Vanguard Analysis: Council’s Call on Revenue For Nishi

Interior View of Nishi

Interior View of Nishi

There are two basic levels of fiscal analysis for Nishi that need to be addressed. The first is the corrected EPS projection that the Nishi development would create a net negative of $106,000 in annual revenue. The second is the call by some that Nishi needs to generate ongoing revenue for the city. Both of these separate issues should be addressed in turn.

The EPS report, as many have stated, used very conservative assumptions to demonstrate the fiscal impact of Nishi on the city. I think it is safe to say, even using very modest assumptions, that the $106,000 deficit can be easily dispelled.

On Tuesday, Tim Ruff laid out that, while “Nishi will NOT be requesting a CFD [Community Facilities District] to finance the public improvements,” it will “agree to a landscape and lighting district to cover costs associated with maintenance of parks and a ‘make-whole’ provision for transactions involving public entities to ensure net fiscal positive.”

As Robb Davis noted on Tuesday, “That alone will take this talismanic figure of $78,000 ($106,000) and turn it positive.”

But added to that, there is the assumption that neither the 2004 sales tax nor the 2014 sales tax will be renewed. I think it is safe to assume that we will renew at least at the half-cent level, which would generate another $127,000. And I would go so far as to predict that it is more likely than not that we go to the full one-percent, which is another $127,000.

So those three factors alone change the EPS assumptions, pushing the project close to $300,000 in the positive.

Anyone who is arguing that Nishi Gateway will be revenue negative based on the EPS report is pushing a false negative.

The council, however, is going a step further and having representatives from the Finance and Budget Commission (FBC) meet with EPS and Plescia to make sure everyone is on the same page. That is due diligence.

But some people are not simply satisfied with the project being net fiscally neutral, they want it to be a revenue generator. For that they cite the goals of the project as laid out in October 2013, which said, “Revenue generation to support city services throughout the community.”

From the outset, I think it is important to recognize that everyone has different drivers. While Nishi got wrapped into the conversation on Innovation Centers, the Research and Development (R&D) space was always going to be small – around 325,000 square feet.

When Studio 30 evaluated sites for Innovation Centers, it saw the need to look at two peripheral sites over and above Nishi, which was always seen to be evaluated at roughly 300,000 to 500,000 square feet in R&D uses.

As Robb Davis wrote yesterday in a comment on the Vanguard, “We did include Nishi last year in the Innovation Park Guiding Principles and those principles DO say significant benefit but it was always going to be challenging to get there.” He would add that “direct fiscal benefit is only one element of economic benefit and I would invite people to read the EPS report for more on the ‘multiplied’ effects of this project, which are substantial.”

That said, if we examine Dan Carson’s analysis of how he got to about $2 million in net revenue, we can see a plausible scenario to get there.

There are three main drivers in and above what we have already discussed.

First, there is the projected hotel generation of $494,000. The city has commissioned HVS Consulting to come out with a feasibility study of TOT (Transient Occupancy Tax) projections. We have to understand that, in addition to the Hyatt on campus in close proximity, there is also the proposed Embassy Suites on Richards. In addition to those, there is an application for a hotel on Second Street across from Target and one on Research Park Drive.

Bottom line is that we will have a better sense when the HVS report comes out, but I would at least take the nearly half-million in projected revenue with a healthy skepticism.

Second, Mr. Carson sees a revenue stream of $420,000 from a CFD. No one at this time seems to favor a CFD. I still think we should at least look at a per square foot surcharge perhaps of $2 on the R&D, which could generate over $650,000 at build out. But that too doesn’t seem to be in the cards.

Third, Dan Carson projects major savings through the assumption of marginal instead of average costs for police and fire services.  Last week, he wrote, “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.”

Matt Williams, also on the FBC, wrote in a comment, “I agree with Dan that the ‘true’ marginal cost to the City for Fire and Police services is going to be significantly less than what EPS is projecting. However, it is important that the developer pay the full EPS calculated amount to the City each year, so I am not going to include that $734,000 cost reduction in this analysis.”

That seems like a reasonable approach here.

The bottom line is this – there are clearly people who want to see Nishi be an ongoing revenue generator for the city. The cleanest way to do that, in my view, would be a CFD or assessment that could generate $400,000 to $600,000 that, coupled with the savings from agreements already in place, and a reasonable assumption of the true costs for fire service and police protection, along with the extension of the sales taxes, can easily push the project into an ongoing NET revenue generation of over $1 million.

Right now, the council does not appear inclined to go that route. They seem satisfied with the project being net fiscally positive and with the benefits in terms of housing, sustainability and job generation.

The community will ultimately weigh on whether this is sufficient. We believe that the MRIC (Mace Ranch Innovation Center), with similar tweaks to the model and an appropriate assessment, can be the sole revenue generator that the city really needs.

But, at this point, it is safe to say that the EPS report is not describing Nishi as a fiscal negative on the city. Addressing three of their assumptions in a reasonable manner pushes the project easily into the positive.

