Aggie Square: The Distribution of Shareable Economic Benefits

Under construction.

The distribution of economic benefits from Aggie Square can be gleaned from reviewing six separate agreements:

  • UCD entered into an affiliation agreement with the Alice Waters Edible Schoolyard Foundation in June 2020.
  • UCD executed ground lease term sheets with its private development partner in September 2020.
  • UCD executed a predevelopment agreement with its private development partner in September 2020 which set the expected profits for the developer.
  • The City and UCD entered into a partnership agreement between themselves relating to the sharing of tax revenues to support the project in April 2021.
  • The City and UCD entered into a Community Benefit Partnership Agreement (without the community as a signatory) in April 2021 to address a pending lawsuit brought by community activists.
  • The City and UCD entered into a master development agreement in September 2021 which included additional financial benefits for UCD.

Taken together, the agreements represent how the shareable economic benefits were split between the UCD Medical Campus, a multi-billion-dollar healthcare institution, and Oak Park, a neighborhood racked by decades of systemic racism and the suppression of homeownership and economic opportunities.

(1) The first of six key development agreements, the MOU between UCD and the Edible Schoolyards Project is directed towards a national agenda and does not indicate any sharing of economic benefits with neighboring communities. The MOU sets forth a mutual agreement between UCD and Alice Waters to explore fundraising for an Alice Water’s Institute of Edible Education. The mission of the Institute is to “model and promote edible education – a comprehensive program to unite education with school lunch; builds and shares a national edible education curriculum for pre-kindergarten through high school; and has a vision that includes gardens and kitchens as interactive classrooms for all academic subjects, and a sustainable, delicious, and free lunch for every student.” The potential for sharing economic benefits from this component of the project, based on the size of the prospective endowment of $165 million, is estimated at $4.125 million. However, no funding for the community is tied to this initiative.

(2) The ground lease documents released to date (term sheets executed September 2020) do not indicate that any of the $29.8 million in potentially shareable revenues to be received by UCD were allocated to adjacent communities. There is only passing mention in meeting minutes that ground lease payments associated with on-site luxury apartments may be reduced to make the rents more affordable to benefit UCD faculty, fellows, and students.

(3) The predevelopment agreement between UCD and their private development partner to develop $850 million in building assets does not indicate any sharing of economic benefits with the community. The potential for shareable economic benefits association with development of the project is estimated at approximately $1.1 million. No community funding is mentioned in this agreement.

(4) The agreement between the City and UCD to create a financing district to support Aggie Square allocates 80%, or approximately $30 million, of the City’s share of property tax back to UCD. This subsidy can be used to fund site improvements, infrastructure, common area amenities, the parking garage for both phases of the project, and the Alice Waters Institute of Edible Education building.

(5) A CBPA was executed between the City and UCD to, among other things, allocate a portion of the shareable economic benefits to adjacent communities. However, many of the items identified in the CBPA do not represent a share of economic benefits from Aggie Square project, nor are the primary beneficiaries the residents of Oak Park.  For example, the CBPA identifies the on-site luxury housing for UCD faculty, fellows, and students as a benefit to the residents of Oak Park when the objective of on-site housing, based on the recommendation from UCD’s market consultant, is to relocate students concerned with crime in Oak Park to the on-site apartments. UCD has placed such a priority on insulating faculty, fellows and students from Oak Park that the luxury apartments are the only component of Aggie Square that is under consideration to receive a break on ground lease payments. See below for further details and a table of benefits.

(6) The master development agreement between the City and UCD’s development partner identifies a new subsidy for the project based on a previous agreement between the City and the Centene Corporation. The Centene agreement provides that corporation $9,000 per new employee up to 1,500 employees or $13.5 million. No community benefits are identified in this agreement.

Below is an itemized list of the purported benefits from the CBPA along with a brief analysis of the beneficiaries of the item and the funding source.

Affordable housing: The City has allocated $16 million of the shareable property tax increment to support housing programs in Oak Park and other surrounding neighborhoods. The City is contributing funding from other sources as well to create a $50 million Stockton Boulevard Area Affordable Housing Fund. Based on the initial use of these funds, a $10 million contribution to a rental project, just a fraction of this funding will directly benefit residents of Oak Park. The primary benefit to residents of Oak Park is the reduced rents offered in the rental projects. Most of the funding, however, will simply increase the asset base of the housing developers building the units – with rents paid by Oak Park residents. The estimated present value savings to Oak Park residents from the $10 million commitment is $1.47 million. If this same approach is used with the balance of the $16 million funding, the direct benefit to Oak Park residents will approximate $2.4 million.

