My View: Vote on CFD Represents A Lost Opportunity For Community

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Innovation-Park-example

When the Davis City Council voted 3-2 Tuesday to move the CFD (Community Facilities District) forward, the vote represented, in my view, two things. First, it was a lost opportunity by the council to gain community assets in exchange for the $12 million in advantages they are giving the developers. Second, and perhaps even more importantly, it can be seen as a signaling device for how the majority on council might treat negotiations over the innovation parks.

Let me begin by clarifying one critical thing. My column on Thursday suggested that things were hidden – and, while it is easy to point to the developer agreement as evidence that there was nothing hidden, my biggest concern was the lack of discussion about the CFD in November 2013 when the room was packed with public commenters, rather than now when most people quite frankly have moved on to other areas of concern.

For me, the biggest problem is first that the costs of CFD will be passed on to the new homeowners twice. First, through the purchase price of the house because, as Robb Davis put it, the demand for housing is so high that it will be a seller’s market and therefore the seller will be able to find buyers who will simply take their asking price.

Then, on the back end, these same homeowners will get hit by the CFD and I believe the evidence is fairly clear that they will be far less likely to support both city and school parcel taxes.

We never really got an answer from the New Homes people as to what would have happened if the council did not support the CFD, but largely I believe that the market is the market, and the housing prices will be dictated by supply and demand rather than costs for facilities and amenities.

The bottom line, however, from my perspective is not that I was necessarily philosophically opposed to a CFD, although I just laid out a case against the CFD from a practical standpoint. Rather, the big error that council made was giving away about $12 million in community assets while getting very little in return.

Remember, Cannery in the early stages was willing to give $2 million for various services.   So, clearly, they saw a huge amount to gain from the entitlement of the project.

These services got far more from the Cannery folks than the city did on the current negotiations. This is not a small deal. The CFD was a possibility per the developer agreement but it still required a second (and really a third) vote coming up before becoming actualized.

This $12 million is a benefit that the city council grants to New Homes and the city council has, for whatever reason, decided to give them that benefit and only get $750,000 in return. Robb Davis attempted to increase that benefit to 50-50 but lacked a third vote to make it happen.

In my view, the city council has a number of different duties, but one of them is to maximize community benefits. For example, the city needs a new fire station because the current one located on Fifth Street is getting older – the developers helping the city to build a new fire station would be a benefit that would mitigate some of the impact of additional housing.

One of our readers yesterday was being a bit humorous with potential goofy headlines, but the bottom line really is that either the developer pays for some of these additional amenities or the money comes from elsewhere in the community – the taxpayers or city employees.

To the extent that perhaps the residents will be less likely to support a parcel tax for schools or streets, it could come out of the classroom as well.

From my perspective then, the city gave away a huge community asset worth $12 million to the developers and got very little in return. As one reader stated, “Municipalities and developers ALWAYS tussle over the value created by land use decisions. Why would that be any different with the CFD? The City is creating $12 million or so in value with this decision. Why is the CC gifting it to the developer instead of pocketing the money itself?”

This is the key point, “Keep in mind, the developer is not creating any ADDITIONAL value for the community with the $12 million. The city is the one creating the $12 million with its action. The only action the developer is taking is depositing the $12 million straight into its bank account.”

So for me it is disappointing that the council chose to leave so much potential value to the community on the table. It is not like the Cannery folks were in the position to walk away from the deal. They will make huge amounts of profit here, regardless.

But the bigger issue is how this ends up becoming a signaling event. I had a lot of discussion with people who sat back on the sidelines and watched how this unfolded. They were watching because they believe this offers us a clue about how the council will approach the innovation parks.

I want to be clear – I do not believe for a moment that this decision will doom the parks. However, there are a lot of people like me – inclined to support the innovation parks, wanting to support the parks, but not willing to support the parks for the sake of supporting the parks.

Does the reluctance of the majority on council to drive the tougher bargain on the Cannery CFD reflect their unwillingness to do the same on the innovation parks?

One councilmember remarked to me off the record that the Cannery and Innovation models will be very different by the nature of the projects. The subcommittee of Robb Davis and Rochelle Swanson will obviously work behind the scenes on a lot of this prior to the projects coming forward.

Obviously, while Rochelle Swanson has been an unwavering supporter of both the innovation parks and the Cannery, Robb Davis, also a supporter, is likely to press for more behind the scenes.

Furthermore, one huge difference with Cannery, both in November 2013 and now, is that it only needed three councilmembers’ support. The innovation parks will face the voters and need to get the support of 50 percent. I maintain that the Cannery would have had a very difficult time passing a Measure R vote as it was agreed to in November of 2013.

I have high hopes that we can get an innovation park project to come forward that I can support.