—David M. Greenwald reporting

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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70 Comments

  1. Barack Palin

    The cleanest place to do that, in my view, would be a CFD or assessment that could generate $400,000 to $600,000 that coupled with the savings from agreements already in place

    Then let’s do it.  Other newer developments in the city have to pay CFD’s so why not Nishi?  Is it fair to let this development slide while others, for instance Mace Ranch, Wildhorse and Cannery residents, have to pay a CFD?

    1. Mark West

      The cleanest way to get the money is with the transient occupancy tax from a hotel, and since it is a tax on people from out of town, it is a net positive for the community (unlike any other tax).  Davis has a shortage of quality hotel space and can readily absorb all of the proposed projects.

      I don’t see any value in a CFD, and just because we made the mistake in the past (with the ones you mentioned) is no reason to repeat it again.

        1. Mark West

          It should be approved.  There is no downside for the City, and no reason not to approve it. As long as there are investors willing to build hotels, we should build them and pocket the TOT.

        2. Davis Progressive

          mark: there is plenty of downside to the city if the hotel market can’t support three or four more hotels, you end up undermining existing business, and potentially doing harm without bringing forward additional revenue.

        3. Mark West

          dp: “there is plenty of downside to the city if the hotel market can’t support three or four more hotels, you end up undermining existing business, and potentially doing harm without bringing forward additional revenue.”

          That is not a problem for the City, that is a problem for the owners of the existing hotels. It is not the City’s job to be concerned about competition for existing businesses, that is solely the business owner’s responsibility. If you cannot provide a competitive product, you should go out of business. The City’s decision should be based solely on increasing revenues to the City.  We do that by making sure that there is always a surplus of beds available in town for interested travelers, which will maximize the TOT.

      1. Matt Williams

        The main question regarding hotel revenue from Nishi is whether that represents net additional revenue or cannibalization of revenue from other hotels.  The $494,000 per year “margin” projected by EPS for a hotel on site is, at least for me, is a “bonus” for this project.  Businesses that grant discretionary bonuses to their employees only do so if the company that employs the boss and the workers has a level of performance that merits a “reward.”  In the Nishi hotel situation the only way Davis will earn a reward in the form of added Transient Occupancy Tax is if the combined hotel occupancy across all the hotels in the city is actually higher because of the increase in the supply of hotel beds.

        Davis currently does not have any appreciable supply of extended stay hotel beds.  I personally believe that an extended stay hotel on the Nishi site could capture additional hotel stays that the other hotels in Davis do not currently service, but there is a shortage of hard evidence on that subject, so pending additional data gathering, analysis and study, I believe we have to treat the $494,000 a year of “margin” for a hotel at Nishi as only “possible” until we have more evidence about the whole Davis hotel marketplace.

        1. Barack Palin

          Matt, what’s the plan for this possible hotel?  Since the Nishi footprint is already fairly small are the developers going to leave a plot of land undeveloped where the supposed hotel will be located?

        2. Mark West

          The existing evidence is that Davis does not have sufficient quality hotel space to meet the demand. Currently, the ‘go to’ places for business travelers are the Hyatt on campus and hotels in Sacramento, Woodland, and even Dixon, which means Davis loses out completely.

          TOT does not have to be shared with any other entity.  100% goes straight to the City’s general fund.  We missed out when we blocked the Hyatt from building in the City because those revenues now go to the University. It is not the job of the City to protect existing businesses from competition, so as long as there are investors willing to build hotels in the City, we should approve them and pocket the revenues. There is no downside risk for the City with these projects.

          We don’t need a marketing study, all we need is a proposal.

        3. Davis Progressive

          the vanguard article from a few weeks ago, calls that into question.  we don’t have an independent consultant’s report.  and we are talking about four or five new hotels.  before we start banking on funding, shouldn’t we know what the market can support?

        4. Mark West

          The vanguard article of a couple of weeks ago was about two owners of the existing hotels in town trying to block new competition.  The data presented with the article did not support their contention that the market was already saturated. They made the same claims back when the Hyatt was proposed, and unfortunately, the City listened, pushing the construction to the University. That was a huge loss to the City and should not be repeated.

          The City shouldn’t be wasting money on marketing studies, that is the responsibility of the investors. All the City has to do is say yes to the construction and pocket the revenues.  Remember, if construction/occupancy is restricted until after the interchange is fixed, we are looking at 5-10 years down the road before this hotel will be in place.

        5. Matt Williams

          BP said . . . “Matt, what’s the plan for this possible hotel?  Since the Nishi footprint is already fairly small are the developers going to leave a plot of land undeveloped where the supposed hotel will be located?”

          I do not KNOW the answer to that question BP.  However, my somewhat informed guess is that given the fact that the developer has committed to no Phase II occupancy until the I-80 Richards Interchange improvements are completed (currently projected by SACOG to be no earlier than 2022), the detailed engineering/construction process for the non-residential space won’t begin prior to 2019 or 2020, and by that time the supply/demand realities of the Davis hotel marketplace (with its added hotel beds) will put everyone into a position to make an informed decision about the highest and best use of the non-residential land that is part of Phase II.

