Commentary: Davis’ Economic Death Spiral

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Infill Housing

In the fall of 2015, Joe Minicozzi from consultants Urban3, LLC, brought some interesting ideas to Davis about the promise of infill development and efficient use of land.  While the idea that the development of a .5 FAR (floor area ratio) is not a good utilization of space was certainly intriguing, there were problems with the application of his concepts to Davis.

Mr. Minicozzi presented his example of Asheville, which was not an example of redevelopment but rather of repurposing of existing buildings. In Davis, we would have to knock down single-story buildings and build more densely.

One of the problems with that approach is cost.  With RDA (Redevelopment Agency) money gone, and the legislature now several years later still without a replacement, we are left with the possibility of public financing being effectively off the table.

This is the problem that Richard McCann highlighted yesterday – while infill development “has become the go-to solution to our land-use ills,” the problem is that large-scale infill projects face 15 percent to 40 percent higher costs and the “bottom line is that infill development for larger projects face a high cost premium that must be acknowledged.”

Ultimately, he writes, “Some in Davis have proposed that new business parks can be developed in Davis through infill rather than by building on large tracts on urban fringe. The result from this study says that the infill projects must be much more profitable (either through other lower costs or higher returns) to make them competitive with the ‘greenfield’ proposals of late. (And this ignores the higher costs often associated with developing ‘brownfield’ parcels due to replacing and reconfiguring infrastructure.)”

But Davis faces a more serious problem.  Developing on the periphery is cheaper, even though they have to add infrastructure and other needs.  However, developing on the periphery of Davis has proven to be nearly impossible, with three Measure R projects going down to defeat.

Pointing that out in a comment, Mr. McCann notes, “With a 40% cost premium, it’s hard to envision that a developer will be willing to make any proposal for a project. As I said, we need to heavily discount infill as a potential economic savior for the City.”  He notes, “Collecting the parcels to create a single large parcel costs 40% more than buying a single large parcel. That’s a 40% premium on the cost of infill for a large project vs. a single large parcel on the periphery a la Nishi and MRIC.”

He adds later that “if David is right that peripheral projects also face too many barriers, then that means there won’t be any large-scale developments in Davis. And that means that this town is facing an economic death spiral–we can’t just stand pat and hope to thrive.”

As bleak as that seems, in some ways things are better and in other ways things are worse.

The good news is that, despite obstacles, Davis in the last six months or so has seen investments in the form of Area 52 as well as the University Research Park.  Both of these are infill and redevelopment of existing research designated areas.

While that is encouraging in some respects, the land area is insufficient for the type of large-scale economic development centers like MRIC and Davis Innovation Center, both either gone or on hold for large-scale projects.

Lack of available land and cost has already proven to be the death-knell for Davis-born and grown AgraQuest, which was bought out by Bayer before leaving town.

Worse still is that relatively small projects like the hotels – the Hotel Conference Center envisioned on Richards, the Hyatt House on Chiles, and the Residence Inn off Mace – have all seen legal and other challenges from neighbors.  The city was hoping the development of hotels would bring TOT (Transient Occupancy Tax), but the loss of the conference center (now drastically reduced in size) will prove to be a huge hurdle for the community.

Likewise, Davis has been strangled with lack of student housing amid UC Davis growth, and even the development of apartments for students has proven to be contentious and controversial.

Adding to the compressed market has been additional costs of conflict resolution with neighbors, litigation expenses and settlements, delays and inflated land values.

When it became clear that Measure J and its successor Measure R presented huge hurdles on the periphery, the belief was that density and infill would be the savior.  Small-scale projects seem feasible with this council and in compromise with neighbors, but large-scale density is both economically unfeasible, as well as politically difficult.

For years the city held out the hope that they could use redevelopment (RDA) money to bridge that gulf.  The city looked into a parking structure for the downtown as well as improvements to Richards Blvd. through RDA – all of which are either off the table or on life-support.

During the Minicozzi talk, former Mayor Joe Krovoza rightly cited another problem we had in Davis – when we actually still had the RDA funds in place for redevelopment of the huge city block between E and F Streets and Third and Fourth Streets.

The landowner would not go for it, the community had strong opposition, and the money ended up disappearing.

As the city faces huge gaps in public spending in the coming years and a difficult political front, the “death spiral” comment may prove to be far more prescient than it seems even now.

—David M. Greenwald reporting

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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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71 thoughts on “Commentary: Davis’ Economic Death Spiral”

  1. John D

    Specual thanks to Richard for his frank, professional opinion of the challenges we are facing.  The question I continue to find perplexing is why so few in Davis see any virtues or merits in seeking to host a larger base of successful, well-financed technology employers.  Seriously, what kinds of jobs/earnings are required to support new mortgages in this town? Where are these folks expected to find commensurate work?

    It’s unfortunate that these ideas did not form a deliberate and integral part of the debate surrounding the innovation park debate.  Likewise, radio silence from the university did nothing to further an honest debate.

    “Grow for growth’s sake” – come on, the issues go way beyond that bumper sticker rejoinder.

    Forty percent of our adult population is now comprised of university students.  How much more vibrant will be the local economy when that percentage reaches sixty or seventy percent?  Show us the models.

  2. Matt Williams

    Minicozzi’s September 2015 presentation (using property tax-land use analysis as economic tool) was the first in a series of four talks by world-class urban planners that has included Chuck Mahron (long term municipal sustainability impacts for new projects), Daniel Parolek (form-based planning/zoning) and Robert Liberty (transformation of Downtown Portland).

