees, closing public pools, and letting the parks and roads deteriorate while there is $10 million dollars sitting in the bank.[/quote]
Well, there’s always the Duh Option: call the bonds early. If the council concludes that it doesn’t have an acceptable plan to spend $10M within a reasonable timeframe, it should evaluate the cost of carrying that money versus the cost paying the bonds off now and issuing new bonds in the future.
What a nightmare: who decided to buy those bonds with no project planned?
May I ask: which professionals made money off the sale of those bonds, and where any of those consultants or brokers involved in the decision to proceed with the bonds? As they said about Nixon, “just follow the money.”
I think the CC has some explaining to do. Rich’s comment that sitting on the money for two years will cost taxpayer nearly $2 million is shocking, and probably accurate.
Maybe Davis should start its own slightly blue version of a Tea Party?
[quote]Rich’s comment that sitting on the money for two years will cost taxpayer nearly $2 million is shocking, and probably accurate. [/quote]
Using Rich’s principal and interest rate figures, I get about $775,440 per year on a simple interest basis. (If there’s any principal included in the $1.96M figure, it has to be subtracted in order to arrive at expense.) Any way you look at it, it’s a lot of money!
RICH: [i]”Two years of not employing the $10.5 million will mean $1,960,702 in interest [b]and principal[/b] …”[/i]
JIM: [i]”Using Rich’s [b]principal and interest[/b] rate figures, I get about $775,440 per year on a simple interest basis.”[/i]
Let me lay out the math:
Of the $10.5 million that was to go toward the E-F garage, $985,000 of that was from the taxable bond series we sold which pays 8.625% interest. That coupon bond matures in 11 years. Its annual principal + interest payment is $677,823. The $985,000 represents 21.002% of the $4.69 million bond. $677,823 x 2 x 21.002% = $284,714.60.
Of the $10.5 million that was to go toward the E-F garage, $9,549,580 of that was from the tax-free bond series we sold which pays 7.25% interest. That coupon bond matures in 25 years. Its annual principal + interest payment is $1,167,978. The $9,549,580 represents 71.747% of the $13.31 million bond. $1,167,978 x 2 x 71.747% = $1,675,987.63.
$284,714.60 + $1,675,987.63 = $1,960,702.22
Of the $1,960,702.22, $421,112 is principal and $1,539,590.64 is interest.
Rich, thanks for the numbers. You must spend hours hunched over a calculator? Cheers!
[quote]Of the $1,960,702.22, $421,112 is principal and $1,539,590.64 is interest. [/quote]
Good enough, but you can’t count principal as a cost unless you actually spend it. If it’s sitting in the bank, you’re just giving it back to the lender — it’s a wash. Interest, of course, is a different story.
[i]”You must spend hours hunched over a calculator?”[/i]
I’m the Rain Man of spreadsheets.
[img]http://www.movieactors.com/freezeframes33/RainMan21.jpg[/img]
I watched the CC the night the consultant talked about Jerry Brown, RDA and bonds. I felt then there was a rush to judgment and I would think that consultant most likely benefited. Can someone expand on the concept of selling the bonds back or would that also endanger e “RDA Money”. I think having interest accruing is a bad idea. Could this money be used to make our existing garages more useable?
At the time I think there was a lot of uncertainty about what the state was going to do and whether or not the RDA’s ability to borrow money (or even continue to exist) was at risk. I’m under the impression that the state backed down and that RDAs can continue to operate much as before, though with some level of reimbursement to the state.
I don’t know what it costs to float a bond issue, nor if there’s an early-call penalty should the city decide to dump the debt (i.e. repay the bonds ahead of the due date). It’d be good information for the decision-makers to have.
My naivete with regard to municipal bonds may further be exposed by the following observations: Rich includes a principal payment in the above calculation as though the principal has to be paid down, like with a conventional mortgage. I always thought bonds paid interest only until the due date. That’s the way it works with Treasury bonds, at least the long ones.
I think that at the time, the council felt they had to move quickly to lock up the RDA funds. Local governments all over the state did the same thing. I also think there was nearly a 3-vote margin for the parking/retail project at that time, so it didn’t seem unreasonable to proceed with the bond sale. But Sue has changed her position, and Dan was on the fence. So there is not a majority vote now for it, and there won’t be IMO at any time in the next couple of years. A strong opposition has emerged. I see no likelihood that a “comprehensive utilization analysis” will result in a report that there is a need for parking downtown. So if I were the developer, I’d be folding up my plans now and filing them away.
