The Vanguard has a new home, please update your bookmarks to

Saturday, December 15, 2007

Councilmember Heystek Requests City Help for Covell Gardens Residents

On November 27, the Vanguard reported on Atria Covell Gardens's increased rents that would raise rent by 8 percent for the second year in a row.

The facility's executive director, Robert Godfrey cited increased costs as the primary reason for these increases.
"I'm certainly empathetic... But it's an unfortunate reality to business right now. Lots of people we do business with are now charging us fuel surcharges, for example."
The Vanguard wrote in its commentary:

While I am empathetic to your cost concerns and understand that you are trying to run a business and make a profit, you also have to understand that you are running a business geared towards seniors. And when you run a business geared towards seniors, you are acknowledging that the residents there are on basically a fixed income. That means that they get only a 2.3 percent increase in their income--not near enough to cover an 8 percent increase, let alone for two years in a row.

When you are a business that relies on seniors for your profits, you have to recognize that the downfall of that market is that you cannot do things the way you would do them in other sectors of the economy. You cannot increase rents by more than their cost of living adjustments. Otherwise, what you will do, is put elderly people on the streets.

Finally, the Vanguard implored the Davis City Council and the City of Davis to step in to protect the vulnerable--and the most vulnerable are people on fixed incomes, some of whom do not have a lot of savings, and many of whom are not in great health.

At Tuesday's Davis City Council Meeting, Councilmember Lamar Heystek stepped in and did just that.
"I want to talk about an issue that I think all the council has heard about, it's the issue of the impending rent increases imposed by Atria Covell Gardens on the residents of that assisted living facility on Alvarado Ave. We've read about it in the Davis Enterprise, we've read about it on the internet, I have received phone calls and I have visited the facility to meet with the residents. Their concerns are very grave."
For Councilmember Heystek this was an alarming development.
"Their rent increase averages 8 percent across the units and they have reached [as high as] 12 percent. They have experienced a rent increase of 8 percent on average last year."

"I believe we have an issue that affects our most vulnerable citizens--they are our senior citizens."
Following the articles last month, the Councilmember has had contact with this in the community on this issue.
"Members of that assisted living community have approached me and asked that I bring this issue to the city council. I do not come with a solution to the problem, I don't have all the facts. I have tried to contact Robert Godfrey who is the executive director of the Atria Group."

"I do come with an idea, I believe it is our necessity and our duty to at least consider the problem as presented by the Covell Gardens Residents' Association and to act accordingly."
Councilmember Heystek looked first toward a voluntary solution, a means by which to bring the members of the two parties together to have discussion and dialogue through the city's mediation service. While this approach is voluntary, it has the potential at least to allow the resident to air their grievances and also the management to explain their rationale for the increase and the methodology by which it was created.
"I ask that the city council... request staff to invite both the represents of both the management of Atria Covell Gardens and the Covell Gardens Residents' Association to engage in the City of Davis' Community Mediation Service. I believe that this process is fair. It's a process that is bilateral in nature. It would allow Atria to convey the financial considerations that justify the rent increase, to convey the methodology by which the rent increases of individual units have been calculated. It would allow the residents to provide their testimony to the rent increase in a formal venue mediated by a neutral party. It would allow both parties to negotiate the terms of the rent increase and negotiate terms by which future rent increases could occur."
This also leaves open the door to other forms of action. However, Mr. Heystek clearly felt impelled to at least attempt to do something to help the situation.
"I believe it is important that we act, people turn to us because they believe we have the power to act. The least we can is ask staff to invite both parties to a fair mediation session. And so I make that request of council and I make that request of staff."
The council as a whole agreed and thought this was a great idea to take advantage of the services offered in this city and perhaps draw some national attention to this sort of problem.

These rent increases are set to take effect at the first of the year and Councilmember Heystek suggested that if these voluntary efforts are not effective, they ought to consider other avenues to deal with this very serious problem.

