Staff Recommends Forming Community Facilities District for Cannery

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Cannery is proposing, and staff recommending, the formation of a Community Facilities District (CFD) to fund certain components of public infrastructure for the CFD. Under the law, “Developers and City may form a Community Facilities District… for the purpose of financing the construction and/or acquisition of public infrastructure and facilities within the Project area or for the provision of services.”

Back on October 22, 2014, the New Home Company, which is the developer building the Cannery project, formally submitted a request to the city, “that the Council institute proceedings pursuant to the Act to establish a CFD over the Land to be designated as ‘City of Davis Community Facilities District No. 2014-01.’”

The Cannery developers are seeking that a special election be held which would authorize the issuance of the bonds, establishing that appropriations limited to the CFD “be consolidated into single elections and that the elections be conducted by the city and its officials…”

Staff writes, “The amount proposed is not to exceed $17,000,000. Project infrastructure proposed for CFD financing includes backbone infrastructure the project is obligated to provide, including, but not limited to, public roadways, storm drainage, sanitary sewer, water, parks and open space, and electrical/lighting, as well as certain off-site improvements required of the project.”

The city has the discretion of consenting to the formation of a CFD. Staff notes that provisions in the Cannery Developer Agreement allow such a request.

Staff notes, “CFD’s are a typical means to finance public infrastructure in major projects, such as public roads and backbone utility infrastructure, parks, and greenbelts. CFD’s may not be utilized for the development of private improvements, such as homes or homeowners association facilities.”

The New Home Company estimates that the infrastructure and park development costs for the CFD would be $18.1 million, plus another $3.2 million for the development of the Urban Farm feature, another $750,000 for an improvement of community benefit to be determined by the City, for a total of about $22 million.

The total amount of the potential infrastructure that could be funded by a CFD exceeds the actual amount requested and the balance would be borne directly by the developer.

Staff writes that they and consultants “believe that this is a prudent approach as the proposal does not seek to ‘overreach’ to fund 100% of the public infrastructure.”

Back in November, the city’s Financial Advisor, Mark Northcross, in his presentation noted that there were taxpayer concerns that led to changes in 1999 as to how the city handles CFDs. At that time, $44 million in bonds were originally authorized, but only $16.855 million of that were actually issued.

Council would terminate the remaining authorized bonds with the 1999 bond issue infrastructure funding, and they also terminated the two percent inflator.

“[Forty four] million [dollars] in bonds were originally authorized for the MPFP [Major Projects Financing Plan] CFD Program back in 1990, only $17 million were actually issued, the remaining authorization was terminated,” Mr. Northcross stated. “That was done because of taxpayer concerns. That was the factor behind that, it was all people coming to the podium talking about their taxes.”

A typical Mello-Roos district has an inflator that allows assessment to go up by two percent a year, and “that piece was eliminated in 1999 by previous council in response to taxpayers and homeowners.”

The result is that the actual percent of taxes being levied is a fraction of what was authorized “and that was by intent.” Mr. Northcross continued, “Not the original plan, we were supposed to be levying $44 million in improvements in Davis, we didn’t do that. We instead did things to lower the taxes on homeowners.”

Mr. Northcross posed two critical policy questions that council should consider for a Cannery CFD – should the council wish to proceed with a CFD. First, should the taxes in the Cannery be at the same level as other CFD taxes in Davis? Second, should there be a two percent inflator for taxes at the Cannery?

Mark Northcross noted that at Mace Ranch the CFD was about $700 per house. In the Cannery, “my guess is, it’s going to be a minimum $1500 per house, that’s twice as high as any other tax in Davis. By any standards of other cities in California that’s very reasonable, BUT, it’s going to be a lot more than any other house in Davis that’s paying a CFD.”

“If we’re going to cross that bridge, we need to be conscious that we’re doing it,” he stated.

Later, Mr. Northcross noted that the other fairness question “came down to why are we who bought homes in the newer parts of Davis going to be paying for $44 million in public improvements and not the rest of the community. Why is it landing on us?”

“The MPFP had reasons for that, but the reasons did not carry weight on the fairness question with the residents of all the new CFD areas,” he added. The past council, he said, “split the baby” by reducing the amount to $17 million and eliminating the inflator, thus finding other ways to finance improvements.

