WDAAC MAY ACTUALLY COST THE CITY MONEY ON AN ANNUAL BASIS


The City Projects a Positive Annual Return to City Coffers as a Result of Build-Out of this Project. However, this Estimate is Based on Accounting Methods that Assume Unsubstantiated Reduced Costs on a Per Resident Basis for Providing Basic City Services such as Public Safety and Transportation.

The City’s Finance and Budget Commission analyzed the potential financial impacts to the City and made a number of projections about the project’s financial viability with respect to income or loss to the City. Their report to the City Council on February 12, 2018 can be found at www.cityofdavis.org/home/showdocument?id=9199:

The conclusions reached by 4 of the Commissioners (with two dissenting votes) made the following observations (with emphasis added):

1. At the time of this analysis, the commission did not have available to it a development agreement with the city for the project. Therefore, any conclusions we have reached should be considered preliminary and subject to change….

6. We recommend that the commission, or if necessary an FBC subcommittee, be provided a timely opportunity to review and comment on the fiscal provisions of the proposed development agreement before its presentation to City Council for approval. “(Emphasis Added)

Surprisingly, the Finance and Budget Commission never did again review the Development Agreement before it went to Council. But nevertheless, City Staff assumed when otherwise calculating the project’s positive return to City coffers that the City’s average cost for providing services to the residents of WDAAC were only going to be 75% of the City's otherwise calculated average costs. Staff made this assumption without any quantitative explanation as to how they derived that 75% figure.

In fact, an alternate set of financial projections was proposed by Finance and Budget Commissioner Ray Solomon that specifically refutes the rosy projections by Staff. In this alternate analysis, Commissioner Solomon assumed that the current cost of providing City services to each resident will be, on average, reflected by the City’s current average costs for such services on a per resident basis.

When calculated in that manner, the average return to the City becomes a negative $150,000 to $200,00 annually.

Note: The estimates of income to and expenses by the City as a result of the WDAAC project that were prepared by Finance and Budget Commissioner Ray Solomon are contained in Appendix B.