Sunday Commentary: Looking at Some Arguments against Nishi

We have already talked a lot about the air quality issue and affordable housing issue, but I wanted to go again through some of the arguments against Nishi.

Colin Walsh pointed out, “The developers still own options all along Olive Drive.  It is quite possible that they will be back, looking to attach through there – I would expect it, they still own the options there.

“I would also point to the MOU with the university – it says it is not a legally binding document.  We have no guarantees that there will be a connection to UC Davis.”

Mr. Walsh also pointed to 435 pages of documents submitted by Thomas Cahill.  He said, “I’m a backer of students.”  He added, “If students live here and they’re harmed, it’s on us as a community. 
It’s on the people who come here and advocate for it.”

He said, “Tonight I’m bringing all Dr. Cahill’s submissions, so when the first person is injured there by the air sues the city and sues the developer, these are on record so they can access these easily because they have a right to sue if they are hurt because of the air.  You have been warned by Dr. Cahill that there’s a problem here.  No one has done a study to show differently.”

Eileen Samitz said, “The MOU is not legally binding, this is a major problem.  The access if you think about that, what happens if the university… later on says you know we just don’t want access to come through the university.  What does the city do?  Has anyone gone through that yet?”

She said, “It has to be legally binding if this project moves forward to go through the university.”

Ms. Samitz was also critical of the fiscal analysis, explaining that at the Finance and Budget Commission: “The discussion was not completed and there was more information coming through.  The discussion was rushed and they didn’t finish.

“Nishi could be as much as a $12 million deficit after 15 years,” she said.

“Cumulative impacts,” she stated.  “The city has not looked at the cumulative impacts of over 5000 units coming into the city.  That would be Lincoln40, Nishi, Sterling, Plaza 2555 – all of this should have been done by the city to see what the cumulative impacts on traffic circulation, water, waste water treatment, police, fire, all this stuff.

“Affordable housing,” she said.  “What makes anyone think this is affordable?  What I saw in the newspaper is that it’s really $700 to $800 per bed.  Do the students really think that’s affordable?  They keep on saying this is affordable housing, this does not seem affordable.  This is exactly what they are complaining about on campus is too expensive.”

She added, for the low income, the developers are just going to be “bleeding out of the market rates.  Let’s talk about what will the market rate cost.”

It was good to see that Ms. Samitz did not reprise her mega-dorm discussion here, although she did earlier in the week in an email.  These are two- and three-bedroom apartments that are rented by the unit.

In her email she wrote that “these mega-dorms do nothing to help provide rental housing for our families and local workers due to their exclusionary design just for students.”

Because of the location of Nishi next to campus and the university-only access, Nishi lends itself more to students than to others, although it is possible some faculty may have interest in moving there initially as well.

I thought the council did a really good job on Tuesday of having staff and experts address the public comments.  You probably don’t change people’s minds by doing that, but you at least are responsive and can correct misinformation.

Both Eileen Samitz and Colin Walsh, as stated, hit on the issue of the MOU.

Matt Dulcich from UC Davis explained that “the MOU is the starting point where the three parties – the developer, UC Davis and the city – can start to chart out what are the shared principles for moving forward on developing actual real estate agreements that would in perpetuity provide that road access.”

He later indicated that the LRDP they are working on has the ability “to approve or move forward with an approval of the road connection to Nishi.”

The other key point was made by Robb Davis.  That is that “this is in the baseline features.  The baselines features say that the access point is via UC Davis.  If you do not grant that, then the project cannot go forward.”

In other words, if UC Davis doesn’t grant the access, the project cannot go forward.  The MOU is simply an indication of their desire to see it go forward and provide the access.

Colin Walsh’s comments drew attention on Tuesday, in particular his implied threat of a lawsuit.

City Attorney Harriet Steiner believes that the city doesn’t face such liability, stating, “Anyone can file a lawsuit that they think has merit.  I’m not aware of any grounds on which to hold the city liable for approving a land use development application on those grounds.  They might file a suit but I can’t think of a reason why it would be successful.”

While I think her answer is too simplistic, the problem with attempting to sue is that it is highly unlikely that someone will be living at Nishi and become “hurt because of the air” as Mr. Walsh put it.  If someone does get sick, it figures to be years down the line, and there will be difficulty pinpointing the proximate cause.