The DDBA leadership must be incredibly frustrated. They have spent years on this project. I am trying to think of any issue in recent years where the downtown business interests have prevailed. Target, B Street Visioning, Ogrydziak’s building, Fifth Street, Anderson Bank Building. I am undoubtedly overlooking something, and I don’t remember the final outcome of the B Street process. But it is clear that if local neighborhood groups or other interest groups oppose them, the DDBA is likely to lose.
I assume the “updated comprehensive utilization analysis and conceptual plans for downtown streetscape improvements” will be done by staff. To that end (no offense intended to staff, but they aren’t the stakeholders) this will be pointless. Don’t waste the time and money. There are no other sites available, there are no other developers willing, and there is no “low-hanging fruit” that is worth it from the perspective of the businesses. Status quo prevails. Downtown parking and circulation won’t really change, regardless of these analyses. On the plus side, status quo doesn’t cost anything.
I really hope the council members will quickly explain what they plan to do with the bond money.
[quote]”(DDBA Co-President Michael Bisch) said that as recently as June, the council and city reaffirmed their support of the DDBA’s downtown vision by putting forth an exclusive negotiating agreement with the Yackzan Group to explore developing a city-owned parking structure.”
“Councilmember Sue Greenwald affirmed her strong support for the downtown, saying, ‘It’s working, don’t break it….The reason I’m against it now’, she said, is ‘there’s always tradeoffs in these things’.”[/quote]One has to feel sympathy for Michael. The past and present councils have encouraged hope for this kind of development for quite awhile. Now, I’d have to agree there can’t be much promise for it to proceed.
I mean, a five-story parking structure in the middle of our three-story downtown? Who is telling the poor Yackzans to even develop this as an option, and who has said to proceed along these lines? Isn’t someone coordinating the council instructions to the contractor?
No one should be surprised about the cost of locking up the promise of RDA money. The Vanguard thoroughly covered this a few weeks ago, and there was lots of debate here about whether it was stupid and wasteful to be chasing RDA money for unplanned projects.
You may remember there was an outright panic amongst the city staff and council that we might miss out on RDA funds if the Governor had his way. Not even knowing what the legislation might be, we moved out to make obligations just in case, with contingencies for staff action in case something happened between council meetings.
Right in the middle of all this was our presently reluctant Councilor Greenwald, having never seen an RDA project that she didn’t like, particularly if it claimed to generate some sales tax revenue. There also was no bigger advocate for getting a parking lot that the city could own and control–just weeks ago. I don’t remember much concern about building specs or any about the cost of tying up the bond money while we fiddled through our regular Davis development battles.
Personally, I don’t see the site as blighted or needing much development. It could use some improvements to make into a nicer parking [u]lot[/u], even using a few of the spaces to turn it into a “hang out” parking area like the Brinley/Baskin lot.
Redirecting the funds to another project sounds inviting. My own downtown bulldozer target would be the [u]Enterprise[/u] areas. The combination of the hardware complex and the newspaper buildings/lots creates a dead zone that separates the adjoining, busy areas to the north, west and south. (Nothing can be done with the train track border fence to the east, I guess.)
Development and spending of this magnitude needs much more careful consideration since it will outlast any of us and will help direct (and establish limitations foe) future development. Move the Yackzans to a better location and tell them to keep within three stories.)
(A five-story edifice will require an art contract to improve its ugly looks, so put aside a couple hundred thousand bucks. I see Dunning writes up a visit to the water tower today and thinks we might have overspent.)
P.S.–Build a new, improved teen center to replace the stolen one! I read we’re spending big bucks to relocate all of those satellite programs back to a combined, inadequate location. Another great decision for our youth.
Mike Harrington: “Maybe Davis should start its own slightly blue version of a Tea Party?”
I agree that financing the bonds without a project because of a use it or lose it scenario is both a financial and development boondoggle but Mike the Davis tea party already exists. They are called the progressives. They tend to be older white home owners who fear others and don’t want to pay to stop polluting the environment.
I find this all rather amusing. The Council HAD a plan for investing the RDA funds. The Council then jettisoned the plan exactly as a number of the bloggers here demanded. And now the Council is being bashed for not having a plan to invest the RDA funds?
Apart from interest expense, there will be a number of consequences to the Tuesday Council decisions that will cause a great deal of community consternation. The Council no doubt will come under pressure. A Council unable to articulate a vision will always be subject to pressure. It’s not a readily defensible position.
It will be interesting observing how this all plays out.
Don, I predict the “comprehensive utilization analysis” will prove beyond a doubt that there is a need for additional parking. Mark my words. But it still won’t change the conversation.
DT: “The Council HAD a plan for investing the RDA funds. The Council then jettisoned the plan exactly as a number of the bloggers here demanded. And now the Council is being bashed for not having a plan to invest the RDA funds?”