---Doug Paul Davis reporting

Friday, December 14, 2007

City Budget Plan A Tax and Spend Mirage

If you read the Davis Enterprise's Wednesday addition you would have seen a small and scant article depicting the discussion from Tuesday Night on the City's Budget. This article glossed over some very serious concerns with the city's fiscal situation to paint a fairly rosy picture. The picture fails to inform the public of the magnitude of the fiscal problems facing the city or the fact that the city council majority's plan to deal with these problems is in essence their own version of tax and spend while at the same time they ignore serious structural problems with the current budget.

City Finance Director Paul Navazio is recommending that the city consider three separate tax increases.

First he wants a public safety tax on the ballot sometime in 2009. Now City Councilmember Stephen Souza wants that on the ballot by November 2008 and made an impassioned plea as to why we need to fund police and fire immediately, however, that did not seem feasible to Mr. Navazio .

Second, Mr. Navazio wants a new sales tax on the ballot--asking for a renewal of the sales tax and an additional quarter-cent increase to pay for street and road maintenance. This would be placed before the voters in 2010.

Finally he wants to replace the parks tax with an increase in the municipal services tax in June of 2011.

So, the Davis voters will be looking at three new taxes over the next four years.

Mayor Sue Greenwald warned that seniors and others on fixed incomes are already stressed by the sales tax system, this increase could potentially put them at risk while really not adding much in additional revenue to the city.

However the most alarming statement came from Councilmember Don Saylor who proclaimed the end of the structural deficit.
"Today we really can look at the structural deficit as we refer to so often as something within our grasp. The numbers are so small that they will be taken care of by small increases in the economic development plans that are already underway."
Councilmember Lamar Heystek remains very concerned about the structural deficit and is reluctant to support new taxes without a demonstration up front that we have improved things with current funds before we ask for additional funds.

The bottom line is that we really have not even dealt with the issue of a structural deficit.

According to Mayor Sue Greenwald
"We have a structural deficit, we haven't really done anything to improve it, we've just changed our accounting principals, made them less conservative. But that also means it's going to be more sensitive to downturns in the real estate market and other potentially recessionary phenomena."
In fact the problem is far worse than that. She continued:
"We have not only not reduced it [structural deficit] but we've also made ourselves more vulnerable to our PERS contributions."
If a problem occurs our payments may go up greatly increasing our structural deficit

We have also not begun to account our unfunded liability which would take $4.2 million a year to pay off.

The 800 pound gorilla, according to the Mayor, is the combined water and sewer capital improvement costs; current projections place costs around $335 million. What this means is that the tax increases in the next four years being proposed by council will be in a way dwarfed by the "fee" increases we will have to pay over the next 20 years in order to simultaneously expend money on a new water supply system and a sewer capital improvement system.

As one councilmember explained to me, we have not even really dealt with the structural deficit that is really looming--that of unfunded mandates in terms of employee retirement pensions. These are not even included on the books. So to suggest that we have solved our structural deficit is very misleading. We have not even touched on the real problems.

All of these tax increases are basically what is necessary to maintain current level of service with perhaps a small increase in police and fire with the public safety tax. None of these will deal with the ballooning entitlements we are handing out to city employees upon retirement. These are lifetime benefits that we are handing out and they are right now not even on the books. That does not mean that the problem is gone. It is simply a matter that this council is trying to get reelected and push off this problem to future councils and future generations.

To me that is the heart of fiscal irresponsibility. And, when the city's budget director says:
"Our revenue and expenditures are getting pretty well balanced."
And when the city's only newspaper agrees with it and does not dispute that information:
"The city has slowly and diligently chipped away at that budget gap, bringing its spending plan more stability and reliability."
We are not being well-served and we are really not aware of the burdens that are headed our way down the road.

---Doug Paul Davis reporting

Thursday, December 13, 2007

Planning Commission Nixes City Staff Supported Project

As I sat in to listen and observe the City Of Davis Planning Commission meeting, the thought repeatedly ran through my mind as to exactly what I was doing here. This was after all, a design review and approval for a minor modification to a private resident on J St in Old East Davis. What possible interest would people who are not neighbors have in the approval of an addition to a home?