    In Chuck Mahron’s presentation he included the following death spiral graphic.  The graphic shows how cities exchange near-term revenue advantages from property taxes for the long-term maintenance obligation of capital infrastructure.  As has been shown by the Pavement Plan presentations by City Staff to Council, we have gotten to the final bar on the right side of the graphic … the point where the pavement has reached the end of its useful life and needs to be replaced … said another way, our “balloon payment” is due, and we don’t currently have the cash to pay it.

    https://www.davisvanguard.org/wp-content/uploads/2017/03/CumulativeCashFlow.jpg

    Revenues are from collected taxes and expenses are due to infrastructure maintenance costs. Everything looks great until the end of the street’s life cycle. At that point, the cost of the repairs far outweighs the revenue collected. If the city were reduced to this one street, it would be insolvent.

    Our fiscal situation would not be as bad if the City had saved a portion of the property tax revenues over the years to be used for end of useful life street repair/replacement.

    One way to partially address this fiscal challenge is to take a realistic look at the city’s Development Impact Fees. Over the past few weeks I have been approached by several people about the City’s current Development Impact Fees, and the FBC received two written public comments.  The issues raised to me have had a common theme. 

    — The first issue is that the Fees are out of date, having last been updated in 2009. 

    — The second issue is that since 2009 development activity in Davis has shifted sharply from SFRs to Apartments, and the fiscal structure of the 2009 Fees is inconsistent with that shift.

    —  The third issue is that the Impact Fees are not aligned with Impact Costs, which in Residential Units are most closely associated with the number of people who live in each Residential Unit. 

    When you add in Mahron’s “balloon payment” issue, it becomes very clear that we need to look at the fiscal sustainability of our Development Impact Fees.

    As follow-up, I looked at the revised Sterling proposal for 160 market rate units and plugged the unit info into an analysis spreadsheet.  The current Development Impact Fees (shown in rows 4-7) (see LINK to City webpage) produces the Fees shown in rows 22-29 with a total Fee amount of $1,865,118.  Rows 10-17 show one possible solution to the equity and unnecessary complication issues Don and Maggie Sherman raise in their public comment e-mail.

    https://www.davisvanguard.org/wp-content/uploads/2017/03/Development-Impact-Fees.jpg

    That possible solution has the 2-bedroom multi-family unit Fees equal to the current SFR Detached Fees since the average population/occupancy of the typical 2-bedromm apartment is about the same as the 2.81 people reported by Matt Kowta (BAE) in past reports (SFR Attached Units have similar population/occupancy as well).  1-bedroom units show Fees at 50%. 3-bedroom units show Fees at 150%.  3-bedroom units show Fees at 200%.  4-bedroom units show Fees at 250%. 5-bedroom units show Fees at 300%.

    The calculated result for the revised Sterling configuration would be Development Impact Fees totaling $3,822,643, which represents a $1,957,525 revenue increase for the City if the project is approved and built as proposed. Since life-cycle costs are part of the underlying rationale for development Impact Fees, we would be wise to save a substantial portion of those fees for deployment when the “balloon payment” for end of useful life repair/replacement comes due.

    1. Ron

      Matt:  “As has been shown by the Pavement Plan presentations by City Staff to Council, we have gotten to the final bar on the right side of the graphic … the point where the pavement has reached the end of its useful life and needs to be replaced …”

      Not true, according to the PCI information that has previously been presented on the Vanguard.

      A link to a video regarding the proposed increase in gas taxes (and registration), which was the lead story on the local news last night:

      http://www.onenewspage.com/video/20170330/7166476/Gas-Tax-Hike-To-Fund-Gov-Brown.htm

      Regarding your other topic (Sterling), I am glad that you are looking at increasing development fees, for multi-bedroom units.  Can these be “adjusted” prior to the council’s consideration of Sterling?

      Is it possible to post the email from Don and Maggie Sherman (that you referenced), in which they raised concerns regarding the current level of fees?  (Of course, I’d suggest asking their permission first, if you’d care to post this.)  Also, what do you suggest if developers simply choose to focus on 1-bedroom apartment units, instead (thereby avoiding the proposed increase in fees)? (And, what would be the impact of paying less in certain categories, such as parks, open space, and public safety if they focus on 1-bedroom complexes?)

      I am hoping that you might respond “sans ridicule”.

      1. Matt Williams

        Ron asked . . . “Is it possible to post the email from Don and Maggie Sherman (that you referenced), in which they raised concerns regarding the current level of fees?”

        It has already been published here in the vanguard on March 16yh, and it is available in the public record of the February FBC meeting.

        Ron also asked . . . “Also, what do you suggest if developers simply choose to focus on 1-bedroom apartment units, instead (thereby avoiding the proposed increase in fees)?”

        The natural workings of the free market will solve that issue.  If you look at the details of the updated Sterling proposal (see http://cityofdavis.org/home/showdocument?id=7753) you will see that a one-bedroom unit contains 583 square feet, while a 5-bedroom unit contains 1,696 square feet.  That means the per bedroom construction costs of a 5-bedroom unit are approximately 40% lower than the per bedroom construction costs of a one-bedroom unit.  A 40% increase in construction costs dwarfs the differential increase in Development Impact Fees.

      2. Howard P

        I am glad that you are looking at increasing development fees, for multi-bedroom units.  Can these be “adjusted” prior to the council’s consideration of Sterling?

        Considering how long Sterling has been “in the pipeline”, changing the fees (radically) now would sure appear to be a “bait and switch”.  If there had been a disclosure that the City was in the process of raising fees at the time of application, and a conceptual magnitude, the answer is yes… has happened before.

        There is a concept in the State and Federal constitutions barring “ex post facto” laws.

        So, if in a criminal matter, a crime took place, and folk decided that they wanted to prosecute on the basis of new laws, new punishments, and if the government enacted those, and tried to implement them for a crime that has already taken place… oh, I’d so rather be the defense attorney rather than the ‘government’… basketball term is “slam-dunk”.