In fairness:
1. There was never any kind of unanimity on this project on the Vanguard.
2. It is not clear to me that the same people are doing as you suggest
3. Just because the council had a plan – and I’m not sure they really did – does not make it a good plan. To me the council panicked when the threat was there to take redevelopment away and have taken a step back now that the money is somewhat secure.
” To me the council panicked when the threat was there to take redevelopment away and have taken a step back now that the money is somewhat secure.”
Therefore, you don’t agree with those bloggers expressing consternation over the interest expense being paid out without an offsetting benefit. Is that right, David. I just want some clarity here on your position as it relates to the position expressed by some of the other bloggers further above.
Whoops! I’m forgetting to properly identify myself today.
DT Businessman reporting and defending (aka Michael Bisch, Davis Commercial Properties, DDBA Co-Prez)
I think the policy that the council laid out this week is a wise course of action. Tackle the low hanging fruit. Determine if we need a parking garage at that location.
Once we took out the bonds, the costs were fixed. I’m not sure how it matters if we start the project now or in two years. If we are going to spend $11 and $14 million, let’s spend it on the right project because we need it, not just a project that we panicked into approving when we feared money was going to disappear.
What is this low-hanging fruit?
[i]”I always thought bonds paid interest only until the due date.”[/i]
There are many types of bonds.
A bond which pays nothing up to the expiration date and the pays off at expiration is called a zero coupon bond. What happens is you buy a zero coupon bond at a discounted price and when it matures you sell it at its face value. Imagine, for example, the purchase price is $6,100, and then after 10 years you can redeem it for $10,000. You would have in that case made a compounded return on your investment of 5.067% per year. (For what it is worth, this kind of bond meets the tenets of Islamic law, because it does not explicitly pay “interest,” which is forbidden in the Koran.) If you want to sell a zero coupon bond before it matures, you can sell it in a secondary market, generally for somewhat more than you paid for it and well less than its face value.
A bond which makes regular (usually monthly) payments is called a coupon bond. (Back in the day you had to physically turn in a piece of paper, your coupon, aka bearer certificate, to a bank or a trading outfit, in exchange for your monthly payment.)
Traditional coupon bonds pay interest only; others, like most municipal bonds, pay interest and principal, just like a mortgage. They are known as serial bonds.
The main reason a buyer might prefer to receive both interest and principal along the way is that it reduces the buyer’s risk. If he gets interest only for say 25 years, but the bond issuer goes completely broke after 23 years, he will get none of his principal back.
Obviously, a traditional coupon bond which pays interest only will have a lump sum payment due at maturity.
Those, like most muni bonds, which are paid down every month in equal payments until they are fully paid off, pay a large interest payment at first and a smally principal payment. But over time, principal payments rise and interest payments fall.
In some countries, though not in the U.S. as far as I know, they have perpetual bonds. These have no maturity date. They simply pay interest, and the interest rate varies based on an inflation index.
Rich: Thanks for the bond lesson — I didn’t know most of that!
[i]”For what it is worth, this kind of bond meets the tenets of Islamic law, because it does not explicitly pay “interest,” which is forbidden in the Koran.”[/i]
This may be news to some of you, but most major U.S. banks have some operations inside the United States designed to meet the needs of their Muslim customers (usually rich people or people who own companies). There are also a handful of chartered banks in the U.S. which exclusively operate under Shariah law.
The main proscription in Islam is the formal charging of interest. (For most of Christian and Jewish* history charging interest was banned as well. But that began to fade with the Protestant Reformation for Christians.)
Muslims have over centuries developed dozens of ways to charge interest and make it seem as if that has not happened. Here is one example with a car loan:
Say you are a Muslim and you want to buy a $40,000 car, but you only have $15,000 to put down and you want to make payments over 8 years to cover the other $25,000.
An Islamic bank cannot charge you interest. But it can — after reviewing your credit and work history and so on — purchase the car and sell it to you at a premium.
Say the bank takes your $15,000 down-payment, buys that car from the dealer for $40,000 and agrees to sell it to you over time for $46,200. (Making a profit, here $6,200 is not forbidden by Islam.)
You would then make 96 monthly principal payments to the bank of $325.
96 x $325 = $31,200; $31,200 + $15,000 = $46,200.
After your last payment, the title of the car is handed to you. That is a common loan type under Shariah law. But there are many other ways that essentially the same thing is done.
