Commentary: An Out-of-the-Box Thought on the Hotel

Guneet Bajwa of Presidio presents his ideas back in August at the Planning Commission meeting
Guneet Bajwa of Presidio presents his ideas back in August at the Planning Commission meeting

The idea came up last week, posed by the neighbors and opponents of the Hyatt project, that they would accept a three-story hotel with underground parking.  One opponent suggested this was a “workable compromise.”

But there is some question about the viability of the project with those changes.  As Will Arnold stated at the council meeting a week ago, “My understanding is that underground parking is a no go and that going down to three stories would result in sacrificing a lot of the things that we find very beneficial about this project, including many of its environmental attributes,” he explained.

It is hard to evaluate the feasibility of such proposals and several have noted that sometimes what developers claim they cannot afford, becomes feasible.

As a caveat for what I’m about to propose, I will note that I have not discussed this idea with either developers or neighbors, but I throw this out as a sort of outside-the-box thinking that I think we need to start considering.

If the neighbors believe that underground parking will help reduce impacts to their neighborhood, have they considered funding it themselves?

Before you dismiss the idea, consider the following.

The Trackside project is largely crowdfunded.  There are no huge financial backers there.  Instead, the development team got a huge amount of people to contribute something on the order of $30,000 and made a whole bunch of people, who would never think of becoming developers, into investors.

Why couldn’t a similar concept work for the hotel?

Instead of neighbors standing by passively hoping to gain a few concessions from the developers, what if they each plopped down $30,000 and became investors?  If 30 neighbors each contributed $30,000 each, that alone would be nearly a million.  While underground parking is probably more than twice that cost, the neighbors would be meeting the developers in the middle.

In addition, they would go from merely being neighbors, to stakeholders – people with a vested interest in making sure the project works.  While underground parking would not deal with the privacy issue, it would deal with concerns that, on heavy days, parking would spill onto Cowell and perhaps into the neighborhood (at least with employee parking).

While I do not believe a straight three stories would be doable, some have suggested that it go to three and a half stories, with no rooms on the backside.  That would further address the privacy issue by eliminating the ability for fourth-story windows to look into the backyards of those neighbors who back up to the greenbelt.

My other thought on that would be, instead of eliminating the rooms altogether, why not build the fourth-story rooms without backside windows?  The hotel could offer the rooms at a discount to guests who are not concerned with having windows – allowing the hotel to retain the use of the rooms but not impacting the privacy of the neighbors.

There has been some question and discussion about how much the neighbors have worked to create a possibility of compromise.  It was noted to me early in the process that the view of the neighbors was, “I don’t want to discuss the hotel project.  I want the hotel project to go away.”

Understandable, but now at this point the council clearly sent the message that there is going to be a hotel project, and the question is now how to make it the best possible project with the least amount of impacts.

And by the way, to the neighbors, you definitely want this project to succeed because, worse than having a hotel blocking your view, is to have an empty hotel that blocks your view and becomes blight.

The question now is whether there are ways forward to make this a win-win and I think that calls for some thinking outside of the box.  If you think that underground parking makes things better, then consider funding it and taking ownership of the project.

—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.

Related posts

77 Comments

  1. Barack Palin

    My other thought on that would be instead of eliminating the rooms altogether, why not build the fourth story rooms without backside windows?

    I’ve got to believe there’s health and safety regulations that wouldn’t allow that, but I don’t know for sure.

        1. Grok

          I have stayed in hotels across the country of all price points and I have never herd of a hotel room without windows. Once at the Waldorf Astoria I had a room with a tiny window placed in an awkward corner of the room opening up on to what could only be described as a shaft – but it had a window. I highly doubt it is legal to build hotel rooms without windows in California.

          In any case, this suggestion is no more or less credible a solution than the rest of this asinine article.

        2. Barack Palin

          Chamber Fan, do you really belive that 30 neighbors have $30,000 each to throw around speculatively? Even if they did and wanted to invest would Hyatt even want more investors?  At what point does the return on their investment get too diluted due to too many investors?