Harriet Steiner noted that originally the CFDs were to finance new infrastructure – for example the Mace overpass, as well as the fire station (that was never built). She said, “I think after those improvements there was a fair amount of disgruntlement on the part of the (residents)… because this is all new development.”

Harriet Steiner would add that, when the council approved the Cannery project, the developers wanted this financing mechanism and would make the request. She added, “It was probably equally clear that it wasn’t something that the staff… was necessarily in favor of.”

However, staff seems to believe the situation is different from what occurred at Mace Ranch and led to changes in city policy. Staff writes that Mace Ranch was a major extension of services outside the existing urban area of Davis and the CFD was “intended to provide funding for these needed services on a timely basis. However, while basic infrastructure was funded on a timely basis, some of the other amenities, particularly in the view of Mace Ranch residents, were not funded on a timely basis. Consequently, many residents felt they were paying taxes for facilities that were not in place.”

Staff argues that the situation is different with the Cannery, as this is an infill project with the facilities required to be constructed prior to the occupation of the first units.

They write, “In addition, the City and the developer can negotiate a prioritization of funding with CFD bond proceeds for all facilities that will help ensure the timely development of all amenities for The Cannery.”

Therefore, staff believes “that the CFD proposal, in the context of a high amenity infill project like Cannery, is a reasonable means of financing such infrastructure and can be readily distinguished from the circumstances found in the Mace CFD. The CFD also provides an opportunity to provide greater assurances of early infrastructure timing.”

On Tuesday night, the council has the opportunity to weigh in on the CFD and any concerns they may have. They have the ultimate say over whether to implement the CFD.

—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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59 thoughts on “Staff Recommends Forming Community Facilities District for Cannery”

  1. Barack Palin

    Later Mr. Northcross noted that the other fairness question “came down to why are we who bought homes in the newer parts of Davis going to be paying for $44 million in public improvements and not the rest of the community. Why is it landing on us?”

    Why weren’t these costs negotiated into the original development when the city approved the project?  That seems like the time that it should have been taken care of.  It sounds like most if not all of the improvements are contained within the Cannery to the direct benefit of the people that will buy there.  Why shouldn’t they pay for it?  As far as fairness, anyone now buying a home anywhere in Davis most likely will be paying higher taxes than their next door neighbor due to Prop 13.

    1. hpierce

      “It sounds like most if not all of the improvements are contained within the Cannery to the direct benefit of the people that will buy there.  Why shouldn’t they pay for it?”  [moderator] edited for language

      http://city-council.cityofdavis.org/Media/Default/Documents/PDF/CityCouncil/CouncilMeetings/Agendas/20150217/08-Cannery-Community-Facilities-District-Formation.pdf

      Suggest you read.  [moderator] edited for language

      The ONLY folks who will be paying the assessments are the property owners (except the City and affordable housing folks) within the Cannery project.

      This IS A BAD IDEA, but I’ll expound later.  But I recommend everyone put their posts on hold until you read the staff report.  There are some mis-leading statements in the report regarding comparisons to the Mace Ranch CFD(S), but I’ll take those up with staff.

      David, shame on you for your “report” without posting the link to the staff report!

      1. David Greenwald Post author

        I’ve never posted a link to a staff report before. What exactly is my synopsis missing here? Also please refrain from calling people “ill-informed” or “stupid.” I’m sure you have much more experience in this particular issue, but that calls for educating and informing not calling names. So please lay it out. If you’d prefer, you can send me the information and I can do a follow up.

        1. hpierce

          I apologize to all, particularly David, and most particularly BP.  I was “loaded for bear” this morning, and when I saw the reference  in BP’s post where they were under the impression that others than those in the new development would be paying the CFD assessments, I over-reacted, big time. After I wrote my post I had to run some errands, and I was hoping Don, or someone, would edit some of my ill-chosen words.

          I still find myself more than a little bit “hot” on the issue itself, so will wait until I reach ‘room temperature’ before I attempt to analytically address the many issues I have with the concept and propriety of implementing the CFD.

          Again, my sincere apologies for the tone of my two earlier posts, and my irresponsible choice in some of my wording.

