The Vanguard has learned from a source familiar with the process that the original MRIC concept included a provision for housing. However, the city at the time was completely opposed to the concept of a mixed-use project.
The original RFEI (Request for Expressions of Interest) that the city put out in May 2014 included the provision: “Acknowledgement of community’s current desire for no residential to be included.”
However, shortly after the application for the Mace Ranch Innovation Center (MRIC) was received, the city was the one to push for a mixed-use alternative in the EIR (Environmental Impact Report).
As Community Development Director Mike Webb explained in December 2014, “Our recommendation to include that as an EIR alternative stems from that community feedback and there being a clear interest in seeing what that looks like from a CEQA [California Environmental Quality Act] perspective.”
By December 2014, Dan Ramos requested consideration of a mixed-use alternative. In a letter from Mr. Ramos to the council, he writes that “as we have proceeded over the last several months, our team has become convinced that a viable innovation center should contain a housing component such as the one reflected in the mixed use alternative. This is interesting because we initially were highly opposed to the inclusion of a housing component in our project.”
He argues, “Over time, however, our view has changed. Why? First, because we have learned that cutting edge innovation centers now almost always contain a housing component, the primary purpose of which is to provide housing for those who work at the innovation center. This proximate housing is endemic of the unique live/work relationship prevalent in the tech industry and is essential to the effective marketing of innovation centers.”
But by February, the council put an end to the mixed-use alternative. Councilmember Rochelle Swanson told her colleagues that, while she was not opposed to a mixed-use project, the key consideration was making sure that this project could pass and, quite simply, she did not believe a project with housing could pass.
She said, “I really do see why the mixed use can work well… I just don’t think in this time frame, the November 2016 vote, I don’t think that this community will pass it.”
Councilmember Rochelle Swanson concluded that, while she thinks the mixed-use project would be best, there are other ways to address housing and vehicles miles traveled (VMT), and “at the end of the day I do think we have to look at the big picture… I really think that it’s important that we put a ballot measure out there that will pass and be successful. Because I feel very strongly that if we put something on the ballot like this and it fails, that fails a lot more to our community than just this one project.”
For those who want to focus on bait and switch – there is certainly some fodder in there. It is difficult to reconcile Mr. Ramos’ December letter with the information that the developers had originally approached the city with a housing component.
To me, however, it seems that the developer has been more consistent than the city, which originally opposed housing and then under new leadership opened the door, only to have the council slam it shut in February.
The question now is whether the door is now open for a housing component. The arguments against housing have mostly been political.
In the Vanguard’s column from August 2015, we argued that Housing was not needed for MRIC. But even here two of the three reasons cited were political: “First, the city in its RFEI (Request for Expressions of Interest) made it clear that there was not to be a housing component. We can call that a political decision, but the expectation was this was to be a tech park – not a housing project. Second, there are reasons to believe that the voters might be willing to approve a tech park, but not housing. We have had two votes in which residents turned down housing and one vote in which the voters narrowly approved Target in the last ten years.”
The third argument suggested a work around on the VMT issue, but at that point we did not fully consider the financing issue.
The press release sent out by the developers last week cited financing issues. It said, “A study prepared by Economic & Planning Systems, Inc. and reviewed at the Monday, April 11, Finance & Budget Commission meeting concludes that the project might not be feasible, given that only 128 acres or 60 percent of the site are considered developable and that infrastructure costs are high. The estimated infrastructure costs of more than $50 million are four times the industry standard for similar projects, according to the project sponsors.”
However, as Matt Williams posted in a comment, “[T]he way that David Zehnder, the EPS consultant, explained it to the FBC on Monday was that the project pencils out very nicely at $20 per unit, but there is no comparable project in Davis to validate whether the market supports a $20 per unit rental rate.”
So EPS looked at West Sacramento and Woodland, where the rental rates were at $9 per unit. Writes Mr. Williams, “David acknowledged that those projects had radically different missions than MRIC, and didn’t have the access to UCD that MRIC had, so $9 per unit was probably quite low . . . but there was no available alternative in the region that matched the innovation profile of what MRIC was trying to offer.”
While this may not answer every question – it clarifies at least in my mind that the fiscal analysis is only part of the equation here. The calculations by the developer probably go far deeper and, while it is true they have already laid a lot of money on the line for planning, the EIR, and outreach – the bottom line here is that a larger factor than the fiscal analysis is the uncertainty of the Davis process.
Mr. Ramos, his team and his investors have to be increasingly uneasy watching how the Nishi process is unfolding. Given that Nishi is a far smaller process, the status of it cannot be giving the MRIC development team a lot of confidence.
As I spoke to Mr. Ramos and many other people in the last few days, my sense is that, while MRIC is not dead, it is on life support.
Does housing fix the financing problems? I would have to see an analysis. What this change does do is change the political calculations for those who believed that housing with the project made it a better project, but were unwilling to take the political risks of including housing.
As Will Arnold put it rather eloquently back in January, [T]he main argument for having housing at the Mace Ranch Innovation Center is to reduce greenhouse gas emissions.” He said, “It’s my opinion that putting housing as part of the Mace Ranch project will reduce greenhouse gas emissions, it will reduce them to zero because there will be no project.”
The problem now is that there is no project, so that calculation is largely out the window.
My view at this point is that, if housing gets the proposal back on the table, then let us look at it. I have never opposed housing on principle – in fact, done right, a live-work project was always preferable. The problem as I saw it was if people are automatically going to vote based on housing, then why are we going to put housing on the site?
That said, I’m not convinced that this is just about housing or just about financing. I think this has a lot more to do with the landscape of development in Davis and the risk of losing additional millions in a project that could be dead on arrival for the voters.
For me at least, that is the most troubling aspect here because, as I have said to many people, if you analyze the fiscal condition of the city, I think we are in trouble without revenue generators and I do not believe we can tax ourselves out of this hole.
—David M. Greenwald reporting