By David M. Greenwald
Davis, CA – In recent years we have seen the retail portion of the Davis Downtown precipitously decline. Increasingly, the downtown has focused on food and entertainment—restaurants and bars. Movies and coffee shops.
While some have disparagingly called it a glorified food court, there is nothing wrong with that vision, in a world that has seen retail decline anyway through increased reliance on the internet.
There are some experts that believe brick and mortar can survive by making the experience part of the allure. That is certainly something to consider in a place like Davis that still attracts huge numbers of students and younger professionals near its core.
In designing the downtown plan, the city—consultants, commission, and city staff—have focused heavily on the notion of community space and then mixed use and density to bring more people into the core area.
If done right—a fair share of entertainment options, community spaces, and the right mix of food and retail—the downtown could be revitalized and tap into a younger, more urban clientele.
Right now, we see a downtown that is wasting critical space because it lacks an overall density.
I was just reading an article on Sacramento, where lawmakers are now looking to transform some old, pre-pandemic state buildings into housing.
“These are underutilized assets,” State Assemblymember Kevin McCarty said. “What we’re seeing down here is a hole in our central city. It’s not good for restaurants, for commerce, for activity.”
Under his bill, which has been passed into law, the state will transition underused state buildings into rentals and homeownership opportunities.
He said that he wants “downtown Sacramento offices to serve as a pilot program for the state.
“The state Fee and Tax department, the EDD across the way here, where there’s 2,000 people at each building who aren’t going to work anymore. They’re working, but they are working from home,” McCarty said.
That is another concern that I have—the city of Davis has taken so long to complete their downtown plan that it was designed in a wholly different era.
How much has the city re-examined the feasibility of converting low-density businesses into higher-density mixed-use projects?
As I pointed out a couple of weeks ago, the city is banking on the ability of mixed-use housing to be able to prop up and reinvigorate the downtown—which has seen a general decline, particularly in the retail sector, in recent years.
More than that, the city is counting on the downtown to fill critical housing needs, both market rate and low income.
Given a dwindling supply of vacant infill land in the city along with the continued unpredictability of peripheral development, the Downtown Plan’s 1000 or so market rate units is a vital source for infill in the coming housing cycle.
But should it be?
Back in August, we questioned the city’s reliance on 83 units of low- or very low-income housing in the downtown. Fifty-three of those low-income units are in a redevelopment of the E St. Plaza, 17 would be along Second and G, and 13 along Fourth St.—all of those are redevelopment sites.
As we pointed out, in 2018 Bay Area Economics (BAE) ran a proforma that should caution us against expectations that housing in the downtown is going to be feasible.
BAE concludes: “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.”
They added that “development feasibility in Downtown Davis is challenging under current conditions.”
If anything, those current conditions are worse now than in 2018.
To understand the difficulty here, look no further than Davis Commons. The original plan drew heavy criticism from neighbors and slow growth advocates because of its sheer size and scale.
The proposal called for the demolition of the majority of the existing University Mall building for redevelopment as a dense, mixed-use project.
The project included 264 new multi-family residential units and around 136,000 square feet of retail space—about 50 percent larger than the existing commercial footprint. This does not include the separate 13,000-foot Trader Joe’s building which will remain untouched.
There would also be a three-level parking structure containing 533 parking spaces and which would be situated on the west portion of the site, with an additional 160 surface parking spaces.
But with a strong push back from neighbors and a split council, it was ultimately approved in a modified form. Ultimately, in August 2020, then-Councilmember Brett Lee proposed a five-story modified proposal that got a bare majority of three votes, over the opposition of Will Arnold and Lucas Frerichs.
But the developers couldn’t make the compromise work.
So two years later, the project having not broken ground, Brixmor announced that it was going forward with no residential component, renamed as the Davis Collection.
At least on the surface that might spell trouble for any real prospect of housing in the downtown—particularly any possible affordable housing component.
Brixmor is a big company with deep pockets, which it was going to take do the kind of expensive redevelopment in the first place. Add in the fact that the proposed size and scale of the project was likely far larger than anything anticipated in the downtown. And yet, they couldn’t make it work at less than seven stories.
That jibes with the BAE findings from several years ago that concluded if there was going to be mixed-use redevelopment in the downtown, it was likely going to have to be very high density.
One of the recent quotes is that the fiscal analysis showed “redevelopment only made financial sense when it was greater than or equal to 4 stories tall.”
We may get a better idea, because we know the city wants to rerun the proforma to see if affordable housing is going to be practical for the downtown and that should tell us if market rate will pencil out as well.
But a few years ago, they concluded mixed-use with high-density, for-sale residential units could be feasible.
Overall, BAE concluded:
Economics improve with density.
For-sale residential may be feasible on larger lots with higher densities or larger unit sizes (that is not likely to solve housing needs for workforce or low income, however).
Office over retail may work in unique circumstances.
Parking challenges will remain—unless the city is able to do away with parking minimums.
One suggestion, though, that the city should continue to look into: “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.”
This is a big problem. The city’s plan relies on mixed-use housing to provide low income and other forms of housing for the city. It is also relying on putting more bodies in the downtown to revitalize it. But feasibility is a big problem here and it seems that issue should be revisited.
In addition, there may be other ways to get more business that doesn’t cater to entertainment and food in the downtown, but the city doesn’t appear to be exploring that either.