I think we need to think big. This is a community of untapped potential, not just for this community but for the region. The point was made at Jumpstart that in the last decade there have been two Sacramento region companies that have filed for IPO (initial public offering).

One was Marrone Bio Innovations and the other was last week, the Davis-based biotech company, Arcadia Biosciences. They announced that they were filing for $86 million for a proposed initial public offering. In other words, in the entire region, there have been two new companies filing for IPO in the last decade and both came from Davis.

My hope is that Davis can aspire to be mentioned in the same breath as places like Mission Bay, Austin and the Research Triangle Park in North Carolina. I want parks that can serve as crucibles of creativity that inspire innovate thinking that happen at places like Google, Apple and Tesla.

Is that unrealistic? Again, two companies in this region have filed for IPO in the last decade and both are from Davis, before we as a community so much as lifted a finger. I remember back in junior high we had a motivational talk from our counselor and he told us that we should shoot for moon, so if we miss, we end up in the stars.

While we have a tremendous opportunity here, we also are only really going to have one shot at this. I am worried now that we have a council willing to sell short.

Ironically, it was pointed out to me this week that, while I have been foremost among those calling for us to not have competition for the innovation parks, that competition probably is our biggest asset here.

Keeping the three innovation park options alive means that they have to compete with each other – and while the downside of that is the possibility of splitting the vote and back-fighting, it also means they have to attempt to forward the boldest and most innovative project they can get.

The Hines corporation, which is part of the team behind the Davis Innovation Parks, has been the developer behind some very innovative designs, including the recent Facebook Campus.

The bottom line is that we should shoot very high with the innovation parks, as a great park will be a huge asset to this community and a huge draw to new tenants. While the CFD vote was disconcerting, I remain hopeful that we have a net-zero and highly innovative design that can come forward.

What I want to make clear here, however, is that I will not settle for second best or support a second-rate project. I believe a bad project to be worse than no project, and a Measure R defeat is much more likely to come if we attempt to cut corners.

—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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60 thoughts on “My View: Vote on CFD Represents A Lost Opportunity For Community”

  1. Mr. Toad

    A rather brutish  piece demanding unspecified design characteristics of innovation parks with the explicit threat that David Greenwald will use his platform to kill the projects he doesn’t like by advocating no votes on required Measure R ballot measures.

    An interesting contrast to his Jan. 30 piece:

    “Commentary: Measure R is Not THE Barrier to Development in Davis”

    where he argues that Measure R is not the problem. Additionally in todays piece he argues that the Cannery would have failed a measure R vote. In other words Measure R is the barrier to growth and David both admits that it is when it suits his purposes and denies that it is when it suits his purposes. His lack of consistency can’t easily be explained by nuance.

    1. Davis Progressive

      brutish?  that seems overwrought.

      i thought the point he made previously is that measure r alone is not the barrier to development, he cited as examples two non-measure r projects that took a long time and uc davis’ problems attempting to development.  it seemed an accurate point.  i don’t see any lack of consistency.

  2. Anon

    “…my biggest concern was the lack of discussion about the CFD in November 2013 when the room was packed with public commenters…”

    Yes, the time for negotiating the contract was PRIOR to the signing of the developer agreement.  To try and renegotiate the contract, after the fact, sends the message that negotiations for developers are never over in Davis, no contract is final.  What sort of message is that to send to innovation park developers?  My guess is they will choose to go elsewhere.

    What I want to make clear here, however, is that I will not settle for second best or support a second-rate project…

    With all due respect, the Vanguard is not necessarily the arbiter of what is “second best” or “second-rate”, nor what is “first-rate”.”  The problem is that everyone has their own ideas as to what constitutes “innovation”.  My guess is the dire need for a tax revenue stream will overcome a lot of the public dissonance that will come with differing opinions on what should be contained within the innovation parks.  Ultimately, if the city is to be an innovation hub, there will have to be some compromise reached as to what is “good enough”, just as happened with the Cannery.

    I would also seriously caution against demanding perfection:

    Voltaire: “Perfect is the enemy of good

    AristotleConfucius and other classical philosophers: propounded the principle of the golden mean which counsels against extremism in general.

    Pareto principle80–20 rule. It commonly takes 20% of the full time to complete 80% of a task while to complete the last 20% of a task takes 80% of the effort. Achieving absolute perfection may be impossible and so, as increasing effort results in diminishing returns, further activity becomes increasingly inefficient.

    Shakespeare: striving to better, oft we mar what’s well

    Watson-Watt: “Give them the third best to go on with; the second best comes too late, the best never comes.”

    Economist George Stigler: “If you never miss a plane, you’re spending too much time at the airport.