        There is similar (STRONG) precedence in CA courts related to process and fees once an application for development has been accepted and deemed complete… citing the ‘ex post facto’ constitutional doctrine.

      3. Ron

        Thanks, Matt.

        So your implication is that no developer will focus on one-bedroom apartment complexes (something that might otherwise be “in demand”), and will instead focus on less-expensive multi-bedroom complexes (despite the increased fees).  Therefore, the reduction in development fees collected for certain categories (e.g., parks, open space, public safety) won’t occur, since developers will avoid 1-bedroom units, regardless.

        What about Howard’s response, in which he suggested that raising development fees (essentially at the last minute, with Sterling) amounts to a “bait-and-switch”, from the point of view of developers?

        1. Matt Williams

          Ron, where in Howard’s 10:09 comment do you see any reference to “bait and switch”?

          He very correctly points out that DIF are not bail-out measures, but rather need to be matched to actual Impact Costs, which is exactly what the revision is structured to do.  The current DIF structure is not aligned with costs.

          EDIT: I didn’t see Howard’s 10:27am comment. The simple answer is that you probably can’t fix it in the DIFs, but just like the FBC did in the Nishi discussions, the fiscal impact can be included in the Development Agreement negotiations (assuming there is a Development Agreement).

        2. Howard P

           from the point of view of developers?

          I either seemed to be inarticulate on that, or you missed it… it is from the ‘point of view’ of constitutional law, State and Fed, IF it is seen as egregious… a 2% increase would probably not be deemed so by the courts… a 100% increase, pretty much “hell yes”, if challenged.  Has nothing to do, per se, about developers’ views, except them challenging the fee increases.

          An agency would pretty much have to make serious “imminent public health and safety risks” to support much over CCI/inflation beyond the application date, if challenged.

          You are making it tough, Ron, for me to refrain from something you might perceive (in “Ron’s view”) as insulting.

        3. Howard P

          Correct, Matt…  DA’s are separate from ‘entitlement’ approvals… the latter being constrained by well-established law and adjudication… DA’s are open ended as to what the parties agree to, but neither are compelled to negotiate nor agree.  A Zoning or MapAct approval cannot be made contingent on entering into a DA. Like gravity, it’s not just a good idea, it’s the law…

          My PSA/factoid for today…

        4. Todd Edelman

          “…imminent public health and safety risks…” 

          A higher fee would likely heal more of our city’s skin, a.k.a. road surfaces, with the repair of potholes and creation of infrastructure which has direct safety benefits and thus helps increase the modal share of active transport modes – this mode shift, which is failing, is City policy – with further health benefits.

          Obviously creating more private vehicle storage and really anything which worsens LOS and weakens incentives to use active transport increases public health and safety risks. The sad thing is that – on paper – our City’s citizens are more educated than those of other towns which recognize these serious threats and have already taken serious action.

          But Davis is finally taking action:

          NY Times, WSJ, UK Guardian, Le Monde, Die Welt, Xinhua, AP, RT… April 1, 2017: “Leaders and citizens of Davis, California – the ‘Bicycling Capitol of the USA’ – admit that their town – less than ten minutes from Sacramento and one hour from Oakland via near-future rail service improvements – is falling well short of cycling modal share goals set in 2014, which in turn has a massive impact on bicycle-rail intermodality – in the Netherlands 50% of train users arrive to a station by bike – and take decisive action on relevant legislation as well as development projects already in the pipeline with the intention of increasing development impact fees. Developers – who agree that they generally like children and other living things and like imagery of ethnic minorities riding bikes – state that rules exist for a reason and in a rare show of unity plan massive lawsuit against the town for ‘changing the rules midstream’ …”

        5. Howard P

          Won’t dispute your ‘philosphy’, Todd (strongly inclined to, but won’t)… but the law and legal precendent are just that… so, won’t affect Sterling.

          Contact your CC members, State Legislature, Governor… maybe you can change the laws/rules moving forward.  That’s what I would advise. More constructive/productive than posting here on the subject.

          But, won’t affect Sterling… “final answer”…

          And thank you so much for joining the community, and persisting we live according to your philosophy… go for it.

        6. Howard P

          Repair of current deficiencies, ala

          A higher fee would likely heal more of our city’s skin, a.k.a. road surfaces, with the repair of potholes and creation of infrastructure which has direct safety benefits and thus helps increase the modal share of active transport modes – this mode shift, which is failing, is City policy – with further health benefits.

          Is philosophically absurd (and/or self-serving), particularly when promoted by a recent arrival… guess we should have charged you more to move here…

          We own the current conditions, and we should solve/address them, without assuming there is any further development.

    2. Howard P

      Minor comment… to be ‘fair’, and compliant with state law (at least the intent), new development (“impact fees”) should only be responsible for the costs of additional infrastructure, solely necessitated by the new development, decrease in otherwise useful life (caused by ND), plus their proportionate share of what the City should have been saving/spending.

      The impact fee concept was not to bail existing development/citizens out of their own responsibilities.  That money needs to come from the City as a whole…

      If we multiplied roadway impact fees by 10 X, doesn’t help much for where we are…particularly if there is little/no new development.

      With that one nuance, thank you Matt for the information… and you are correct, impact fees should be raised to account for CCI/inflation, but not to retroactively pay for the failure to adjust in the past… everyone living/working/studying in Davis TODAY, needs to “own” today’s situation and pay for it.

      The needs are here, now. And we need to address those, even if not one additional DU or SF of non-res is added.

      1. Matt Williams

        Agreed on all points Howard, which is why I said “Our fiscal situation would not be as bad if the City had saved …”  The key is the fiscal discipline to anticipate ongoing and future costs and manage your finances to be able to pay for those costs when they come due. If we borrow from Peter to pay the repairs of Paul’s roads, then there won’t be any money around when Peter’s roads need to be repaired.

