Nishi Project Could Provide the City a Big Fiscal Boost

Nishi Artist Rendering
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Nishi Artist Rendering
Nishi Artist Rendering

By Dan Carson

A year ago, the City Council declared that it wanted to see innovation center projects that had low greenhouse gas emissions, minimized auto traffic, encouraged walking and bicycling, improved the jobs-housing balance, and maximized open space. One very important set of goals (called the Guiding Principles) said such projects must also provide significant fiscal benefits to the city if they were to be worthy of approval.

One line from a study by a city-hired economic consultant from last September has been invoked as proof that the Nishi Gateway project now before the City Council would be a financial loser for the city. Let me share with you my different perspective, based on my career as a nonpartisan state fiscal analyst and my work on the city Finance and Budget Commission.

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. Other local agencies, including the county and school district, would also cumulatively receive millions of dollars in additional revenues.

Since last summer, I have analyzed hundreds of pages of economic and fiscal consultant reports as well as the project EIR; asked many questions of city staff and consultants; and obtained information from various other sources, including the project applicant. My resulting analysis is available on the City of Davis web site in our commission’s January agenda packet.

The economic studies prepared by the city’s highly professional consultants, Economic & Planning Systems Inc. (EPS), show that the Nishi Gateway project would provide a significant economic benefit to the city and the surrounding region in greatly increased economic activity, jobs, business-to-business sales opportunities, and productive partnerships with Davis’ largest employer, UC Davis.

My findings that the project would have a net positive impact on city coffers are consistent with what EPS has been saying from the start. EPS’s so-called baseline scenario projected a modest deficit, but their study further stated, over and over, that its projections were intentionally conservative and excluded a number of factors that turn it into a fiscal positive.

The project is evolving daily. Planning documents now allow conditional approval of a hotel onsite that could add transient occupancy, property and sales tax revenues. The applicant has agreed to compensate the city for property taxes losses if UC Davis and nonprofits rent office and research space there. Parks, open space, and certain public works would be supported privately, saving the city money. My numbers take these kinds of project changes into account.

I also made some different technical assumptions in my projections.

For example, EPS assumed that the project would generate sizeable fire service costs, basing their number on the average cost of providing fire services to Davis citizens and workers. As you can see on the nearby figure, EPS assumed it would cost the city $312,000 annually to protect 43 acres at Nishi, but the Fire Department gets about twice that much money annually to protect Nishi land — plus 32,000 acres more — in a local special fire district.

Carson-Nishi

 

The Environmental Impact Reports for Nishi Gateway said that such an infill project could receive fire services with existing staffing and stations and that remaining costs could be offset with development impact fees. Accordingly, my analysis assumes much lower and more reasonable marginal costs for providing fire, and other city services, to Nishi Gateway.

 I also counted one-time benefits to city finances that would result from the project, such as sales tax revenues that would be gained as 1,000 construction workers built the public infrastructure, housing, and office and research space. Also, under city law, $3 million in construction taxes plus development impact fees would also be collected. These kinds of revenues were not accounted in the EPS report, and they said so.

One important piece of the puzzle is still unresolved — a specific assessment of some sort to create positive ongoing revenue for the city as the Guiding Principles endorse. Recent project design changes and proposed school district levies could make streets and bridges and other public infrastructure needed for the project more expensive to finance, leaving less cash flow available for such citywide project benefits.

Fixes to the problem are already being worked on. School district officials are likely to be reasonable about their money demands; if the project doesn’t pencil out, they gain nothing. The chief of SACOG, our regional planning agency, says the project would be highly competitive for transportation grants it dispenses that would offset some mitigation costs. Project financing and infrastructure costs can be reduced and more revenues generated to pay for infrastructure – and citywide benefits — without undermining core project goals.

However, it is important that a development agreement be carefully written and vetted to ensure that Davis citizens get the full fiscal benefits that Nishi Gateway could and should bring, consistent with the Guiding Principles for such projects adopted by the council a year ago. This will be critical if the project is to pass in a Measure R vote this June.

Dan Carson worked for 17 years as a nonpartisan fiscal and policy adviser to the California Legislature, retiring in 2012 as deputy legislative analyst. He is vice chair of the city’s Finance and Budget Commission, but this commentary reflects his views only.  Originally published in the Davis Enterprise.

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43 thoughts on “Nishi Project Could Provide the City a Big Fiscal Boost”

  1. SODA

    The fire discussion appears to be either yes or no; black/white: Dan’s estimate or the consultant’s. Has the consultant responded to Dan’s assertion that the fire monies are mostly accounted for?