This wouldn’t be like a point pollution issue of groundwater contamination that leads to a cancer cluster.

It would be harder than you think to even establish the danger in general.  As Dr. Salocks explained, “Diesel particulates are responsible for 70 percent of the cancer risk from traffic related pollutants.”

He said,  “The concentration of diesel in the Delta Study was .57 micrograms per cubic meter.”  He said that the statewide ambient level of diesel particulates is .58 micrograms per cubic meter.

“Dr. Cahill’s hypothesis is that the air at Nishi is extremely polluted, it’s much worse than any other area, it’s comparable to Ontario, California.  It’s not.  In fact, the results of that study that were done showed that the air at Nishi was average.  It was almost exactly equivalent to the statewide average for diesel particulates.

“In my mind, there’s no support for saying that this air is particularly polluted,” he said.

Finally, on the issue of affordability,  Eileen Samitz said, “What I saw in the newspaper is that it’s really $700 to $800 per bed.  Do the students really think that’s affordable?”

It is hard to get firm numbers on what a project is going to rent for.  My guess is going to be if a number of units come online around 2020 as expected, that could generate a glut in the market that can bring down the costs.

But let us use her figure of $700 to $800 at face value for the purposes of this exercise.

In 2017, the average apartment according to the BAE report rented for $1035 for a studio, $1270 for a one bedroom, $1660 for a two-bedroom and up to $2270 for a three-bedroom.  Assuming single occupancy, it would seem that a market rate three-bedroom is renting for just over $750 per person and a market rate two-bedroom for about $830 per person.

So that puts the cost estimate in line with market rate apartments.  A room at West Village is $1050.

And for a bed lease the average is $892 a month.

Is that affordable for students?  Of course not.  But that’s reality.  The best way to reduce those rents is to increase the vacancy rate.  Contrary to the rhetoric here, these are not luxury apartments.  These are basically market rate apartments and the students will be paying around the market rate.

However, with the university agreeing to 8500 beds and about 5000 other beds coming on line in the city, we can improve the 0.3 or 0.4 percent vacancy rate currently and increase it closer to the goal of 5 percent.  We do that, and maybe we can drop those rents a bit more.

—David M. Greenwald reporting



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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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17 thoughts on “Sunday Commentary: Looking at Some Arguments against Nishi”

  1. Ken A

    If rent was not “affordable” to students (aka students could not “afford” to pay the rent) we would have a lot of empty units (so most people figure out a way to “afford” to rent in Davis since it is a pain to take the bus in from out of town every day).

    It is important to remember that different “students” can “afford” different things and I bet the students I see driving late model BMWs and Audis think the new Nishi rents are a “bargain” (compared to SF, West LA and Hong Kong) while the kids taking Yolo bus from their grandmothers home in Woodland still can’t even “afford” to rent a garage in Davis.

  2. Don Shor

     it says it is not a legally binding document.  We have no guarantees that there will be a connection to UC Davis.”

    An MOU would typically lead to an easement, which is legally binding and which conveys with the property. Easements are the 

    actual real estate agreements that would in perpetuity provide that road access.

    It’s also hard to imagine a scenario in which UCD would close off access from Nishi onto campus and force their own students to travel around via Richards Blvd.

    “Nishi could be as much as a $12 million deficit after 15 years,” she said.

    This number has been thoroughly debunked. I really wish Eileen and others would stop repeating it. It reduces their credibility.

     Do the students really think that’s affordable?

    I have concluded that most people don’t understand how the affordable numbers are derived. Yes, by definition, those rents are “affordable.” But what really stands out about this project is the inclusion of units for “extremely low income” and the fact that these are affordable units specifically for students. I shared Rochelle’s concern about trading off “extremely low” for “very low” because I feel the more “extremely low income” units provided, the more we are meeting the greatest need. But the other council members evidently preferred having a larger number of units overall geared to various levels of lower income.

    The lawsuit threat was just theater of the absurd.

    1. Howard P

      This number has been thoroughly debunked. I really wish Eileen and others would stop repeating it. It reduces their credibility.