        1. Howard P

          Actually, would have gone more towards “the sins of the father will be visited on his sons for seven generations”, but there are indeed limits as to what “newbies” can be charged for the sins of someone else’s father.

          But your cite works, too…

          I was mainly focused on dissuading folk from thinking we can lay it all off on new development… not good public policy, and illegal if taken to extremes.

        2. Howard P

          My bad… Exodus 20:5 says only third and fourth generations… must have inadvertantly added…

          Context is different, but still is an appropriate ‘analogy’… not just in Davis, but the State, Soc Sec., etc…

    3. John D

      Matt,

      Just another example why we need a high performung CFO who understands the practical value of sinking funds and accrual accounting.

      Even if they aren’t allowed in conventional public sector accounting and financial reporting.

        1. John D

          Yeah, not funding shouldn’t be an option – just as it shouldn’t be an option for Pension contributions (wasn’t when the law was first enacted) and OPEB (if it is indeed a “defined benefit”).   Sadly, we can’t trust the politics, to make the right choices on their own, when it come to the finances – as long as they have the option of non-reporting/non-funding and of pushing the liability off to future generations of taxpayers.

        2. John D

          Actually, your comment reminds me that virtually all private sector corporations keep two sets of books (one for tax/timing-related recognition/cash-based and one for financial reporting – the version that is issued to stockholders and management to get a realistic picture of how incoming revenues are realistically matching up to current period expenses).

          Why not allow our public agencies to issue its semi-annual budgets and 270 page annual CAFR, and then simultaneously issue a Financial Management-based Reporting version which incorporates a detailed, cost-accounting-based, version for purposes of evaluating actual, real-time trends in revenue and expenses?

          It’s judged to be a standard management necessity for running a successful company, why should it be any different for a city or an agency?

  3. Howard P

    Key word is “if”, and the answer is “no”.

    Except for UC students and staff living in the community… on the same basis as everyone else…

    1. Ron

      Howard:  Would you mind posting a link to that article (and/or, the title)?  I’m not seeing it, online. (I’m not surprised that this is apparently occurring, however.)

  4. Ron

    Matt:  “1-bedroom units show Fees at 50%. 3-bedroom units show Fees at 150%.  3-bedroom units show Fees at 200%.  4-bedroom units show Fees at 250%. 5-bedroom units show Fees at 300%.”

    Also wondering how the reduction of fees collected for parks, open space and public safety (for one-bedroom units) would impact the city in reference to Sterling’s Affordable housing complex (which isn’t addressed in the chart you posted above), and other similar/future Affordable complexes.  Are Affordable housing complexes assessed using a different fee schedule?

    1. Matt Williams

      Ron, that is why I posted the spreadsheet graphic.  The impact on each one of those is already there in black and white.

      The link to the City’s DIF webpage will answer your Affordable Units question.

      1. Ron

        My bad, I think.  I didn’t immediately recognize the (14) “A1” units in your chart.

        Looking at the link to the updated proposal, it appears that there’s (13) one-bedroom, A1-AFF units, and (2) one-bedroom, A1-TCAC units (whatever that means) within the Affordable complex.  A total of (15) one-bedroom units in the Affordable complex (with the remainder having more than one bedroom).

        1. Ron

          Actually, I’m not sure that I’m understanding this.  I tried to edit my comment, but it was too late.

          It appears that there’s (22) one-bedroom units in the 3&4 story building, in the updated proposal that you referenced (4+4+14, in various categories).  In addition, there’s (15) one-bedroom units (as referenced in my comment above), in the “Affordable complex”.

          Right?

        2. Ron

          Matt:  “The impact on each one of those is already there in black and white.”

          It doesn’t appear that way, in regard to the only question I asked (regarding the possible impact of your proposal to reduce fees for one-bedroom units –  in reference to the Affordable units). Looking at your response again, I now realize that you didn’t try to answer that question.

        3. Matt Williams

          Ron, you asked two questions, with the second one being about Affordable unit rates.  As I said, the previously provided link to the City’s DIF webpage will answer your Affordable Units question.

          Your first question, the one about fees collected for parks, open space and public safety was/is answered by the spreadsheet graphic.

        4. Howard P

          Ron… the “affordable” rates have little to no correlation to “impacts”, they reflect ‘social engineering’ or ‘charity’… if push comes to shove, legally, the City needs to be prepared to show that a lower income family of the same size as a higher income family produces less “impact”… good luck with that…

        5. Ron

          Matt:

          That’s not correct – I only asked about the impact on Affordable complexes.  Take a look at the post, again.  (No big deal.  I can look it up, but it might be a larger question:  Do developers of Affordable complexes pay sufficient fees to offset costs? If not, that might also be contributing to the city’s financial challenges. There’s a lot of Affordable complexes, already.)

          Now that I think about it, I do have a question regarding your quote I pasted, above my question.  How did you arrive at 50%, for one-bedroom units?  What, exactly, does that refer to?

          Your proposal keeps overall fees for one-bedroom units at about the same level, but shifts fees collected from parks, open space, and public safety toward roadways and storm sewers.

        6. Matt Williams

          Ron, as I said on March 16th and again today,  Impact Costs […] in Residential Units are most closely associated with the number of people who live in each Residential Unit. 

          The exception to that rule of thumb are Storm Sewer impact costs.

          There is absolutely no shift of fees collected from parks, open space, and public safety toward roadways.

        7. Ron

          Matt:

          The chart you posted above supports my statement regarding your proposal, and shows a significant reduction in fees collected for parks, open space, and public safety, and an increase in roadways and storm sewers (for one-bedroom units).

          And again, what do the percentages (e.g., “50%”) refer to?