        3. Matt Williams

          BP, other neighborhoods in Davis have stepped up to try to do something similar in the past.  Their approach was slightly different.  They attempted to purchase the parcel from the developer, but the “banding together” concept is the same.

        4. Chamber Fan

          BP – It’s unlikely, but I think we ought to look into out of the box approaches here.  Put your money where your mouth is.

          How many investors for Trackside?

        5. Ron

          BP:  I believe that Tia has suggested something similar.  Although it might be an interesting brain-storming-type idea, I see problems (in addition to what you’re stating).  For example, it might pit “neighbor against neighbor”, between those who can afford to invest, vs. those who cannot.

          If it actually resulted in the project being “improved” (from the point of view of most neighbors), perhaps there wouldn’t be any conflict.  However, what the article seems to be suggesting is that the neighbors essentially “pay for” mitigation, themselves:

          From article:  “While underground parking is probably more than twice that cost, the neighbors would be meeting the developers in the middle.”

  2. Mark West

    There is no unmitigated privacy issue. The applicant changed the design to block the views from the 3rd and 4th story windows and has agreed to plant more trees and shrubs to complete the screening. Besides all of that, there are now new fangled products on the market and available to the neighbors collectively known as ‘window treatments’ (curtains, shades, blinds) that completely block all visual access into their bedrooms if they so choose.

    As my late business partner used to say ‘never accept as an investor someone you wouldn’t want to see at the parties.’

      1. Tia Will

        Ron,Mark West ,and Frankly

        I believe that Tia has suggested something similar.  Although it might be an interesting brain-storming-type idea, I see problems (in addition to what you’re stating).  For example, it might pit “neighbor against neighbor”, between those who can afford to invest, vs. those who cannot.”

        I have indeed suggested something similar. I believe that allowing those most affected to “have skin in the game” would be beneficial all the way around. I would not limit it to any arbitrary number but allow anyone who wanted to invest to do so.

        Mark has posted this comment about “someone you would want to see at parties” previously. Well that is a sure way to make sure that people who are less affluent or less well connected than you are never have the opportunity to invest. If your goal is solely to enrich yourselves and your close social associates, then that is a great strategy. If you would truly like to promote economic well being, it is a terrible attitude.

         

        1. South of Davis

          Tia wrote:

          > Mark has posted this comment about “someone you would

          > want to see at parties” previously. Well that is a sure way to

          > make sure that people who are less affluent or less well

          > connected than you are never have the opportunity to invest

          Reading this it sounds like Tia must only invite “affluent and well connected” people to her parties…

          After reading posts from Mark is sounds like he is like us and would invite “nice fun to be around” people to his parties (and not really care if they are “affluent and/or well connected”.

          P.S. I’m wondering if Tia can tell us the minimum new worth and number of prominent connections she was thinking of as a minimum to come to a party when she wrote: “that is a sure way to make sure that people who are less affluent or less well connected than you are never have the opportunity to invest”?

        2. Mark West

          Tia: “If your goal is solely to enrich yourselves and your close social associates, then that is a great strategy. If you would truly like to promote economic well being, it is a terrible attitude.”

          Once again, you have absolutely no idea what you are talking about, but don’t let that stop you…

          If you are going to take on investors, you will very likely be spending a great deal of time with them over the life of a project. If you don’t enjoy their company, or don’t want to hear from them on a regular basis, you may want to look elsewhere for your money. It is a simple as that. I did not know most of the investors in our company when we started, but I found that I enjoyed each and every one of them, whether they had written a check for $5,000 or $100,000. There were others, some with quite a bit of wealth, who we did not bother asking to invest because we did not want to see them on a regular basis. Their investment simply wasn’t worth the cost.

          If you are interested in investing in development projects you need to understand that you cannot force someone to take your money. If you are a pain in the ass, or you are someone who demands an undue amount of attention or hand-holding, you should not be surprised if you are not invited to join in.

    1. Grok

      has agreed to plant more trees and shrubs to complete the screening.

      That was in the plan before the planning commission (the planting replaced several parking spaces lowering the total parking) but inexplicably removed from the plan put before the Council. Maybe they will put it back. Mark might have advanced insight on this from discussions with the developers but as the plan currently stands publicly, with the landscape requirement waived from the South Davis Specific Area Plan there is essentially no landscape area on the proposed Cowell hotel property in its current draft.

