Analysis: Sixty Percent Occupancy Issue, Commercial Demand, Other Matters Addressed in the Final DISC EIR

This week the final SEIR was released for the Davis Innovation and Sustainability Center (DISC) —where the Planning Commission is expected to take up the Final SEIR the next two Wednesdays, followed by the City Council at the end of the month.

The city received 81 comment letters during the public comment period for the Draft EIR. That includes letters from 44 different individuals and 12 different groups.

For the first part of the final EIR – go here.

Addressing the sixty percent occupancy issue

In their responses the SEIR notes that, in the previous EIR, MRIC (Mace Ranch Innovation Center) had assumed 100 percent of the 850 residential units at the project site would each house at least one MRIC employee. But when the Final EIR at that time looked at the break point at which the mixed-use alternative no longer performed better than the proposed project—which at that time had no housing proposed, the results “demonstrated that the Mixed-Use Alternative would generate more external total daily trips when compared to the MRIC project with no residential units if the percentage of MRIC housing units occupied by MRIC employees drops below 60 percent.”

The SEIR, in looking at the background, found that there is no requirement to ensure “that at least 60 percent of the on-site units shall be occupied by at least one MRIC employee.”

They add that “the ARC Draft SEIR technical analysis did not make employee assumptions for the on-site units, but rather relied on empirical data collected from other mixed-use projects to estimate trip generation.”

Found in the draft EIR: “[T]his analysis does not establish any explicit association between ARC Project dwelling units and ARC Project employees, and instead relies upon empirical data in the MXD+ model (i.e., trip generation data collected at other mixed-use project sites) to estimate the degree to which on-site residential and commercial uses at the ARC Project would internalize travel.”

Use of the 25-Acre City Parcel

Comments from the public allege that the use of 6.8 acres of the 25-acre city-owned property for a conservation easement and agricultural buffer “would be unlawful given that the Mace 25 property was purchased with Measure O funds or that the agricultural buffer does not meet the requirements of the Davis Municipal Code.”

While this is not explicitly a CEQA issue, the city notes that the proposal from the “developer is to pay the City for a habitat conservation easement on 6.8 acres of the City’s Mace 25 land for use as a portion of the project’s agricultural buffer in perpetuity.”

The proposal would not be a purchase of the 6.8 acres, but rather the city would “would continue owning the 6.8 acres but those acres would then be protected with a habitat conservation easement.”

The city has not committed to this transaction at this point, and it would of course be “contingent on the approval of the project by the voters as well as successful negotiation of terms with the developer.”

Nonetheless, city staff believes “that the proposal is consistent with Measure O and consistent with the City’s agricultural buffer ordinance.”

Infill Alternative

The Final SEIR notes that an Infill Alternative was dismissed from further analysis based on infeasibility.

The analysis notes: “While a meaningful amount of vacant land may be zoned for development within the City of Davis, the collection of acres, spread over numerous non-contiguous sites that are controlled by multiple different owners, does not represent a viable alternative to a master planned innovation center, such as the ARC.”

They note that on January 8, 2019, the council received a report on undeveloped property in the city of Davis, looking at the potential for commercial development.

The EIR writes: “The inventory, at that time, included 27 parcels, totaling 124.51 acres of vacant, privately held commercially-zoned land within the City limits.”

As shown in the map attached to that report, “the largest single parcel totals 27.48 acres and is adjacent to the Sutter Davis Hospital. The largest group of contiguous parcels is along 2nd Street, with five parcels totaling 27.57 acres.” (The report does note that the 27 acres is owned and set aside by Sutter and that the 27 acres along 2nd Street are a Superfund site).

The analysis also notes : “The vacant 27-acre sites would only be able to accommodate about 26 percent of the proposed project square footage.”

They write, “The lack of large, contiguous parcels of land would not provide sufficient flexibility for an ‘infill’ alternative to accommodate businesses that need a large space initially, or prefer to have access to adjacent property for future growth.”

This is supported by the Business Park Land Strategy prepared by the City of Davis in 2010, even though, at that time, a total of 44 vacant sites within city limits were identified as suitable for business growth, with a total acreage of 227.9 acres.

However, “this number has been substantially reduced to 27 sites, comprising approximately 125 acres.”

They add that “even assuming the number of sites available in 2010, the City’s Business Park Land Strategy (BPLS) determined that only eight of the 44 sites could be considered ‘High Quality.’”

Importantly, four of the identified high quality sites in 2010, are not longer available. This is due to development since 2010, including The Cannery, DMG Mori-Seiki, and a 1.6-acre site along 2nd Street.

Furthermore, they continue, saying “an additional High Quality site is the location of the University Research Park project site, a proposed project which is anticipated to be brought before the Davis decision-makers within the next month.”

The EIR additionally notes that the ARC site itself was identified as a “Potential External Business Park Location” Furthermore, “the ARC site would appear to meet the characteristics of High Quality/Class A sites in the BPLS.”

They write: “Research shows that innovation centers are most successful when they provide a range of spaces that address the diverse needs of a variety of tenants in terms of age, size, and industry sector. While existing infill parcels may provide space for some small tenants, the parcels would not adequately satisfy the needs of larger tenants.”