As the evening went on, I think the same question must have occurred to each of the seven people who sit on the Planning Commission itself, but it would have taken the form of, how exactly did this project come forward to this point. However, bear with me here, because what you are about to see is shear incompetence on the part of city staff, yet again, in allowing a project to go forward without proper vetting by the City Attorney and despite serious concerns from neighbors.

The applicant in this case proposed constructing a 1,469 square-foot, two-story rear addition to an existing one-story residence in the Old East Davis Neighborhood. The proposed addition would be substantial and more than double the size of the residence. The addition would result in a floor area ratio of 43.4%.

One of the key factors here was a large 32” diameter Chinese hackberry that is located in the rear yard. The tree constrains development. To minimize potential impacts to the tree, the addition is pushed back 12 feet from the tree and results in a proposal to reduce the north side yard setback to 1’-8” for both stories. A new front porch would also replace the existing porch and new landscaping installed. A small second-story deck would be located on the south side elevation.

In other words, the applicant claimed that in order not to kill the tree, the addition had to be a certain distance away, this forced it to almost abut the south side of the property line. Only 20 inches would separate the northern edge of the home from a fence. Now think about 20 inches for a second and how narrow that is. City ordinance requires a five foot setback for the first floor and 10 feet for the second floor. The applicant in this case is asking for 20 inches on both floors and what is essentially for all intents and purposes a 20 foot high wall to be only 20 inches from the property line.

The staff report suggests as follows:
"Staff recognizes that the addition is sizeable and that the 1’-8” side setback is a substantial reduction in the setback requirements. Although it reduces the sense of openness on the north side, it preserves other useable areas in the yard and does not significantly impact the adjacent parking area. The Zoning Code gives the Planning Commission the discretion to reduce the side setback in the R-2 CD district in order to protect significant landscaping. The Planning Commission has discretionary approval over the project and may deny the project or request changes that it deems appropriate."
The staff report acknowledged that concerns were raised, and I focus on two of these concerns.

"Concerns were raised that the reduced side setback would have visual impacts; that it would not be consistent with side yard setback generally found in the neighborhood; and that it could set a precedent for future projects. Additionally, concerns for maintenance, drainage, and fire issues in the side yard were mentioned. It was noted that other buildings in neighborhood had zero setbacks though they were generally accessory structures and/or single-story. The question was asked whether the addition could be placed further to the rear instead of the side."
This is a key point because the answer we are given is that the reason that it cannot be moved closer to the rear of the lot rather than the side is the tree and concerns that it will encroach on the tree.
"The R-2 CD zoning provides flexibility allowing the Planning Commission to reduce the side setback to protect historic landscaping."
The staff is claiming that the tree, a mature Chinese hackberry, represents historic landscaping and that building near the back could endanger the tree. The owner had an arborist testify to this effect, although it was unclear from that testimony how close they could actually get to the tree, the arborist appeared to suggest that it would be considerably closer than the current design.

The other complaint that was registered had to do with the size of the addition. For me, the tree issue was only part of the concern here, the other was, why they had to build such a large addition to begin with.
"There was concern that the addition was too large and that the mass and scale of the new structure would be out of proportion for the lot and the neighborhood and would have insufficient open space. Particularly, there was concern that it would overwhelm the nearby historic Tufts House.

The proposed addition is substantial and results in a FAR of 43.4% that exceeds the allowable FAR of 40% by approximately 200 square feet. The zoning allows an increase in the FAR with Design Review."
In the end, despite strong objections from neighbors, the staff recommended approval for this project:
"Staff believes the project is consistent with the DDTRN Design Guidelines and that the proposed design is compatible with the neighborhood and surrounding structures and would not adversely impact the integrity of the adjacent historic resource. Staff therefore recommends that the Planning Commission approve the project based on the findings and conditions of approval."
Immediately to the north is a newly built complex of two town homes and two single family detached homes that are at this point unsold. The real estate company, Coldwell Banker and Doug Arnold, claim that this project would devalue adjacent property.
"As currently proposed, the set back for the addition at 425 J Street is only 18 inches for both the first and second story. This will create a 20-foot vertical wall that will radically change the appearance and character of the backyard area and will devalue the four properties affected.

