Trackside has been a contentious issue since it was introduced as a six-story project way back in mid-2015. It was no less contentious on Tuesday, with several hours of public comment and more than 50 people speaking.
Council ended up approving the project by a 4-1 vote (although the approval of the environmental document was unanimous), with Mayor Pro Tem Brett Lee as the dissenting vote.
The lengthy public comment on Tuesday was punctuated by two very distinct schools of thought. One was a fairly large contingent of students and recent graduates who spoke forcefully on the need for student housing and affordable housing – even though Trackside itself would not seem to lend itself necessarily to either. The concerns of the low vacancy rate seemed to motivate an unusually large number of comments from the generation under 40.
In fact, several people on Tuesday observed a large generational divide, with very few people under the age of 40 opposing the project as proposed, and the vast majority of the opposition to the project as proposed (i.e., in favor of a modified or reduced size/impact project) being older, established residents in the immediate neighborhood.
But one of the questions that immediately came up with the neighbors’ counter-proposal is whether they did any sort of assessment to see if three stories would be fiscally viable. They argued by comparison that other similarly-sized projects were viable. If the proposal 3.0 is not financially feasible, Councilmember Will Arnold reasoned, “that means it’s between proposal 2.0 and nothing.”
When the question was posed to the developer team, Steve Greenfield told council, “The financial viability model doesn’t hinge on what the return on investment is going to be in 20 years, it hinges on can you finance the project to build it.”
He said a bank reviewed their pro forma, “based on construction value from last year and downsized project 3.0, and construction costs have gone up since last year… I looked at the 3.0 and it comes out with a negative net value of over one million dollars. So if we’d been given the land for free, it wouldn’t be viable to build the 3.0.”
In response, one of the neighbors with 40 years of experience in construction said, “All these developers have to do is get more equity from their investors and take on less debt, and any building could be financially feasible if they’re getting rent.” He said, “I don’t know what their financial feasibility study showed or their pro forma to the bank, but it can be changed by getting more equity from their investors.”
Larry Guenther acknowledged that they had not had a conversation with a financial advisor.
Mayor Pro Tem Brett Lee said he takes zoning for what it is “and if I have to make an exception, I have to ask why.” He said, “I think there is an objective component, and the objective component is does this fit within the zone, and if it did, it wouldn’t be here tonight – almost by definition. So we’re saying let’s ignore the rules and let’s approve something outside the rules.”
He said that he was surprised by all of the references to things like the housing crisis and greenhouse gases and accepting the binary choice before them. “Why aren’t people, for example, demanding the six-story option,” he said. “Once we’re sort of outside of this objective area, now we’re into subjective.”
He said, “Personally I’m okay with the three, I’m not okay with the four.” He doesn’t see a huge difference on these issue, with the three versus the four-story proposals. “The amount of housing here isn’t going to significantly address the housing issues in Davis.”
Councilmember Will Arnold thanked the neighbors for presenting an alternative proposal, something he had never seen before. But he took exception to what he called “the rhetorical gap.” He took exception to the notion that the design guidelines were being wiped out and “Davis was losing its soul.”
“The idea that we would be throwing out all the guidelines and waiving all the rules and kicking in the doors of zoning, I believe our staff has done a very good job of presenting a solid case as to why that’s not the case,” he said. “The actual Trackside image is absolutely consistent with the case study that was provided for in the design guidelines…”
About the idea that we would be losing the soul of our town, he said “to me I think there’s a huge gap there between what is actually being proposed and the rhetoric around it.”
“What it is, is discretionary,” Councilmember Rochelle Swanson said. “Moving forward with what’s being proposed doesn’t throw everything away – we make exceptions, we make small changes… It concerns me when everything is looked at in discrete pieces and not wholistically.”
She said “when I saw the first proposal, I was not a fan.” She called it “transit oriented development.”
In addition, she was concerned that “no one is talking about the fact that this is about the haves and have-nots.” She appreciated the presence of the students. “Our job is that we are stewards, we don’t just represent one neighborhood… We represent the present but we also represent the future.”
She said that for every person down there, there is a working family working two or three jobs, sleeping, trying to get ready for their day tomorrow and our job is to represent them too. “Yes 27 units isn’t going to save the world, but it does set a precedent. People are looking at this.”
She said that “if we were talking about four stories’ difference (between neighbor and developer), I think we would think differently. But we’re talking about one and there’s financial feasibility. Just because it’s fiscally feasible doesn’t mean that it’s financially feasible.”
Councilmember Lucas Frerichs said “(the housing crisis) is real.” He added, “Housing of all types is needed. That’s something that fundamentally I believe. Are we going to solve it all here in Davis? No.”