      1. Mark West

        No ‘advanced insight,’ just the comment from the applicant to the CC at the meeting Tuesday stating that they were willing to add more screening. You were there, but maybe you were talking too much to hear.

        1. Grok

          lol.

          So as stated, the current publicly presented plan has essentially no landscaping, and no place for additional trees and shrubs.

          The plan that was presented at the 3rd planning commission meeting had additional landscaping, but also had less parking on a hotel project that already has fewer parking spaces than hotel rooms.

      2. Matt Williams

        Grok said . . . “with the landscape requirement waived from the South Davis Specific Area Plan”

        Grok, have you looked at the landscape requirement of the PD #2-12 zoning that controls the parcel, and was passed by the Council on August 21, 2014?  Reading that zoning language, it appears that there does not appear to be any current “waiving of the landscape requirement from the South Davis Specific Area Plan.”

        I am not a lawyer, and I know my limits, so I have asked a zoning/land use lawyer to look at the language to give me their expert opinion when/if I hear back I will pass on the result.

        1. Grok

          Matt, are you suggesting that staff recommendation 3 from the November 1 staff report is wholly unnecessary?

          3. Approve the attached resolution amending the South Davis Specific Plan to allow a reduction in the required landscape area as established in a Planned Development, for the area on Cowell Boulevard between Drummond Avenue and the eastern terminus of Research Park Drive;

           

        2. Matt Williams

          I’m not suggesting it Grok.  I’m asserting it.  I asserted it in the Hyatt House item public comment on Tuesday.  I have asserted it in other public hearings.  I have asserted it in writing multiple times here in the Vanguard, the most recent of which was Saturday (see HERE) I continue to actively assert it.

  3. Biddlin

    “Instead of neighbors standing by passively hoping to gain a few concessions from the developers, what if they each plopped down $30,000 and become investors. ”

    In risk-averse Davis? Good luck finding 30 of them.

    1. Mark West

      Just for giggles, let us look at the numbers (all of which are made up here).

      If you have a project that requires a $20 million equity investment and your financier requires you to show that the project will return 20 percent annually after the initial 5 years, then the project has to have an annual net income of at least $4 million after 5 years (20% of initial investment).

      If you want to add underground parking at a cost of $4 million to the initial project and increase the equity investment to cover that new expense (neighbor’s investment), then the total equity investment is now $24 million, and your annual net income required to meet the 20% ROI is now $4.8 million, or a 20% increase. How does a hotel project increase revenues by 20%? By increasing the number of rooms by 20% (or more). You would need a larger project to produce the returns required to justify the greater initial investment.

      The only way that this ‘idea’ could function would be if the neighbors did not invest in the hotel, but simply paid for the mitigation with no expectation of receiving a share of future earnings. The ‘return’ on their investment would not be in the form of future income from the property, but simply the value of not having to look at parked cars.

        1. Mark West

          First, the numbers are made up, as I said.

          Second, the projected ROI (not the actual return) required by the financiers is dependent on the risk associated with the investment.

          Third, a town full of noisy, willfully ignorant ‘neighbors’ who choose political games over engagement (and a CC that plays along) will dramatically increase the ‘risk’ of a project. Just ask the folks at Nishi.

        2. Ron

          Mark:

          It seems to me that a loan would not go through, if the proposal is not approved.  Therefore, the “noisy, willfully-ignorant neighbors” that you’re referring to would not be much of a factor, regarding the success of an approved proposal.

          I’m having difficulty being concerned about a potential lender’s (theoretical?) “required 20%” annual return on investment, and that a possible, suggested mitigation is therefore too “unaffordable” to implement.

          Perhaps other communities “roll-over” whenever a developer proposes something like this, which essentially enables lenders to set such standards. (“Hey – I can get 20% down the road in the next town, so why should I agree to your mitigations?”)