          I strongly recommend, though, that people read the staff report, and also recommend that everyone look at their property tax bills, to see what each is paying for each of the existing CFD’s.  This is not a “simple” subject

        2. hpierce

          David… my point (stated more dispassionately now) was that it appears that you drew heavily from the staff report, but obviously, it was a “Readers’ Digest” synopsis.  BP came to a false conclusion/reaction.  What I suggest to you, is when you use a public document/record as your source, and if you genuinely want folk to learn, understand, and opine, why not cite your source for the folk?

          1. Matt Williams

            I agree pierce. Providing a link to the whole document makes a lot of sense. In the past I have mad a visual image of individual pages from a document and posted the images here, especially if the document is long.

          2. David Greenwald Post author

            Hpierce – It is a good suggestion and I will start doing it. My intention was to pull from the staff report about the item – I also pulled from the discussion in November on cfd’s and then see where this is headed.

  2. SODA

    Could you simply state what the options are here?

    And is it accurate to say that a developer could promise the moon in terms of amenities (urban farm, etc etc) and then pass those costs onto the city or residents in this way?

    It seems the cart was before the horse in approving the plans without at thesae time approving who was to pay for it in total.  What am I missing?

      1. South of Davis

        hpierce wrote:

        > Please read this.  You are missing a LOT.

        The report says: “Without the CFD, the combined ad valorem, assessment and CFD special tax burden on anaverage home in The Cannery would be $8,939 per year… With the proposed CFD, the combined annual ad valorem, assessment and special tax burden would be $11,163 per year.”

        Since SOMEONE has to pay the extra $2,224 per home why not create the CFD and let the new home buyers DECIDE if they want to pay it (if people don’t want to pay it the developer will just lower the price of the homes to a point where the monthly payment gets to a point where people are happy).

        I can’t think of any downside for the CFD unless I was a potential home buyer who wanted the rest of Davis (most who can’t afford to buy a fancy new $600K+ home)  to pay for my new streets and parks…

      2. Tia Will

        hpierce

        You are missing a LOT.”

        So I have just read the staff report. I have read it as someone who is fully literate, but has no experience at all with financing of projects, development or city planning. So after reading it, I am of a similar mind to SODA in the questions that arise for me. What would be helpful for my understanding would be a bullet point list of the pros and cons of this proposal free of the jargon of city development and financial planning. As a doctor, it is my obligation to translate medical terms into everyday language for those who are not medically sophisticated. That is the same kind of approach that would be helpful here to guide me through what I am missing.

        1. hpierce

          With all due respect, Tia, you are compensated for being a doctor.  It is not my uncompensated “obligation” to inform people of the bad consequences of the proposed CFD.  Given my poor behavior in posting earlier, and the reactions, I just don’t see any value for my time/effort.  Perhaps, as a courtesy, I will share my information/informed opinions with some, off-line.  It’s pretty apparent I’ve poisoned anything I had hoped to offer for an informed discussion.

      3. SODA

        hpierce, I thank you for your apology. I was offended when you mentioned I was ‘missing ALOT’ especially when I was asking some clarifying questions.  I am sure I could confuse you with my particular professional jargon too as we all could in our own niches.

        I really look forward to your assessment of the proposal along with answers to my original questions of options!

    1. Barack Palin

      Thank you Don and David, as for hpierce well he knows what he can go do to himself.  Sorry if I don’t understand the inner workings of these developments, but the article and the quotes seemed to suggest that either the residents of the Cannery or the City (us) would have to pay for these amenities.

      1. Matt Williams

        BP, the basic economics of the situation say that the residents of the Cannery will have to pay for these amenities one way or another. They will either pay for them with the $2,224 per home annual fees spread over time (as proposed) or they will pay for them as a lump sum portion of the purchase price when they buy their home in Cannery. This really is a cash flow issue.

        When a prospective buyer decides what to offer on a house, one of the key factors in what to offer is the cost of living in the house. If there are two identical houses, one with a $2,224 per home annual CFD payment and the other without any CFD payment, the offering price of the first house is going to be lower than the offering price of the second house. The difference between the two offering prices is going to be the Net Present Value of the stream of $2,224 CFD payments. That is simple microeconomics.