  2. skeptical

     
    Mr. Carson is comparing apples to toothpicks.  The East Davis Fire District is nothing like what is proposed at Nishi.  Furthermore, the units of comparison make no sense whatsoever.  If the revenue stream is based on dollars per square foot of building area, then the costs should be based on dollars per square foot of building area.  The consultant used a per capita cost estimate and Mr. Carson wants to use cost per acre estimate?  Why wasn’t this caught by city staff?  I understand the consultant and Mr. Carson taking shortcuts based on the data that is most readily available.  Why is staff?  Why doesn’t the analysis reflect the actual cost of public services?
     

    1. Matt Williams

       
      Skeptical’s criticism of Dan Carson’s costs ($312,000) vs. revenues ($615,000) comparison for Nishi makes sense to me for the following reasons:  
       
      —       The March 19, 2015 minutes of the East Davis Fire Protection District report a 2015-2016 budget for the entire District of $678,028. 
       
      —       The District includes Nishi, the Royal Oaks Mobile Home Community off Research Park Drive, Willowbank, El Macero, plus the 32,000 acres of open land referred to by Dan Carson.
       
      —       Section 5 (District Annual Payment) Subsection a (Cost of Service) of the East Davis Fire District contract with the City of Davis uses the ratio of the “Assessed Valuation of the District” divided by the combined “Assessed Valuation of the City and the District” to determine the total annual cost of service paid by the District to the City.
       
      —       The County then allocates that total cost of service ($678,028 in 2015-2016) to individual parcels based on the ratio of the assessed valuation of each individual parcel to the aggregate assessed valuation of the District
       
      —       The assessed valuation of the Nishi property is unimproved agricultural land.  The assessed valuation of the Royal Oaks Mobile Home Community off Research Park Drive, Willowbank, and El Macero include both improved land value and improvements (homes) built on that land. 
       
      —       The 47 acres of unimproved agricultural land of Nishi is a very small fraction of the total 32,000 acres of unimproved agricultural land in the District as a whole.
       
       Bottom-line, the proportion of the $678,028 ($615,000 in Dan Carson’s example) is probably less than 1% of the total . . . somewhere below $7,000 per year.

      Skeptical’s concern about units of comparison also makes sense.  The City needs to be transparent about the method it uses to calculate any development’s fair share of not only Fire Safety costs, but all city services costs.  Further, because of the City’s history of deferring capital infrastructure maintenance costs, actual Fire Safety expenditures understate the true fair share costs for Fire Safety, as well as those other city services that rely on bike paths, streets, sidewalks, park structures, pools, tennis courts, traffic signals, our urban forest, playgrounds, irrigation systems, fire stations, and city building maintenance.

      Skeptical’s question “Why doesn’t the analysis reflect the actual cost of public services?” is very much in the same vein as the six motions passed by the FBC on Monday.

      1. Dan Carson

        I have clarified for Matt what I’m actually saying because there is some misunderstanding on his part of my analysis.

        I did not say in the caption on the map above that the city Fire Department was being paid $615,000 just to protect Nishi. I said that the Fire Department was being paid $615,000 (as of last year, apparently more now) under contract to protect Nishi and the entirety of the East Davis County Fire District, all 32,000 acres.  My argument is that there is reason to doubt that protection of just 47 Nishi acres would cost $312,000 per year.  I think this point is clear on pages 7 and 12 of my full analysis, a link to which is provided below.  Hope this helps.

        The Final EIR for the project says that as an infill project Nishi can be served with existing capacity and stations. The marginal additional costs should be low for infill, and my analysis reflects that likelihood.

        1. Matt Williams

          Dan, I wholeheartedly agree that there is reason to doubt that protection of just 47 Nishi acres would cost $312,000 per year.

          With that said, when Nishi is built out:

          (1) It will no longer be in the County, and as such will probably no longer qualify to be in the East Davis Fire Protection District.

          (2) Any future costs of service will have no resemblance to anything in the current East Davis Fire Protection District.

          (3) Any future costs of service will have considerable resemblance to portions of the City of Davis.

          Based on the above, I believe any cost analysis of Nishi Fire Safety costs should be not be based on the East Davis Fire Protection District.

           

        2. Don Shor

          as an infill project Nishi can be served with existing capacity and stations. The marginal additional costs should be low

          This seems to be the key point.

    2. Matt Williams

      Some of the logic in Dan Carson’s article is similar to the logic I used in making the following formal recommendation to staff and EPS:

      I believe the values in the Annual General Fund Expenditures section of Table 1 (Estimated Annual General Fund Revenue and Expenditures Summary at Buildout) on page 132 of the pdf file, should be broken into two separate columns (6 columns in total for the three) as follows.

      The first column should include the Incremental New Costs that the General Fund will incur, and the second column will contain the Existing General Fund Costs that are being Allocated to the respective projects.

      The result of that change is that we will be able to see both a New Net New bottom-line as well as a Fully Allocated bottom-line, both of which are meaningful to a fully informed decision.