        6. Matt Williams

          Mark West said . . . “We don’t need a marketing study, all we need is a proposal.”

          Mark, my understanding (but not firsthand knowledge) is that over and above any possible hotel proposal from Nishi, the City is currently processing either three or four hotel proposal applications.  If that information is correct, then your “all we need is” statement is already a work in process.

          I personally believe that Davis can support considerable additional hotel bed supply without negatively impacting room rates for the existing hotels.  Whether it can support as many as five new hotels (MRIC is considering one too) is enough of an unknown that a bit of evidence gathering seems to be in order, given the 2022 Phase 2 occupancy commitment made by the Nishi developer.

          In the meantime, the City can/will proceed with an expeditious processing of the hotel proposals it has in hand.

        7. Mark West

          Matt:  “Whether it can support as many as five new hotels (MRIC is considering one too) is enough of an unknown that a bit of evidence gathering seems to be in order”

          Whether or not the market will support that many hotels is not the City’s concern.  What impact it has on room rates even less so.  The only questions for the City are, is the zoning appropriate, and does the building conform to existing planning guidelines. The success of the new venture, or the existing competitors, are the responsibilities of those owners, not the City.

          It doesn’t matter if you think the City can support more hotels. What matters is if there are investors willing to invest in the new venture. The City is not (or at least, should not be) running a protection racket.

  2. Barack Palin

    I think it is safe to assume that we will renew at least at the half-cent level which would generate another $127,000. And I would go as far as to predict that it is more likely than not, that we go to the full one-percent, which is another $127,000.

    As was pointed out yesterday, since Nishi will be filled with mostly students that would’ve been here anyway that Davis would’ve realized most of those sales tax revenues regardless.

    1. David Greenwald

      Matt can probably address this better, but I don’t believe the extra revenue generated comes from the presence of the residents in the project. There are retail components and perhaps projected point of sale taxes.

      1. Barack Palin

        Who buys the retail?  The students that would be here anyway.  If they didn’t buy their goods at Nishi they would most likely buy them at some Davis establishment.

        1. David Greenwald

          If the students would be here anyway, why are we building new housing? I thought it was to address the shortfall in housing for students who are having to live elsewhere.

        2. Barack Palin

          The town would’ve absorbed most of them one way or another.  We always have.  Do you believe that many students that go to college here live elsewhere?

          BTW, did you see where the UC system is going to start addressing their housing needs?  Maybe we really don’t need all that housing at Nishi?  More R&D?

        3. Davis Progressive

          according to what don shor has said, a lot of students are commuting into town and that’s why we need more rental housing.  if that’s the case, then this project should add needed housing and generate additional tax revenue from its retail component, small as it may be.

          1. Don Shor

            From the 2014-14 Campus Travel Survey:

            Residential location
            Since travel behavior varies substantially by residential location, each year respondents are asked about their residential location, defined as the place of residence from which they regularly travel to campus. The four broad categories included the on campus area, the West Village apartments, off-campus elsewhere in Davis, and outside of Davis (Q15). The results suggest that 13.1 percent live on campus (an estimated 5,499 people), 3.9 percent live in the West Village apartments (1,641 people), 60.2 percent live elsewhere in Davis (25,355 people), and 22.8 percent live outside of Davis (9,620 people) (Table 14). Individuals who indicated that they live outside of Davis are most likely to live in the nearby cities of Sacramento, Woodland, Vacaville, West Sacramento, Dixon, Elk Grove, and Winters.

            How they get here:

            Table 21 shows the mode share for students and employees who live outside Davis (an estimated 9,620 people). Among those traveling from outside Davis, 86.4 percent commute by car, 6 percent ride the bus, and 4.8 percent ride the train.

            Lots of info here (download the pdf): http://its.ucdavis.edu/research/publications/publication-detail/?pub_id=2347

            And, of course, none of that includes the non-UCD folks who work in Davis and commute in.

        4. Matt Williams

          BP, you are right the student s would be here anyway; however, the current Davis residents (who are not students) that the added students will outbid for rental housing will no longer be in Davis, and the current level of sales tax revenues that come from those “pushed out” residents will be lost.

          The key metric is not sales tax revenue per person.  It is sales tax per bed.  Nishi, if approved, will add beds.  Therefore, it will add sales tax.

          Changing the demographics of a person sleeping each night in an existing Davis bed will not make any material change in sales tax revenue.

      2. Jim Frame

        The town would’ve absorbed most of them one way or another.  We always have.

        The way we’re “absorbing” them these days is by converting single-family homes to mini-dorms (often more like mini-animal-houses) and reducing the availability of housing for actual families.

        1. Matt Williams

          That is correct Jim, although student groups outbidding families for apartments and thereby driving those families out of town is another way the “absorbing” is being done.