        3. Ron

          No wonder cities are often “broke” (or close to it), while developers end up with the money (and power). Maybe the city can get a few crumbs, at least. (Regarding the neighbors, perhaps the developers will be “generous enough” to reduce the size of their upper-floor windows, if they’re so inclined?)

          1. Don Shor

            No wonder cities are often “broke” (or close to it), while developers end up with the money (and power). Maybe the city can get a few crumbs, at least.

            The numbers were made up.

        4. Ron

          Don:  “The numbers were made up.”

          I understood that, but I recall a similar figure used as an example in other Vanguard articles, as well.

          It would be interesting to know what the actual “required” return on investment is, for developments such as this.  (That might help communities know whether or not a developer is being “forthcoming”, regarding the affordability of a given mitigation.)

          And Mark – let’s be honest.  Development money/interests are firmly in control, in most communities.  (Even Davis, to some degree.) And, cities are left with crumbling infrastructure. Essentially “beggars”, hoping for a few crumbs from developers.

        5. Matt Williams

          Ron said . . . “It would be interesting to know what the actual “required” return on investment is, for developments such as this.  (That might help communities know whether or not a developer is being “forthcoming”, regarding the affordability of a given mitigation.)”

          That “requirement” established by the lender varies from project to project.  Lending institutions have standard algorithms that they use to model risk for each individual project.  The higher the risk, the higher the “requirement.”  Here are two examples.

          First you have the Mission Residences on B Street.  There are no unique contingencies that have been placed on that project. There are the normal risks associated with the City’s inspection and certification process, but beyond that the only risk is the sale-ability of the units, which in the Davis housing market is very low risk. A lending institution looks at a project like Mission Residences and says “low risk” and sets a relatively lower “requirement” for any loan there.

          Second you have the Nishi Project prior to the Measure A vote.  Needless to say having a project subject to a go/no-go vote of the citizens adds significant additional risk to the Nishi Project that does not exist at Mission Residences.  Even if Nishi had passed the Measure A vote, there still was substantial risk associated with the contingencies for the UPRR Underpass to the UCD Campus and the I-80 Richards Interchange Reconfiguration.  A lending institution looks at a project like Nishi (either before or after the Measure A vote) and says “very high risk” and sets a much, much higher “requirement” for any loan there.

           

        6. Ron

          Matt:

          Thanks, but wouldn’t the loan simply not go through, if a given proposal is not approved? (I understand that there may be costs, prior to approval. However, I don’t know if a loan is used to pay these costs.) In any case, costs incurred prior to approval would not equate to the total cost required to construct a proposed development.

          Do you have any knowledge regarding the actual, “required” rate of return for any recent development?

        7. Mark West

          Ron: “let’s be honest.”

          It might be a new experience for you, Ron, but I have always been honest in these discussions.

          The crumbling infrastructure in Davis has been brought to us by noisy residents who are primarily concerned about their property values and perceived ‘quality of life,’ and a series of City Councils that were more interested in their own political futures than in doing what is necessary to have a fiscally sustainable City.

          If you want to know who is responsible, go look in the mirror.

        8. Ron

          Mark:

          It is true that I don’t support the residential development “Ponzi scheme” that created these challenges, and really came to light as a result of the housing crash.  Maybe you do.

          Are there any actual numbers that you’re aware of and are willing to share, regarding “required” rates of return for recent developments?

        9. Chamber Fan

          The bigger problem was the disproportionate influence of the firefighters and other employee groups.  It’s notable that the biggest problems – 4 on an engine, 3% at 50 and eventually the pay increases themselves were done with the support of purported slow growth leaders like Ken Wagstaff, Michael Harrington and Sue Greenwald.

        10. Ron

          Chamber Fan:

          Well, not Sue Greenwald from what I recall, which has already been addressed and debated.  Don’t know about the others.

          But, I’d like to remain on the question I asked.

        11. Matt Williams

          Ron said . . . “Thanks, but wouldn’t the loan simply not go through, if a given proposal is not approved?”

          Ron I don’t understand your question.

          In the case of Mission Residences a loan did go through and the risks were low so the lending institution requirements were low relative to other more risk burdened projects like a Measure A passed Nishi.