      The reason for separating the costs is to transparently deal with prior events.  An example of a prior event is the fact that the East Davis Fire Station has already been built and staffed.  The cost of building that Fire Station needs to be included in the Fair Share calculations used to determine how much revenue the City will receive.  However, for the purposes of evaluating the bottom-line contribution that a project will make to the City Budget it is not necessary to hypothetically duplicate/re-spend the Fire Station capital infrastructure construction expenditures.

      A different kind of prior event exists for the staffing and operating costs of the East Davis Fire Station.  Adding MRIC isn’t going to cause Chief Trauernicht to modify the current per-engine staffing or the per-shift staffing.  For the most part he will cover the Fire Safety needs of MRIC without adding to the East Davis Fire Station’s annual operating costs.

      That means the annual amount of incremental building costs for the East Davis Fire Station will be $0, and the amount of incremental staffing/operating costs for the East Davis Fire Station will be close to $0.  On the other hand, the amount of revenue the City receives from MRIC for the services provided by the East Davis Fire Station will be equal to whatever the final fair share of the City’s total Fire Safety costs are calculated to be.  Currently the EPS report has that fair share cost calculated to be $376,000 per year.

      It is worth noting that in his comments at Tuesday’s Council Workshop on Nishi, Robb Davis used the term “Marginal Costs” rather than “Incremental Costs.”  Both those terms work.
       

  3. Dan Carson

    Skeptical, my estimate was not based on a cost per acre estimate of fire costs. I used the map seen above only to illustrate that the estimates that were built into the prior EPS estimate seemed out of proportion with reality. My conclusions about these costs were based on the city’s determination, in its Final EIR for the project (please see page 2-78 of the document, which is available on the city of Davis web site), that (1) the cost of providing fire services to the Nishi site would be modest because there is existing capacity to serve the site with existing staff and facilities and (2) much of the cost would be offset with development impact fees. Which, of course, is the whole point of having infill development and imposing development impact fees.  My complete analysis explaining the basis for my assumptions was posted by a commenter on this site the other day and can also be found at the City of Davis web site via the following link.

    http://documents.cityofdavis.org/Media/Default/Documents/PDF/Finance/Commission%20Agenda%20-%20January%202016/January%202016/Item%20No%206e_DC%20FBC%20Draft%20Comments%20Nishi%20Gateway.pdf

  4. Davis Progressive

    It is interesting that some are claiming that the project is going to net a lot more than expected – I agree that EPS is conservative, but on the other hand, some have pointed out that the project could cost a lot more than expected and that the tax revenue won’t be nearly as much as projected.  I wonder which is the right assessment?

    1. Matt Williams

      DP, “wonder” may not be the word that the Finance and Budget Commission (FBC) would use to describe its Monday deliberations and six passed advisory motions, but the uncertainty you identify in your question is much the same as the uncertainty that was discussed by the FBC.  The FBC believes that with some focused effort by the consultants and staff, the uncertainty can be substantially reduced, if not eliminated.

  5. Jim Frame

    Note:  Station 33 is known as the South Davis station, not the East Davis station (see http://cityofdavis.org/city-hall/fire-department/about-dfd/stations).  I suggest harmonizing the discussion nomenclature with that used by the city to avoid confusion.

    Also, Bob Milbrodt mentioned that the assessed valuation of the property that will be retained by the developer (all of the apartments plus ?) will be much lower than it would be if the buildings were sold after development.  Has that been reflected in the tax revenue estimates?

    1. Dan Carson

      Jim, Bob raised a concern about a $350 per square foot estimated value for the commercial space in the Infrastructure Financing study for Nishi.  The EPS study that is the basis for the tax revenue estimates (and for my estimate ) used far lower assumptions of the commercial property assessed values — in the range of $225 to $245 per square foot as I recall.
      I think the assessed values assumed for both owner occupied and rental housing are pretty close in the two studies.

    2. hpierce

      Methinks Milbrodt’s opinion does not appear consistent with that of a competent assessor/appraiser… is Milbrodt currently an appraiser with the YC Assessor’s office?  Or just rendering an opinion as you or I might make?

      There was a guy (who has since retired) in the Assessor’s office who explained to me (years ago) that the assessed valuation for new development takes into account original land acquisition costs, reasonable projections/assumptions of what the current land values are (assuming they were on the open market), value of infrastructure built, and market value of structures built.  Don’t see where a change in ownership, early on, for a given moment of time, would change that valuation.  But, I’m not an appraiser.

      I am dubious of the opinion apparently expressed by Mr Milbrodt… perhaps he’d be willing to expound…

      1. Robert Milbrodt

        hpierce,
        I am a licensed real estate appraiser with over 25 years of experience, including 15 years as a property tax appraiser.  You could have looked up my credentials online or contacted me before posting your comment.

        Either the information shared with you regarding property assessment was incorrect or you don’t remember the information correctly.  For all the property that remains under developer ownership, it will be enrolled at land value from the purchase price plus the cost to construct the site and building improvements, NOT the market value.  Whatever portion of the project this might be (20%-40%?) will be assessed at a fraction of the market value.  This was not considered in the financial analysis.