In particular, 437 J Street will immediately lose both light and openness due to the blockage of the sky and sun. The massive and imposing new addition closing off the sky and sun will dramatically alter both the appearance and usage of the side yard and patio and will seriously devalue this property."
Bill Kopper, represented the owner of the adjacent property, Mr. Frank Skover before the Planning Commission. He presented key testimony arguing that the city had three criteria with which to grant an exception to the zoning ordinance that requires a five foot setback. The only one of these three criteria that was applicable without either a zoning change or a general Variance, was if the tree was part of an historic landscape. Mr. Kopper then went on to argue that this did not fall within the normal definition for historic landscape of which there are very few such designations in the city. Mr. Kopper successfully argued that a mature tree is not necessarily historic, nor could a tree in and of itself, be part of an historic landscape without some accompanying structure.

At this point, Mike Levy, one of the planning commissioners, asked City Planning Staffer Mike Webb point blank whether Mr. Kopper's interpretation was correct that this needed to be designated an historic landscape. Mr. Webb acknowledged that Mr. Kopper was correct. And when pressed, Mr. Webb acknowledged that unless it was deemed an historic landscape, they would have to rely on Variance procedures in order to grant such a setback.

Here is where this gets interesting. Mike Webb and Eric Lee, the planning staff, argued for approval of this project. They did so without getting a legal opinion from the City Attorney as to whether this could even be designated an historic landscape. This fact was brought up by Mr. Levy at this time and several other members of the commission wondered out loud how the planning staff would go forward with such a recommendation and more importantly how this process got this far.

Amazingly, for the next two hours, the meeting would continue with a variety of members of the public coming forward. One of the neighbors openly acknowledged that the reason for the addition was retribution for Mr. Skover building the "condos" that overlooked her property--from roughly 50 feet away.

In the end, staff worked very diligently in order to rescue this project giving the planning commissioners a number of different avenues short of outright denial. Even without the issue of the historic status of the tree which was by this point in severe doubt, the planning commission in general felt that this project was too large and the lack of setback very intrusive.

You see a very rare thing occur, by a unanimous 7-0, the Planning Commission voted down the proposal but instructed the city attorney to weigh in on this issue about the determination of the historic status, as much for future interest as for determining this project.

The question on many people's mind after the decision was finally reached late into the evening, is why the city's planning staff not only pushed for approval of this project but when it became clear that the Commission was opposed to it, continued to try to wear down the Commission into making a weaker ruling, a tactic that was actually partially successful and would have been more successful were it not for the resolve of several of the commissioners including Mr. Levy who caught on immediately that there was a legal problem and that Mr. Kopper's opinion had serous merit.

For the staff to knowingly recommend approval of this project, knowing the ordinance rules as Mr. Webb appeared to acknowledge, without seeking the opinion of the City Attorney is blatant incompetence. At the very least he wasted the time of the commissioners by failing to even check to see if this could be done in the first place and in fact if he had his druthers, the planning commission would have sent it back to the City Attorney and then possibly revisit this issue in the near future. Staff should never have come up with such a recommendation without checking on its legality and whether this tree fit the definition of an historic landscape.

In fact the suggestion at one point was that the owner could simply cut down the tree. The applicant claimed that city planner Eric Lee had told her that if she did, she could face a $40,000 fine--a preposterous claim that in fact, Mr. Lee though he hedged, never disputed.

For those wondering in the end, why this issue comes before us, it is because this is yet another example of the sheer incompetence of city staff. I have never seen a proposal that staff itself recommends be voted down unanimously but that is what happened here. You have staff failing to check to see if their recommendation was legal. You have staff pushing and carrying the water for a proposal despite strong and legitimate objections from neighbors. It was not even known whether the Planning Commission had the ability to weigh in on the judgment of the historic nature of the tree and the landscape.

In the end, the question from all involved is how this got to this point. It was a question openly asked by those on the Planning Commission. It was a question wondered through out the proceedings. While for most this is a small issue, this was extremely costly to the owner of the adjacent property who had representatives there to protect his investment in his project. And you have once again, city staff, failing to do their job in a thorough and proper manner, which ended up wasting the time of the Planning Commission and those who came before the commission. Something needs to be done about this issue in the future or the city will end up setting itself up for a very serious and expensive law suit.