    1. David Greenwald Post author

      I very much disagree with you that this as attempting to renegotiate the contract after the fact.

      Instead this was about negotiating what it would take to change the “may” form a cfd to a “will” form a CFD. I believe Hpierce made that point previously and I agree. Therefore you mischaracterize what took place.

      The contract would have been final, except for the fact that they re-opened negotiations by requesting the CFD. And in fact, they did renegotiate as it was, they agreed to give $750,000 for community benefit. The debate therefore is not over whether to negotiate on the CFD but rather what to get.

    2. Don Shor

      To try and renegotiate the contract, after the fact, sends the message that negotiations for developers are never over in Davis, no contract is final.

      The point has been made several times that it is the developers, not the city, that want to renegotiate. Am I misunderstanding this?

        1. Don Shor

          Ok. So in general, when one party seeks to reopen negotiations, it would be expected that the requested change would be mutually beneficial to the parties — perhaps not to equal degrees, but at least sufficiently so that the other party would consider it. So in what way is the CFD beneficial to the city, the home buyers, or the community at large?

        2. Michelle Millet

          So in what way is the CFD beneficial to the city, the home buyers, or the community at large?

          I have yet to see this question be answered by anyone who supports the CFD.  I understand how the formation of a CFD benefits the developer, at best it is neutral to home buyers, but only I see negative impacts for the community at large.

          1. Matt Williams

            Michelle, if revenue flowing to the CFD is used to fund/complete City infrastructure maintenance/improvements (one possibility is the Covell Corridor Plan), then the currently existing City of Davis taxpayers would not be fiscally burdened by the completion of such a currently on the books project, and they would also benefit from the improved infrastructure.

            As I said to Anon in a prior comment, I am on the fence about the CFD. If it improves the City’s fiscal situation and reduces the backlog of deferred maintenance on our roads, buildings, structures, and other assets, then I am open to considering it. If it simply is a way to create $12 million of “hidden revenue” for the developer, then I am against it.

        3. Michelle Millet

          Michelle, if revenue flowing to the CFD is used to fund/complete City infrastructure maintenance/improvements (one possibility is the Covell Corridor Plan), then the currently existing City of Davis taxpayers would not be fiscally burdened by the completion of such a currently on the books project, and they would also benefit from the improved infrastructure.

          It was understanding that the revenue generated from the CFD was going to pay for things that the developer is contractable obligated to fund. No?

          If so then how does it benefit the city to have these funds come from a CFD rather then directly from the developer?

          1. Matt Williams

            Michelle, the Development Agreement terms include the list of “things” inside the property lines of the 100-acre parcel, and the developer is responsible for the cost of those “things” inside the property lines of the 100-acre parcel. In addition, the developer is contractually obligated to provide the City with a specified amount of money for the City’s use for “things” outside the property lines of the 100-acre parcel. None of those terms would be changed by approval/implementation of a CFD.

            The value of the CFD is $12 million. That $12 million value is external to the Development Agreement terms. If the City receives 50% of the CFD value, that would incrementally increase the specified amount of money for the City’s use for “things” outside the property lines of the 100-acre parcel by $6 million.

        4. Michelle Millet

          If the City receives 50% of the CFD value, that would incrementally increase the specified amount of money for the City’s use for “things” outside the property lines of the 100-acre parcel by $6 million.

          The city is getting $6 million from the CFD it pay for whatever it wants? When did that happen?

          1. Matt Williams

            That is what I proposed in Public Comment and Robb proposed in his “friendly amendment” that Rochelle did not accept.

          2. Don Shor

            This exchange literally makes no sense. Anyone else care to try?
            So in what way is the CFD beneficial to the city, the home buyers, or the community at large?

          3. Matt Williams

            Don, not sure I understand your comment. How does having an additional $6 million for infrastructure not help the City’s (the community at large’s) finances.

        5. Michelle Millet

          Don, not sure I understand your comment. How does having an additional $6 million for infrastructure not help the City’s (the community at large’s) finances.

          Umm, having $6 million would help the city, but, minor detail, this was not what council voted to approve the other night.

          Given the fact that the city is NOT getting the $6 million dollars, because as you mentioned Robb’s friendly amendment to make this happen was not accepted by Rochelle, how does the city benefit from the agreement that council ACTUALLY approved?

          1. Matt Williams

            Michelle, your question didn’t specify or limit the answers to only the work-in-process pre-CFD situation as it currently exists. With that said, if your question is restricted to thatm then my answer is that there is no way any of your three categories benefit from the CFD.