        The second point that I made to the FBC was the lack of support for the concluded value estimates for each of the property types.  MRIC applies a value per square foot of $225-$250 while Nishi, for the same property types, is applying $300-$350.  Both projects need more and better analysis.  If there is to be a mechanism to make the City financially whole, then it must be based on realistic and supported data.

        If you want a better understanding of assessment or appraisal practice, feel free to contact me.

  6. Frankly

    While I have been critical of Dan’s sometimes highly optimistic opinions on the city budget situation, I have to say this seems well done.  It also seems to sync with my previous research on business and research park fiscal benefits as applied to MRIC.  I have written, and so has Rob White I think, that the net fiscal benefit of a fully built-out 200 acre innovation was $4MM to $6MM.  The missing piece has been the secondary revenue benefits.

    This from Dan makes me a supporter of Nishi now.

    1. Don Shor

      The missing piece has been the secondary revenue benefits.

      I’d been wondering the same thing — as to whether the multiplier effect was fully accounted in the fiscal analyses we’d been seeing.
      I think it is clear that Nishi will be net fiscally positive for the city. It will provide some much-needed housing in a central location, and provide some space for businesses. It’s a well-designed project for a difficult location.

      1. Robb Davis

        Don – please check out the EPS study. The multipliers were very definitely included and they are substantial (not going to produce the numbers here–too tired to dig them up). This is why all the hand-wringing over the Nishi “fiscal drain” has struck me as a very narrow view of the report. Strange.

  7. Eileen Samitz

    Robb,

    I was at the same Finance and Budget Commission that you attended and there was plenty of “hand ringing” about the “fiscal drain” or more accurately the revenue negative concerns that the Commission has. There were a number of questions forwarded to Staff and Council but please note these three motions that were of particular interest and clearly reflect the concerns of the Commission.

    Passed Unanimously
    The FBC recommends that the City Council does not move forward with any development project until such time as a method is found to ensure a profit to the City.
    Yes-Knickerbocker, Salomon, Wood      No-Carson, Miller      Abstain-Weiss, Williams   Passes 3-2-2

    The FBC recommends that the City Council does not approve development of innovation center projects until the economic analyses are complete and accurate. 
    Yes-Knickerbocker, Miller, Salomon, Weiss, Williams, Wood,         No-Carson      Passes 6-1

    The FBC does not consider the current EPS report to be complete and accurate until the concerns contained in the handout submitted at the January 2016 FBC meeting and additional questions from commissioner Williams are answered. 
    Yes-Knickerbocker, Miller, Salomon, Weiss, Williams, Wood,         No-Carson      Passes 6-1

    By the way I, like others, took offense with your comment of the suggestion of any possible “misrepresentation” by number of us testifying about what happened at the Finance and Budget Commission. We were all very consistent on testifying abut what he saw and heard at that Commission meeting. The Commission clearly had much concern about if Nishi had any fiscal benefit to the City. Thus,the questions sent forward to Staff and City Council from the Commission. This is partially because more infrastructure major expenses were revealed that were not included in the first fiscal analysis, such as the Putah Creek Parkway Bridge and the parking structure, which are two very BIG ticket which made the fiscal analysis on the Nishi Gateway project look even more dismal. Again, the motions passed by the Commission above are the evidence of their concern and our testimony about that.

    1. Matt Williams

      Eileen Samitz said . . . “The Commission clearly had much concern about if Nishi had any fiscal benefit to the City. Thus, the questions sent forward to Staff and City Council from the Commission”

      Eileen’s characterization in the quoted sentence above is incorrect.  The concerns that the individual members of the FBC expressed focused on two key areas that would improve the quality of the analysis, and put the FBC in a position to comply with its mission/purpose/function.

      The first area of concern was with the assumptions that EPS had made in its analysis.

      The second area of concern was with the choice of only a single year analysis at the end of the project life rather than a multi-year trended analysis that is inclusive of the full range of years from beginning to end.

      Further, before any of those concerns were raised, Commissioner Salomon made the strong recommendation that (a) EPS’ Base Development Program be permanently eliminated from consideration in all future analyses, and that (b) the assumptions for Sensitivity Scenario 10 from the December 2015 EPS Executive Summary become the Base Development Program.

      Commissioner Salomon’s logic was that Scenario 10 shows a $75,000 per year surplus at full buildout rather than a $106,000 per year deficit.  All the members of the FBC concurred with this recommendation, with the understanding that just getting to a surplus wasn’t enough . . . further analysis was needed in order for the FBC to comply with its mission/purpose/function.