          I’ve said this many times before but the population changes in Davis from 2000 to 2010 documented in the US Census are clear”

          Age Group _ 2000 Census _ 2010 Census _ Change ____ % 2000 _ % 2010

          0-19 years ___ 16, 184 _____ 15,317 ___ minus 867 ____ 26.8% __ 23.3%

          20-24 years __ 13,698 _____ 17,200 ___ plus 3,502____ 22.7% __ 26.2%

          25-54 years __ 23,170 _____ 21,630 ___ minus 1,540 ___ 38.4% __ 33.0%

          55 plus years __ 7,256 _____ 11,475 ___ plus 4,219 ____ 12.0% __ 17.5%

          The numbers don’t lie. From 2000 to 2010 UCD student population in the City went up dramatically. Senior population went up dramatically. Familes with children went down dramatically.

          From 2010 to 2020 that trend will both continue and accelerate as the UCD students are “absorbed” by the supply of Davis housing.

        2. Barack Palin

          Matt, those stats could also say that due to lack of local good jobs that once students hit the job market age they had to move away.  That’s why students and seniors who mostly don’t have jobs increased.  It’s all in how one decides to decipher fact based analysis.

        3. Matt Williams

          BP said . . . “Matt, those stats could also say that due to lack of local good jobs that once students hit the job market age they had to move away.  That’s why students and seniors who mostly don’t have jobs increased.  It’s all in how one decides to decipher fact based analysis.

          Your bolded words are correct BP, but what you have done with your argument above is move deck chairs on the Titanic.  Adjustments to the mix of underlying reasons for why the process of “absorbing” UCD student residents has displaced family residents doesn’t change the bottom-line . . . 2,407 family residents are gone from Davis at the same time as 3,502 additional UCD student residents have been “absorbed.”

           

  3. Misanthrop

    We should’t do a CFD for the same reason we shouldn’t have done one in those other places, the tax burden on new residents will undermine their willingness to fund school parcel taxes.

    Watching the tape of public comment on Nishi last night I noticed that the for the old Davisites who showed up the same dynamics of the growth wars of years past were expressed with the same people voicing them. Do the names Samitz, Pope, Souza and Wagstaff sound familiar? Yet in addition to this generation of old pro-growth and anti-growth warriors was a new demographic, Millenials. A number of young people spoke complaining about a housing shortage, out migration of the young, the poor conditions of rental housing in a sellers market, low vacancy rates , high rents and unattainable housing prices. This represents a change in the election dynamics and an opportunity for the advocates for Nishi.

    I have received several solicitations about endorsing Nishi. To date I have resisted taking a public stand in the form of doing so under my real name for personal reasons. Still I have some advice for Tim Ruff and his team, you should be organizing the young people of Davis to register and vote. Young residents and students have long been the sleeping giant of Davis politics but that same cohort, who have been squeezed between UCD’s need to grow and an old guard determined to resist that growth, seem to be your natural allies in the debate over what the future of Davis will look like. Getting them to participate in the election might very well determine its outcome. Instead of working the voter rolls, or at least in addition to it, you should get your people out to the shopping centers, big apartment complexes and houses where the students are and offer to register them to vote making the case for how the lack of rental housing plays against their interests as renters or potential buyers.

    Perhaps some of the investors in Nishi don’t want to do this because they have other interests where student electoral apathy plays to their advantage as landlords, perhaps they feel or have polling that shows they can win the vote without young people turning out. But from what I saw at public comment the other night the generational battle lines are drawn and the surest way to defeat the old guard is by organizing the young.

     

      1. Matt Williams

        DP, the answer to your question is “No” based on my understanding of the information presented to the FBC on January 11th by the two consultants who presented, Goodwin and Plescia.  The CFD presented to the FBC covered all property types.

  4. Barack Palin

    We should’t do a CFD for the same reason we shouldn’t have done one in those other places, the tax burden on new residents will undermine their willingness to fund school parcel taxes.

    Most of the residents will be in apartment rentals who  in my understanding don’t have to pay school parcel taxes.

    1. Matt Williams

      Your understanding is incorrect . . . based on my understanding of the information presented to the FBC on January 11th by the two consultants who presented, Goodwin and Plescia.

      1. Barack Palin

        Please explain.  I thought a lawsuit was settled that apartments weren’t charged per unit anymore but per building at whatever fee the school parcel tax was set at per residence.

         

        1. Barack Palin

          Granda had argued that the dual rate structure written into Measure E, a four-year school parcel tax approved by voters last November, violated state law. The measure would have charged single-family homes $204 per year and multi-unit dwellings (apartments, condos, etc.) $20 per unit.
          The California Court of Appeals ruled against a similar dual-rate school parcel tax in Alameda County in March, saying parcel taxes had to be assessed at a uniform rate, meaning one rate should apply to all types of parcels.

          http://www.davisenterprise.com/local-news/davis-school-board-announces-settlement-of-measure-e-lawsuit/
          So the way I read that only the building is charged the flat rate and no more per unit charges.