        6. hpierce

          I’ll attempt to answer your question (8:13, tonight).  ” how does the city benefit from the agreement that council ACTUALLY approved?”  You need to define ‘City’.  The CC gains by fulfilling “promises” that may have been made by CC or former CM ‘off-line’.  Or, new promises that we are not currently privy to.  I question whether such “promises”, if made, will be of benefit to the current homeowners/residents in the City (probably close to ‘nada’ given City “needs”), but am pretty darn sure we’ll be asking buyers in the Cannery project to “bend over and take it”. The larger, “existing City” gains nothing significant and takes a modicum of risk by pursing the CFD

          At the VERY LEAST. the City should demand that, in consideration of forming the developer CFD (which I oppose), that the City require the current and future developers to fully disclose the on-going costs to buyers of amount of obligations under the CFD, interest rates that will apply to the CFD, term of the CFD, and expected assessments, including the “max-tax” rates, should those kick in.  Anything less could be considered an unspeakable violation of the buyers’ economic interests (see previous metaphor).

          When I bought into Mace Ranch, I did so fully knowing the economics, proximity to a “superfund site”, etc.  Think my knowledge and analysis, before I committed, put me in a 1% category.  Have no faith, unless the CC requires the full disclosure by the developers to SF buyers, that those buyers will “get it”.  Rest assured that buyers of the non-res properties either will get it, or are ‘Darwin Award’ candidates.

           

          1. Don Shor

            Rest assured that buyers of the non-res properties either will get it, or are ‘Darwin Award’ candidates.

            What effect would this have on the buyers and tenants of the commercial and retail sites in this project?

      1. Anon

        The point has been made several times that it is the developers, not the city, that want to renegotiate. Am I misunderstanding this?

        Yes, you are misunderstanding this, as is David.  One has to look at the contract in its entirety, including ALL its terms.  The real issue is not about “renegotiation”, which is how David is trying to reframe things.  It is about CFD or no CFD, as hpierce has tried to repeatedly point out.

        1. Matt Williams

          Here’s a simple yes or no question Anon, “Is The New Home Company’s request for the addition of a CFD to the Cannery Development Agreement a request to renegotiate the Development Agreement?”

    3. David Greenwald Post author

      I want to address the second point. the Vanguard is not the arbiter, the Vanguard is one voice among many. If it matters what the Vanguard thinks or what I think, so be it. The sentence actually came from a conversation with one of the councilmembers who said they wished people would say what they wanted in advance. So I obliged.

      Finally, seeking something great is not the search for perfection, it’s the search for greatness. It’s way I riffed from my JHS Counselor – shoot for the moon because if you miss you will still be in the stars. to me that’s an acknowledgement that you will never gain perfection, but if you shoot for a specific target that is lofty and miss, you still end up with greatness. So my takeway here: greatness not perfection.

      1. Anon

        But who defines “greatness”?  And how “great” is necessary?  As in politics, continually setting the bar higher and higher does not necessarily lead to better solutions.

    4. Tia Will

      Anon

      striving to better, oft we mar what’s well“:

      Interesting that you should include this quote. This is exactly how I see the efforts of those who are of the opinion that we can and should “grow our way out of our current problems” or “grow as much as we can ” to paraphrase one city council member. For me, Davis is a lovely community as is and I favor slow and deliberate and well planned growth. Not leaping on the rapid growth bandwagon in the hopes that others will have to pay for the amenities that we want.

      1. Anon

        Whoa, who said anything about rapid growth or growth at any cost?  What makes you think anyone is not for “smart growth”?  I very much doubt you can find a single Davisite who would favor growth if it cost the city fiscally.

        The problem here is you have one definition of “smart growth” that might not comport with someone else’s definition.  I would strongly suspect that your vision of a small 1960’s style Davis is in the minority, but I could be completely wrong about that, and freely concede that may be the case.  Only time will tell, as the innovation parks move forward in the planning process, and at least one comes up for a Measure R vote.

        Having said that, it is easy to say the city should remain small and one is willing to pay for services rather than grow, when one has a well-paying job that allows for that.  But many, especially those on fixed incomes, will not be able to remain in their homes if Davis taxes go too high – and will see well-planned innovation parks as a good solution to the city’s fiscal woes.

  3. Jeff Boone

    The clause to allow consideration of a CFD should never have been included in the initial agreement.  This appears to have been an oversight.  But contract language is contract language, and since the legal opinon is that the DA was enforcable to expect the developer to pay for all of this infrastructure, I am now of the mind that three of the five CC members did piss away an opportunity for the city to come out in better shape.

    However, I think David’s article inflates the impact to the city.  We are talking about future property owners that will make their own cost-benefit decision to buy or not buy in the Cannery.  If the perceived value of the purchase price and/or debt service matches the  perceived value, then all is right.