*For hundreds of years, Jews were forbidden under their own religious laws to charge interest to other Jews. But because they were banned by the Christian Churches from almost all other professions, while Christians were banned from banking, some Jews in Europe became bankers out of necessity. Eventually the proscription on charging interest to Jews was eased and forgotten. In my read of history, about 25% of the reason Christians were so rabidly anti-Semitic for most of their history was due to the wealth of the Jews, itself a byproduct of Christians forcing them into the monied professions: banking, insurance, bond and stock and commodities trading, etc. The other 75% of the reason for hating Jews was A) the rejection of Christianity and hence Christ; B) the group prejudice based on the belief that the Jews killed Christ (which is impossible to logically believe if you believe that Christ was omnipotent); C) the Jewish cultural practice of excluding others, especially when it came to food; and D) the general hatred and suspicion of any minority group, particularly one which was normally much better off financially than the majority group, and hence inspired jealousy.
[i]” B) the group prejudice based on the belief that the Jews killed Christ …”[/i]
I lump into that all of the other libels against Jews on the whole which cropped up over the years, including the often widespread belief that Jews were kidnapping Christian babies and sacrificing them for some scary religious ceremony. Variants of that are known as “the blood libel.”
[i]”A) the rejection of Christianity and hence Christ …”[/i]
It should be added, if you read European and Christian history from 330 A.D. on, that prejudice based on religious difference was not exclusively one of the Christian Church condemning Jews for their religious beliefs. In fact, in that respect, Jews (other than during the various Inquisitions) had it easier than those Christians who were deemed heretics. For hundreds of years up to and beyond the time of Martin Luther, the Catholic Church was busy slaughtering people who we today would consider some variant of Christian, largely because those people either viewed Christianity slightly differently than the Church or directly rejected the practices of the Catholic Church (or the Orthodox churches in countries where the Pope was not in charge). Most of northern and Eastern Europe was converted to mainstream Christianity by force, meaning the people were forbidden to live if they wanted to live under their pagan belief systems.
So anyway, what are those low-hanging fruit?
Don. Thanks for pulling us back from the edge. It was interesting to learn that it’s Calvin and Luther that are to blame for me being under a rock on our mortgage. Or Calvin and Hobbs–I always get them mixed up.
Anyway, in my recent conversations with some parking experts with broad experience, I have found out that the accepted optimal utilization rate in parking structures is 90%, not the same 85% used for street parking. I can imagine one reason is that drivers circling the blocks looking for parking spaces at the curbs impact other users more than if they are circling around in off-street structures.
In the process of looking at the spreadsheets Davis Bicycles! gave you to post, I found we have no counts that meet that 90% standard. However, there was one above 85% that I overlooked in my initial scan of the data. I have now shaded that box yellow like the other 4 above 85%.
This does not affect any of our counts, occupancy rates, or averages, and it’s all a moot point now. Still, we want it coded right on the charts. I have sent you the corrected spreadsheet for the F Street garage to post in place of the one showing only 4 of the 50 counts in that structure above 85% if you are willing. Thanks.
” Or Calvin and Hobbs”
Clearly the five story parking structure would be a Leviathan.
“Anyway, in my recent conversations with some parking experts with broad experience, I have found out that the accepted optimal utilization rate in parking structures is 90%, not the same 85% used for street parking.”
There will be significant backtracking on this statement as the council-approved actions are implemented and the conversation moves forward.
DT Businessman reporting (aka Michael Bisch, Davis Commercial Properties, DDBA Co-Prez)
Oh, no, Stacy, now you’ve hired a bunch secret-source experts, too!
DT Businessman, what’s been the DDBA view on our three-story limit, generally, and this concept of a five-story parking structure?
The consultant hired by the city years ago conceived the project as 4 stories with roof top parking. That is the project that came before the Council. It is not 5 stories. There is no 3-story limit in the Core. There’s essentially a 4 story limit (technically 3.5 but it amounts to the same as 4) due to fire fighting equipment limitations, but that’s now been lifted with the pending merger between the city and campus fire depts. The CASP calls for a predominantly 3 and 4 story retail core. That all being said, the DDBA is not wedded to any number of stories. We simply want the lot developed for a higher and better use. A surface parking lot is a terrible underutilization of a very valuable community resource and it kills the shopping, dining, and pedestrian experience.
DT Businessman reporting (aka Michael Bisch, Davis Commercial Properties, DDBA Co-Prez)
Michael: “but that’s now been lifted with the pending merger between the city and campus fire depts”
We’ll see if that happens, right now my understanding is that there are some huge problems that have stalled that process.
I haven’t been tracking the merger negotiations. In any event, the E/F project will be / would have been / might yet be, limited by any number of constraints, including the fire code.
DT Businessman reporting (aka Michael Bisch, Davis Commercial Properties, DDBA Co-Prez)