        2. Barack Palin

          The way I read it if an apartment building has 50 units and the parcel tax is $204, the apartment building owner only pays a total of $204 for all 50 units.  Do you really believe the apartment owner is going to charge each renter $4?  Come on now, fact based analysis.

        3. Matt Williams

          BP, you are focusing solely on the Parcel Tax, and you may be right.  I’m not informed enough to know.  However, what the FBC heard from the consultants on January 11, 2016 was that two School District CFDs also apply to Nishi.  I don’t see anything in the Enterprise article that would indicate that those CFDs are affected by the Granda settlement.

          Further, it really makes no difference to the City’s revenues whether the property owner passes the tax on to the tenants or not.  As I said in my 5:54 comment, “They won’t be paying nothing, which is what you appeared to be saying.  They will be paying something, although what the something is is unclear.”

  5. Odin

    As a resident of Olive Drive, we are very concerned about the impact on Olive and Richards.  It is a super dangerous intersection that will only get more dangerous if Nishi is approved.  As it stands traffic is slightly eased because east/west traffic is slim.  It is dangerous due to the number of bikes and pedestrians traversing the intersection and due to traffic created by both IN and OUT and Dutch Brothers.  I see nothing in the plan to relieve this.  The danger to bicyclists and pedestrians will get worse, congestion will get worse, as well as pollution levels from the increase of idling cars.  If they approve it, traffic should only exit to the university.  They say this for the students?  Then what is the need for a hotel, and why should traffic be allowed to connect to Olive.  This whole thing smells of a bad idea.

    1. Davis Progressive

      those are reasonable concerns, but if they plan to reduce cars to the project, limit peak hour flow, time occupancy with corridor changes and changes to how dutch brothers works, i’m not sure how much of an impact it will be.

        1. Barack Palin

          They can meter out flow, how do they meter in flow of traffic let’s say coming off the freeway onto Richards or from downtown under the tunnel on Richards and flowing into Nishi?

        2. Barack Palin

          Are you saying we should meter traffic coming off of I80, I can’t believe the freeway backup that would cause.  Or meter the traffic coming in from under the Richard’s bridge?  Crazy!

        3. Barack Palin

          those are good points that they are obviously going to have to work out

          If they can be worked out and hopefully before council decides to put this up for a vote.

        4. Matt Williams

          BP, my personal discussions with the developer have focused on the installation of three foot tall bollards all the way across West Olive Drive so that automobiles would not have any access to Nishi from West Olive Drive.  Emergency Vehicles, yes.  UNITRANS buses, yes.  Yolo Transit buses, yes.  Automobiles, no.  That would mean the Richards/Olive intersection “peak hour flow” would get no material addition of vehicle volume.

      1. Jim Frame

        didn’t brett say metering?

        I don’t get how this is going to work.  A Nishi resident returning from Sacramento gets off at Richards (thereby contributing to the congestion), turns left at West Olive, drives to the Nishi entrance only to find a sign saying, “Sorry, we’ve exceeded our inbound quota at this entrance for today.  Please drive way the heck around to Old Davis Road and try again”?

        1. CalAg

          What I understood was that there would be monitoring, and various “mitigations” would kick in when traffic levels exceeded some threshold. I never heard anything about physical metering (like with a gate), just fuzzy stuff like education campaigns, incentives to take alternative transportation, and disincentives to have a car on site.

          If the City Council is contemplating limiting peak flow through the Nishi property during the am and pm peaks, then the traffic study becomes inadequate (since I don’t recall it considering this mitigation – which would have a profound impact on peak hour traffic flows on 1st and Richards) and the Traffic Element of the EIR would need to be redone or litigated.

      2. CalAg

        “i’m not sure how much of an impact it will be” DP

        The EIR traffic study (which is overly optimistic), shows that the LOS on Richards will go to F (because the traffic modeling isn’t set up for any rankings less than F). The proposed mitigations will not provide any meaningful relief, and are just a smokescreen so the public thinks that the traffic problem will magically go away. They won’t.

        I’m pretty sure what the City is relying on to make their finding that the Nishi traffic impacts are okay is a “loophole” in the code that allows a LOS of F for downtown intersections – and Richards north of I-80 is conveniently considered to be in the downtown.

         

        1. Davis Progressive

          i thought los f was going to richards regardless?  also, what impact will the corridor improvements and the council’s plan to re-route traffic have?

  6. CalAg

    “Vanguard Analysis: Council’s Call on Revenue For Nishi” David Greenwald
    Greenwald carefully makes the case that the project is revenue positive while diligently ignoring the legitimate concerns by experts in this subject matter that both the property taxes and sales taxes are significantly overestimated in the EPS report. The Vanguard “analysis” is not objective.

    “The council, however, is going a step further and having representatives from the Finance and Budget Commission (FBC) meet with EPS and Plescia to make sure everyone is on the same page. That is due diligence.” David Greewald

    Not by a long shot. And certainly not when the experts that disagree are not in the room. The EPS meeting – as proposed by ??? in the public hearing – is just a political maneuver to suppress and whitewash a legitimate question.