          In the case of Nishi, if Measure A had been passed (approved by the voters) a loan would have gone through and the ongoing risks regarding the UPRR Underpass and the I-80 Richard Interchange Reconfiguration would still have been there, so the the ongoing, post-election risks were high so the lending institution requirements would have been high relative to other less  risk burdened projects like Mission Residences.

        12. Ron

          Matt:

          I understand what you’re stating, regarding Nishi.  (A loan would have gone through, had the measure passed.)  Since it didn’t pass, I’ll assume that there was no loan, and therefore no loss or risk (regarding a loan).

          Regarding Mission Residences (or any other recently-approved or proposed developments), do you have any knowledge regarding the actual “required” rate of return for the loan?  Seems like an important thing to know, when negotiating possible mitigations.

          The theoretical example provided by Mark (20% annual rate of return) seemed quite lucrative, to say the least. (And again, I believe that I’ve seen that percentage used as an example, previously.)

           

           

        13. Matt Williams

          Ron, you asked a question about the relationship between a project’s “risk” and a lending institution’s return on investment “requirement” for the loan.  I’ve given you two crystal clear examples of that concept.  Instead of staying focused on the concept you asked to be educated about, you are now comparing (nit picking) differences between the conceptual Nishi example and the real-life, now-dead, Nishi.

          With that said, do you now understand the concept?  Do you understand how even after approval of the project by the jurisdiction, risk factors can (and will) continue on well past the date of the approval?

          Regarding your 20% question, you are attempting to be deterministic in a situation that is highly variable.  Each project and each loan is gong to be different.  In fact the exact same project will have different “requirements” from the lending institution if the actual amount of the money borrowed increases or decreases.

        14. Ron

          Matt:

          You’re making this more complicated (and bringing up points that I’m not necessarily asking or arguing about).

          My question was this:

          Do you have any knowledge that you’re willing to share, regarding the actual, “required” rate of return for any recently-approved development?

          It’s a yes or no question, followed by an expected annual percentage rate, if you know of an example.

        15. Matt Williams

          Ron asked . . . “What kind of normal investment returns 20% annually?”

          In asking that question, you need to specify whether the investment is made with borrowed dollars or equity dollars. To illustrate, is a 10% annual return a good return or a bad return?

          Scenario A: If you invested your own dollars and got a 10% return, after taxes your net return will be about 7.5% (more or less).

          Scenario B: On the other hand, if you borrowed the money you invested at a 6% interest rate, the net return before taxes is reduced to 4% and after taxes that is further reduced to 3%.

          In each of those scenarios you have the same investment return of 10% from the market, but in the one case your take home is 7.5% and in the other case your take home is 3%.  That’s a huge difference.

          A lender setting the investment return requirements understands that Scenario A does not apply, because by definition there is going to be borrowed money.  Further, if there is uncertainty with respect to whether the 10% can actually be achieved, they feel a need to set the requirement at a level higher than 10%.

          Further, there is real risks that the lender can lose 100% of the money they lend to the project.  For example the Taj Mahal Casino Hotel opened in April 1990 in Atlantic City, but six months later, “defaulted on interest payments to bondholders as his finances went into a tailspin,”   Once Taj Mahal filed for bankruptcy, two other Atlantic City casinos could not keep up with their debts, and those two properties declared bankruptcy in 1992. A fourth property, the Plaza Hotel in New York, declared bankruptcy in 1992 after amassing debt.  In each of those cases, the lending institution lost both principal and interest.  That is why they set the ROI “requirement” at 20%.

        16. Ron

          Matt:  In addition to “recently-approved”, please include in your response “proposed”, as well.  (Presumably, investors in proposed developments have some idea of this percentage rate – even if it’s not “locked in”.)

          Again, yes or no, followed by an expected percentage rate. I’m not asking for any explanation, other than that.

        17. Matt Williams

          Yes, and my guesstimate is in the range between 100% and 8% depending on the characteristics of the project.  100% may actually be too low, and depending on the Federal Reserve’s then current monetary policy, 8% may actually be a bit too high.

