Council to Hear Second Street Target Auxiliary Pad Issue

Will Council Side with Staff or Downtown Business? – City staff continues to recommend a modification of the zoning restrictions for four pad buildings at the Second Street Crossing (Target) development, to reduce the minimum sizes of some retail uses and make minor adjustments to the site plan.

“Staff continues to recommend approval of the applications as presented,” they write in a staff report by Director of Community Development Ken Hiatt and Katherine Hess, Community Development Administrator. “We have worked with the applicant to refine the use adjustments to retain consistency with the intent of the Second Street Crossing approvals, minimize impacts on the downtown, support the economic health of the center, and encourage a range of uses to serve community and neighborhood needs.”

They argue: “There are no significant issues with the modifications to the site plan. Staff supports the inclusion of the bus shelter and the bike path as mechanisms to encourage alternate transportation to the center.”

The issue now comes before council.  On a 3-2 vote in October, the Planning Commission voted to “seek direction from the City Council as to the appropriateness of its role in policy matters, given the potential that any decision may override the political decision made by the electorate. Seek direction regarding distinctions that the commission should be making between downtown viability and the Second Street Crossing development.”

Staff believes, “Construction of the pads will generate construction tax and impact fee revenues to support city capital programs. Full development and occupancy of the Second Street Crossing project is expected to generate ongoing property and sales taxes to the city. The amount of sales tax that is generated depends on the success of the businesses that locate in the center, and the extent to which the sales are net new sales to Davis.”

When voters approved the zoning changes to allow Target into the site, it also created four pad buildings, a total of 46,000 square feet.  “The zoning for the pad buildings lists specific allowable retail and ancillary uses, many with minimum store size or maximum aggregate square footage,” staff reports.

According to staff, about the use of the 25,000 square foot pad by TJ Maxx, “This community retail use is consistent with the current Planned Development and does not require any amendments to the allowed uses.”

However, remaining modifications which would reduce the size of minimum allowable stores would require modifications.

The modifications would reduce the minimum size from 10,000 square feet to 4,000 square feet.

It is these modifications that the downtown business community considers problematic.

A letter dated September 10, from Davis Downtown Director Stewart Savage, argued that when Target was approved, “The City Council structured an agreement with developers that would bring Target and potentially a couple other large retailers to the periphery of town. The development agreement had minimum size requirements that ensured we wouldn’t just cannibalize our current stores but would truly bring new sales and new tax dollars to town.”

“The City Council knew this was a delicate retail project. They asked our community to weigh in on the proposed development agreement with a vote of the residents. After months of debate and deliberation, we voted very narrowly to accept the new retail project as proposed,” he writes.

He adds, “We have our Target but it hasn’t worked out to bring other large retailers to town. The current developers would like to scrap the agreement and change the size requirements that were so purposefully crafted and voted on. A big box surrounded by small retailers is the standard big box development model across America. The big box doesn’t kill downtowns; the small parcels that surround the big box are the problem. It seems that a big box magnet and a sea of parking are just irresistible to potential strip mall tenants.”

In a letter a month later, Mr. Savage notes, “We have seen no discussion about development efforts on properties adjacent to 2^nd Street Crossing, no studies of vacancy rates at existing neighborhood shopping centers, and no input from the community. Essentially, the Community Development and Sustainability staff is discounting past development efforts and a community vote simply because the proposed changes ‘are in alignment with the General Plan.’ “

In comments to the planning commission, Mr. Savage noted, “The Second Street Crossing has already had a significant impact on our downtown area.”

Mr. Savage added, “As you’ve noticed, there has been a decrease in retail downtown and there has been an increase in dining and entertainment, which is great, but we do feel that having a nice product mix downtown is essential for the success of our downtown area.”

However, there was contrast to the view of downtown businesses from that of city staff, who argued in their staff report, “At the time the Second Street Crossing project was being considered, the major significant issue that was identified was impact on the downtown.”

“The EIR for Second Street Crossing analyzed the potential for physical blight as a result of the project, and concluded that impacts would be less than significant. This did not mean that the project, and particularly the Target store, would not have impacts on individual stores or the downtown as a whole – just that physical blight would not occur to a significant level,” staff argued.

They admit that since Target has opened, many downtown merchants have struggled and a number have closed.

“Stores have been affected by Target and other competitors elsewhere in the region, internet shopping, and the downtown in the economy. Overall, downtown has continued to thrive and most vacant spaces have been filled or leased,” staff argues.

Michael Bisch, a business owner and co-President of the Davis Downtown, posted on the Vanguard in September that the impact of Target has been significant.  There was a study that showed monthly shopping trips downtown have declined 9.09% since Target opened, and monthly shopping trips to neighborhood shopping centers have declined 21%.  While there has been a study of the impact on downtown, there has been little analysis of the impact on neighborhood shopping centers.

Mr. Bisch notes, “Staff says no blight will result. Is that possible when shopping trips dive 21%? What will the impact be on the already approved Alhambra shopping center? What will the impact be on the primary community planning objective of fostering a compact community with greenbelts surrounded by open space? What will the impact be on our efforts to foster a sustainable community?”

Furthermore, he notes that the original Target shopping center project was a tricky proposition.  He wrote, “It was an attempt to reduce sales tax leakage to other communities without cannibalizing the sales of existing Davis businesses.”

“I’m fairly confident that the project proponents have partially achieved their aim in capturing sales tax that would otherwise have benefitted other communities. But I’m also fairly confident that the project has cannibalized sales of existing Davis businesses,” he adds. “The issue is that no analysis has been done that I’m aware of to determine how much the community has gained from reduced sales tax leakage vs. the harm of cannibalized sales.”

There is a clear disconnect here between city staff, who seem to be arguing that there was no harm done by the original Target project and there will be no harm by these changes, and the merchants in the downtown who seem to believe Target has harmed them.

Alzada Knickerbocker, of The Avid Reader, similarly weighed in, in September, arguing that the discussion in 2006 “resulted in very carefully structured parameters for the businesses coming to that site with the intention of striking a balance between garnering more sales tax and not cannibalizing our downtown and neighborhood retail.”

Mr. Bisch’s analysis already suggests that, at least with respect to the neighborhoods, this balance did not work.

Ms. Knickerbocker added that the request for the adjacent pads would “undo what was studied, debated and decided on this time with no study that I’m aware of, and virtually no community debate.”

“It’s to the developer’s benefit, but how about the rest of us?” she asked.

Staff now once again puts the city council into a needlessly awkward position of weighing the concerns of downtown business against the strong interests (apparently) of city staff to push this forward.

—David M. Greenwald reporting

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