    If the hand wringing is that the cost increase will push loan qualification beyond the reach of a few people that might want to buy in Davis, then it should be directed at the no and slow-growth people and Measure R and not this CFD decision… because it is a de minimis impact on the overall cause of Davis’s high housing costs that prevent MANY people from buying here.

    1. David Greenwald Post author

      “However, I think David’s article inflates the impact to the city. We are talking about future property owners that will make their own cost-benefit decision to buy or not buy in the Cannery. If the perceived value of the purchase price and/or debt service matches the perceived value, then all is right.”

      It is a bit weird that you’re the one making the argument that a tax on home ownership isn’t too onerous.

      1. Jeff Boone

        I think that your point is that the city gets hit with the $12MM in aditional expense, but it is the home buyers.  In my view home buyer does not equal city.

  4. hpierce

    Here’s the deal.  The 12 million isn’t, in any way, a “community asset”.  It is an “exaction” from future buyers of property, and they’re not at the table to negotiate.

    On the “capital” side, it would be a “push” IF AND ONLY IF, their property acquisition costs were reduced by the “time value of money” costs of the improvements being financed by their “second mortgage”, the CFD.

    IF AND ONLY IF, their acquisition costs were equal, their main loss will be due to the additional costs assessed to their “second mortgage” due to higher interest rates on their “second” than if it was covered in their mortgage, additional costs to the CFD for administrative costs for managing the CFD, AND having the “affordable housing’s” share of the improvements financed covered by the rest of the property.  My guess is that will fall mainly to the other residential property, but I don’t know that.  It might have happened anyway as part of the Developer’s pricing scheme.  But the property acquisition costs with or without the CFD would probably be the same.  Hence, the “paying twice” concept.

    Perhaps, as David suggests, the City could have shared in what I see as the “rip-off” of the future buyers.  Either the City could split the 12 million rip off of those buyers, 50-50.  Then the City could equally share in the “rip-off”. Hands just as clean or dirty as the developers.  Or, the City could structure it as giving the 12 million to the developers, and get another 12 million from the future buyers.  Sweet!  Just remember, some of those future buyers are already Davis residents, either renting, and/or looking to “move up” (or “down”) if they currently own their home.

    The fairest, most equitable legal thing we can do is have the CC have the cojones to re-consider and reverse their action, as soon as possible (to avoid more ‘wasted’ time and money of having staff, including City Attorney, on this ill-conceived action).

    But like David said, it isn’t very likely that the CC will own up to its regrettable action, and reverse themselves.  More is the pity.

    As the future plays out, it should be on the heads of those voting for the CFD, and the supporters of those actions, when it comes time to “reap that which was sown”.  My hands are clean.

    They only way to financially “make them whole”.

  5. Anon

    JB: “The clause to allow consideration of a CFD should never have been included in the initial agreement.  This appears to have been an oversight.  But contract language is contract language, and since the legal opinon is that the DA was enforcable to expect the developer to pay for all of this infrastructure, I am now of the mind that three of the five CC members did piss away an opportunity for the city to come out in better shape.”

    What makes you think that the City Council didn’t take into consideration the CFD when they entered into the Development Agreement, and already received sufficient compensation?

    This is the problem with all this Monday morning quarterbacking the terms of a contract. It is very difficult to know what considerations went into the Development Agreement. What we do know from the four corners of the contract is that a CFD was contemplated.

    1. hpierce

      It kinda’ doesn’t matter.  Whether the DA provided for ‘possible’ consideration, or not, and whether the CC were aware of the permissive language, or not, unless the DA provided for “no way, no how, no matter why, City and developer hereby agree that no CFD will ever ever be asked for, considered, nor approved…”, the developer had the right to ask.  That being said, despite what Mr Pinkerton, other staff members, CC members may have said behind the scenes, as the NH rep seems to imply, contractually, the CC [representing the community?] had no obligation to approve the CFD.  And still doesn’t.

    2. Matt Williams

      Anon, if the Council received compensation for the CFD, then why was the CFD referred to with a conditional word “may.” What you appear to be arguing is that the payments reflected completeness, but the legal language reflected incompleteness. Is that a correct assessment of what you are arguing for?

  6. Anon

    hpierce: “The fairest, most equitable legal thing we can do is have the CC have the cojones to re-consider and reverse their action, as soon as possible (to avoid more ‘wasted’ time and money of having staff, including City Attorney, on this ill-conceived action).

    Reverse their actions how?  Renege on the terms of the Developer Agreement?  Or reverse the decision to move forward with a CFD?

    Obviously you object to CFDs, I get that.  I am going to play “devil’s advocate” here. So suppose the city decides to not approve a CFD.  So what is to stop the developer from tacking on the price of the infrastructure to the price of the house?  And now the consumer has lost the flexibility of financing any of the infrastructure costs!

