The Davis City Council likely will not make a final decision this evening about the Nishi project, as the staff recommendation calls for a public hearing on the project including staff responses to councilmember questions, public testimony and then preliminary policy direction on Baseline Project Features and Development Agreement provisions. The final vote will not come until February 2.
Staff is “requesting the City Council provide policy direction on the concepts for Baseline Project Features and Development Agreement provisions at this meeting, so that documents can be prepared for action on the meeting of February 2, 2016.”
A key question is whether the council is going to keep Nishi on track for a June vote or push the project toward November. While there are a number of concerns, the Vanguard’s discussions with various councilmembers over the last week leads to a belief that, at this point, the project will go on the ballot in June.
As one councilmember told the Vanguard, there are clearly concerns with the project and work to be done, but there is a belief that those hurdles are not insurmountable.
Two weeks ago, the Davis Planning Commission pushed the project toward the city council, with a 7-0 vote to certify the Environmental Impact Report (EIR) and a 5-2 vote on the development agreement and the General Plan Amendment for the Nishi Property, including provisions that the Nishi Project should not be occupied until connections to both UC Davis and West Olive Drive/Richards Boulevard interchange improvements are constructed. Second was that residential units cannot be sold (but may be rented) until the outside air quality improves to acceptable levels to a standard to be determined.
These votes occurred despite concerns expressed by commissioners, particularly on air quality issues.
From the view of the Vanguard, there are still areas of concern that need to be shored up before the project goes on the ballot.
First, the Finance and Budget Commission “recommends that the city council does not approve development of innovation center projects until the economic analyses are complete and accurate.”
The EPS report showed about a $78,000 net negative fiscal analysis, however that number increased to about $106,000 in the negative when some other considerations were factored in.
Dan Carson, in reanalyzing the fiscal data, believes that the project will be a net $2 million positive for the city. He writes, “My independent analysis finds that Nishi Gateway would achieve a significant direct net fiscal benefit to the city that, in the long term at build-out, could reach $2 million annually, with one-time benefits in the millions of dollars.”
The developer, for his part, has pledged in the baseline features to make the project “net fiscal positive with or without hotel.” Tim Ruff suggests provisions could include a make-whole provision for UC leases, landscaping and lighting assessment district, a CFD (Community Facilities District), and negotiations with the county.
In a back-of-the-envelop analysis, it was suggested to the Vanguard that if we start with the EPS assumption of a negative $106,000, we can see a relatively easy path to fiscal positive. We start with the assumption that the county tax share is worse than the EPS estimate, costing another $101 to $207 thousand each year.
Next, we assume that we keep not all but just half of the sales tax increases of recent years. That will add about $127 thousand. If the developer makes good on his promise to not lose tax from UC Davis renting or owning part of Nishi, that would add about $100,000.
Then if we require private rather than public maintenance of the open space, we add about $184,000.
As was pointed out to the Vanguard, just these reasonable changes, many of which are already agreed to by the applicant, would put Nishi into the black by $181,000. And that doesn’t even include a CFD.
Next comes the question of air quality. The city has recognized this issue through the EIR, where they believe that they can reduce the impact by planting trees to create a barrier of sorts.
Mayor Pro Tem Robb Davis argued that if we examine the actual risk of the air quality issues, it is not as great as we might think. He explained, “What we’re hearing about this property is one in 4500 people will over the course of an entire lifetime contract a certain form of cancer. That’s not annually, that’s one in 4500 over the course of a lifetime. We’re talking about magnitudes of difference.”
He said, “These are minuscule risks compared to the risks that we face every day in our lives.”
That leaves us with three remaining issues.
First, there are concerns that the baseline features lack specificity. It has been suggested that this lack of specificity might result in legal action.
In the Vanguard analysis, we noted that Measure J, in order to have teeth, required the “Establishment of baseline project features and requirements such as recreation facilities, public facilities, significant project design features, sequencing or phasing, or similar features and requirements as shown on project exhibits and plans submitted for voter approval, which cannot be eliminated, significantly modified or reduced without subsequent voter approval.”
When the city renewed Measure J, the city developed “Parameters for Evaluating Proposed Project Modification for Consistency with Baseline Features and Master Plan.” In the city’s analysis small adjustments do not require a new vote, but major changes do, including, “A reduction or increase in the density or total number of housing units within the overall project below or in excess of the established minimum or maximum number of units set out in Base Line Project Features.”
What is not clear from the text and analysis is how specific the baseline features have to be. For instance, for Nishi, baseline features call for “up to 650” units and “up to 325,000 square feet of office/R&D.” It also suggests, “Hotel or extended stay hotel may be added,” and “additional 20% residential units may be added.”
Is that specific enough or does the city need to add more certainty to those numbers?
Finally, there are the provisions that there can be no project on the site until the second crossing is approved. We have reason to believe that this may be agreed to but not finalized because of the UC Davis process.
Second, is the provision that no occupancy can occur until the Richards Boulevard interchange improvements are complete. That would delay occupancy until perhaps 2021 or 2022. Clearly, they are attempting to mitigate traffic impacts on an already-congested Richards Blvd., but we believe there are other work-arounds.
One thing we have suggested is a reduction in parking spaces and reduced car ownership in the residential sector. That could be coupled with a university-only access point for residential and businesses or it could include some sort of restriction for peak time access to West Olive through a metering system.
At times the Vanguard has suggested that the project add density to the residential component and then further reduce the ability for people to drive to and from the property. The developer, however, does not believe they can go beyond about 780 residential units.
They cite the open space requirements for 14-16 acres of open space. There are also technical needs for setbacks, underpass and roadways. They have already mostly eliminated surface parking. They do not believe they can lose the R&D (Research and Development) and business components.
So they end up with 10 acres for residential units and they do not believe they can go above five stories due to the costs of moving from stick frame to steel framing.
The bottom line here is that there is still work to be done and agreements to be made, but it appears that the project will go forward in June with those agreements and the voters can decide whether the advantages of the project – the added 325,000 square feet of R&D space and the perhaps 780 units of housing with 1500 or so beds – outweighs the drawbacks in terms of congestion and potential air quality concerns.
Council will decide what agreements and parameters to put on the project, and the voters will decide whether to approve the project in the end.
—David M. Greenwald reporting