---Doug Paul Davis reporting

Wednesday, December 12, 2007

Carrots and Sticks in Development Can be Transposed

It was last summer that Yolo County received an offer from developer Angelo Tsakopoulos in exchange for him being allowed to develop a huge swath of land west of the causeway, he would use some of that money to produce a stem cell research facility. However, the idea of the stem cell research facility, the size, the location, and the proximity to a flood plain weighed heavily against such a proposal. As did the fact that the proposed site was on the periphery of Davis and the Davis City Council had not been involved in any of the discussions.

Eventually this site was eliminated more or less as a viable option for the County General Plan update.

Now we get a similar story from El Dorado. Here the housing development was not the problem, however there were other concerns.

From yesterday's Sacramento Bee:
"A developer's willingness to purchase water services in advance of home construction will help the El Dorado Irrigation District weather the downturn in the housing market.

The district board Monday approved an agreement with AKT Carson Creek Investors LLC that calls for the firm to pay nearly $4.34 million in facility capacity charges for water, wastewater and recycled water service in 2008 as an advance deposit on the fees that will be levied when the residential units are built. The company owns the Carson Creek properties in the El Dorado Hills area.

District counsel Tom Cumpston said the pact is similar to contracts the district entered into in the past through assessment districts and other advance funding agreements.

"The issue is an overarching one," Cumpston said of the impetus for the agreement. "The volatility of the regional housing market has a significant effect on the district's budgeting."

Without the advance payment, he said, the district would have difficulty providing the debt service coverage for its bond program in 2008. To meet the bond obligation requirements, the district's total revenues must exceed operating expenditures, including debt payments, by 125 percent."
The story illustrates two things. First, that Tsakopoulos is willing to do a tremendous amount in exchange for the ability to develop housing developments, even in the midst of a construction slow down that is dissuading and encumbering many. A stem cell research facility would be a nice thing to bring to Yolo County, but not at this cost. Certainly not at the cost of having to allow Tsakopoulos to sink his teeth into our local community. But by the same measure, he does get it in a way some of our local leadership do not.

For there is a second lesson for all involved here and that has to do with development agreements themselves. Imagine in the next development that Davis considers, if the developer has to pay some of the huge costs that the city would ordinarily have to eat. For example, the amount of cost in services for West Village is prohibitive. UC Davis will lose money on it regardless. The City of Davis if they annex it, loses somewhat less money. But imagine if one of the conditions upon which the developer is entitled to develop the property is that they have to find a way to mitigate some of the costs for the city?

In short, the real question is are we asking developers to do enough in the city of Davis when we approve their plans?

I am not advocating more development here. Nor am I suggesting that developers need to take a loss on their project.

What I am suggesting is that we ask our developers to do more than we presently do. If they want to develop land adjacent to Davis, and we think these are good projects for the future, maybe, just maybe, we should ask for things in return, so that these developments do not negatively impact the city as much as they presently do.

Just some food for thought.

---Doug Paul Davis reporting

Tuesday, December 11, 2007

City Wants Your Participation in Parks and Rec Master Plan Survey

It is with great irony that I opened an email on Saturday from Chair of the Open Space and Habitat Commission, Kemble Pope.

He writes:
Hi David, First of all, thanks for all of the time and effort that you put forth in maintaining the Davis Vanguard as an independent source of information and as a gathering place for interested Davisites.
Yes, flattery will probably get me to pay attention and at least consider helping you out.
As you are aware, the Parks & Rec Master Plan update is underway. A survey is available online that gives residents a first opportunity to voice their opinion on the future of parks, recreation, and natural habitat in our community. I was hoping that you could encourage your readers to take 6-8 minutes out of their busy day to complete this survey... there are plenty of opportunities to broaden the assumptions of the survey questions/choices by typing your personal responses as well.