      And that would be a bad thing?  Or, just ‘self-defeating’? Will assume you intended the latter… more charitable…

      Fact is, we will not KNOW the REAL numbers, until they happen… I am OK with the current “odds”…

      1. Howard P

        Still, have some reservations, but they are not fiscal, nor related to air quality… am still a bit “on the fence”… but lean more and more in favor… particularly when I see who the opponents are, and listen to their “arguments”…

    1. David Greenwald

      The actual Affordable units are $404 and $670.  The 700 to 800 a month units I believe our market rate. That makes sense because the subsidy is $100.

  3. Matt Williams

    Based on the input and questions from the FBC Commissioners during the January 8th FBC Nishi discussion, Item 7-C in Monday’s FBC Agenda Packet is an updated version of the Salomon alternative – Nishi Fiscal Model.  Commissioner Salomon has included the following adjusted assumptions.

    http://www.davisvanguard.org/wp-content/uploads/2018/02/Item-7-C-Salomon-alternative-Nishi-Fiscal-Model.jpg

    Those assumptions have reduced the Cummulative Total from ($11,157,205) in Salomon’s January model to ($6,154,609) in this updated model.

    http://www.davisvanguard.org/wp-content/uploads/2018/02/Item-7-Ci-Salomon-Updated-Nishi-Model-Summary-2-7-18.jpg

      1. Howard P

        Recall, folk, that these are ALL models… with inherent assumptions… “your mileage may vary”… might be better than those presented to date, might be worse… best that can be said is they “might” bracket the range of what will be reality…

        Will have to look to see if the estimates ‘amortized’ the upfront revenues… or, just on-going…

        Might not be ‘honest’ if initial revenues, less initial expenditures, are not factored in… perhaps that has been dealt with…

      2. Matt Williams

        Howard raises a very good point, motels are only as good as their assumptions.  Ray Salomon’s model has assumptions.  The City model reviewed by the FBC in December and January has different assumptions.  The 2016 Nishi model prepared by the economic consulting firm EPS for the City has different assumptions.

        I personally believe one of the assumptions the generic New Development model should include is a proportional sharing of the annual shortfall in funding for infrastructure and service categories shown on page 4-9 of the 2107-18 City Budget. That average annual shortfall in funding is reported in the Budget as $7.8 million.

        Multiplying that $7.8 million by Nishi’s 861 DUEs and then dividing by the City total DUEs of 24,873 calculates the Nishi share of the shortfall as $270,143 per year.  Any model that I put together would have that fair share of the shortfall as a listed Expense.

  4. Tia Will

    My guess is going to be if a number of units come online around 2020 as expected, that could generate a glut in the market that can bring down the costs.”

    Although I am in favor of Nishi and will probably favor Lincoln 40, I am very skeptical of this claim which I see as too optimistic. I feel that those who favor development, whether business as in the case of Target, or housing as in the Cannery, frequently overestimate the benefits which then do not materialize as pitched.

    1. Howard P

      Conversely, I feel that those who abhor development, whether business as in the case of Target, or housing as in the Cannery, frequently overestimate the detriments which then do not materialize as pitched.

      It truly works both ways…

      The truth is somewhere in the middle…

       

      1. Tia Will

        Howard

        “The truth is somewhere in the middle”

        Agreed. However, once a development is completed, it precludes a possibly better plan for the site involved. The same is not true if the suboptimal project does not go through. This could be seen as the flip side of “Don’t let the perfect stand in the way of the good”. I might phrase it, “Don’t accept second best”.

  5. Richard McCann

    In general, students will not qualify for “Affordable” housing units that require income qualifications of various kinds. Those who can qualify already qualify for financial aid and subsidized loans.

    As for the market economics, the 2008 market crash was caused in large part by overbuilding in housing. Real estate prices crashed across the country. It shows how rents and prices can be driven down by increased supply. Note that Davis housing prices even dropped during that period (just not as much.) Just look at the Zillow Zestimate on the house you live in.

    1. Howard P

      You might want to separate “rental” from “purchase”… rental prices nary saw a dip… stagnant, perhaps…

      Housing is housing… but big differences in rental and ownership… rental is at the mercy of others… if they have any…

       

  6. Tia Will

    Richard

    It shows how rents and prices can be driven down by increased supply.”

    Your comment is true as written. But it addresses only one part of the equation. It does not reflect the overall impact of a recession. It does not take into account that even if purchase prices and rents drop, they still may not be affordable for those adversely affected by the overall economy. For example, the student one of whose parents has been layed off in a two worker family.

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