    1. hpierce

      By voting for reconsideration [requires a request from one of the 3 members who voted ‘yes’ on the action], reversing their vote/action, they would NOT be reneging on the DA.  Period, end of facts.  They were obligated only to consider it, and given the 3-2 vote, a reconsideration and rejection would not be re-neging, except, perhaps in the eyes of NH, their stockholders and/or allies.

      “Obviously you object to CFDs, I get that.”  No, I do NOT object to CFD’s.  That is your assumption, and I’m sure you have heard of one of the etymologies of the word “assume”.  I strongly support Cannery being annexed to the City-wide CFD, North-Central area.  I ardently oppose the formation of the Developer’s CFD.  Huge difference.  Participation in the City-wide CFD’s reduces the impact fees of properties in a way that is pretty much a zero-sum game.  Equitable.  That is not what is proposed here, and the results are, in my considered opinion, in-equitable, particularly if more pounds of flesh are sought from future buyers.

      “So what is to stop the developer from tacking on the price of the infrastructure to the price of the house?”  Market forces relating to price.  Duh. They will be motivated to maintain the “market” price, because if they don’t, they will have made the expenditures they are obligated to make, and not have the cash-flow to re-coup their costs.  They will bleed money, or breach the DA.

      “And now the consumer has lost the flexibility of financing any of the infrastructure costs!”  Uh, no.  Quite the opposite.  Without knowing the actual numbers, please follow this example.  If you are looking at buying the house/property, and your faced with buying a house you ‘really want’ for 500k, or buying a house for 20% less and paying the 20% (plus additional assessments for CFD, City “tag-ons” for ‘community benefit’ costs, admin, etc), You can finance the purchase price with a mortgage.  You can pick a 10, 15, 20, 30 year mortgage.  If you pick a shorter term mortgage, your will save a lot of ‘wasted’ interest payments (remember, your net savings by deducting interest from your State/Federal taxes is maybe 25-30% of what you pay in interest, so the 70-75% will be “wasted”), as opposed to paying 100% up-front, instead of taking out a mortgage.  Here, an owner would be stuck with a 40 year ‘second-mortgage’ at higher rates than the current market for home mortgages, and MUCH more wasted interest payments.  The “pre-payment” penalty of opting out of the CFD, would be high, initially, to assure that the CFD remains solvent… at the current value of the stream of payments at the “max-tax” rate, which is likely to be twice as high as the initial assessments (based on Mace Ranch developer CFD).  The implications are that you wouldn’t be paying 20% less, but would still have the 20% ‘second mortgage’ over a 40 year period.

      Can someone more familiar with finance/tax matters help here?  I know (95% certainty) my that my logic is correct, but don’t know how to crunch the numbers…

      Anon… why are you such (apparently) an ardent supporter of the “developer” CFD?

      1. Anon

        Not necessarily in favor of developer CFD.  And didn’t realize there could be an annexation to an already existing CFD (how would homeowners already in that CFD like that?). By the way, the prospective homeowners can prepay the costs of the infrastructure and have no yearly tax bill at all.

        Here is my sticking point.  I believe the issue is CFD or no CFD.  Others see this as an opportunity to renegotiate the DA, which opens a whole can of worms – that is what I am not comfortable with on a gut level.

        1. Matt Williams

          Here is my sticking point. I believe the issue is CFD or no CFD. Others see this as an opportunity to renegotiate the DA, which opens a whole can of worms – that is what I am not comfortable with on a gut level.

          Anon, first I want to thank you for your open engagement with this issue. Community dialogue helps us all. Thank you for your contribution to that dialogue.

          Your bolded words above seem to indicate that you are against any renegotiation of the DA. Is that what you are saying? If so, that appears to be an evolution in your position, unless you believe that the developers request to amend the DA to include a CFD is not a renegotiation of the DA.

        2. hpierce

          Anon… it was said clearly at the CC meeting (which I watched again today), and which I know based on familiarity of most City DA’s.  BOTH parties must agree to amend the DA.  BOTH parties must agree to the scope of the proposed amendments.  Then, and only then do they re-open.  This is not a “white-board” issue where a “re-do” is on the table, unless BOTH parties agree to do so.

          As to how existing City wide CFD property owners would feel about the annexation… the term I’d think of is “relieved”.  The improvement costs/bonded indebtedness of the district are fixed at this point.  Any new contributors would mean reduction of assessments, and/or shortening of the term of the assessments.  You really don’t understand CFD’s, do you?

          Yet, you seem strident in supporting the proposed one, and are now worrying about the existing one? If staff hasn’t required the annexation, then you should worry.