  8. Eileen Samitz

    Matt,

    I saw the Commission discuss various options to try to see how to improve the way the project could be financed.  But are you trying to say that the Commission was concluding and comfortable that Nishi Gateway was revenue positive for the City? And if so, please explain how so, and why the long list of questions, including yours? Plus, there was concern about comp assumptions on the residential and commercial (per square foot) being elevated which, when corrected, would make the fiscal outlook even more negative. In fact, there was a request to have the comps information researched for accuracy.

    The motions made and passed by the Commission speak for themselves.

    Also, can you explain why you abstained on the following motion?

    The FBC recommends that the City Council does not move forward with any development project until such time as a method is found to ensure a profit to the City.
    Yes-Knickerbocker, Salomon, Wood      No-Carson, Miller      Abstain-Weiss, Williams   Passes 3-2-2

    And Robb, I also also stand by what I say about your condescending comments.

    1. Matt Williams

      Eileen, you were understandably looking at the FBC’s deliberations and actions from a specific advocacy perspective . . . your desire to kill the Nishi project and move forward with Plan N.

      The mission/purpose/function of the Finance and Budget Commission is an advisory one not an advocacy one.  In late 2014 the FBC members formally requested Council revise the FBC’s mission/purpose/function  to read as it does in the quote at the end of this comment.  What you and the other members of the public saw at the FBC meeting was the FBC advising steps that the consultants and staff and Council could take that would make the very professional EPS analysis even better.

      The e-mail recommendations that I formally submitted on December 17th will, in my opinion, make the EPS report clearer and more complete, and in the process, easier to understand for the Davis citizens at such time as they are asked to vote on the project. That, for me, is the essence of transparency.

      I believe the reasons that Dan Carson submitted his written recommendations and the reasons that Ray Salomon submitted his analytical questions were for very much the same reason . . . to be able to give the Council the best possible fiscal advice.

      The reason I abstained in the one vote was that as a motion I felt it was not specific enough.  I felt it did not rise to the high level of the FBC’s mission/purpose/function statement.  I wasn’t opposed to the concept of the motion.  I was opposed to the non-specific language of the motion.  All of the FBC motions that preceded it were about doing a better job in specifying the Nishi fiscal picture.  If the words “… method is found to ensure a profit to the City” had been improved I would ave voted for the motion.  As it was, the final two motions provided the specificity I was looking for and I voted for both those motions without hesitation.

      FUNCTIONS OF THE COMMISSION

      The Finance and Budget Commission shall have the responsibilities as provided in this section and such other duties as the Council may, from time to time, decide:

      _ _ a. Providing transparency of City Finances to the citizens of Davis.

      _ _ b. Reviewing the spending outlined in the city budget in order to advise the Public that City Council/City Management is accountable for spending taxpayer dollars effectively and in keeping with important city priorities.

      _ _ c. Searching for and advising actions that could maximize city revenues and reduce governmental costs and help ensure municipal fiscal stability.

      _ _ d. Providing recommendations/special studies on financial and economic issues to the City Council.

       

       

      1. Ron

        Matt:

        You’re stating that Eileen has an advocacy perspective?  With all due respect, it seems to me that you and Dan have an (opposite) advocacy perspective.  I base this on the comments that have been made.

        The difference is that Eileen is not on a commission that’s supposed to provide objective financial analysis.

         

        1. Matt Williams

          Ron, I can not speak for Dan, and don’t speak for him.  However, I can speak for myself. As I said in a prior response to CalAg in a prior thread, what I try to do with my comments is look objectively at the available data.  I work hard to leave the logical analysis of the data to each individual, knowing that each individual will come to their own personal conclusions.  My job is not to tell anyone.  It is to listen to everyone.

          For some decisions the evidence is very clear.  For example, the M-U Zoning regulations clearly state the number of stories a building can be and its maximum allowed FAR (Floor Area Ratio).  Unless a zoning variance is requested, those are clear cut limitations.

          With that said, what advocacy positions do you think I have put forward?

           

           

  9. Ron

    Matt:

    You’ve laid out a list of “plans” to increase the amount of housing.  One of your plans (Plan D?) states your support for the Nishi development.  At the same time, you’ve downplayed anyone’s ability to influence the University to build housing.  (You basically said that it was impossible to influence the University.)  I can find/repeat your exact comments, if that helps.  These statements consist of advocacy.

    Are you (now) stating that you don’t have an opinion/position regarding Nishi?