        As I said before, this is all about cash flow for the buyers. It is also about cash flow for the developer. Their cost to build the amenities is the same whether there is a CFD or no CFD. The difference is when they get paid back for those amenities. With a CFD in place they get paid in full up front by their lending institution, which sees a secured revenue stream. With no CFD in place the developer gets paid in full only after the last dwelling is sold. Their payback comes in discrete separate payments at the time of each dwelling sale. That change in cash flow for them has value. It removes a level of uncertainty in their corporate financials.

        The Council and the developer need to mutually agree on what the value of reduced uncertainty is and the developer has to pay the City an incremental payment over the current Development Agreement equal to that incremental value. Otherwise the Council is giving the developer value for free.

        1. Matt Williams

          In addition to the above, the prospective buyer’s mortgage company is going to reduce the amount of the mortgage that they will allow for the CFD house because the annual carrying costs of the CFD house are $2,224 higher each year.

        2. South of Davis

          Matt wrote:

          > In addition to the above, the prospective buyer’s mortgage company

          > is going to reduce the amount of the mortgage that they will allow for

          > the CFD house because the annual carrying costs of the CFD house

          > are $2,224 higher each year.

          When it would have been more accurate to write:

          For SOME buyers that are making a small down payment and/or not making a lot of money who are probably buying a more expensive home than they should be buying, a mortgage company MAY reduce the amount of the mortgage that they will allow for the CFD house because the annual carrying costs of the CFD house…
          > are $2,224 higher each year.

          1. Matt Williams

            I will accept that editorial addition SoD.

            With that said, why is your editorial addition meaningful?

        3. South of Davis

          Matt wrote:

          > why is your editorial addition meaningful?

          Just like Lake Alhambra, Willowbank and El Macero have few “first time/low down payment/barely qualify for the loan buyers” so will the Cannery (based on the estimated price of homes that will probably average over $700K once you add in the cost of popular developer “upgrades” completing the exterior landscaping and other improvements to the newly developed lots).

          It is also important to note that the price of a “identical” brand new home with a CFD payment will only be LESS than an “identical” home without the CFD payment if it is in an “IDENTICAL” location.

          Just like many people will pay more for a golf course or lake view lot many will pay MORE for an “identical” home in a new development like the Cannery with CC&Rs so they don’t have to deal with neighbors who have run down homes with junk cars in the driveway like so many people in East Davis.

          1. Matt Williams

            I still don’t get your point. Any intelligent buyer of a home that has a $2,244 per year CFD payment will offer $35,000 less for the home than they would offer for that same home (thus the term “identical”) without the $2,244 annual CFD payment. How did I get the $35,000 value? I used Excel to calculate the Present Value of a 30-year stream of payments of $1,244 per year discounted at an interest rate of 5% per annum. The exact number according to Excel was $34,979.81.

            With that said, the mortgage company will still reduce the maximum amount they are willing to loan by that $35,000 amount. In the scenarios you have described, the fact that the prospective buyer is paying a larger down payment is where the $35,000 is covered … and because it is covered, it never becomes a discussion item between the mortgage company and the prospective buyer.

            With that said, no two homes in different neighborhoods are ever going to be “identical” so your argument is moot. “Similar” maybe, but not “identical.”

  3. Frankly

    This is rather a  [non-moderator] edited for language  debate from a bunch of  [non-moderator] edited for language  people.

    It is actually extremely humorous… Davis  [non-moderator] edited for language demanding amenities to the development and then complaining about the added costs to future buyers.

    What about a Planned Unit Development where there are monthly home owner’s fees?  $190 per month isn’t really a cost worth debating.

    Next topic please.

    1. Miwok

      Frankly (because you are), I hope all these buyers are being told they live next to a field where tractors, dust and crops are planted, homeless seem to have a few tents set up just north of the property, and there are soccer fields and noisy go karts on the weekends?

      It is only a matter of time the City gets sued for the omissions the real estate people forget to mention.

  4. hpierce

    OK.  Should have read all the subsequent posts BEFORE I apologized.  I was in a hurry, when I got back, to do what I could to ‘repent’.  It’s obvious that unlike anyone else who posts things that they should regret, the sentiments are strongly in favor of me performing an impossible act, and perhaps roasting in Gehenna.

    Given those sentiments, I see no point in wasting anyone’s time, or my own, in trying to lay out the practical, economic, and ethical reasons why the City should not approve the CFD, at least without many more restrictions than are currently being proposed.

    Good luck with the outcome.

