On Monday it was interesting to note that the Vanguard article on land use, which attempted to fact-check some of the neighbors’ concerns regarding the proposed Hyatt House, generated over 250 comments and counting. Meanwhile, Matt William’s fiscal analysis generated just six at the time of my writing this column.
Matt Williams ironically opens his piece by noting, “In all of the Vanguard dialogue about the Hyatt House project, to date there has been very little discussion about the fiscal viability/sustainability of the project.” Indeed, there still has not been.
He summarizes Dan Carson’s fiscal analysis as, “The Hyatt House project would financially benefit the city and local agencies. For example, it would likely result in a net fiscal benefit to the City of Davis of almost $700,000 annually.”
It is here that I think the more fruitful and necessary discussion needs to occur. While some may disagree, my tour of the location convinced me that the land use objections of the neighbors and others are largely unfounded. Given the existing conditions, greenbelt, trees and distance from the road, the hotel is simply not going to, in my view, have a huge impact on the quality of life of neighbors.
Ironically, what could have a much larger impact on their quality of life is the failure of the city to generate revenue in order to meet basic municipal service needs. Right now, there is a greenbelt highly dependent on park funding along with play equipment and a nearby park. The residents have roads that are being stressed due to lack of funding. They rely on police and fire protection, the former of which at the very least needs more funding for protection of this community.
Ten years ago, the city put forth the Davis Target as a means to generate roughly $600,000 in badly needed sales tax revenue. It was a measure that I opposed, as I believed at the time that a big box store would undercut local commerce and retail and do more harm than good. While it is difficult to analyze the impact of Target (one study attempted to at least in terms of VMT), the hotel is projected to provide roughly $700,000 in TOT (Transient Occupancy Tax) – on a smaller footprint.
Is a new hotel a magic bullet? No. In fact, when the Vanguard met some existing hoteliers in town, they greatly disputed the PKF report on which the $700,000 is based. They believe the occupancy and hotel revenue projections – which would nearly double in the PKF study – with no new demand generators is far too optimistic.
Whether the PKF projection of $700,000 in revenue or the existing hoteliers’ belief that the annual growth will more resemble five percent per year is correct should be the real question and real debate that we are having.
This chart which the Vanguard constructed, with the consultation of some members of the Finance and Budget Commission, represents the real future challenge of Davis.
While the city has presented a balanced budget on paper, the revenue projections are modest in terms of growth and, once the sales tax falls off (if not renewed), the city falls back into the red on paper.
But the reality is that we have ongoing unfunded needs. The Vanguard has identified five of them, that flip a modest $1 million surplus for the current fiscal year into a massive $13 million shortfall.
Looking at roads and parks in particular demonstrates the challenge. Right now the city is funding about $4 million per year in ongoing, general fund money for roads. That covers roads, bike paths and sidewalks, to be precise. And, while that represents a huge step forward from where we started in 2009 and 2010 when the Vanguard first covered this issue, it is still about $6 million per year short of what we need.
We really have not begun to deal with the parks shortfall and, again, that includes things ranging from park capital equipment replacement to greenbelts to swimming pools.
The scary part is that, while we have identified an ongoing gap of between $9.6 million and $18 million over the next ten fiscal years, that doesn’t including the bulk of the cost for the 20-year period – much of which is in capital infrastructure for parks.
While the annual $700,000 projected revenue represents a drop in the bucket compared to $600 million plus in unfunded needs (and that might be a low number depending on what happens with CalPERS, as the figure represents a deficit based on 7.5 percent return in a fund that generated less than 1 percent revenue this year), it forms a starting place for an ongoing revenue strategy.
The debate that we need to be having as a community is how to start bridging these scary numbers. They are not going away and the longer we defer maintenance on things like roads, parks, greenbelts, bike paths, swimming pools, etc. – the higher the eventual costs.
As I argued in Sunday’s column – something is going to have to give here. People are going to have to give things up or they will face a community in just ten years that does not really resemble what we all appreciate about Davis.
We all want to appreciate our quiet and secluded neighborhoods, but the reality is that, without the financing, the things that we appreciate are going to deteriorate. It may be our roads. It may be our bike paths. It may be our parks or swimming pools. It may be our greenbelts.
Without presupposing an answer, the debate needs to shift from the exact height of a building to how do we put together a comprehensive plan to address our community needs before it is too late.
—David M. Greenwald reporting