He noted that on his way to council, he ran into a homeless student living currently in a vehicle near City Hall. He said, “It is absolutely real. It is great for those of us who own homes in this community to think that it’s the other, but it’s people in this community, it’s happening right now and we need to be responsive to that.”
He said that “we are pushing on the university to do their part and they need to do a lot more.”
Mayor Robb Davis gave some lengthy remarks. He said he believes that Trackside “clearly contributes to the goal of the Core Area Specific Plan. I believe it contributes to the intent of the design guidelines.
“It will bring more people into the downtown,” he said.
The question becomes, what does it do to Old East Davis? He said the environmental review has convinced him that it is not going to damage the historical buildings in that neighborhood. He acknowledged that there was disagreement on that and potentially a lawsuit. “I don’t see a problem there,” he said.
Will it harm the neighborhood? he asked. “That’s where I’ve lost sleep over the last several nights,” he said. “Will it drive residential out of that neighborhood. I don’t think so.” He also didn’t think it would contribute to the over-densification of the neighborhood. “I don’t think it’s precedent setting in that way.”
How is it harming the neighborhood? he asked. “I’m not going to say it doesn’t because I don’t live there… Will it change the neighborhood? Yes. There will be changes in the neighborhood because of this.
“Will it destroy the character of the neighborhood?” he asked. What is the character? And he mentioned the word “eclectic.” He doesn’t think that it fits that definition of the word.
“The character of the neighborhood is extremely diverse… it is probably the most diverse neighborhood in the system,” he said. But he argued, “Diversity in a biological sense is a resilient thing.” Because of that, he said “I’m not convinced that this project is going to hurt it.
“I think a project like this helps accomplish the intent of the Core Area Specific Plan,” he said. “I think it definitely meets the design guidelines in the sense that the design guidelines seek to serve and carve out these different areas, that are designed to carve out and achieve these ends.”
He supported the project because it brought the achievement of goals without, in his view, harming the neighborhood.
The council, on a motion by Will Arnold and seconded by Lucas Frerichs, voted 4-1 to approve the project, with Brett Lee in dissent. Is this the end of this story and controversy? That remains to be seen.
—-David M. Greenwald reporting
I watched much of the meeting on my computer. It seemed to me that the “yes” side was very coordinated and orchestrated with most of their speakers brandishing a “YES” sticker when coming to the podium. Their theme of climate change, needed housing and the .2% vacancy rate was heard ad nauseam. I had to laugh at some comments about how the group of investors were doing this for the good of the community because they care so much for Davis, like making a buck has nothing to do with it. The old east neighborhood speakers came off as much more down to earth and believable in my opinion.
Secondly, why were they even discussing if a project pencils out or not? That shouldn’t be the council’s focus. So if I get a group of investors together and buy a piece of land I’ll be able to build whatever project I can get away with oustside of neighborhood guidelines because it has to be able to pencil out? What if I overpaid for the land or any other number of fiscal mistakes I might have made? That shouldn’t matter because my project will be shaped and decided on to make it financially viable?
Lastly, a project was recently approved near central park with the council saying how could they not approve it when it fit within the neighborhood guidelines. So in turn one could easily say how could they approve Trackside when it didn’t fit the guidelines?
“like making a buck has nothing to do with it.”
I don’t know how fair a comment this is. I have talked to a lot of investors personally and have come to the conclusion that most did it because they believe in the concept and the need for housing in Davis and most really don’t expect much if any return on investment.
Yeah right David, investors put their money and time into higher end projects all of the time when they don’t expect much if any return on investment.
This is not the typical investment structure either, you’re talking about a lot of people, most of whom are not large or hard core investors putting some money into the project.
Another thing David, if the investors were in it for the need for housing and the community good and not for an investment return why the retail stores and restuarant on the bottom floor? Why did it need to pencil out? Why couldn’t they give in to the three story compromise?
“Why did it need to pencil out?”
Because it had to get financed? Is that really a question? They claim that they would end up $1 million in the whole with the three story compromise, I don’t know if that’s true, but I don’t think they had that kind of money to begin with. I’m kind of baffled by the questions here.
You say this but yet you’re baffled by the questions.
That was my polite way of saying I don’t agree with you.
If someone plopped down $30,000 as their share, what do you think they are expecting as a return on investment? This is not going to be a big money making project for most investors.
David, you just said “They claim that they would end up $1 million in the whole with the three story compromise, I don’t know if that’s true” but you somehow know that “This is not going to be a big money making project for most investors.”
Good question. (Also, if they plopped down a higher amount.) What kind of return are they expecting?