They add that “dispersed infill development poses strong challenges to the financing of specialized facilities such as wetlabs and clean rooms, which are necessary for large companies and small startups that typically lease portions of a larger specialized facility.”

In addition, “infill development would lack the support services that can be provided through the centralized management of a true, concentrated innovation center, such as incubator facilities, networking breakfasts, and workshops. Therefore, the alternative was determined infeasible and dismissed from consideration.”

Urban Decay

The EIR notes that a number of comments regarded what they are calling “urban decay issues.”  Some “pertained to whether the proposed office, R&D, manufacturing, and retail uses would ‘cannibalize’ tenants from elsewhere in the City, including downtown Davis and 2nd Street.”

Others addressed whether there would be sufficient “future demand for office and innovation uses to support the ARC Project and other pending projects such as UCD Aggie Square (‘Aggie Square’) and Woodland Research and Technology Park (‘Woodland Tech Park’).”

Urban decay, from the court decision in Bakersfield Citizens for Local Control v. City of Bakersfield, is described as “a chain reaction of store closures and long-term vacancies, ultimately destroying existing neighborhoods and leaving decaying shells in their wake.”

These would cause a “physical deterioration of [a] downtown area” or “a general deterioration of [a] downtown area.”

In the Draft SEIR they note that “given the long time horizon associated with project buildout, there is no knowing how many tenants and the associated amount of additional existing space that could be at risk of potential innovation type space relocation. In all likelihood it would be confined to the City’s existing innovation sector tenants, as these are the type of tenants to which the project R&D/technology-oriented uses will be targeted.”

There are also concerns about the impact from the global recessions caused by COVID-19. They write, “At this point, it is unknown how long the current COVID-19 related recession will last or what long-term impact the stay at home order may have on future trends in telecommuting and working remotely.”

They continue: “Given the current lack of information concerning the extent and duration of COVID-19 pandemic and the associated current recession, predicting the long-term market demand for such uses and ascertaining whether a future lack of demand could lead to urban decay requires a substantial amount of speculation. It should be noted, however, that unlike traditional office uses, laboratory, R&D and advanced manufacturing uses such as those proposed in the project site can neither take place in a residence nor via video conferencing.”

The rule in such cases: “If, after thorough investigation, a Lead Agency finds that a particular impact is too speculative for evaluation, the agency should note its conclusion and terminate discussion of the impact.”

But they also point out: “The project is anticipated to be built-out over approximately 20 years, a considerably longer period than most recessions.” Even the great depression of 1929 lasted 10 years, while the Great Recession from 2007 to 2009 lasted around 18 months.

They also add: “Competition from other innovation centers within the region will not result in the project site being underutilized or allowed to languish. Rather, the project and the extension of on-site infrastructure would be phased to ensure that sufficient market demand exists prior to the development of each individual phase of the project.”

Further they note: “The decision of whether to proceed with the next phase of project construction would be based on actual demand and be, primarily, user driven.”

For this reason, “perceived competition for two other innovation centers in neighboring jurisdictions will not result in buildings at the project site being constructed and sitting vacant or underutilized. Rather, those structures will not be built until demand is assured.”

They also cite the recent discussion of Greater Sacramento and Barry Broome, who “indicated that Aggie Square has been fully committed to tenants before the project has broken ground.”

Broome further indicated “that he is currently aware of fourteen additional science-based enterprises looking for commercial space in Yolo County today. This economic report indicates that demand in the region is diverse and sufficiently robust to sustain several technology centers.”

—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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4 Comments

  1. Richard McCann

    The Natural Resources Commission sent a set of proposed baseline conditions to the Planning Commission at its special May 19 meeting, and last night added a set of proposed transportation baseline conditions as well slightly modifying the original set of baseline conditions. These include specifications on build out phasing of housing and occupancy requirements, including master leasing. In addition, the Bicycling, Transportation and Street Safety Commission is preparing a set of proposed transportation baseline conditions.

    I strongly urge the Vanguard to obtain and report on those proposals. The developer has said that they will accept many of the NRC proposals and hasn’t yet rejected any of them.

  2. Alan Miller

    In addition, the Bicycling, Transportation and Street Safety Commission is preparing a set of proposed transportation baseline conditions.

    I am interested in expressing input on this.

    1. Bill Marshall

      Please make sure a grade-separated crossing of Mace, @/near bottom of Signature prop, is an absolute part of that… might not be feasible, for many reasons, as a condition of first phase, but no later than second… and $$$’s are not the cause of early infeasibility… more complex than that.

      On that improvement, as a baseline (with some flexibility as to timing of completion, but major efforts towards the goal from the get-go) I am in full support of…

  3. Matt Williams

    I would also add that Fehr and Peers addressed the bulk of the issues I raised in Transportation.  While I do think there are still areas where their assessment could be more complete, I believe the report substantially complies with the CEQA threshold of “complete and accurate” in the issues I raised. That does not mean that the issues that other commenters have raised are substantially addressed.  I will leave it to those commenters to weigh in on how effectively the FEIR has addressed the issues they raised.

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