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