    On a related note, I do not see how Eileen’s statement above (regarding the commission’s concerns about the financial viability of Nishi) are a “mis-characterization”.  Are you now saying that the commission did not have concerns?  According to the article in the link below,

    “The document lists several points the commission felt uneasy about, including questions about the project’s fiscal benefits (or detriments) to the community during its 20-year build-out period and rates for funding infrastructure.”

    http://www.davisenterprise.com/local-news/citys-finance-planning-commissioners-weigh-in-on-nishi-gateway/

     

     

    1. Matt Williams

      Ron said . . . On a related note, I do not see how Eileen’s statement above (regarding the commission’s concerns about the financial viability of Nishi) are a “mis-characterization”.  Are you now saying that the commission did not have concerns?  According to the article in the link below,

      “The document lists several points the commission felt uneasy about, including questions about the project’s fiscal benefits (or detriments) to the community during its 20-year build-out period and rates for funding infrastructure.”

      http://www.davisenterprise.com/local-news/citys-finance-planning-commissioners-weigh-in-on-nishi-gateway/

      Ron, the article you are quoting is a second-hand source.  It is not fact.  It is the reporter’s opinion based on what she understood the FBC Commissioners were saying.  She failed to look at the Commissioners’ words through the lend of the FBC’s mission/function/purpose.  If the same words had been said by a bunch of Planning Commissioners, I would probably agree with both the reporter’s interpretation, as well as your interpretation of her interpretation.  The FBC wasn’t (and isn’t) being asked to share its opinion of the project in its totality.  The FBC is being asked to perform a due diligence on the fiscal analysis . . . and only the fiscal analysis.

       

  10. Matt Williams

    Ron said . . . “Are you (now) stating that you don’t have an opinion/position regarding Nishi?”

    Ron, let me be crystal clear.  In my opinion, neither the City nor its residents have a robust enough data set of evidence to support either a yes/no position for Nishi or a yes/no decision against Nishi.  If I were forced to make a decision absent that robust data set then I would be making a political calculation.

    Ron said . . . “You’ve laid out a list of “plans” to increase the amount of housing.”

    Go back and reread the Plans.  Plan C does not increase the housing.  Plan C accepts the continuation (and likely acceleration) of the negative impacts of the well established demographic change trends that have occurred in Davis over the past 15 years.

    Table 5 on page 16 of the EPS Executive Summary (see this LINK) lays out ten Scenarios and summarizes the fiscal impacts at buildout of each Scenario.  Does EPS state support for any of the ten Scenarios?  No, they don’t.

    Similarly I have laid out in my comment five Scenarios, and then identified some of the key impacts of those five Scenarios.  I used the word Plan instead of the word Scenario, and if you want to take me to task for a poor choice of semantics, I bow my head and accept the criticism.

    Regarding the (relatively) objective information I shared about each Plan/Scenario, let me ask you a series of simple questions that I have asked myself.

    (1) What do you think the odds of successfully accomplishing Plan A in your lifetime are? 1 in 2?  1 in 10? 1 in 100?  1 in 1,000?  1 in 1,000,000?  1 in 1,000,000,000?

    (2) Whatever your answer to (1) is, what do you believe is a realistic timeline for accomplishing Plan A’s first goal, the building of the first (currently unplanned) additional on campus bed?  2020?  2025?  2030? 2035? 2040?

    (3)  What do you think the odds of successfully getting UCD to slow its enrollment growth (Plan B) in your lifetime are? 1 in 2?  1 in 10? 1 in 100?  1 in 1,000?  1 in 1,000,000?  1 in 1,000,000,000?

    (4) How do you propose dealing with the continuing deterioration of Davis’ family neighborhoods as more and more single family residences are converted into UCD student mini-dorms?”

    (5) How do you propose dealing with the continuing trend in Davis apartment neighborhoods where groups of UCD students are able to outbid single families for apartment rental units, and thereby push those single families out of Davis, and raise the apartment rental rates in the process?”

    I look forward to your sharing your observations about those questions, just as I have openly and transparently shared my observations about those questions.

    In closing, I don’t consider dispassionate observations and passionate advocacy to be equivalent.

     

     

     

     

     

  11. Eileen Samitz

    Matt,

    Wait Matt, So MY interpretation is the same as the Enterprise reporters interpretation.  Please explain to me so we are ALL clear on this issue. Are you saying the the Enterprise got it wrong?

    Otherwise, YOU have it backwards. The deficit originally was $78,000 NOT a surplus. And Ray Salomon found the calculation error bringing  it up to a $106,000 deficit for Nishi Gateway.

    1. Matt Williams

      Yes you got it wrong Eileen.  You have failed to differentiate the $78,000 number originally associated with Scenario Zero (the original Base Development Plan) and the $75,000 number associated with Scenario 10 from Table 5 of the EPS Executive Summary.

      The $78,000 number was a deficit.

      The $75,000 Scenario 10 number is a surplus.

  12. Ron

    “Go back and reread the Plans.  Plan C does not increase the housing.  Plan C accepts the continuation (and likely acceleration) of the negative impacts of the well established demographic change trends that have occurred in Davis over the past 15 years.”

    You just noted the “negative impacts” that would result from Plan C.  And yet, you state that you have no opinion of this option?

    Your support for Nishi comes through loud and clear, when you lay out your proposed plans (and then proceed to discount options that don’t include Nishi).