FYI, the OS&H Commission will be meeting in joint session with Parks & Rec Commission in February to discuss matters of mutual interest.
Yes, and as Mr. Pope should be aware, I have been a strong opponent of using city funds in conducting another Parks and Rec Master Plan Survey, particularly when we had a large amount of unfinished projects from the previous survey. I am far from convinced that we need to do a survey to find out what people's usage of parks resources is and how we can better serve their needs.

It's not that I do not think these are important questions--but given limited resources, I do not believe this is the best use of $75,000.

Nevertheless, I give Mr. Pope space here for the very reason that he indeed asked. I want to encourage the city to start thinking outside of the box. The city did a survey back in the spring and discovered an amazing thing, while most people still received their information about the city of Davis from the Davis Enterprise, the percentage had dropped steeply from the previous survey. The internet had strongly increased as a source for information and news about the city. For the city, trying to get information out to the public, that means that they have to use non-traditional means.

I took the survey, it is a difficult survey to take in some ways unless you use the parks a lot, I'm not sure how helpful the feedback will be. It was interesting that in the end, it asked if people should be able to smoke in the parks and then if people should be able to drink in the parks.

The big thing I have noticed in the parks especially when I take my young nieces and nephews there is that we need to be able to keep the equipment in good maintenance. Other than that, I really do not have much to say about the parks, we seem to have a good amount of parks in the city, a good mix of large parks and small neighborhood parks. In any case, the city doesn't ask the one question I wish they would, whether they should be spending $75,000 trying to figure out what the public's needs are in terms of parks and rec.

Along the same lines, I note that the owner of Westlake Plaza is requesting a change:

"to the General Plan and zoning for the center to allow a remodel of the vacant 22,000 square foot supermarket space into new retail and office suites ranging from approximately 160 square feet up to 3,000 square feet. The owner of the center has signed a lease with a small food store to occupy 3,000 square feet at the front of the former grocery store space."
So let me get this straight, the owner wants permission to take what is currently a very small grocery store space and reduce it down to 3,000 square feet for a small food store? And they already have signed a lease with a small food store? There is a Circle K less than three blocks away, what would be the difference between the "small food store" and the Circle K that is literally right down the street?
"The General Plan currently requires the center to have a grocery store/ supermarket. The new food store does not meet the 15,000 square foot requirement. With the requested amendments a grocery store would be allowed but not required at the shopping center."
There are a few things I do not understand. First, why the city is not more supportive of continuing neighborhood grocery stores. Second, the owner of Westlake has allowed the quality of the building to degrade substantially over the past 10 years. They are finally doing some basic upgrades to the facilities. The city has a continued policy that rewards owners that allow their property to degrade.

Unfortunately there was a neighborhood meeting for this last week. Now this goes before the planning commission in January and before the city council in February.

I just think West Davis can do better than to take what was once a small but functional 22,000 foot grocery store and turn it into a 3,000 foot food store.

Then again, I am still dreaming of having a Trader Joe's there as I think the proposed location in the University Mall would be a disaster in a lot of ways.

---Doug Paul Davis reporting

Monday, December 10, 2007

City Opts to Refinance DACHA to Keep Co-Op Viable and Limited Equity

In June of 2006, members of the Davis Area Cooperative Housing Association (DACHA) came forward with a series of complaints about the operations of the Cooperative.

DACHA is a 20-unit scattered site, limited equity cooperative. It was meant to provide ongoing affordability and be an alternative to affordable for-sale units. It was a non-profit and consultant development and transitioned from initially having a board to a member-led and run board.

In the staff report, Jerilyn Cochran cited a large number of challenges and observations with DACHA from a very early time. These included a number of varying agreements, meaning that different members had different agreements. The financing structure was varied, done in an expeditious manner trying to get people aboard in an inexperienced co-op, but this ended up creating financial instabilities.

There was an unaffordable share price of $18,000 to begin with. This was unaffordable for many low and moderate families to come up with. In addition, the original board was not representative of the members.

The developer fees involved here, as Ms. Cochran described, are not unusual except that in an affordable housing project, this adds to costs and compounds the problem of unaffordability. The developers in this case are Neighborhood Partners--David Thompson and Luke Watkins.