    “Anyone who is arguing that Nishi Gateway will be revenue negative based on the EPS report is pushing a false negative.” David Greenwald

    This is a false framing of the issue. There are people that are concerned that the project will be revenue negative (and thereby consume taxpayer dollars rather than contribute to the General Fund) based on *errors* in the EPS report.

    Let’s have an honest and transparent vetting of the concerns so that we can move forward with some assurance that the EPS study has been independently validated.

     

    1. Davis Progressive

      “legitimate concerns by experts in this subject matter that both the property taxes and sales taxes are significantly overestimated in the EPS report. ”

      who are these experts?  and what are they saying?

      1. CalAg

        Salmon – FBC commissioner – Sales tax estimates are overstated

        EPS assumes >$13,000 in sales per employee per year for the R&D component. This is wrong. The annual sales for the large majority of the small tech startups that are the intended tenants are likely to be very close to $0 per employee per year. It’s not appropriate to claim that the “innovation park” is for young startups (esp UCD spinouts) and then assume the revenue of large mature companies.

        Milbrodt – Yolo County Assessor’s office (fmr) – Property taxes are overstated

        EPS assumes that the property values per sq ft are almost 50% higher for Nishi than for MRIC. There is no justification for this assumption. In fact, the property tax yield per sq ft will probably be marginally higher at MRIC.

        1. Davis Progressive

           

          maybe milbrodt is correct here, i’m no expert.  what i do know however is that i don’t trust mr. milbrodt.

          as you mention he used to work in the assessor’s office – do you know why he doesn’t anymore?

          he accused his bosses of improprieties: “Appraiser Bob Milbrodt, who works in the assessor’s office, recently claimed publicly that his supervisors low-balled that million-dollar house—and their own properties—to keep the property taxes down for themselves and one of the region’s most prominent developers.”

          you can read more detail here: https://www.newsreview.com/sacramento/appraising-the-assessor/content?oid=46929

          so the county asked the board of equalization to investigate.

          the boe ruled that there was no sign of impropriety and faulted milbrodt for releasing confidential documents:

          The grand jury has made no public comment, but on Friday, the State Board of Equalization issued its own report, saying that the assessor’s office is doing its job properly. Instead, the board faulted Milbrodt for releasing detailed tax records to the media.

           

          “Milbrodt has been placed on paid administrative leave, and county Assessor Dick Fisher told SN&R that Milbrodt’s handling of the tax records also had been forwarded to the district attorney. ” source: https://www.newsreview.com/sacramento/upfront/content?oid=48410

          here is the boe doc: Yolo County Special Survey Report
          https://www.boe.ca.gov/proptaxes/…/57special.p…State Board of Equalization
          Mar 16, 2006 – In February 2006, the Board of Equalization (Board) conducted a special … to the Board’s Investigations Division from Mr. Robert Milbrodt, an.

          milbrodt defending himself calling himself a “whistleblower” and said you have to release confidential documents to be a whistleblower.  but of course you don’t – he could have sent the complaint to the BOE for investigation without public disclosing the issue at all until there was a ruling.  but that doesn’t make for good politics when you’re running for assessor.

          he ended up being fired, as i understand it for cause, a firing that was upheld by a the state personnel board.

          so is he an expert?  perhaps, but he was publicly discredited.  i certainly don’t trust his work without someone else with similar expertise vouching for him.

          what i find interesting is that there are plenty of people who have similar expertise in this community and none of them are coming forward to back milbrodt’s claims.

          this is all a matter of public record, you can find this on google.

    2. Robb Davis

      Not by a long shot. And certainly not when the experts that disagree are not in the room. The EPS meeting – as proposed by ??? in the public hearing – is just a political maneuver to suppress and whitewash a legitimate question.

      This is incorrect.  The issues to be discussed come directly from the motions made by the FBC.  Indeed, one of the people who dissented from the majority on a number of motions IS in the room along with a member who supported all of them.

      Point out ONE issue that those in the room disagree with and then we can discuss it.

      This is absolutely not a political maneuver but one that assures that the motions made by a City Commission are fully vetted by the FBC. Further, the recommendation I made assured that concerns raised by public speakers at the FBC are also included in the discussion.  This includes potentially overinflated estimates of assessed values of properties.

      1. CalAg

        I don’t believe putting the subcommittee you proposed in a closed meeting with the EPS and Plescia teams will be sufficient to adequately resolve the question of fiscal sustainability in an open and transparent process.

    3. Frankly

      Let’s have an honest and transparent vetting of the concerns so that we can move forward with some assurance that the EPS study has been independently validated.

      What individual or entity would you accept as being qualified to independently validate the EPS report or any other report on economic impact?

      I get the sense that folks have kinda’ dug in their heels here… if a report comes out with net positive revenue, those having tended to support the development are validated, and those having tended to not support it say that the report has errors on it and should not be trusted.

      Then when those that tend to oppose the project see a report that shows costs to the city they are validated, and those wanting to support the project claim the report is tarnished by political motives.