        1. Chamber Fan

          If you think it’s unrelated perhaps you shouldn’t state: “It is true that I don’t support the residential development “Ponzi scheme” that created these challenges, and really came to light as a result of the housing crash.  Maybe you do.”

          As they say, you opened the door.

        2. Matt Williams

          Ron, there is no point in going down the same road one more time.  You have your opinion and others have a different opinion.

          With that said, will your statement still be true if the Davis City Council succeeds in its deployment of its Cost Containment initiative, as stated in the recently updated 2016-2018 Council Goals, and (1) the rate of cost inflation comes down to below the rate of tax revenue inflation and (2) the annual Budget is legitimately in the black?

        3. Ron

          Matt:

          Again, no answer to the question I asked. Worse still, drifting off into other points (similar to a “Chamber Fan” comment). Not sure if you’re trying to deflect, but that’s o.k.

          This seems to be an example of disregarding “other” relevant data.

          Off to other things, for awhile.

        4. Matt Williams

          Ron said . . . “Matt:  Again, no answer to the question I asked. Worse still, drifting off into other points (similar to a “Chamber Fan” comment).”

          Ron here is the only post of yours in this stream of today’s comments, there is no question there for me to answer. I can’t answer a question when none is asked.

          Ron said . . . “Chamber Fan:  You are trying to start an argument that is unrelated to the question I asked.  (Not the first time, either.)

        5. Ron

          Matt:

          Here is the question that I’ve asked several times, above:

          “Do have any knowledge that you’re willing to share, regarding the actual, “required” rate of return for any recently-approved (or proposed) development?”

          Here is your response from above (which I just saw):

          ” Yes, and my guesstimate is in the range between 100% and 8% depending on the characteristics of the project.  100% may actually be too low, and depending on the Federal Reserve’s then current monetary policy, 8% may actually be a bit too high.”

          So, you’re “guessing” somewhere between 8% – 100% expected annual rate of return.

          Thanks.

        6. Matt Williams

          That question was in a different thread of today’s comments.  I didn’t make that connection.

          The reason I said “guesstimate” is that I called my brother-in-law with your question.  He works for a lending institution in Philadelphia in this field, so he has first hand knowledge of hundreds of project loans.  He was very clear that the answer to your specific question varies substantially from state to state and from lending institution to lending institution and from time frame to time frame .  The data sample he was drawing from included in excess of 100 project loans in his region, but 100 is just a drop in the bucket of the universe of project loans you were asking about.  Therefore, the use of the qualifying phrase “guesstimate.”

          I hope that helps.  Did it give you what you were looking for? You sound like you are frustrated.

        7. Ron

          Matt:

          Thanks for checking it out.  (Really, you could have just stated “no – I don’t know”, but thanks for researching some general information.)

          Yes – I was starting to get frustrated, because my question was simple (and then this new thread started, which was initiated by Chamber Fan in response to a comment that I made to Mark).  (Check out what Mark stated, if you’d like to know how that got started. Followed by more comments from Chamber Fan, in the original thread.)  At least Mark didn’t continue on, beyond that.

          Unfortunately, communications on the Vanguard often go off-track (sometimes purposefully, I suspect).  And then, there’s no end to it.

        8. Matt Williams

          Ron, I had contacted my brother-in-law long before you asked the question.  The dialogue piqued my curiosity and I knew who to call to get the straight skinny.

          I know what you mean when you say “Unfortunately, communications on the Vanguard often go off-track (sometimes purposefully, I suspect).  And then, there’s no end to it.”  I’ve often wanted to catch up with you and say to you, “Can you please stay focused on the original topic until its original premise is resolved, before morphing into a different area.”  Your question about lending institution return on investment requirements nationwide was a perfect example.  It seemed like a digression when you asked it.

        9. Ron

          Matt:

          Not necessarily denying that I’ve led conversations off-track, before.  (In fact, it’s somewhat the nature of these blogs, especially since they’re open to anyone who wants to make a point about something.)  But, I don’t think I was asking about nationwide investment requirements.  Only known local examples.

          Will be signing off, shortly.

  4. Matt Williams

    A couple of thoughts on this article.