    1. Anon

      To Don inre what advantages are there to a CFD: City gets infrastructure, developer gets help paying for the infrastructure, and the homeowner is able to finance their share of the costs of the infrastructure over a period of years.

    1. Jim Frame

      Two of the three have designs on higher elected office, which should be self-explanatory.  The third tends to lend credence to claims that a business proposition won’t “pencil out” absent approval of the request.

  7. Tia Will

    What I see here is a vacuum that is being filled by speculation about motive in the absence of the presentation of the thought processes that actually went into this decision making. Only one council member has taken the time to lay out his reasoning in any detail.

    To be fair, I was not at this city council meeting and so did not hear the full discussion so there may have been much fuller explanations given. However, from what has been presented here, it does sound like there is a dramatic difference in perspective regarding whose interests should be given the highest priority, the interests of the community as a whole, the interests of specific groups of potential homebuyers, the interests of “affordable” homebuyers ( which by the way was supposedly part of the point of this development in the first place which now seems to be forgotten), or the interest of the developer, which now seems to be the preeminent factor for three of our CC members.

     

  8. davisite4

    I see that Lucas Frerichs wrote the “Mayor’s Corner” column in today’s Enterprise.  That could have been an opportunity for him to explain his reasons for voting in favor of this CFD.  But not a peep on the topic.  I would genuinely like to understand his thinking, because I truly don’t understand it.  It seems like a giveaway to the developers at the expense of the city and its future residents.

  9. Tia Will

    davisite4

    While of course, I cannot speak for Councilmember Frerichs, I believe that the Mayor’s Corner column is dedicated to informing the community about issues that are not actively undergoing debate at the City Council and is primarily used to update the community on these perhaps less controversial, issues which are also vital to the well being of our community.

    Having said that, I am one of the more vocal posters on the Vanguard urging more transparency from all members of the City Council regardless of which public forum they choose. When there is silence beyond what is said from the dais on any controversial issue, it is all too easy for those of us who have not taken responsibility for our opinions by running for city council to fill in the spaces with what we believe their motives must be. This leads to all kinds of less than helpful and often inaccurate speculation about those motives. I truly look forward to more complete explanations from those members of the city council who have not clarified their positions beyond statements about integrity and about their perceived appreciation of the features of the development.

     

     

    1. davisite4

      Agreed, that did not have to be the venue where his comments appeared.  I agree with your call for more transparency from all the members of the City Council, regardless of the venue.  I think in this particular case, the citizens of Davis ought to insist on it, because right now it doesn’t look very good.  If, however, there is a reasonable explanation, I would like to hear it.

    2. David Greenwald Post author

      I will say this, I would love to be able to ask Lucas and others to explain their views. They have at times and I’m grateful for Robb Davis’ frequent participation. But I also understand that some feel that their participation will lead to getting exposed to the local spanking machine, to borrow from another discussion, and I can understand why they might be unwilling to subject themselves to it.

      1. davisite4

        Seems to me that they are already getting exposed to the local spanking machine on this topic, and so they should relish the opportunity to set the record straight.  Maybe ask anyway even if you think they are unlikely to say yes?

      2. hpierce

        Well, you ARE able to ask, and they are free to not respond, say “no”, or explain.

        If they are reading, I ask them to explain, particularly Lucas, who seemed to struggle more in the questions asked, during the discussion, and in casting his vote.  It looks to me like he was the “swing vote”.  I believe that Rochelle, Dan, Robb and Brett were pretty clear on their decisions to vote the way they did.

  10. sisterhood

    When I lived in Davis, I boycotted purchasing the Enterprise so I couldn’t read Mayor’s Corner unless I picked it up for free at Cindy’s, Mishka’s, Black Bear, or other coffee shops. I appreciate reading this info in the Vanguard.

  11. Barbara King

    From what I remember of the many granted requests for changes in the Mace Ranch agreement and this piece about in today’s Woodland Daily Democart about changes the plan in Woodland’s Spring Lake, it appears that–not just in Davis– a development agreement is only as strong as the city council that is asked for changes.

    http://www.dailydemocrat.com/20150216/woodlands-spring-lake-to-get-more-homes-but-not-all-are-happy-about-it?source=topstoriesrot

    “Woodland’s Spring Lake to get more homes but not all are happy about it

    By Elizabeth Kalfsbeek, Special to The Democrat

    POSTED: 02/16/15, 1:15 PM PST |

    Portions of Spring Lake’s development will be rezoned to accommodate more single family homes, despite opposition from many miffed residents who’d rather see their promised amenities realized.
    Specifically, Woodland’s City Council agreed recently to amend the city’s General Plan and Spring Lake Specific Plan to allow for more single-family detached homes, replacing multi-family units and a two-acre commercial parcel. The decision affects about 16 acres of the original 44-acre Cal West project, which sits at the northwest corner of Farmers Central Road and Harry Lorenzo Avenue.