      I agree that we should have an accurate accounting, but I am thinking it really won’t help much with this crowd.

      1. Mark West

        “I agree that we should have an accurate accounting, but I am thinking it really won’t help much with this crowd.”

        Considering how much angst has been expressed on these pages about the sales tax projections for the Target store…I think you are right. As hard as this will be for some people to accept, the projections simply don’t matter. What is important is to decide whether or not the project adds value to the City.

        With this project, we get an expanded downtown core, some much-needed apartments, improved connectivity with the University, and the flexibility of added space for new businesses to start up.  Down the road (a decade or two?), the project should help feed the buildout at one or more peripheral business parks, as the new businesses grow and expand.  If you think those are benefits to the City then you should probably support the project.  If you don’t, then you should vote against it.  Arguing about the pennies, however, is really only useful if you need to justify your preconceived position.  That is especially true as the fiscal benefit won’t appear until after the project is fully developed and populated, which now looks to be at least a decade away.

        I think this is a good project and I think it could have been better. Since I am not the developer, however, what I think doesn’t really matter.  I am just one vote, and when it comes down to it, I will have to decide if the benefits outweigh the deficits. The only thing I know for certain is that the amount of money projected to reach the General Fund will have absolutely no impact on my decision as those projections are functionally meaningless.

        1. Frankly

          Meeting with the UCD people involved in all the tech transfer.  Pretty exciting stuff going on.  Faculty and students are coming up with idea after idea.  They need help on the business side which I am involved to some degree with helping to provide and facilitate.  But Davis is going to crap all over itself if we fail to approve the innovation park space.

          Here is an example of a Davis born innovation company that is going gangbusters…

          http://dysonics.com/

          There are so many more like this… medical, ag tech, tech devices, tech software… you name it.

          UCD has become a world-leading research school while the population of Davis has become more old and Podunk.  But the point is the potential missed opportunities if we keep our underwear in a bunch over change and growth.  UCD will just go to Sacramento for these things, and Davis will melt into obscurity and fiscal decline.  We will be come a sad little broke down with a bunch of grumpy old people… the laughing stock of the region.

      2. CalAg

        “What individual or entity would you accept as being qualified to independently validate the EPS report or any other report on economic impact?”

        I’d say Salomon and Williams at the very least (and preferably the whole FBC) plus an independent expert in commercial property valuation. In an open public meeting.

        “… but I am thinking it really won’t help much with this crowd.”

        If a credible quantified case can be made that the project is fiscally sustainable, it would make the loss of more than half of an incredible AAA+ R&D opportunity site to an unnecessary student housing project easier to swallow for some of us.

  7. Eileen Samitz

    Robb Davis: If you are sincere in your statements of getting the important fiscal questions answered about Nishi Gateway, then please make it a transparent, open process as you say you want. This means  including the other Finance and Budget Commissioners in reviewing the original fiscal analysis by EPS in a public meeting allowing public comments.  Why are you not being inclusive of the rest of the Finance and Budget Commission? Otherwise, it makes this very clear that this is a political maneuver.

     

    1. Matt Williams

      Eileen, why are you attacking Robb personally?  There is no Council member who has “walked the walk” more than Robb has . . . none the less you choose to say it is “very clear that this (his actions and words from the dais) is a political maneuver.”

      Your message is powerful enough to stand on its own merits without resorting to personal assassination.

      JMHO

  8. Eileen Samitz

    Matt: I find this comment by you pretty interesting.

    First: There is nothing personal about my comment, since it addresses a recommendation made by Robb only, which somehow evolved into an “action” that was not voted on by the rest of the Council. So, since Robb made this individual recommendation, which exudes the other Finance an Budget Commissioners, I was just wanting to know, why?

    You make an incorrect accusation that I am “attacking” Robb. I am simply questioning why he made such a very odd and questionable recommendation, while claiming it is for “transparency”, when it is not “transparency”. Another obvious question is why do you feel the need to “defend” Robb, or even to feel he needs defending? He’s a Council member who can speak for himself.

    For the record, I am not attacking Robb, but making clear that this intention of “transparency” by asking for an opinion by only two of the Finance and Budget Commissioner’s, rather than the entire Commission,  is not really evidence of the “transparency” which he says he wants.  It sounds like his critical discussion of the “re-evaluation” of the Nishi Gateway fiscal analysis is being heard behind closed doors, without the public being present, and  by only two members of the Finance and Budget Commission, as decided unilaterally by Robb Davis. This is in contrast to including the entire Finance and Budget Commission with the EPS consultants, and having a meeting “transparent” to the public allowing public comment. This would not be so important were this fiscal analysis not be so controversial, since clearly there are many different opinions on it.

    Therefore, this EPS fiscal “re-evaluation” really needs to be truly transparent and inclusive, and most importantly, accurate. The entire Finance and Budget Commission should be present. as well as the public who should also be allowed to comment. Important and relevant information affecting the EPS fiscal analysis came forward as a result of public comment during the last Finance and Budget Commission meeting, so public comment must not be suppressed.