        8. Howard P

          You also raise an interesting point… in the past, a 2 bedroom MF unit assumed 2 people to each room (student apartments in the ’70’s)… now student housing is often assumed to be 1 bdrm/one person.

          Also had the experience of renting a 1 bdrm appt, where I shared my bed with my girlfriend (at least on weekends).

          At some point, barring real time monitoring, impact fees must be based on simplifying assumptions.

          No answers here, but you raise a good point as to assumptions of impacts, based on bedroom units… and the question of whether a “household” of four has more or less impact for City services whether they be ‘lower income’ or affluent/market is another good question…

        9. Matt Williams

          Ron asked for the third time … “And again, what do the percentages (e.g., “50%”) refer to?”

          And for the third time the answer is Impact Costs […] in Residential Units are most closely associated with the number of people who live in each Residential Unit. 

          To help you answer your own question, here are some pointers.  (1) What is the average occupancy of a Single Family Detached residence in Davis?  (2) What is the average occupancy of a Single Family Attached residence in Davis? (3) What is the average occupancy of a 2-bedroom apartment in Davis? (4) What is the average occupancy of a one-bedroom apartment in Davis? (5) What is the average occupancy of a 3-bedroom apartment in Davis? (6) What is the average occupancy of a 4-bedroom apartment in Davis? (7) What is the average occupancy of a 5-bedroom apartment in Davis?

           

           

        10. Matt Williams

          Ron said . . . “The chart you posted above supports my statement regarding your proposal, and shows a significant reduction in fees collected for parks, open space, and public safety, and an increase in roadways and storm sewers (for one-bedroom units).”

          I’m not sure where you are getting that impression Ron.  Here’s a simple before-after table that should clarify your confusion.

          https://www.davisvanguard.org/wp-content/uploads/2017/03/Development-Impact-Fees-bevore-vs-after-1.jpg

           

           

        11. Howard P

          Matt, Ron, others…

          Remember that the impact fees are for new dev…. ‘amortized’ over 30-40 years, in most cases… one-time, not-ongoing… change of ownersip doesn’t trigger anything (except reassessment of property taxes, but that is not inherently a “Davis” thing, and has nothing to do with ‘impacts’).  If existing development “re-develops” it has generally only paid “incremental” costs, be it units/SF/change in use, with credit given for previous payments (but no “refunds”, if a use is down-sized…).  Just another trollish factoid…

          [ex.  if a four MF unit is demolished, another one built, it has not paid impact fees, even if originally built prior to 1986, when there were no such fees] Which, in my view, it should be… no new impacts…

        12. Ron

          Matt:

          Thanks for posting the simplified chart.

          So, current and proposed development fees (for one bedroom, in a multi-family complex – such as Sterling’s market-rate units). (Without analyzing the Affordable complex fees.)

          Roadways:  Increase from $3,047 to $4,047

          Sewer:  Increase from $85, to $305

          Parks:  Decrease from $3,277, to $2,507

          Open Space:  Decrease from $564, to $432

          Public Safety:  Decrease from $700, to $496

          Facilities: Decrease from $1,249 to $1,195

          Total fees slightly increase, from $8,922 to $8,981.

          How does that not support what I said?

        13. Matt Williams

          Ron asked . . . “How does that not support what I said?”

          Ron, given that only 5% of the 160 units in the revised Sterling proposal are one-bedroom units, it is quite perplexing that you have you chosen that group as the example most representative of the 160 unit whole.  Do you typically choose samples that are only 1/20th of the whole, when at the same time the 82 4-bedroom units represent over 50% of the 160 unit total (51.25% to be exact).  If you were going to select only one type of unit why choose the one that is (A) 10 times less prevalent and (B) the least prevalent of all the possible choices?

          With that said, your table for 4-bedroom units is as follows:

          Roadways:  Increase from $4,942 to $12,140

          Storm Sewer:  Increase from $85 to $305

          Parks:  Increase from $3,827 to $7,521

          Open Space:  Increase from $659 to $1,295

          Public Safety:  Increase from $757 to $1.488

          General Facilities: Increase from $1,823 to $3,584

          Total Fees: Increase from $12,093 to $26,332

          How does that support what you said?

           

        14. Ron

          Matt:

          I just got back.

          There is nothing “perplexing” about my point, if you refer back to the beginning of our communications.  Initially, we were talking about permanently “adjusting” these fees (for all developments).  I had asked what the impact of that would be, if developers then chose to focus on one-bedroom apartments.  You subsequently clarified that you envision these fees as a “one-time” occurrence, as part of a potential development agreement.

          Regarding how that supports “what I said”, developers would contribute less for parks, open space, and public safety (if they focused on one-bedroom complexes), compared to the current fee schedule. The numbers are staring right at you, in the table you initially posted (and repeated, in my posting). Do I need to post it, again?

          Still no comparable calculations, showing the fees potentially collected from the Affordable component.  (I understand that I can do this myself, but it’s an incomplete picture without showing this.)

        15. Matt Williams

          Ron said . . . “I had asked what the impact of that would be, if developers then chose to focus on one-bedroom apartments.”

          And we dispensed with that question as follows … “The natural workings of the free market will solve that issue.  If you look at the details of the updated Sterling proposal (see http://cityofdavis.org/home/showdocument?id=7753) you will see that a one-bedroom unit contains 583 square feet, while a 5-bedroom unit contains 1,696 square feet.  That means the per bedroom construction costs of a 5-bedroom unit are approximately 40% lower than the per bedroom construction costs of a one-bedroom unit.  A 40% increase in construction costs dwarfs the differential increase in Development Impact Fees.”

          Ron then said . . . “developers would contribute less for parks, open space, and public safety (if they focused on one-bedroom complexes), compared to the current fee schedule. The numbers are staring right at you, in the table you initially posted (and repeated, in my posting). Do I need to post it, again?”