    1. Barack Palin

      Ah come on Hpierce, I posted this before you posted your apology, I was pissed off at what you wrote.  Your apology is accepted, now let’s move on.

    2. sisterhood

      I agree w/SODA, and I’d like to read hp’s info. Hp, we don’t always agree but I really respect your ability to apologize. You just felt very passionate about this subject. That’s okay. And I have no problems with cussing.

  5. DanH

    The CFD looks fine to me but no decision has been made on the SW bike access. The cattle chute bike path “proposed alignment” will be an eyesore. I am also concerned about pedestrian and cyclist safety in a 750′ fenced corridor that has no escape routes.

    1. South of Davis

      DanH wrote:

      > I am also concerned about pedestrian and cyclist safety in a

      > 750′ fenced corridor that has no escape routes.

      I just used the Google Maps measurement tool and it looks like the bike bridge I ride over I80 a couple times a week has a ~900′ “fenced corridor that has no escape routes”.  The bike bridge works great for everyone I know that rides, runs and walks over it despite the lack of multiple “escape routes” (keeping in mind that turning around and going back the way you came is almost always a good “escape route”)…

      1. DanH

        I don’t think that traveling up to the length of a football field to reach the ends of the cattle chute is safety feature.

        I’m afraid that you are comparing apples to oranges by comparing the I-80 pedestrian overpass to the proposed alignment. A comparison of crime mapping for these two areas will show a much higher incidence of crime for the E. Covell Blvd. overpass area. Try looking at one year stats at .5 mile increments. Look at both location and heat map displays.

        http://maps.cityofdavis.org/crimemap/

        1. Matt Williams

          Dan, I went into the heat map and the largest amount of time that would display was 30 days. Beyond that the number of incidents exceeded the software’s limit. At 60 days I was able to get a heat map to display and the whole city was essentially in the same orange zone. There appeared to be no differentiation anywhere in the city to speak of.

        2. DanH

          Information needs to be entered into this mapping service before it will display graphics in detail.It helps to enter an address, the time frame, and the area covered. Smaller areas of a half mile or less will work for one year time frames. I suspect the I-80 overpass area is relatively safe because it is out in the middle of nowhere and not near high density housing with many streets.

        3. DanH

          Enter this for the mapping fields. I tried to post a pic or a Photobucket link to the graphic I have but I don’t think I have permissions for that here.

          -For the E. Covell location enter 955 Cranbrook Court.

          -For the I-80 overpass area enter 202 Cousteau Place.

          -Uncheck the block for “entire city.”

          -Enter Davis for the city.

          -Filter by date range: 1 year.

          -Filter by distance: 0.5 miles or less

          -Select either heat map or crime locations

          -Push the Show Crime Incidents button

           

        4. South of Davis

          Dan wrote:

          > I’m afraid that you are comparing apples to oranges by

          > comparing the I-80 pedestrian overpass to the proposed

          > alignment. A comparison of crime mapping for these two

          > areas will show a much higher incidence of crime for the

          > E. Covell Blvd. overpass area.

          Don’t forget that the crime rate for an abandoned Cannery property along the railroad tracks where the homeless have been living for years (ask any Little League parent and you will get stories of drunk, drugged guys wandering out from under the Covell overpass) will be a LOT different than a new upscale home development with $600K+ homes backing on to the railroad tracks…

        5. DanH

          Yes indeed. Homeless are camping along the ditch on the east side of F Street from Covell north to city limits this winter.  Some of this prime real estate north of Grande Avenue may be under county jurisdiction but I’m not sure of that. Poor law enforcement or is this the way Davis treats its least fortunate residents?

      1. Matt Williams

        DP, one of the points that I really agree with Brett Lee on is the simple geographic fact that the proposed J Street grade separated crossing is far too close to the H Street (railroad underpass) crossing … especially given the fact that the next grade separated crossing to the east is at Monarch. It would be far superior (and more expensive) to create a grade separated crossing at the corner of Pole Line and Covell. Such a crossing would serve the western portion of Wildhorse, as well as Covell Farms, in addition to serving the Cannery and the property owned by the Streng/Whitcombe partnership.

        With that said, if the total dollars provided by The Cannery’s developers for bicycle/pedestrian infrastructure is increased, how that money is spent can be dealt with by the Council in a separate process.