The question is whether or not the city must be “concerned” about whether or not a given proposal is feasible with/without external financing (and at what level/amount, e.g., compared to the owner/developer’s investment).
And, if the city is going to be concerned about this, should they simply “take the word” of the development team? (As Will Arnold seemed to do, last night. Much as I like Will.)
By the way, I strongly suspect that MRIC will also “depend upon” housing to obtain external financing. Of course, that will be obscured by the same type of green arguments, global warming, jobs, housing needs (created by the MRIC development itself), etc.
Keith – I agree with everything you wrote.
Thanks Ron.
Ron, if you had an extra $30,000 lying around would you invest it in a project where you weren’t assured a good return on your money?
Keith: I’d try not to, at least. I realize there’s always some risk with investment. But, I suspect this one is pretty solid.
Regarding external financing, I seem to recall that a given development must have an extremely high rate of return, to be approved. (Something well-beyond what you might logically expect.) I think this was discussed a long time ago on the Vanguard, by commenters who apparently had first-hand knowledge of such arrangements.
Not sure what kind of interest rate is charged, to receive that financing. Regardless – once it’s paid off, I suspect that it’s mostly “gravy” for the owners/investors – with lots of “extra calories”.
You really need to work on your comedy bits if you ever hope to work for The Onion.
I know Alan, it’s pretty head scratching isn’t it?
David
“that most did it because they believe in the concept and the need for housing in Davis and most really don’t expect much if any return on investment.”
What would you have expected them to say given the controversial nature of this project?If they were doing this for altruistic reasons and didn’t want much return, then why would they have not opted for a largely affordable housing project rather than luxury apartments. Surely we could all agree that affordable housing is a greater need in our community than are luxury apartments.
Thank you, Keith. Your points are all spot-on.
The Council must consider the economic and financial viability of the projects that they approve. In fact, the 4th Amendment requires this–the Supreme Court has ruled that making requirements too extreme is a regulatory taking.
So is keeping within the neighborhood design guidelines considered requirements that are too extreme?
They sure didn’t give such scrutiny to Paso Fino developer’s claims of not being able to build and pencil out — and guess what, it did after all. Then again, the investors/developers/speculators weren’t 40 of their closest local connected friends and fellow collaborators. By “them” of course, I’m only speaking of the Fabuless Four.
Kaboom!
Did I hear a mic drop?
” Is this the end of this story and controversy? ”
Nah, you can count on the “neighbors” and others who didn’t get a piece of the action to stir the pot, but that’s your bread and butter, right?
Is 4:1 going to be too divisive for Tia? I’m waiting to see her reaction to this step forward. Hope the local supply of straw is sufficient for all of the arguments now being constructed.
More interesting question for me: the initial project was preposterous at six stories, after it was lowered to four, should the neighborhood have just conceded the project? Did they gain anything over the last year? I think Linda Deos hit the nail on the head that no one cared outside of OEDNA.
I’m sure you have causes too that no one cares about outside of your circle that you still pursue.
Curious, where are the Old East neighborhood thoughts and comments today? You would think they would be sounding off on here.
Where are we?
I will have a full set of comments once I get over my initial reaction. I have been informed by a city council member that I am civil and I would like to be able to maintain that reputation.
That’s no fun
That one almost got you Onion cred.
Given the time when folk KNEW what the result was (although I think a lot of folk figured out that they could count to at least three long before — note the previous comments saying 3-2 wasn’t ‘right’), and a need to process the discussion, and then composing their thoughts in a cogent and/or “civil” manner, I’d say 24 to 48 hours to react, should be expected.
Keith’s question is inane at best…
Thanks Howard, I expect no less from you.
The council finished at 12:15 am this morning. I slept a few hours and got up at 3:30, finished this by 6 and continued on my day. But that said, I think Howard’s point is fair, although I expected more in the way of response.
Glad I didn’t disappoint, Keith. Please note my quoted comment was directed to your question, and not to you.
I have been informed by someone more dignified than a City Councilmember that I am a flaming arsehole, and I have no trouble maintaining that reputation.
And that’s your charm, precisely why I like you.
But there’s something about a few other flaming arseholes that have absolutely no charm and disgust me.
That’s the greatest compliment I have ever received.
And amen-amen regarding those few other flaming arseholes.
Please note my comment wasn’t directed at anyone.
Any perceived similarity to actual Vanguard commenters is strictly coincidental.
Here’s an attempt at summarizing. Proponents of more housing in Davis declare a win even though this this blip will not improve the housing situation in Davis one whit, while they simultaneously put money in investors’ pockets, set a bad precedent, and make someone else’s neighborhood more unpleasant to live in. Yay! Here’s to the so-called “new progressives,” some of whom seem to think they are Berniecrats when in fact they are failing Bernie 101: follow the money and don’t let corporate interests drive your community’s decisions.