          That argument of yours would make sense as an argument if (A) the natural workings of the housing market didn’t provide such clear incentives not to build one-bedroom units (see answer above), and (B) if the percentage of one-bedroom units in the revised Sterling proposal that we were specifically discussing weren’t the incredibly low 5% that they are.

          Ron said . . . “Still no comparable calculations, showing the fees potentially collected from the Affordable component. (I understand that I can do this myself, but it’s an incomplete picture without showing this.)”

          It is not an incomplete picture.  There absolutely are 100% comparable calculations there staring you in the face.  You just are not seeing them.  Look at the table again.  The figures are very clearly there.  If you take your time and think it through, you will have a Eureka moment.

        16. Ron

          Matt:

          We’re communicating in circles, again.  If you’re proposing the development fees for the market-rate component of Sterling (as part of a development agreement), then I’m not seeing a concern with that suggestion.  Let’s just leave it at that.

          Still not seeing the Affordable housing component analyzed, though.  It might indeed be “staring me in the face”, but I’m not seeing it there.  For example, there are (15) total one-bedroom units, in the Affordable complex (which aren’t analyzed/presented).  (The rest have more than one bedroom.)  All I see in your chart are the (22) (4+4+14) one-bedroom units, in the 3-4 story building.

        17. Ron

          Matt:
          Are you just “messing with me”?  You’ve alternately suggested that I go to the city’s website regarding Affordable housing fees (which I haven’t found so far), but then stated this as well:

          Ron said . . . “Still no comparable calculations, showing the fees potentially collected from the Affordable component. (I understand that I can do this myself, but it’s an incomplete picture without showing this.)”

          It is not an incomplete picture.  There absolutely are 100% comparable calculations there staring you in the face.  You just are not seeing them.  Look at the table again.  The figures are very clearly there.  If you take your time and think it through, you will have a Eureka moment”.

          You’ve either analyzed this (and included it in your table), or not.  (So far, it appears not, despite your statement above.)  If not, then your table doesn’t really provide a complete picture of your proposed suggestion.  That’s fine.  Your suggestion (presumably affecting the “market rate” component of the development) is still worthwhile as part of a potential development agreement, if the city ultimately still insists upon approving a dormitory-like structure far from campus.

        18. Matt Williams

          No Ron I am not messing with you.  For the sixth time, just go to the City’s Development Impact Fee webpage (here’s the link one more time). The rates for Affordable Units are in the very first table.  The rates for market rate units are in that table too.  The numbers very clearly show that,  So everything I have said in the paragraph you quoted is 100% correct.

          It is not an incomplete picture.  There absolutely are 100% comparable calculations there staring you in the face.  You just are not seeing them.  Look at the table again.  The figures are very clearly there.  If you take your time and think it through, you will have a Eureka moment”.

          Yes,  I have done the analysis.  Yes, I have included the results of the analysis in the table I have provided. Yes, the table provides a complete picture of my proposed suggestion.  In time it will all become clear to you.  Have patience and think it through.  If you do, you will have the Eureka moment I’ve promised you.

        19. Ron

          Matt:

          Thanks for providing the link (for the first time), but the link itself is not working.  (Perhaps a technical problem on my end, not sure yet.)

          Regarding your table, where are the (15) one-bedroom units in the Affordable complex listed?  I’ve asked you that an untold number of times.  If you would kindly point that out, perhaps I’d see what you’re referring to. If I see the units for the Affordable complex listed (as the market-rate units are), then it would be obvious that you included it in your analysis. Based upon your response, I do trust that you’re referring to something.

           

        20. Ron

          Matt:

          The “other ” Matt (Palm) just provided me with a clue.  If there are no development fees collected for Affordable housing, then your table would be complete.  (That might be a cause for “concern”, though.)  (By the way, your link still isn’t working, for me at least.)

          If there are no fees collected for Affordable housing, I sure hope that other developments can offset the full costs to the city.

          If that’s my “Eureka” moment, you probably could have saved a lot of communications by just noting that there are no fees collected for Affordable units. (Assuming that’s correct.)

        21. Matt Williams

          Ron said . . . “Thanks for providing the link (for the first time), but the link itself is not working.”

          You are welcome Ron. Sorry you are having such a hard time.  I provided it to you in my 9:16am comment and also in the March 16th original comment I pointed you to as the original time I put forward this concept.

          Ron asked . . . “Regarding your table, where are the (15) one-bedroom units in the Affordable complex listed?”

          Row 6 and Row 13 of my graphic in my 9:16am comment, and also in the third row of the City table.

          Ron said . . . “If I see the units for the Affordable complex listed (as the market-rate units are), then it would be obvious that you included it in your analysis”

          Your eyes definitely are seeing them Ron.  You brain still hasn’t processed what your eyes are seeing.  You are close to that Eureka moment.  Keep at it and you will get there.

        22. Ron

          Matt:

          I guess you are playing games, after all.

          Two simple questions (that I’ve asked many times) would clear it up.

          Where are the (15) one-bedroom Affordable units listed?

          Are fees collected from developers who build Affordable housing?

          Alternatively, you can keep playing games and creating cryptic responses, perhaps for your own amusement.  But, I won’t keep playing.

        23. Ron

          Matt:

          In your initial 9:13 comment (there is no 9:16 comment), the fees you describe are the same ones used for the market-rate units.  However, you haven’t “multiplied them out”, to show the totals for the (15) one-bedroom, Affordable units.  That’s what I was looking for, to see if you included the Affordable complex in your table.

        24. Matt Williams

          Ron said . . . “The “other ” Matt (Palm) just provided me with a clue.  If there are no development fees collected for Affordable housing, then your table would be complete.  (That might be a cause for “concern”, though.)  (By the way, your link still isn’t working, for me at least.)