Furthermore, there were inadequate reserves and poor record keeping from the beginning. They had problems with sustaining another housing organization--it currently costs $52,000 to sustain the co-op, that is a huge cost that others do not have. And finally, from the city's standpoint, there has been a tremendous amount of staff time required in monitoring and technical assistance with this model.

The 2006 audit found that this was not sustainable in the long-term. Around this time, the members got an invoice from Neighborhood Partners from which they had no money to pay and they questioned the validity of the invoice. The contract was terminated by the members. There have been conflicting accounts of who offered and who declined mediation.

Neighborhood Partners in December of 2006 filed a lawsuit against the members of DACHA.

The city was asked to review the financing, sustainability and affordability of the project. The city found major sustainability issues. They do not have the money to pay the loan obligations. They do not have the money to adapt to the balloon and adjustable rate financing once that comes due. The financing is not helping to contribute to the sustainability of the project.

They also found marketability issues. There are issues with the unit size, the share price, the uncertainty of the co-op and the carrying charges. The impact of the lawsuit is contributing to the problem.

There are also issues of good faith with the members. The members have lost faith in the co-op. There are a number of reasons for this. There have been inconsistent rules applied to the different members. There are unstable carrying charges--there was no understanding that there would be perpetual carrying charges or that the debt would be perpetual, they could never pay down the debt.

Further they were misled about the model itself. This was the source of complaint in mid-2006. Some of the members were qualified with inadequate income. They did not make enough money to move into DACHA. The members have had to spend a lot of time moving into this project especially compared with other types of ownership.

The city then last Tuesday proposed refinancing goals as a major step toward getting that project sustainable and restoring good faith.

The first goal would be that this not increase the current costs to members. Next, is affordability and the idea to assure the long-term affordability of this project to its members. Furtherm there would be assurances that no one would be evicted due to refinancing. They would establish adequate reserves, refinance substandard loans while releasing obligations to others.

They will evaluate the cooperative model after stabilization. The terms will be no more favorable than other projects. Three percent interest rate is standard for city projects. Provide a justifiable basis for refinancing and then finally establish clear preservation goals for the project.

This refinancing would be $4.1 million, 30 year fixed rate at 3 percent per year. This would provide annual income of $214,428 to the redevelopment agency for a total of $6,432,840 going to the agency of the terms of the 30-year agreement.

The results of this refinancing are as follows. It will establish affordability and reserves for its members. It will stabilize the debt and carrying charges. It will reduce the share prices. Part of the problem with marketability is the high share prices starting at $18,000 now it is up to $27,000 which is a tremendous amount for a new person buying into DACHA to pay. So part of this finance would help stabilize there prices for future and existing members.

This will help them evaluate the model in more favorable circumstances in the future. It will allow continuing limited equity which will enable the units to stay affordable. There would be regular repayments to the city and redevelopment agency. This will also enable a good deal more control by the city and redevelopment agency over DACHA.

Critics of the Neighborhood Partners charged that the membership was sold into this arrangement based on false, promised, misleading statements, and an unworkable structure.

From my standpoint, this refinancing is probably the best solution. In June of last year, the members of DACHA stated that they were led to believe that this was a means to own a home outright. That was clearly never the intention of DACHA, whether that was what the membership was led to believe in order to gain their initial buy-in is an open question.

For their part, David Thompson and Luke Watkins issued forth a lengthy statement to the Vanguard that is excerpted here.
"NP commends the city staff for proposing the comprehensive refinancing of the Davis Area Cooperative Housing Association. Their plan is good for the DACHA families."

"We are also glad to see the staff pointing out the problem of the diminishing size of the affordable home units which reduced the value being obtained. We brought this problem up almost three years ago and provided detailed information to the Social Services Commission and staff on the shrinking size of the affordable units. We do hope that the city will now set a formula for minimum standards that works both for the developer and affordable housing.

