The University of California, Davis, today released a fiscal impact report on its proposed new residential community that examines the cost of providing public services such as police, fire and street maintenance to the neighborhood.

The campus is considering developing a 224-acre residential neighborhood on a site west of State Route 113 and south of Russell Boulevard. The neighborhood would consist of about 1,600 units for students, faculty, and staff, and include recreation fields, a community education center, commercial services and an elementary school facility. It could house about 4,350 residents.

The report, prepared by the Goodwin Consulting Group in Sacramento, analyzed two scenarios for providing public services to the neighborhood. One scenario assumes the project is annexed and served by the city of Davis. The second scenario assumes no annexation and that the campus would provide essential services.

"This is a starting point for discussions among officials from the university, city of Davis and Yolo County," said Karl Mohr, who is managing the project for the Office of Resource Management and Planning. "Although finances are a key issue, it is only one of many relating to how the neighborhood should be served."

If the city annexes and provides services to the neighborhood, the report says, the combined net gain to the county and city would be $91,000. That figure represents the difference between the costs of public services provided to the new neighborhood and the amount in property taxes and other revenues that would be raised upon annexation. However, looked at individually, the city would experience a net loss of about $336,000 while the county would generate a net gain of about $428,000.

As a result, the report states, "cooperative actions taken between the city and county could result in a break-even fiscal impact for each of the two agencies."

"The city's position is that annexing the neighborhood is preferable as long as the city's budget is kept whole," said Davis Mayor Susie Boyd. "Residents of the campus neighborhood should be able to participate in all aspects of the neighborhood and city, including voting in Davis elections. However, we have to be mindful of our precarious budget situation," she added.

For the city, annexation would enable more direct involvement in the neighborhood's development, consistency with city standards, possible fair-share housing credits, and greater property and sales tax revenues.

Yolo County Supervisor Helen Thomson said, "The County's General Plan has strong policies directing urban development into existing communities. Assuming that both the county and the city receive revenues sufficient to cover increased service costs for new community members, I think it makes sense for the city to consider annexation of this neighborhood to their existing city boundaries. I am sure that the fiscal issues can be resolved and each government entity be made whole."

Mohr noted, "If the city and county find the other reasons to annex the project to be compelling, the analysis indicates there is enough revenue to keep the city and county whole."

THE NON-ANNEXATION SCENARIO

On the other hand, if the city does not annex the new neighborhood, the university would have to levy fees on residents to pay for community services. This could mean higher rental fees for students and other fees for all residents in the neighborhood. And the university would be looking at net costs of $1,560,000 to service the site.

Mohr said those costs translate to about $950 annually per unit in the new neighborhood, which would likely have to be assessed in some form. The university does not receive the tax or fee revenue sources that the city and county does, and therefore its costs of providing services are not offset.

"If the neighborhood is not annexed, residents would essentially pay twice for services," noted John Meyer, Vice Chancellor for Resource Management and Planning at UC Davis. "Their property and sales tax revenues would flow to the city and county, but none of that revenue would offset service costs. Aside from fundamental equity questions, a service surcharge could also hinder the financial feasibility of the project."

One example of prior collaboration is the university-owned Aggie Village neighborhood along First Street. Working with the university, the city annexed the 37-unit site several years ago and agreed to allow the campus to provide police and parking services while it provided all the rest. Though the university owns the land, the project was structured to include all applicable fees, as if it was any other project in the city.

Mohr stressed the principle that the neighborhood must pay its own way for public services. "This neighborhood project will not take away campus funds for educational and instructional purposes."

In preparing the report, Goodwin Consulting Group worked closely with university, county and city financial experts to examine projected revenues and expenses for the proposed neighborhood and interviewed city, county and university officials about service costs. Once each agency has studied the report, it will serve as a basis for negotiations between the city, county and campus about how to best provide services to the proposed neighborhood.

Copies of the report are available on the campus Long Range Development Plan Web site at http://www.ormp.ucdavis.edu/environreview/2003lrdp.html, or by contacting the Office of Resource Management and Planning at (530) 752-7585.