Council Looks at City’s Affordable Housing Program

Last week, the Davis City Council had a discussion on the city’s affordable housing program.  Here are some of the thoughts from councilmembers.

Brett Lee said his preference is for housing that’s integrated.  He said he has problems with separate affordable and market rate developments.  “The social research that I’ve seen seems to indicate that…  when people are fully integrated it provides better outcomes for all involved.  So my strong preference would be unless there’s a reason to not do that, (integration) would be my preference.

“For general affordability, I think the idea that there are affordable units and the market rate integrated on the same parcel would be my preference,” he said.  He is willing to look for alternative ways for people to meet the affordability goals of the city “in a way that allows traditional university students to live there.  Allowing the developer to have some flexibility to have a creative approach to have some affordability for university (students) in a different way from what we’ve kind of seen in the last couple of projects.”

He said he’s not talking about squishing eight students into a building that would normally house four and calling it affordability.  He said he’s “talking about ways to build a complex where there are some units set aside and perhaps the rent is not ‘big a’ affordable for extremely low income but maybe done at a different level that allows full-time students to move in there.”

He has agreement on the mismatch “between fees being based on front doors versus bedrooms.”  He said he wanted to see the impact fees being based upon bedrooms.  “I’d also like to see density based upon bedrooms,” he said.  He said it should not be how many units per acre but rather how many bedrooms per acre that is the key indicator of density.  “I think it just is a more sensible policy to track the number of bedrooms.”

Mayor Pro Tem Lee noted that Sterling limited the occupancy to one student per bedroom, whereas Lincoln40 is looking at two students per bedroom.  He said, “Given the extreme rental housing shortage, is it so far-fetched to say a year from now, well we’re going to have four per bedroom?”  Given the shortage of rental units, “students would be willing to live in that situation.”  But he wants that to count towards density.

The mayor pro tem added, “A full exemption for mixed use, seems like that’s inappropriate.”  He said the analysis shows there is some percentage of affordable housing that would make sense and allow the developer to make money without a full exemption for that type of housing stock.

Rochelle Swanson pushed for mixed pricing within a complex and truly integrated affordable housing.  “It’s not enough that it’s across the street,” she said.

She agreed with Brett Lee that a full exemption for mixed use was not necessary but said, “I think the financials are going to dictate that.”  She suggested that staff reach out to those building
the projects to find out what some of the key financing issues are.

“Thirty-five percent of zero is still zero,” she said referring to the fact that if the units are not built because of the requirements, we get no affordable housing.  “It should probably be lower than (35 percent) so that we do see it being built.”

She also pushed for creativity to have some micro-units which are affordable by design.

She said, “I agree that number of rooms and not number of units is the appropriate number we should be looking at.”

Earlier, Will Arnold had cited Matt Williams as pointing out that existing housing is always going to be less expensive than building new housing.  Rochelle Swanson, building off that point, said we should examine our floor area ratio (FAR) requirements.  “Another group that we miss, that missing middle, some of these folks started out young and got a small house and as their families grow they end up moving to Woodland or Dixon because they can’t do a remodel that makes sense because our requirements are so tight.”

She said, “We need to be looking at density within existing neighborhoods.”

Mayor Robb Davis noted that mixed-use units are really costly to build and therefore the affordability within them is more challenging.  He wants to look at Davis on a finer level to examine, for instance, how to incentivize mixed-use housing in the downtown.

“What’s the reality of trying to achieve an affordable unit in the downtown given the land prices and small parcel sizes?” he asked.

Housing is one of the more complex issues they deal with on council.  He noted in the past the city built larger housing developments which enabled them to have relatively large dedicated sites to build large “a” affordable housing.

“Those days now largely are done,” he said.  “We aren’t getting any large developments like that that lead to that kind of ability to create the affordable set aside inside.”

He also noted we need to keep talking about the disappearance of RDA (Redevelopment Agency) and the $2 million a year that used to come from that.  “The reason that’s important is that we do have this large stock of capital ‘a’ affordable housing that is at risk.  It’s at risk because it’s just going to fall apart.  And that’s probably our fault historically for not making sure that the amount of money that was being set aside for rehabilitation was built into the pricing of the development.

“We do need a revenue stream just to make sure we maintain some of the housing that’s aging now,” he said.  And what is that revenue stream?

He also asked what can we expect from state funds that were just passed and what can they be used for?  Can they only be used for new construction?  Can they only be used for capital “a” affordable housing?  “We need more on that,” he said.

For Robb Davis, the bottom line he saw was that we want workforce rental housing to come to the market. We want to figure out how to incentivize it.

Right now, we have a stomach for more student-oriented housing, but he questions whether that is going to remain forever, because what we really need is to incentivize dense workforce housing.

“While we recognize that we need more student-oriented housing and we pushed the university to do more, we also recognize that that’s not meeting the needs of people who work here and are not students,” he said.

He said “if our affordable 35 percent (requirement) is meaning that people are not going to build them, then it is time to review that.”

He said regardless of whether it’s student-oriented or workforce, “we’ve got to find that sweet spot where there’s an incentive to cross-subsidize within a rental property a certain number of affordable units.”

He said that’s important because “it means we will get new units built.  We need new units built.”

And this gets away from having segregated and set-aside affordable housing and toward integrated units.

He said we want to move away from projects with a low number of units with a lot of rooms, to something that is going to “make housing more available for families and others besides students.”

On in-lieu fees, he said he has been in favor of them because of our trust fund, but he wants to find other funding sources so they can move away from in-lieu fees.  “Just do away (with) in-lieu fees in my opinion,” he said, but we need to find a revenue stream and then set in-lieu fees really high to disincentivize their use.

The bottom line from the council is projects that integrate affordable within the projects, and reviewing inclusionary percentages in rental projects to see if they are stymying project proposals coming forward.

They are all concerned about students – not just building for students but creating affordable student housing – and, finally, not just charging by unit, but actually looking at the number of rooms and putting that back into the balance.

—David M. Greenwald reporting