Realtors around Davis have expressed concern about the overall viability of the project describing it as small housing with limited equity that is unlikely to attract existing homeowners. They pose the question as to whether the project will fail before it even gets underway.
West Village will use a similar housing model as Aggie Village.
“It’s the same formula based model as the Aggie Village.”
According to Real Estate Services Director Ingrid Schmidt of the 37 units at Aggie Village, 22 are currently occupied by faculty, 8 by staff, 4 by the general public, and 3 are currently vacant.
While some have suggested that Aggie Village was a failure in terms of its ability to provide housing to faculty members, these numbers do not seem to bear that out.
As one poster on the Vanguard complained that as staff members they were dissuaded from putting their names in the pool for housing. The Vanguard asked about this of Ms. Hayakawa. She acknowledged that for the Aggie Village the priority was indeed faculty members, but she did not believe that staffers had been dissuaded from applying or utilizing the facility.
“The priority for Aggie Village was for Academic Senate members and faculty members but in the beginning they sold–it was pretty equal across the board. Because we only have 37 units there, in the past several years it has been used to recruit faculty. A lot of those have been offered to faculty on resale over the last couple of years just because of the scarcity of product.”
“It’s not that they’ve been dissuaded it’s just that the campus has used it to achieve other priorities.”
The suggestion is that West Village would work the same way. In fact, as Ms. Hayakawa pointed out, UC Davis is one of the few campuses that attempt to address housing for staff members at all.
“We struggled with that on the Faculty Housing Committee that put together a faculty housing policy. We were concerned with that very issue. Other universities in the system exclusively are for faculty, we’re the only one in the system that really prioritizes staff at all. So what we’ve done is that we have the pool system, so there’s the Aggie Pool, the Mustang Pool, and the Blue and Gold pool.”
According to the FAQ put out by the university, the Aggie Pool comprises half of the pool and those are exclusively UC Davis employees or employees who own homes in Aggie Village.
“Ladder-rank faculty members who have been recently recruited and staff members who have been recently recruited through national searches.”
The Mustang Pool is about 28 percent and that includes all other faculty and staff.
The Blue and Gold pool are those faculty and staff with the lowest incomes comprising about 22 percent of all the units.
As Ms. Hayakawa explained, the rationale for including existing Aggie Village home owners in the Aggie Pool is that it would free up another unit in their system while allowing people to get a slightly larger home.
“The Aggie pool also includes those who own a home in Aggie Village. So if you live in Aggie Village and you want to buy a slightly larger home, then you would be in that first pool. It would still be a lottery but you would still be in that first pool. The reason for doing that is it would still be freeing up another unit at Aggie Village.”
The key question is how large these units are and how much they will cost.
While these are limited equity homes, the costs are not set in stone and would be determined by the market.
As Nolan Zail told the Vanguard:
“The actual cost will be determined at the time they go to sale depending on the market.”
When pressed for greater levels of precision:
“If you can tell me what the market is going to look like in a couple of years time, I can be more precise with you. There are price caps that we can’t go beyond and those have been predetermined. But the actual price will be determined at the time we go to sale. I think in the press release we give the indication that they’ll be starting around $400,000, but really to be honest the prices will be determined at the time of the sale.”
That $400,000 will be for the smaller homes.
“They’re currently under design and they’re going to range from right about 1300 square feet up to about 2600 square feet. That’s the range. Probably most of them will be around 1300 to maybe 1500-1600 square feet.”
So for most of these units, they will be in the 1300 to 1600 square foot range. And the thing to remember, these are not full equity homes.
“It’s actually not a shared equity system, there’s just an appreciation cap. It’s based on formula, but there’s no shared equity model.”
“The re-sale price is based on a formula, based upon a faculty salary index. For Aggie Village the higher of the CPI and the faculty salary index. That’s just the formula price. So if you paid $400,000 for your home and you owned it for so many years, you look at those indices and that would give you the re-sale price.”
For people looking to build equity, this is probably not the route to go.
“They are not considered to be market rate homes. It’s not for huge investment. It will be capped to the higher CPI or Faculty Salary Index. That’s how Aggie Village works. You don’t have a huge capital appreciation on home ownership for that. Unless CPI goes crazy.”
Ms. Hayakawa also made it clear to the Vanguard that this is not a low income housing model.
“It wasn’t built up from a low income housing model. The prices were not set that way.”
Mr. Zail argues that this is a project about the community rather than the square-footage.
“I’m a little bit cautious about equating dollars with square-footage, what you’re really getting at West Village with the single-family homes is more than just square footage. It’s the quality of space both inside and outside. And also our amenities and spaces that are associated with the home. So I think you have to focus on what you get and less on square footage. You’re getting a quality brand-new three bedroom home with quality spaces is where we focus on more than a square-footage game.”
The jury is out on this project. While they argue that this will be below market rate, it does not appear to be much below market rate if you believe the numbers 1300 square foot homes with limited yards for $400,000. The kicker there is the limited equity. For faculty members who wish to live close to campus, this might be enticing, but the realtor I spoke with cautioned that from their experience, a lot of faculty members do not want a small and narrow home with limited yard space, without the prospect of equity.
The project has been billed as a huge addition to housing in Davis, but if we break it down it really might not be that big. Of the 1500 units that some bill this as, two-thirds of them are simply student housing that still will not bring the university up to par with its counterparts in terms of proportion of student housing offered on campus. One of the bigger needs the city of Davis has is to open up more student housing to accommodate UC Davis students. Surveys have shown that UC Davis ranks last in the UC system in terms of on-campus housing. That has either forced students into rental units within the city or out of the city entirely. Clearly offering 3000 additional students housing is a good start, but it probably does not even scratch the surface in terms of need, particularly if UC Davis continues to grow.
It is an open question as to whether this sort of limited equity housing can succeed on a broader basis. Some have suggested that Aggie Village struggled early in its inception and that was just a 37 unit development, this will be ten times larger and built during a tough market. Will it succeed at providing affordable housing to faculty members and staff in a nice community that people will wish to raise their children and will attact new faculty to UC Davis? That is the big question at the moment.
—David M. Greenwald reporting