          If there are no fees collected for Affordable housing, I sure hope that other developments can offset the full costs to the city.

          If that’s my “Eureka” moment, you probably could have saved a lot of communications by just noting that there are no fees collected for Affordable units. (Assuming that’s correct.)”

          I’m not sure what Matt Palm is talking about, but based on first-hand knowledge provided to me by developers who build Affordable Housing in Davis for a living, Affordable Units pay Developement Impact Fees just like all other developments do.  Perhaps when Matt Palm comes back on, he can provide us with a reference source that corroborates his comment.  Corroboration with reference sources, ideally with links, is always a good idea.  That is why I provided the links to the City’s Development Impact Fee webpage to you multiple times.

          So, you haven’t gotten to your Eureka moment yet.

        25. Ron

          (A repeat, of my message above.)

          Matt:

          In your initial 9:13 comment (there is no 9:16 comment), the fees you describe are the same ones used for the market-rate units.  However, you haven’t “multiplied them out”, to show the totals for the (15) one-bedroom, Affordable units.  That’s what I was looking for, to see if you included the Affordable complex in your table.

        26. Matt Williams

          Ron said . . . “In your initial 9:13 comment (there is no 9:16 comment), the fees you describe are the same ones used for the market-rate units.  However, you haven’t “multiplied them out”, to show the totals for the (15) Affordable units.  That’s what I was asking for.”

          You are right.  It was 9:13, not 9:16.  My bad.

          So let me get this straight, you were asking me to multiply the number 15 times the individual fees in row 6 and row 13 of the table I provided?

          Setting aside the specifics of your arithmetic request, what would multiplying the individual rates by 15 have told you?  What would you have learned from multiplying 15 by $3,047?  Or from multiplying 15 by $85?  Or from multiplying 15 by $3,277?  Or from multiplying 15 by $564?  Or from multiplying 15 by $700?  Or from multiplying 15 by $1,249?  Or from multiplying 15 by $8,922?

          Or for that matter, what would you have learned from multiplying 15 by $4,047?  Or from multiplying 15 by $305?  Or from multiplying 15 by $2,507?  Or from multiplying 15 by $432?  Or from multiplying 15 by $496?  Or from multiplying 15 by $1,195?  Or from multiplying 15 by $8,981?

        27. Ron

          Matt:

          You’re kidding me, right?

          You’ve multiplied out the totals for the “market rate” units, to arrive at a grand total.  And, you’re asking me why you haven’t done that for the Affordable units?

        28. Matt Williams

          Not kidding you at all Ron.  I’m not asking myself why I haven’t done that for the Affordable units. I know precisely why I didn’t do it. I’m asking you why you haven’t done the multiplication for the Affordable units if it is important to you.

          I created the “extended” column for the market rate units because Sterling will be paying those fees in the relatively near term (if the project is approved).  By having the respective totals I could show the fiscal impact of the proposed change.

          The affordable unit Development Impact Fees will be paid by a non-Sterling developer, and in a timeframe somewhere much farther in the future. Therefore there was no immediate fiscal comparison reason to show an “extended” column.

          With that said, given your desire to compare Affordable Unit Development Impact Fees to Market Rate Unit Development Impact Fees, how do you see the multiplication by 15 being meaningful?  Why would you prefer to compare the Fees at a 15:15 ratio rather than a 1:1 ratio?

        29. Ron

          Matt:

          So, instead of this long, drawn-out nonsense, you’ve finally addressed the question.  And, your earlier response, in which you stated the following regarding the Affordable complex is entirely untrue:

          Matt:  “Yes, I have included the results of the analysis in the table I have provided.”

          No – there’s no “Eureka” moment for me.  I guess I should have expected this, from you.  I had hoped we could communicate honestly regarding your table, but I guess you’d rather play games.

          Regarding the “15” Affordable one-bedroom units, I was looking for that as an example of the units that would show up in your table, if you had included the Affordable complex (as I already repeatedly explained).  (However, after much “ado about nothing”, you have finally now acknowledged that the Affordable complex totals are not included in your table.  Something you could have clarified about 6 hours, ago, when I first started asking.)

          I finally was able to access the link you referred to.  Only one set of fees is listed, with no particular title to differentiate between (or even address) Affordable, vs. Market-rate fees.  (You could have simply stated this, rather than suggesting I search for this.)  Of course, you also falsely stated that you addressed this in your table, already, and “egged me on” to search for something that wasn’t there.

          Oh, well.  Maybe you had fun playing games, tonight.  If so, at least one of us did.

        30. Matt Williams

          Ron said . . . “And, your earlier response, in which you stated the following regarding the Affordable complex is entirely untrue:

          Matt:  “Yes, I have included the results of the analysis in the table I have provided.”

          Ron, the Affordable Units are 100% a part of my analysis.  Their values appear in row 6 and row 13 of my table in my 9:13 am comment.  What makes you think they aren’t there?

          Ron said . . . “you have finally now acknowledged that the Affordable complex totals are not included in your table.”

          What makes you think that.  The affordable unit fees are included in my table in row 6 and row 13 (one-bedroom units), row 7 and row 14 (2-bedroom units), and row 7 and row 15 (three-bedroom units)

          Ron said . . . “I finally was able to access the link you referred to.  Only one set of fees is listed, with no particular title to differentiate between (or even address)  Affordable, vs. Market-rate fees.  (You could have simply stated this, rather than suggesting I search for this.)”

          Ron, as I said, you have eyes, but you do not see.  That is a malady that only you yourself can cure.

          Ron said . . . “Of course, you also falsely stated that you addressed this in your table, already, and “egged me on” to search for something that wasn’t there.”