    First, I would have preferred it as two separate articles, each focusing on a single outside the box idea.  The two ideas you have put forward are very, very different, and each deserves its own focused discussion.

    Second, there is no need to have rooms with no window.  That is a bridge too far in my opinion.  I think the comments you have gotten are probably right.  No windows would face local code challenges, Hyatt Corporation standards challenges, and as Grok has pointed out, finding another hotel anywhere in the country with no windows is going to be hard to find . . . other than one of the lon-term-stay government hotels.

    Third, you can accomplish the same intended result by making the back side 4th floor all clerestory windows.  Clerestory windows achieve the intended privacy mission and still let in light.  Here are some pictures of clerestory windows in bedroom situations.

        1. Ron

          The photos that Matt posted look pretty nice, to me.  Some travelers prefer staying on the top floor (due to noise concerns from the floor above, when staying on lower floors).

          I don’t know if the developers considered this, but it seems to be a relatively simple, cheap, and easy mitigation, to address some of the neighbors’ concerns.

  5. South of Davis

    It looks like the California building code requires:

    “All habitable rooms shall have an aggregate glazing area of not less than 8 percent of the floor area of such rooms”

    https://law.resource.org/pub/us/code/bsc.ca.gov/gov.ca.bsc.2010.02.5.html

    P.S. Finding ten homes in a row in Davis with residents that had $30K to invest in a hotel would be harder than finding ten homes in a row in Davis with African American residents who all voted for Trump…

  6. Frankly

    It is true that I don’t support the residential development “Ponzi scheme” that created these challenges, and really came to light as a result of the housing crash.  Maybe you do.

    Ron, I have a guess that you must have lost some of your paper wealth from previous real estate that you have owned, and that is fueling your opposition to any new housing in Davis.

      1. South of Davis

        Matt wrote:

        > based on what I found in my Google search about a month

        > ago, I’m very close to 100% certain your guess is wrong.

        Will you let us know how a Google search told you that “Ron” has not lost money in real estate?

        1. Matt Williams

          SoD, that question by you is remarkably similar to the real estate comments/questions that you make about Tia Will.  I concur with Don that there is no reason to pursue that line of discussion or questioning.

          I chose to reply to Frankly’s “guess” because allowing it to stand unanswered would have been (in my personal opinion) inappropriate.

          I will say no more on this subject.  Out of mutual respect, I hope you will say no more on this subject as well.

          If you want to talk to me directly my e-mail address is mattwill@pacbell.net

        2. South of Davis

          Matt wrote:

          > Out of mutual respect, I hope you will say no more on this subject as well.

          Time to get back to talking about the real estate that the Sieber family sold to the Bajwa family (or the property that the Nishi Family sold to the Ruff, Thompson and Whitcombe families or maybe a couple more articles on what the Taormino and Fouts families are developing).  I’ll try and only talk about people who don’t want to be on the Vanguard and who have never posted anything about the property they own on this site and not mention anything that someone has personally posted on this site dozens of times (probably close to 100 times).

        3. Matt Williams

          SoD, no need to pout.  How does talking about Ron’s personal real estate holdings advance the community dialogue in any way?

          Similarly, talking about any real estate owned by anyone only in terms of the market value, without also including the mortgage liabilities is cherry picking.

          I’m not sure why personal poster real estate ownership is such a magnetic issue for you.  It’s a puzzlement.

        4. South of Davis

          Matt wrote:

          > talking about any real estate owned by anyone only in terms

          > of the market value, without also including the mortgage

          > liabilities is cherry picking.

          If I own $1 million of real estate that with 1st and 2nd mortgages totaling $1 million (0% equity)  and the value of homes in town increase another 50% in the next five years (FYI according to Zillow the average home in town has gone up in value by about 50% over the past five years) due to my work to stop any new development (knowing that when the supply is not increasing when the demand is increasing is is sure to increase values) I will increase my net worth by $500K the EXACT same increase in net worth as neighbor who owns $1 million of real estate free and clear (100% equity) .  Most mortgages are recorded with the county so the amount of debt on most properties is public record but I have never posted anything about the loans anyone has on their property (or even hinted about any loans on anyone’s property) since it has nothing to do with the point I an trying to make “that when you restrict development real estate goes up in value” (for those deep in debt AND those without any debt)…

          > I’m not sure why personal poster real estate ownership is

          > such a magnetic issue for you.  It’s a puzzlement.