“Proponents of more housing in Davis declare a win even though this this blip will not improve the housing situation in Davis one whit, ”
I agree with this and it has been my problem with the project from the start
But the investors weren’t in it for the money, right David?
I don’t know
But David, you earlier wrote:
They obviously were in it for ‘the money’… don’t think it was meant as a charitable deduction, or to show a paper loss for taxes. Their investment was when they put their money in.
As to what ROR they anticipated is unknown.
Some folk invest their money (even in excess of $10,000) in a savings account… at less than 1% return, per year… but at least they would not be likely to LOSE money. They would at least need to recover their expenses for the financing they receive.
I fail to understand your point. Does anyone ever invest money, taking on risk, without expecting to make money? I know I don’t, except when I ‘invest’ (spend funds) in charities, etc., but the ‘profit’ is not financial. I say that the investors did not envision their investments as a ‘charitable contribution’.
Keith: And you disagreed with me (even though you didn’t talk to them, hence my response this time).
A thoughtful, intelligent person, informed of the history and process, would not declare a “win”, based on the action, to justify “more housing” in any other venue, except, perhaps, at the edge of the Core Area.
But, we have no shortage of fools in town…
On that we agree
I find it unfortunate that the CC acted, without a re-visit of the supporting documents. The re-zone appears to be accepted by PC as well.
On the other hand, holding it up indefinitely, until the supporting documents were revised/clarified, with the potential of being a two to 20 year process is not right, either.
This approval should be seen by no one as a “precedent”… a decision in time, given the facts at that time, rightly or wrongly as to philosophies/viewpoints. If there are factual issues as to process, bring those on… those would be fair game.
I do! I do!
If it was a precedent it was established long before this issue emerged.
It was established with Mission, which was supposed to not set a precedent.
A precedent is in the eye of the beholder, just like neighborhood design guidelines.
As in, BEHOLD: The Design Guidelines no longer mean what it was intended that they mean.
Approving this project sets a precedent for similar projects. I think that many supporters saw this as a step towards densifying housing around the core–this wasn’t a one-off project. The Core Plan will tee up a bigger discussion about how we will satisfy our housing demand–or whether we will become a town of old, white property owners with a quasi-gate at Richards.
Oh no! He brought race into this. I am terrified to scroll down.
“The Core Plan will tee up a bigger discussion about how we will satisfy our housing demand–or whether we will become a town of old, white property owners with a quasi-gate at Richards.”
If we continue to approve very expensive luxury apartments aimed at affluent residents whether property owners or not, I guarantee that will be the outcome.
Come down my street sometime in Wildhorse, the home prices are in the $800 thousands but you’ll find a lot of diversity.
Keith: It’s interesting that you noted this.
I was recently watching a hearing in Sacramento (on TV), regarding rent control. Normally, I don’t watch these things, but found this one kind interesting. Almost without exception, there were lots of older, Asian property owners from San Francisco who opposed relaxing the restrictions. And, lots of younger white people (some of whom worked for Affordable housing organizations) who wanted the restrictions repealed.
As a side note, a lot of the students in Davis will (eventually) earn more than the current generation. That’s why they’re going to college, of course.
The only “race” that doesn’t seem to be making a lot of “progress” (as a whole) is African-Americans. (At least, that’s my impression.) No doubt, still related to the history of this country.
To clarify, the statewide “restrictions” prevent cities (such as San Francisco) from enacting tougher rent control laws.
Upon further reflection, my comments should probably be disregarded. I forgot that Asians are lumped in together with whites, as having “no color” (aka, translucent) – at least on the Vanguard.
O.K., I’ll shut up now, before I dig my hole deeper. 🙂 Pretty much a “no-win” situation, when you start talking about race.
Did you learn no lesson from Michael Harrington last night?
That’s probably the funniest thing you’ve ever said. (And no – apparently not, as I voluntarily stepped into it, as well!)
Honestly, I don’t know why he (or subsequently I) brought this up. Maybe I can ask Don to delete the whole thing. 🙂
That IS the funniest thing you’ve ever said. Onion cred granted.
. . . still laughing . . . . . . . . . . . . . . . . . . still laughing . . . . . . . . . .
“the home prices are in the $800 thousands but you’ll find a lot of diversity.”
Diversity of what ? Skin color ? Religion ? Degrees ? Ages ? Maybe all of the above. But what you won’t find is much economic diversity. I don’t believe that the wealthy need “help” in the form of exemptions from the city in procuring adequate housing.