On Tuesday council will vote on whether or not to approve the formation of a Community Facilities District in the Cannery, the passage of which will allow the developer, The New Home Company, to fund a portion of the infrastructure costs associated with the development through special taxes levied on future homeowners within the Cannery Development.
Below is a table from the staff report showing the proposed maximum tax rates for each category of land use:
Table 1: Cannery CFD Rates for Fiscal Year 14/15
|Housing Unit Size||Estimated # of Units||Proposed CFD Rates Per Unit Per Year|
|Greater than 3,025 sf||59||$2,145|
|2,575 to 3,024 sf||64||$1,790|
|2,125 to 2,574 sf||85||$1,473|
|1,675 to 2,124 sf||171||$838|
|Less than 1,674 sf||84||$465|
|Non-residential (per sf)||171,000||$0.25|
When individual council members cast their vote on Tuesday on whether or not to approve the formation of the CFD, whose interest will they choose to represent – those of the community, or those of The New Home Company?
The Community Facilities Act was passed in 1982, in order to address the financial struggles some California communities faced after the passage of Prop. 13, which restricted the ability of local governments to raise property taxes, when attempting to generate the revenue necessary to maintain their basic infrastructure needs.
This act allowed communities to form “Community Facilities Districts”, and through special taxes that must be approved by 2/3rds of the voters within the district, finance major improvements and services, which could include schools, roads, libraries, police and fire protection services, or ambulance services. The taxes are secured by a continuing lien and are levied annually against property within the district.
It has since become common practice in California for land developers to request the formation Community Facilities Districts (CFD) in order to pay for the infrastructure costs associated with the construction of their developments. Because, there is usually only one landowner at the time the CFD is formed, in this case The New Home Company, there is only one entity casting a vote on whether or not to approve the special district.
While the formation of a CFD by developers may be financially justified in some communities in California, I don’t not believe that this is the case in ones that have the type of competitive housing market we see in Davis, where infrastructure cost can be covered by the higher prices home buyers are willing to pay in order to live here.
I understand that there is no free lunch, and that infrastructure cost associated with the development will be passed on to future Cannery homeowners, either through the formation of a CFD or an increase in the cost they pay for their home. But while the approval of a CFD has clear benefits for the developer, it has no clear benefit to future Cannery homeowners, or the Davis community at large, and instead has only potential negative impacts on both.
While I appreciate the amenities The New Home Company has included in the Cannery Development, and the time spent on meeting with community groups and commissions, and their efforts to address the needs of these various groups, I do not believe that these actions obligates the city council in any way to approve their request for the formation of a CFD, to suggest otherwise sets a scary precedent for how our council will negotiate deals with developers in the future, especially large scale ones like those being currently proposed for future Innovation Parks on our towns peripheries.
So who will our council represent on Tuesday? It is my hope that they fulfill their duty and the obligation as our elected representatives and vote, not in a way that protects the financial interests of The New Home Company, but instead in a way that protects the interests of the citizens and the community that they have been elected and entrusted to represent.