  6. Davis Progressive

    what hasn’t been said is that the staff seems to have done a complete 180 on this issue in three months – so the question is why?  did they cut a deal or is this the influence of the new cm?

    1. Frankly

      One thing everyone needs to consider… government at all levels has nickled and dimed new development to death.  They have already picked the bones about clean.  There is not much left to use to start demanding expensive innovated features.  Developers have to project a return strong enough for banks or other investors to lend them the money to fund the project.

      Look at it this way… all the public employee over-payments and over-commitments, combined with the myriad of causes that people demand government cover, has led to less flexibility for communities to extract greater value from development projects because politicians have layered on more and more fees and taxes to capture more revenue for those things.

      My guess is that City Staff finally got to a point where they understood the true accounting for the project and realized that the new owners of the developed parcels would need to pay for the amenities.

  7. DavisBurns

    The new residents of the Cannery will increase the vehicle miles driven on our existing roads requiring additional maintenance, they will use all city services resulting in more work for city employees, longer waits at DMV, more crowding at the at-capacity library, more people using the parks, more kids enrolled in the schools, more constituents concerns for our city council representatives.  Generally, we all pay for those services but unless the services expand (and expansion costs more than just crowding existing service) why shouldn’t the new residents pay for the additional cost of providing services as well as the infrastructure of their own development?

    Heres a reminder that the income the city gets from the new development (which is meant to cover the additional cost of providing services but tends to be discussed as additional revenue available to be used to offset our deficit) will go from additional revenue to a net loss in ten years.

    One reason not to have a CFD is residents paying high city taxes are disinclined to vote for any additional taxes. In addition you get a repeat of the Mace Ranch argument that they are paying more for the same services is not “fair”. The city didn’t collect a significant portion of the CFD funds for Mace ranch which could not have helped our city finances.  Let’s not repeat that mistake;  incorporate the charges into the selling price.

    1. Anon

      If I am understanding the CFD issue correctly, the question is whether to tack the cost of the Cannery infrastructure onto the house price, or keep the house price lower and tack the cost of the Cannery infrastructure onto yearly taxes paid by the homeowner.  Either way the owners in the Cannery will pay for the new Cannery infrastructure. So I am not quite following your point.

      1. Davis Progressive

        you’re assuming they can just tack on the charge of the infrastructures in the home price rather than the home price being driven by market values of supply and demand.

    2. Matt Williams

      Davis Burns, I believe, but please correct me if I am wrong, that all the issues you have outlined in the first paragraph of your comment above are covered in the “normal” baseline property taxes being paid by each parcel in the Cannery (actually not only in the Cannery, but also across all neighborhoods in Davis). Is that not your understanding?

  8. Anon

    I’m not sure I understand this issue, so someone correct me if I am wrong.  Here are my concerns.  If the Cannery forms a CFD, which tacks on a yearly ad valorem tax to pay for the development’s infrastructure, it essentially “hides” the true cost of the house from the homeowner.  The reason I say this is because I am not convinced homeowners are going to either be told in a meaningful way or fully understand all fees they are expected to pay on a new home, e.g. school parcel tax, parks parcel tax, monthly HOA fees, etc.  Monthly HOA fees, for instance, do not have to be disclosed unless the homeowner actually asks about them.  Were the pro rata cost of the Cannery infrastructure tacked onto the price of each home, which would increase its price significantly, so it was clear to a prospective homeowner what the actual cost of the dwelling was, the homeowner might not buy or possibly would not qualify to buy the home.  My second fear is this is a way to get unqualified home buyers qualified, who may not be able to afford all the yearly and monthly taxes and fees that go along with purchasing the residence.  Am I off base here?  I know homeowners are incredibly naive; and I know realtors, developers, and banks are incredibly sophisticated and not always above board and ethical in their dealings with prospective home buyers.

    1. Davis Progressive

      seems like you understand the issue very well and articulately.  the big issue is if it adds $1500 in fees, that’s like having a $1500 parcel tax and so it makes them less likely to support parcel taxes for the city or school.  we don’t even know what the hoa fees will be – i don’t think, but that’s another expense.