          Are you “puzzled” that someone might be interested in seeing their net worth increase by $1 million over 10 years (and also have more cash flow every month as rents in town continue to increase)?

        5. Matt Williams

          Not that puzzled, but definitely not that cynical either.

          I’ve said my piece. You clearly see it a different way. From what I know about Tia, which is a lot, and from what I know about Ron, which is much less, I don’t think either of them are motivated by the kind of venal greed you are accusing them of.

           

        6. South of Davis

          Matt wrote:

          > I don’t think either of them are motivated by the

          > kind of venal greed you are accusing them of.

          I’m not “accusing” anyone of “venal greed” the point I’m trying to make is that is something will benefit you personally (say prop H will give more money to the schools your kids attend) but that is not the only reason you are voting for it (say you think that paying $620/year to the schools will make your home increase in value by MORE than $620 each year) it is important to acknowledge the personal benefit (not deny it exists and/or call the people that point this out Trump like liars) before you go on to talk about the other reason (or reasons) you want something to happen.

          P.S. Really don’t think that Tia and Ron care much about increasing their home values but that does not mean that a LOT of other people/no on A voters don’t care about their home values.  I personally don’t think the money from Prop H will make things even 1% better for my kids (since they will probably blow most of the money on teacher raises, teaching kids to play instruments no one has heard of or increasing the self esteem of the so called “achievement gap” kids) and I really am just voting for it since I have decided that spending the $620/year/parcel has a positive ROI…

        7. Matt Williams

          SoD, thank you for clarifying.  The sentiments that you have expressed at the more general level have resonance.  I just felt that your comments about Tia have come across as a very personal witch hunt, and your response to my response to Frankly about Ron’s real estate came across as another budding personal witch hunt.  Lord knows Ron and I bang heads enough, that letting you skewer him would be easy to overlook, but that’s not how I roll.

          With that said, saying that that does not mean that a LOT of other people/no on A voters don’t care about their home values is a point with considerable traction.

          Sleep tight.  Let’s have a beer some time.

  7. South of Davis

    Matt wrote:

    > Scenario A: If you invested your own dollars and got a 10% return,
    > after taxes your net return will be about 7.5% (more or less).

    True assuming it was a no load mutual fund where all you had to do was push a button to buy and sell.

    Many small investors will invest 300K in a “fixer upper home” then spend every night and weekend and $100K to renovate it and landscape the garden themselves.  When they sell after a year for $500K many will say that made a 25% return but after backing out taxes and real estate brokerage fees they are down to about 10% and more often than not if they “paid themselves” $25 an hour it will get the return down to well under 5%

    > Scenario B: On the other hand, if you borrowed the money you
    > invested at a 6% interest rate, the net return before taxes is reduced
    > to 4% and after taxes that is further reduced to 3%.

    I is almost impossible to borrow all the money but lets say a $10 million hotel has a 10% Cap Rate (NOI/Value) if you pay $10mm cash for the hotel you will have a 10% return, but if you invest $3 million and borrow the other $7 million at 5% I/O your cash on cash return increases to 21.66%  Keeping in mind that leverage is not without risk and if the interest rate on the loan goes up or the occupancy goes down the return can quickly drop to 0% (and even go negative)…

    Just like VC investing real estate development will often have big returns, but it will also have big losses where most (or even all) of what the developer invested goes away (on in the case of property like Nishi and Covell Village) it may be decades of paying property taxes, insurance campaign contributions and other expenses before the before the developer can develop the property and sees a penny of return on their investment.

    P.S. I remember hearing the total loss for Lewis Planned Communities on their attempt at developing the Cannery and it was a big number…

Leave a Reply

X Close

Newsletter Sign-Up

X Close

Monthly Subscriber Sign-Up

Enter the maximum amount you want to pay each month
$ USD
Sign up for