The CFD issue has been heating up in recent weeks just in time for the council to vote to finalize it at next Tuesday’s meeting. A number of prominent residents have come out against the CFD recently, but the local paper today has published its editorial supporting the CFD.
Unfortunately, what they put forth is of both questionable accuracy and logic.
They begin the editorial arguing that Davis is a desirable place to live, but that desirability comes “at a price” as “houses in Davis cost more than comparable houses in many nearby communities.” Ironically, they put forward a policy that will make housing prices higher for the very reason they put forward, saying, “Demand for Davis homes is high, and supply in this slow-growth community remains low.”
The editorial notes that the council was divided 3-2 on the vote to direct staff to draft up the CFD. They write, “Those in the majority — Mayor Dan Wolk and Council members Rochelle Swanson and Lucas Frerichs — want to move forward to ensure that future residents receive everything they’ve been promised.”
But then they add, “Those in the minority — Mayor Pro Tem Robb Davis and Brett Lee — are wary of the additional taxes that will be levied on future Cannery residents and argue that the developer agreed it could build the amenities without further fees.”
To me this seems like an inaccurate representation of the minority view. There has been discussion that the CFD was not publicly discussed at the time when the developer agreement was finalized. There were questions about what would happen if the CFD was not approved.
There was also discussion about the “may” versus “shall” provision in the developer agreement and whether the “may” provision obligated the council to consider and/or approve the CFD. And there have been any number of other points raised in opposition.
The editorial, by choosing that questionable contention, misrepresents the debate.
They continue: “What’s lost in that simplistic description is a simple truth: Cannery residents will be paying for their amenities one way or another. Either they’ll get their parks, greenbelts and bike connections up front and pay the additional taxes or they’ll have to wait for what’s been promised until developers sell enough homes — at a higher price — to afford their construction.”
The problem with that simple truth is that the truth is one of the central points of contention in this debate.
Mayor Pro Tem Robb Davis argued in his op-ed that this is “a highly inelastic demand function” where “TNHC is essentially a price setter in this market.” He argues, “In such a market they very well may be able to set a home price and not have to reduce it if a CFD is included. In other words, unlike in a competitive market, they will not have to reduce the price by the full amount of the CFD.”
He argued, “Given the foregoing, I believe that home buyers moving into the Cannery face the risk of overpaying for the infrastructure there.”
In essence, the problem is this. In a more equitable market, the home buyer could negotiate the cost of the CFD off of the cost of the initial purchase. But the problem in Davis, with limited supply and large amounts of demand, the seller doesn’t have to agree to reducing the cost to offset the future CFD costs; instead, they can simply find someone will to pay their asking price and eat the cost of the CFD later.
There have been debates over whether that means the homeowner would pay double or pay for the cost twice, but from this perspective, there is no simple truth that Cannery residents will pay one way or another, but, rather, they will pay now or pay more later.
This becomes a crucial point, because the editorial bases this fact on their support for the CFD. They write, “For that reason, we support the formation of a CFD for The Cannery.”
Like others, the editorial then moves to downplay previous mistakes.
They write, “Much has been made of the mistakes made with the Mace Ranch CFD, the last such major Community Facilities District in Davis. And yes, plenty of mistakes were made — Korematsu Elementary School and Mace Ranch Park were built many years after they were promised — leading residents there to distrust city and school district leaders. Consequently, the voters were restive, and have supported school parcel taxes to a lesser degree than voters in other Davis neighborhoods.”
They argue, “Fast-forward about 30 years, and things are much different. There’s no iconic feature such as a school envisioned at The Cannery. The economy is different now, and the players are much more savvy about CFDs; we have 30 years of history both in Davis and across the state from which to learn. The Cannery is not nearly as large as Mace Ranch, and far fewer homeowners will be affected.”
“Will Cannery residents be less likely to support school parcel taxes in the future? We know those taxes are key to the financial stability of our school district and to the rich slate of opportunities our children receive,” they put forward. “We believe the answer is no. We believe future Cannery residents will be moving here from other communities where CFDs are common and they won’t blink twice, or they’ll be downsizing from larger Davis homes and choosing The Cannery for the type of community it will be. Those folks are already invested in the top-notch Davis schools.”
But they do so without any analysis. Recent history shows that the Mace Ranch voters are more likely to oppose CFDs.
In 2011’s Measure A, 2012’s Measure E, and 2014’s Measure O – three of the last four elections for taxes, the voters in Mace Ranch failed to achieve passage levels for the taxes. While the number of voters in Cannery will be significantly fewer than in Mace Ranch, in a close election such as 2011’s Measure where a few hundred voters would have swung the election, every vote is likely to count.
Moreover, the city may end up shooting itself in the foot. While many voters, who are otherwise opposed to taxes, hold their noses to support the local schools, the city might be another story. Measure O only passed 58-32 with Mace Ranch primarily opposing the measure. If the city is looking at a parcel tax to fund roads, such a measure could depend on voters who will already be paying a $1000 to $3000 annual tax assessment.
“A CFD is a popular funding instrument for a developing neighborhood for a reason: It works. And we believe a CFD for The Cannery will work for Davis,” they conclude.
In general, the editorial is a stunningly bad analysis, failing to support their conclusions, providing inaccurate representations of the fact, and creating a simple truth that is, in fact, the heart of the argument.
—David M. Greenwald reporting