    Spring Lake was approved in 2001, before the housing market took a nose dive. Driving the plan were three distinct neighborhood nodes; one in the northwest, one around Jack Slaven Park and one in the southeast corner. Roughly 2,800 single-family and 1,170 multi-family units were designed to be mixed within the neighborhoods, each of which was to have a two-acre commercial center and eight-acre park.
    “Some of these themes were really popular back in the 2000s when new traditional town planning was coming into vogue and the idea of being able to walk to neighborhood services and gathering places and social places and schools was really being looked to as a better way to plan our neighborhoods as opposed to more suburban sprawl,” said Community Development Director Ken Hiatt. “However, since 2001 there’s been a variety of changes to the plan.”

    Two of the three elementary school sites have been relinquished back to the landowners and rezoned for residential use, for example, after the school district determined they were not needed to serve the neighborhood or the district as a whole.
    “There’s also been a significant shift in the housing market,” Hiatt explained. “Builders want a single-family detached product. There’s very little interest in the attached or condo-style, and even multi-family apartments that aren’t heavily subsidized. That’s the reality of today’s housing market. How long that trend will continue, time will tell.”

    But some residents just aren’t having it. In June, Spring Lake resident Marissa Sirota authored a lengthy “resident demand for positive action” memo with input from other homeowners, to which the city issued a just as lengthy reply in October.
    “We as property owners were sold on the published plan, which called for four neighborhood centers,” Sirota wrote. “Each of these centers was to include a park, elementary school and commercial vendor locations. … We have clearly deviated from that published plan and residents are very upset about this. Developers keep building houses, but are unwilling to build supporting amenities. … I can vouch that a neighborhood coffee shop, day care and small office building would likely do very well here.”

    In December, the issue of rezoning was squashed at Woodland’s Planning Commission meeting with a split vote. Prior to the commission’s public hearing, seven letters of opposition were received by the city.
    “Although there are several developers within Spring Lake, there is only one plan,” said resident Ron Oertel in his Planning Commission presentation outline. Oertel also spoke at the City Council’s public hearing held earlier this month.
    “Allowing one of the commercial sites to be rezoned at this time represents a ‘piecemeal’ change to the plan, creating a dangerous precedent regarding the other commercial sites, and reducing any incentive for the developers to work together to share responsibilities associated with adhering to the plan.”

    Woodland Chamber of Commerce President Al Aldrete spoke in favor of the rezoning at the council’s meeting. As the former general manager of County Fair Fashion Mall, Aldrete said he can attest to what a low foot traffic environment can do to retail, adding that roof tops will bring in the revenue to build amenities.
    “As a member of the Spring Lake community I’d much rather see some homes being built than empty dirt lots,” he said.

    As a concession of sorts, applicant Cal West will “essentially” front the costs of developing two acres of the eight-acre park within that neighborhood as the first phase of homes are built, explained Associate Planner Erika Bumgardner. This may include a turf or play structure, pending community input. This park will be located at the northeast corner of Miekle Avenue and Martson Drive.

    City staff supported rezoning the neighborhood commercial center in part “due to its close proximity (less than half a mile) to the existing Bel Air (shopping center) which serves a similar purpose,” according to the staff report.
    “The intent of the small neighborhood commercial site designations was to encourage retail and small office opportunities for residents in the immediate neighborhood with the goal of accommodating routine daily needs within walking distance of most residents,” said Bumgardner in the report. “As Spring Lake residential development builds out, a higher population base will increase the potential viability of commercial uses; however, it is unlikely that all of the commercial sites will be viable even at build out of the plan due to the variety of factors constraining them.”

    Removing this particular retail pad from the equation will reduce competition from the planned five-acre Spring Lake Central shopping district, helping it to be economically viable, staff explained.

    “This area is less than half a mile from Bel Air,” said Councilman Jim Hilliard. “Bel Air wasn’t there when this started. It makes sense that this would be the first neighborhood commercial site to go.”
    While City Councilmen (minus absent Vice Mayor Bill Marble) unanimously agreed to rezone multi-family to single-family homes, Angel Barajas opposed the rezoning of the commercial site without more study.

    “We had a five-year recession that was not in the plan and now we’re trying to pick up the pieces,” said Mayor Tom Stallard.”

    1. hpierce

      One of the strengths of a DA is it can be amended, if it is no longer in the best interest of the community and the developer.  Not sure if that’s the case in Woodland, but for the community to insist on two sites that the schools say they don’t want/need, while the housing market has undergone many changes, might be not really in the best interests of the community, as a whole.  Two potentially really good reasons to at least consider an amendment.

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