As part of the process we look forward to DACHA honoring its contractual obligations to NP for the work we have done. DACHA staying as a limited equity housing co-op was one of our major goals and this financing allows that to occur. As the original demand of the co-op members was to own the homes by dissolving the co-op we commit ourselves to ensuring that if anything does occur that these homes will be made available by lottery after a very public process. We will make sure that the law on limited equity housing cooperatives is maintained and that no co-op member will have any private gain from the dissolution of the co-op. DACHA must remain a community asset."
Critics such as Mayor Sue Greenwald and Councilmember Lamar Heystek, as well as key members of both the Senior Citizens and Social Services Commissions, clearly have very serious concerns about the handling of this project from the start. Frankly, the fact that Neighborhood Partners turned around and sued DACHA looks very bad for the partners, as they are in essence suing low-income residents who have put up their meager assets and bought into this project. There are further concerns that this arrangement is being extended to Rancho Yolo at the same time the city is in essence bailing out the Neighborhood Partners on DACHA.

Leaving the question of what was promised and offered to the members as a condition of buying into the co-op aside, I think the plan that has emerged from the city staff is is a good solution for all involved. The city will keep DACHA as a limited equity housing co-op which will enable it to retain the income restricted requirements giving us a permanently affordable housing option which is much needed in this community. However, it also relieves a good deal of burden from the membership themselves--giving them housing at an affordable price. It enables those who were not intending to live in a co-op a chance to get out and recoup most of their costs while allowing others to either stay or buy into the co-op at an affordable price in the future.

---Doug Paul Davis reporting

Sunday, December 09, 2007

How Much Does Davis Need to Grow Now?

When Measure X was on the ballot, the council majority made it a point to talk about state mandated growth. RHNA indeed sets the state guidelines for growth, however, traditionally any sanction has been a slap on the wrist. While those penalties now may be more serious, the actual RHNA required growth for Davis--defined as Davis' fairshare--is actually quite low.

In terms of state mandated growth for the next 10 years, we are talking on the order of a couple of small projects.

The real growth inducer is now the city's own and SELF-IMPOSED 1% growth requirement.

The City Council majority of Stephen Souza, Don Saylor, and Ruth Asmundson in September, upheld that goal.

Councilmember Souza argued that we are a community that grows by initiative now.
"So it doesn’t matter if you have a one percent, a half percent, ten percent, whatever the percent may be. The determination of where, when and how much we shall grow is determined by the residents of this town. That’s the policy we have, and unless we’re going to amend that policy, that’s the true policy that determines when, where and how we’ll grow."
There is an element of truth to that. Any peripheral development is required by law to obtain a Measure J vote. Any infill is not, and though there are not many locations for which infill would occur, any major project the council likely to ask for a vote anyway.

The tricky part though is that Mr. Souza is also incorrect. Growth is also determined by the planning process and the Housing Element update process. The locations and size will be largely determined by what spots on the map the Housing Element recommends for future growth. If the Housing Element recommends 1% worth of developments that will lead to more potential for growth than .5%.

The community rallied against Covell Village because of the magnitude of the project and likely foreseen disruption it would cause. Would there be future outcry against smaller and less burdensome projects? It seems unlikely.

The developers who propose these projects have a built-in advantage in that they have money and organization already in place in order to run Measure J elections. Grassroots movements are likely to be underfunded and disorganized. A large number of Measure J votes will leave them tired and depleted.

Thus having a rearguard defense is not enough. The key for proponents of slower growth is the gatekeeping power--the ability to determine which projects go forward and which do not.

During the Covell Village Arguments, the City Council Major argued that SACOG's Fair Share numbers required us to grow at a given rate. Now that these numbers have been reduced, suddenly they are not as important. Indeed in September they argued that these are merely goals and they know we will come in well under 1% growth rate.

This argument largely ignores the fact that we will grow by whatever amount of proposals are actually placed onto the Housing Element Update. It seems unlikely that projects that are selected will not ultimately go forward as Measure J votes in the development process and as I mentioned earlier, it seems even less likely that all but the most massive and disruptive would then be approved.

For too long the argument has been that we have to obtain a certain level of growth, the state mandates it. Now with the new RHNA numbers said to require much lower growth rates than we place upon ourselves and with a depressed housing market, the pressure to grow will be much reduced. The question is whether that means that the council will ease up on its goals for growth over the next ten years. That seems much less certain.

---Doug Paul Davis reporting