          It was there the whole time.  The reason that the City’s table does not show a difference between the Development Impact Fees of Affordable Rate units and the Development Impact Fees of Market Rate units is that there is no difference.  Showing a difference, when there is no difference is a meaningless and fruitless exercise.  Further it would make the table more complicated and confusing than it needs to be to serve its purpose.  You approached the table with a preconceived agenda expecting a predetermined outcome.  You had convinced yourself that the fees were different, and as a result couldn’t see the simple fact that they were in fact not different.

          Ron said . . . “Oh, well.  Maybe you had fun playing games, tonight.  If so, at least one of us did.”

          It wasn’t a game.  It was a critical thinking exercise.  It lasted much longer than I expected it to, but that really shouldn’t have surprised anyone, because “the force is strong in you.”

  5. Matt Williams

    Howard P said . . . “No answers here, but you raise a good point as to assumptions of impacts, based on bedroom units… and the question of whether a “household” of four has more or less impact for City services whether they be ‘lower income’ or affluent/market is another good question…”

    No answers here either.  The question at the heart of your comments is whether impacts should be measured (A) instantaneously and at a specific project and specific unit occupancy level, or (B) community-wide using “typical” unit occupancies.

    There are pros and cons to both approaches (and they are not the only approaches).  Alternative (A) has ACLU invasion of privacy challenges, temporal equity challenges and cost of administration challenges.  Alternative (B) avoids the ACLU invasion of privacy challenges and cost of administration challenges, but has its own temporal equity challenges that are different from those in Alternative (A).

    The bottom-line for me is that we have had more than enough lawsuits in recent memory.  We don’t need to add an ACLU invasion of privacy lawsuit to that list.  Therefore, I use the community-wide average historical occupancy values as a proxy for Impact Cost increments.

    1. Howard P

      Je d’accord… just was pointing out that we need the “community-wide average historical occupancy values as a proxy for Impact Cost increments.”

      Perhaps adjusted every 5 or so years, if it has been demonstrated that there is a trend different from historical…

      Matt, thinking we’re talking the same thing, just parsing/wording it slightly differently… would not compare the 2010’s to the ’70’s or ’50’s… am used to 5-10 year “rolling averages”… 10 years is probably best, coinciding with census #’s…

    2. Ron

      Matt, quoting Howard:  and the question of whether a “household” of four has more or less impact for City services whether they be ‘lower income’ or affluent/market is another good question…”

      Your response doesn’t address that point.  Since no one has posted information (so far), I strongly suspect that developers of Affordable housing complexes do not contribute a “fair share” of fees (amount equivalent to market-based units). I haven’t looked this up, yet.

      Your point does touch on the fact that Affordable units may have an even GREATER impact on the city than market-based units, e.g., since they might also house more individuals per unit. 

      As noted, this would likely contribute to the city’s financial challenges.

       

      1. Matt Williams

        Ron, my response said that Howard’s question was impractical because it would more than likely lead to an ACLU invasion of privacy lawsuit.  How is that not an answer to his question?

        Your allegation that Affordable housing complexes do not contribute a “fair share” of fees (amount equivalent to market-based units) is patently false.  I have pointed you three times (now four times) to the link to the Development Impact Fees webpage, where you will find the answer to the question you keep repeating over and over and over again.  Have you gone to that webpage?  Have you reviewed the table?  The answer is there written in black and white.

        You really should try and avoid making baseless allegations.

        1. Ron

          The reason it doesn’t answer the question is because your response did not necessarily address income level (which was the main point of the quote). And again, my statement was not “definitive”, but was “exploratory” in nature. I had already acknowledged in my response that I hadn’t searched for (and found) the fee schedule for Affordable complexes.  I looked briefly just now, using the terminology you suggested, but didn’t find it.  Might you be able to provide a link to that?

          Given the amount of time/effort you spend creating tables, charts, etc., I would think that you might have already included an analysis of the fees collected from the Affordable housing complex component, at Sterling.  Does your suggested changes to the normal development fees at Sterling include the Affordable housing complex at that site?

        2. Ron

          I should clarify that it’s not “income level” I’m interested in.  However, I’d generally like to know if developers of Affordable housing are subject to fees that are equivalent to market-based housing.  If not, that’s a problem.

        3. Matt Palm

          Ron, we don’t link impact fees to anticipated incomes because:

          a. A market rate unit could be rented to anybody and you cannot predicted incomes

          b. That would probably be illegal.

          Cities usually waive impact fees on affordable units so they can pan out or because they hey are putting in subsidies. Otherwise the city is just funneling money to themselves through an affordable housing development. A city putting 2 million into a project and then taking 300,000 out doesn’t make sense. They would just put in 1.7 million

        4. Ron

          Matt P:

          If you look at my clarifying statement (right above yours), you’ll see that I clarified what I was asking.  I was asking if developers of Affordable units pay the same amount of fees as those that develop market-based units.

          If developers of Affordable units pay less fees (per unit) than those that develop market-rate units, the city would put itself in an ever-worsening financial situation, for each Affordable unit approved (compared to market-based units).  (It’s not an “opinion”, or a commentary regarding Affordable housing.)

          I see that you clarified your statement as I was writing this comment, but I’ll just let it stand, for now. (I think that you were starting to address the fees that are collected from other developments, to help offset the “loss” of not collecting fees from developers of Affordable units.)

  6. Ron

    Regarding Matt’s suggested (significant) adjustments to development fees (to more closely account for costs), I’m wondering why these weren’t examined and appropriately adjusted PRIOR to processing an application for a development such as Sterling, which is scheduled to be considered by the council, very soon.  Seems rather crazy, to consider such changes so “late in the game”, with the “hope” of including it in a development agreement.

    Is this really the way our city operates?

  7. Howard P

    Matt W, re your 13:15-17 post… [think about it… you could be a contributing author to a good book]

    You gave me my smile of the day… was it on purpose?

     

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