    I have no idea what the odds are, regarding influencing the University.  But, you’ve already concluded that it’s not possible.  That is an opinion.  It’s also quite harmful, if others accept your conclusion as fact (and therefore don’t even try).

    Regarding the conversion to “mini-dorms”, you’ve cited some examples.  However, I don’t know if this is an extensive problem, or limited to certain areas/situations.  (No one in my neighborhood has done this.)  In any case, I believe that the city can implement controls regarding such conversions (e.g., during the permit process).

    You also haven’t made any comments regarding the negative impacts of Nishi, regarding traffic, congestion, financial and access concerns, viability of the small commercial component with limited parking, etc.  Your lack of comments regarding the problems that Nishi would create also demonstrate your bias.

    Regarding the Enterprise article, are you stating that the commission that you’re on had no concerns?  And, that the reporter and others simply misunderstood? And, that the city’s financial consultant “got it wrong” in his report, when he stated that the proposal would create an ongoing deficit?

    There’s nothing inherently “wrong” with having an opinion (bias), one way or another.  Everyone on this forum has an opinion.  For example, I would (generally) like to see the city grow as slowly as possible.  But, when you make comments that others might not support a proposal (and that this is the basis for their comments), you might want to examine your own motives, first.  This is especially important for someone on a city commission.

     

     

     

     

    1. Ron

      (Forgot to clarify:  The comments above are written in response to Matt.)

      Also – I understand that Nishi may use a city-backed CFD, which exposes the city to further financial risk.

      1. Ron

        Matt:  It seems that you and Eileen are stating something entirely opposite:

        You stated:

        Commissioner Salomon’s logic was that Scenario 10 shows a $75,000 per year surplus at full buildout rather than a $106,000 per year deficit. 

        In response, Eileen stated:

        The deficit originally was $78,000 NOT a surplus.  And Ray Salomon found the calculation error bringing it up to a $106,000 deficit for Nishi Gateway.

        Please explain.

      2. Matt Williams

        Ron said . . .  “I understand that Nishi may use a city-backed CFD, which exposes the city to further financial risk.”

        I strongly believe that there is no reason for a CFD at Nishi.  The principal reason for that is that all the rental units will be owned by the developer once built, which would mean the developers are paying annual CFD payments to the City in order to give the developer a one time up front payment.  The developer can get their up front payment by taking out a mortgage on their rental units.  Private financing like that will be a much more efficient and effective use of money (lower interest rates and no bond placement costs) than public financing.  Commissioner Salomon and I were very vocal about that matter in the FBC meeting.

    2. Matt Williams

      Ron said . . .  “Regarding the conversion to “mini-dorms”, you’ve cited some examples.  However, I don’t know if this is an extensive problem, or limited to certain areas/situations.  (No one in my neighborhood has done this.)  In any case, I believe that the city can implement controls regarding such conversions (e.g., during the permit process).”

      Ron, just ask Eileen how big a problem mini-dorm conversions are.  The July 2015 Staff Report that can be accessed at this LINK  will get you started in an understanding of the issue.

       

    3. Matt Williams

      Ron said . . . “Your support for Nishi comes through loud and clear, when you lay out your proposed plans (and then proceed to discount options that don’t include Nishi).”

      You are confusing not opposing (remaining objective) with supporting (not remaining objective).

      Ron said . . . “I have no idea what the odds are, regarding influencing the University.  But, you’ve already concluded that it’s not possible.  That is an opinion.  It’s also quite harmful, if others accept your conclusion as fact (and therefore don’t even try).”

      Ron, each time I have talked about the likelihood of any UCD event happening, I have begun my comments with the words “I believe . . .” which is a very clear and transparent labeling my words as opinion.  Belief = Opinion

      Ron said . . . “Regarding the Enterprise article, are you stating that the commission that you’re on had no concerns?” 

      The Commission had concerns about the completeness and accuracy of the fiscal analysis, as well as strong opinions that no decision should be made until completeness and accuracy has been materially achieved.

      The FBC’s concerns were not about the end result.  Rather, they were about the process.  The language of the final two motions clearly illuminates that.

      Ron said . . . “And, that the reporter and others simply misunderstood? And, that the city’s financial consultant “got it wrong” in his report, when he stated that the proposal would create an ongoing deficit?”

      In a word, “Yes” the reporter did not understand the process orientation of the FBC’s concerns.  The FBC was clearly saying that the completeness and accuracy deficiencies in the EPS analysis report make it impossible to make an informed decision about whether the proposal will create an ongoing deficit.

       

  13. Matt Williams

    Ron, thanks to input from Ray Salomon in the November FBC meeting, EPS corrected a mathematical error and added $28,000 to the $78,000 annual deficit at full build out for the Base Development Program (which can be called Scenario Zero in Table 5 of EPS’ Executive Summary).