Housing assistance and anti-displacement efforts: The City and UCD are planning to each raise $2.5 million to create a $5 million fund. While the program is undefined at this time, for this analysis it is assumed that all funding from this program will benefit Oak Park residents directly. For purposes of this analysis, it is assumed that this funding is allocated to the Cash Assets segment of the project financing.

Student housing: The CBPA claims development of 200 beds for student-oriented housing as a benefit, however, based on the discussion above these on-site luxury apartments are exclusively benefitting UCD.

Jobs and Workforce Development: The CBPA identifies a number of strategies to employee area residents in the construction and operation of UCD’s expansion efforts. However, these activities are not funded with the shareable economic benefits of the project. These activities, in a challenging time for employers, primarily help UCD build it operations and accumulate assets.

Youth Opportunities and Education Support: The CBPA promises “Expanded opportunities for youth providing access to educational support and programs which promote career readiness. K-12 Youth Engagement activities including internships and mentoring, and Regular events with STEM practitioners including after school STEM programs. No portion of the shareable economic benefits are identified with this programming.

Aggie Square Community Partnership and Fund:  The CBPA commits to “establishment of Ongoing Community Fund paid through rent surcharge” to “ensure neighborhood participation and priority setting in use of Community Fund Alignment of efforts with Stockton Blvd. businesses and neighborhood.” This will be funded with a portion of the shareable economic benefits at an annual level of $150,000. For the purposes of this study the present value of this contribution is $3.0 million and it is associated with the Building Asset class..

Neighborhood Transportation Connections and Street Enhancements: The CBPA identifies several specific improvements with are necessary for the development of Aggie Square and are the obligation of UCD.  The funding of these improvements may in part come from the property tax increment rebated to UCD from the City, and therefore should not be considered a benefit to the Oak Park community. These improvements include:

  • Implementation of intersection improvements at 2nd and 3rd Street and Stockton Boulevard including bicycle access improvements.
  • Up to $1.1. million in funding (based on the fair share methodology) for Broadway/Stockton Intersection Improvements.
  • Granting of an easement to the City and construction of improvements along Aggie Square’s Stockton Boulevard frontage for off-site walking, bicycling and transit elements identified in the City’s March 2021 Draft Stockton Boulevard Corridor Study.

Community Access to Space and Resource: The CBPA identifies as access to space at a discount, if available, for community use. The value of this benefit is tagged at $1.0 million annually, but there is no guarantee that space will be available for community use. The source of funding for this benefit cannot be determined, but the language is vague enough that the reduced rent may not be a discount at all, and simply reflect the lack of a demand for certain dates and times.

Summary of distribution of benefits and public disclosures

The table below provides 1) a cross-tabulation with the shareable economic benefits discussed in previous sections, by class, and the benefits included in the CBPA, and 2) an estimate of the economic benefit data that was shared by staff with their governing boards.

Building CostLand ValueEndowmentLocal TaxesTotal
 Totals$850,433,477$37,273,420$165,000,000$48,000,000$1,100,706,897
 Shareable Benefits (%)0.125%80%2.5%100%
 Shareable Benefits ($) $1,063,042 $29,818,736 $4,125,000 $48,000,000 $83,006,778
 Distribution
CBPA
   Affordable Housing* $ 2,353,916 $ 2,353,916
   Housing Assistance $ 5,000,000 $ 5,000,000
   Student Housing                          –  
   Workforce                           –  
   Youth Opportunities                            –  
   Partnership Fund $3,000,000 $  3,000,000
   Transportation    –  
   Community Access       –  
 Totals $3,000,000 $   –   $5,000,000 $2,353,916 $10,353,916
282%0%121%5%12.5%
Shared with Governing Boards
 UCD $1,063,042 $    –   $   –   $48,000,000 $49,063,042
100%0%0%100%59%
City of Sacramento $1,063,042 $     –   $   –   $48,000,000  $49,063,042
100%0%0%100%59%
* Represents the present value of rent savings to residents from property tax increment contribution from Aggie Square to rental housing construction