      1. Mark West

        It is fair to assume that the cost of the infrastructure improvements will ultimately be borne by the house purchasers and not the developers.  As Matt correctly points out, it all comes down to a cash-flow issue for the developer.  From the prospective home owners perspective, if you have to pay for the improvements one way or the other,  either through an increase in your purchase price or through additional annual fees to fund a bond, are you better off adding the cost to your mortgage or paying it at the presumably lower interest rate of the bond?

        I am certain that there are complications that make the CFD decision a difficult one, but on the surface it doesn’t necessarily seem like a bad deal for the buyers.

    2. South of Davis

      Anon wrote:

      > Monthly HOA fees, for instance, do not have to be disclosed

      > unless the homeowner actually asks about them.

      They don’t have to be “disclosed” on the big signs that say “Homes from the Mid $600s” but they have to be “disclosed” (in writing) before anyone buys a home…

      > My second fear is this is a way to get unqualified home buyers

      > qualified, who may not be able to afford all the yearly and monthly

      > taxes and fees that go along with purchasing the residence.

      The “liar loans” of the last real estate bubble are pretty much gone and today to get a loan the lenders look at EVERY fixed expense a borrower has before funding a loan.  Every lender will find out about the CFD when they do a title search and will assume every borrower has to make the payments.  As I mentioned before at the price point of the new Cannery homes I bet most (but not all)  buyers will be coming in with cash from the sale of a current home (I have friends in Ivy Towne on the other side of Covell who are thinking about a new Cannery home and since they have been in their current home for ~15 years they will probably clear close to $400K when they sell)…

        1. Anon

          [HOA dues] don’t have to be “disclosed” on the big signs that say “Homes from the Mid $600s” but they have to be “disclosed” (in writing) before anyone buys a home…

          From http://www.dre.ca.gov/files/pdf/re6.pdf

          NOTE: Upon written request, the association is to provide within 10 days the above information to or as directed by the owner. In addition, some transactional documents require that the owner secure for the prospective buyer copies of minutes of proceedings, which may be obtained from the association by the owner in accordance with Civil Code Section 1365.2.

          In other words it is the responsibility of the homeowner to ask the appropriate questions about HOAs.

  9. Nancy Price

    Even though, technically, a request by the developer to form a CFD is allowed, if these costs are included in the Development Agreement, why would the City Council vote to approve this? The name Community Facilities District is a euphemism for “bait and switch” even though, technically, the developer has the right to request a CFD.

    If the City Council was to agree to put this to a vote, it does not bode well for trusting that the City Council can negotiate and hold developers accountable to a Development Agreement on any one of the Innovation Parks. We know that developers always come back to cite new conditions and circumstances as a reason to change the Agreement.

    The City Council needs to demonstrate to the public that we can trust that they will stand for what is negotiated.

    1. South of Davis

      Nancy wrote:

      > The name Community Facilities District is a euphemism for “bait and switch”

      Since most Cannery Home Owners didn’t vote on the deal and Cannery Home Owners are the ones who will pay for the CFD, how was this a “bait & switch”?

      > it does not bode well for trusting that the City Council can negotiate and

      > hold developers accountable to a Development Agreement

      Is there a signed document between the city and the developer that says there will NOT be a CFD?

      1. David Greenwald Post author

        The developer agreement holds it open as a possibility, but at least two people on the council have told me that there were never council level talks about the possibility of a CFD

        1. Anon

          If the possibility of a CFD was in the developer agreement, then it is the fault of the City Council members not to talk about the possibility of forming a CFD.  It is not as if City Council members are ignorant of CFD’s since there are several CFDs that already exist in Davis housing developments, e.g. Mace Ranch.

    2. Mark West

      There was no ‘bait and switch’ involved as the Development Agreement specifically states that a CFD is an option.  We can however assume that this comment presages the factually deficient arguments we can expect from the anti-development crowd as we move forward with a plan to increase business development and create jobs.

       

      1. Anon

        I agree.  A CFD being formed for the Cannery was a known quantity at the outset since it already existed in the development agreement, and the City Council knew it or was on constructive notice about it, i.e. should have read the development agreement.  This has nothing to do with the proposed innovation parks, a whole separate issue.

        That said, I am still concerned about homeowners, who are incredibly naive and often do not read over home sale contracts carefully.  And realtors have been known to “gloss over” important details like this.  A typical real estate contract is pages long with lots of fine print.

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