Extortion is the practice of obtaining something, especially money, through force or threats. Measures J/R clearly do result in additional expenses for a developer; however, the City (and the community) don’t receive any payments as a result of any of the provisions of Measures J/R. The additional developer dollars are paid out (discretionarily) to third parties, like election campaign consultants, and advertising channels, and experts providing testimony, etc.
In the last 10 years I can only think of one example of “extortion” and that example is one where the developer “extorted” an $8 million payment from the City. Of course I refer to the Cannery CFD. Not only did the developer receive that $8 million cash payment, but that $8 million payment cost the Davis taxpayers a total of $21.8 million in principal repayment, bond closing costs and interest payments.
My personal opinion is that the most important aspect of Measures J/R is that it makes it very hard for our local government to unilaterally approve those kind of giveaways. If Cannery had been approved with a Measure R vote, when New Home Company came back to the City one year after the project approval, “asking” for that $8 million “change” to the agreed-upon terms, staff and Council would have had to prepare the appropriate/relevant documentation for the voters explaining why that $8 million supplemental payment was warranted/legitimate. They also would have had to explain to the voters why they were incurring $2 million in bond closing costs and annually paying 6% interest costs each year for 30 years.
I do not believe that it is a coincidence that the only developments since 2005 that have had their fiscal impact reviewed by the Finance and Budget Commission are the Measures J/R proposals. That is a failure in process by the City. When Nishi 2016 came to the FBC, they were asking for a CFD similar to the one Cannery had been granted. In short order the members of the FBC showed the developer and City staff why a CFD at Nishi 2016 would reduce the developers’ profits by approximately $20 million, as well as cost the City taxpayers $20 million. The developer thanked the FBC for its keen insight, and quickly removed any consideration of a CFD from the table.
For me personally the biggest issue I have with the removal of the provisions of Measures J/R is the consistent inconsistency that we see from City staff in handling development applications. I will give you one example. The neighbors near the Willowbank Park site (the same neighbors who packed over 200 people into the East Davis Fire House this past Thursday night) expressed their clear desire to have the housing on that site be attached housing (condominiums) like the nearby El Macero Oaks (and many years later, the recently-built The Villas at El Macero). After extensive community dialogue, the neighbors accepted a compromise that resulted in about a third of the housing units being detached Single Family Residences (SFRs), and the remaining two-thirds as attached SFRs. Council approved that compromise project. The developer began the construction of the detached SFRs, and a bit over a year after the Council approval, very, very quietly an item appeared on the Council agenda to modify the project approval to convert all the attached SFRs (condominiums) into detached SFRs. It turns out that staff and the developer had been discussing that change behind closed doors, and the public only heard about that requested change when the Council Agenda packet was published on the City website 4 days before the Council hearing. Council approved the change. Then 6-9 months later the developer came forward to staff with an additional request to convert one of the Affordable Housing SFR units into a Market Rate SFR unit. Again, nothing was disclosed to the public until the Council Agenda packet with the item was published on the City website. Again Council rubber stamped that change. Under the provisions of Measures J/R, both those back room dealings would have had to go to a vote because they were changes to the baseline features of the originally approved project.
So, bottom-line for me, if there is any concern about “extortion” it is trumped by the inconsistent application of process by City staff and the developers.