    Matt, are you objecting to having the entire Commission hearing and participating in this very important discussion with the EPS consultants to re-evaluate the original EPS fiscal analysis? Why only two Commissioners, not even including Ray Salomon, who submitted many of the very relevant and objective questions  which the Commission forwarded to the EPS consultants? He made most of the motions which the Commission passed, yet he is not included in this “special re-evaluation” fiscal analysis meeting. Why?  My understanding is that this “special meeting” would not include the public being present to observe and make public comments. So what exactly is “transparent” about about this non-public and private meeting to re-analyze the controversial and critical Nishi Gateway fiscal analysis which clearly would not be inclusive?

    1. Robb Davis

      Just to be clear, any work that the sub-group of Jeff Miller and Dan Carson do with the consultants will be fully vetted by the entire FBC at their February meeting.  There is no intent to obfuscate, hide, dissimulate, veil, or otherwise reduce the ability of the entire FBC to wade in on the work.  My request (accepted by the entire CC) was to enable the Chair and Vice Chair (who were elected by their peers) to work on the details of the motions put forth by the Commission to expedite the analysis, SO THAT the entire FBC could deal with the issue in an appropriate and timely way.

      I hope this explanation will put to rest (though of course it won’t–silly me) the idea that there was some sort of crude “political” motivation to my recommendation (which was, again, accepted by my colleagues).  To date we have engaged in a highly public and participatory process on this project, that will continue with a full analysis by the entire FBC of the outcomes of the work of the Chair and Vice Chair.

      There is a certain sad irony in all of this in that I am now receiving emails from people who believe that we have gone too far in trying to “nail down” elements of the fiscal analysis that are, by definition, too uncertain to arrive at any “final” sense of certainty about.  Sigh…

    2. Matt Williams

      Eileen Samitz said . . . “Another obvious question is why do you feel the need to “defend” Robb, or even to feel he needs defending? He’s a Council member who can speak for himself.”

      Your observation above goes right back to the same personal attack well, only with me as your target this time.  Again your argument is powerful enough to stand on its own without the gratuitous addition of the personal.

      Let me try and illustrate to you the difference by using your original comment.  You start that comment with a strong message about what you see as a key issue:

      Robb Davis: If you are sincere in your statements of getting the important fiscal questions answered about Nishi Gateway, then please make it a transparent, open process as you say you want. This means including the other Finance and Budget Commissioners in reviewing the original fiscal analysis by EPS in a public meeting allowing public comments.  Why are you not being inclusive of the rest of the Finance and Budget Commission?

      All of the above focuses on the issue and powerfully makes your point and puts forward a solution.

      Then you flip the coin over and go personal when you conclude your comment with the following sentence.

      Otherwise, it makes this very clear that this is a political maneuver.

      When I read that comment, I couldn’t help but wonder why you would choose to pull the rug out from under your own argument.  Everything that went before that final sentence was focused on addressing/remedying the problem.  Your final sentence took the spotlight off the problem and its solution and redirected that spotlight to your personal feelings about Robb.

      You may want to try rereading your original comment without the last sentence.  When you do, I think you will find that it is much more powerful and much more constructive than it is when the final sentence is included.

      The same can be said if you reread your response to me today without the gratuitous sentence, “Another obvious question is why do you feel the need to “defend” Robb, or even to feel he needs defending? He’s a Council member who can speak for himself.”  Here too when you “go personal” you take the focus away from the well constructed, powerful arguments that come before and after your digression. 

      Regarding your final paragraph.  Ray took the time to put his concerns in writing, and those concerns are formally part of the public record.  I took the time to put my concerns in writing, and those concerns are also formally part of the public record.  I believe there is no ambiguity in either Ray’s concerns or my concerns.

      I’m not sure what my physical presence at that meeting will add to the meeting’s content or process. However, I am open to your suggestions about how my presence will improve the quality of the subcommittee meeting.

      With that said, I stand ready as a member of the FBC to do whatever the Council desires.  If the Council decides it needs me to participate in the subcommittee meeting for the purposes of clarity then I will make myself wholly and completely available.

  9. Eileen Samitz

    Robb,

    My understanding is that the Financed and Budget Commission meeting to review the subcommittee’s report after the subcommittee’s meeting with the EPS consultants is Feb. 8. Is this true?

    But is this information from the Finance and Budget subcommittee going to City Council on Feb. 2nd? If so, is Feb. 2nd tentatively the City Council meeting when it will be decided if Nishi Gateway is going on the June 2016 ballot? Also, wouldn’t this include Nishi Gateway’s baseline features and the development agreement? If this is the case, then that would mean that the Finance and Budget Commission is reviewing the subcommittee’s report on Feb. 8th, AFTER it goes to City Council on Feb. 2nd. Is this what is planned?

    On the emails you are getting, believe me, the first thing Davis citizens are going to want to know about Nishi Gateway at this point, is the fiscal analysis and critical certainties about this project, including the access issues and traffic and circulation as well. Davis voters deserve, and need to know this information.

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