    Separate and distinct from that $28,000 annual adjustment to Scenario Zero, Scenario 10 reduces the City’s annual costs by $181,000 if the responsibility for maintenance of all of Nishi’s Parks and Open Space is paid for each year by the developer.  That produces an annual Scenario 10 annual surplus of $75,000.

    My comment would have been clearer if it had read “Commissioner Salomon’s logic was that Scenario 10 shows a $75,000 per year surplus at full buildout rather than Scenario zero’s $106,000 per year deficit.”  My apologies for that lack of clarity in my comment.

  14. Eileen Samitz

    Matt,

    The elephant in the room is that the Nishi Gateway fiscal analysis has major flaws making the numbers even worse than they already are. Just two of the major flaws are:

    1) The sales tax is grossly overestimated, as has made clear by Ray Salomon, the Finance and Budget Commissioner who submitted the table revealing this to the Budget and Finance Commission and to the public, at the last Finance and Budget Commission meeting. David Greenwald posted the table illustrating this and commented on it in the second posting above, regarding this Vanguard article.

    2) The property tax is grossly over-estimated as made clear by Bob Milbrodt, who has expertise on this subject, and which he clearly explains in his comments posted above, as well.

     

    1. Matt Williams

      Eileen, the FBC dealt with the sales tax issue as the first issue on Page 2 of Commissioner Salomon’s handout, which was incorporated into the formal legal language of the FBC’s final motion.

       
      The FBC does not consider the current EPS report to be materially complete and accurate until the concerns contained in the handout submitted by commissioner Salomon at the January 2016 FBC meeting and additional questions from commissioner Williams are answered. 

      There was no written copy of Bob Milbrodt’s issues to incoporate into the FBC motions; however, the FBC was crystal clear in its discussions that the issues Bob Milbrodt was raising needed to be analyzed in order to achieve the level of “materially complete and accurate.”

      When the FBC adjourned its meeting, there were no elephants that were loose in the room.

      With that said, since the FBC is only an advisory body, the Council could choose to ignore the FBC’s advice on Tuesday night.  In my opinion (a nod to Ron), if the Council does that it will be a major mistake on their part.
       

  15. Ron

    Matt:

    Thanks for the clarification, regarding the $75,000 figure.  I have now downloaded the report myself, and can see the figures (including the $106,000 projected annual deficit for the base alternative).

    In your response above, you state that I am “confusing not opposing (remaining objective) with supporting (not remaining objective)”.

    You mentioned several plans (and then proceeded to discount options that don’t include Nishi).  In contrast, I don’t recall any statements in which you mention the problems associated with pursuing development at Nishi.  If that doesn’t demonstrate an opinion, I’m not sure what would.

    1. Matt Williams

      Ron, glad to help with the numbers.

      In all ordered lists A comes before C, so I’m also very clearly stating my opinion that in that ordered list Plan A is preferable to all three of the Plans that come after it.  Similarly, I’m also very clearly stating my opinion that while Plan B is less desirable than Plan A, it is at the same time preferable to the two Plans that come after it.

      I’m not discounting Plan A when I speculate on its likelihood of succeeding.  I’m simply sharing an observation based on the historical UCD actions to date.  You have deftly avoided answering what odds you give to Plan A succeeding and in what time frame the success will happen.  I stand by my PowerBall analogy.

      So that we can dialogue about the problems associated with pursuing development Nishi I have copied and pasted the following list from your prior comments.  Let me know if the list is complete and we can then start our dialogue.

      — traffic

      — congestion

      — financial concerns

      — access concerns

      — viability of the small commercial component with limited parking

      Regarding the above list I have posted many comments on the first four items on your list. Perhaps you have missed those prior comments.  Regardless, it will be fun to discuss them again.

      1. Ron

        Matt:

        Again, you’ve discounted all possibilities except those that include Nishi.  By stating that you prefer a plan that won’t succeed, you’ve already made some negative assumptions (conclusions) that may not be true.

        I’m not trying to engage again, on the pros and cons of Nishi.  I’m just pointing out that you already have an opinion (or have at least arrived at a conclusion).  There’s nothing wrong with having an opinion, or arriving at a conclusion.  But, there is something wrong when you deny it.  It seems like this is a game for you.

        You’re other “plans” also include assumptions, that may or may not be true.  (In any case, your conclusions only list negative effects, if Nishi is not built.)

        I have not “deftly avoided” answering your question regarding “Plan A”.  You cite historical data, but I’m not sure what data you’re talking about, or whether or not it would apply in this case.  Again, I have no idea what the chances are regarding convincing the University.  Perhaps if they’re actually faced with a problem that they are creating (and that the city will no longer enable), they will look to solutions, within.  If you assume that you already know the answer, you won’t even really try.  That’s not leadership.

        Regarding the Nishi proposal, I don’t think that the positives outweigh the negatives.  I’ve already seen most of the arguments, either way.

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