By David M. Greenwald
Davis, CA – My columns this week have taken a rather dim view on the Housing Element and the future prospect for infill development in Davis, given that the difficulty of developing peripheral housing under Measure J is a problem.
UC Davis Law Professor Chris Elmendorf in response to my column earlier this week pointed out that “there’s nothing wrong with city relying on infill redevelopment rather than greenfield expansion, provided that city shows that redevelopment is economically feasible.”
As I pointed out, while true, the problem is the questionable fiscal feasibility of the infill at this point.
His response: “Price, rent in Davis is higher than Sac, yes? Sac’s doing infill. So if it’s not feasible in Davis, fault lies with city exactions and discretionary review.”
Actually, yeah, but… he’s right. Right now the city is going to have a great deal of difficulty with additional infill—especially in the downtown where it seems to be counting on infill to provide the housing it needs.
Remember the Bay Area Economics group back in June 2018 (seems like a million years ago now) reported on the financial feasibility “to evaluate the feasibility of retail, office, and residential (for-sale and for-rent) projects, including mixed-use projects.” BAE’s full DRAFT Economic Background Analysis – Downtown Davis Plan can be accessed HERE.
On pages 38 – 44 of the Draft Analysis BAE looked at a number of scenarios to determine the feasibility or infeasibility of ten (10) different redevelopment scenarios. Table 14 on pages 43 showed that 9 of the 10 scenarios were fiscally infeasible.
Also on page 43 of the analysis report, BAE concluded: “These results indicate that under current conditions, it will be very difficult for developers to undertake projects similar to the prototype projects, with a few exceptions. As mentioned previously, it appears that a medium-sized mixed-use project incorporating high density for-sale residential units could be feasible.”
BAE concluded that “development feasibility in Downtown Davis is challenging under current conditions.”
On page 44 of the analysis report BAE went on to note that:
There are important ways that the City of Davis can positively influence development feasibility, including:
- Reduce project risk and project timelines by establishing clear planning guidelines for the desired development types and reducing or eliminating discretionary review processes;
- Allow increased densities, so that developers can achieve greater efficiencies of scale on the limited number of available sites, including better spreading the high cost of site acquisition;
- Limit requirements imposed on downtown development projects which would translate to increased costs that do not bring corresponding revenue increases; and
- Consider entering into public-private partnerships with developers to help put together feasible development projects that attract new businesses to downtown. This could include utilization of City-owned land on terms that help to bridge feasibility gaps where there is an expected return on the City’s involvement.
A huge consideration would be to reduce time and risk for developers.
BAE suggests providing “clear planning guidelines,” limiting discretionary decision-making, provide environmental clearance such as Specific Plan EIRs, provide fast-track path to entitlements, and “follow through with streamlines and efficient building permit and inspection procedures.”
As I pointed out earlier this week, the city continues to put most of its development eggs into the infill basket. I know there are mixed opinions on the wisdom of that. But if they are going to continue in that direction, the city council needs to level that playing field and allow projects of that sort to become viable.
Of course, the small contingent of folks who oppose Measure J (remember, that was less than one-fifth of all voters in 2020) see the only viable solution as leveling Measure J. Personally I think there are at least two work-arounds that are perfectly legal under the current scenario. One suggestion would be to simply designate a certain amount of land to be Measure J-exempt under the next General Plan. You would have to build in density and other requirements to prevent abuse, but it’s a viable solution.
That’s probably the better approach, although it would require the city to do regular and timely updates to the General Plan and would require the voters to pre-approve land.
The other and more radical solution would be to make the opposition play perpetual defense—place a Measure J matter on the ballot every single election and force the opposition to have to organize against a project every six months. That was actually one of the fears of the progressives, that developers would simply be able to outlast the opposition. That’s never come to pass and there are a lot of reasons for it.
Bottom line, the city in my view is coming toward the end of infill as a workable long-term strategy for housing needs, and will have to start re-thinking its approach. As I mentioned earlier this week, that time might not be the 2021-28 Housing Element, but it is coming.
—David M. Greenwald reporting
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