Council Says No To Mace Parke Project

The Davis City Council had previously approved the Mace Parke project on a land dedication site at 2990 Fifth Street as a residential and office mixed-use subdivision with 29 affordable ownership units and just under 10,000 square feet of non-profit office space.  It would have been developed by CHOC under the community land trust ownership model where CHOC would maintain ownership of the land that the project is developed upon through a community trust, and would lease individual lots to the buyers/owners of the single-family detached homes.

CHOC came back before the council on Tuesday asking that the City and the Redevelopment agency approve them to proceed with the project that does not use the community land trust model.

But the big change was that originally city had awarded the project $1.2 million, now CHOC was coming back to ask the city for an additional $1.999 million for a total of $3.2 million.  That means that the city would be giving out a $103,000 loan per unit.

The council balked at this suggestion.  The rationale for that amount of the loan is that there are only limited funding opportunities for a project of this sort.  The project contains 29 low and moderate ownership units, with a focus on low-income ownership in 21 units.  Recall from our previous discussion low income means up to 80% of median, which would place the targeted group at somewhere around $58,000 in income.  For that they would purchase a limited equity home that is designed with resale-restrictions and the City’s Right of First Refusal to ensure resale to income-qualified buyers.

Staff was supportive of CHOC proceeding without the land trust model given the current financial realities.  They simply argued that the city could achieve the same goals without the land trust model as it could with it.  And they were probably correct about this point.  The bigger issue seemed to be the increased cost of the project to the city.

In addition, the project itself was mixed-use, which is unique among affordable projects.

However, a couple of factors weighed heavily against the project.

First, it is only 29 units total, which means while it would supply some affordable housing that the community needs, it is not going to make a huge dent into a community need. 

Second, at $103,000 several on council questioned whether the city could not make better use of those resources to help more people be able to afford homes.  Councilmember Stephen Souza in fact suggested that the city might be able to help more by simply providing $10,000 a piece to help people qualify for market rate homes.  While that may have been an off-the-cuff suggestion, he may also be onto something.

The city needs to think in those terms since it has very limited resources.  If the city established an affordable housing program aimed toward people in the low income bracket and toward getting people ownership opportunities such a program might be the way to go.  There would need to be two key components to it.  First, it would need assist with start up funding for a down payment.  Second, it would need a program to help these low income individuals qualify for a loan.  The city could look into ways to help guarantee loans to low income individuals. 

Before people balk at this idea, remember that essentially the city has done that for DACHA and was asked to do that in this project.  Had council approved it, they would have loaned $3.2 million for this project on top of the $4.2 million for the DACHA project.  That nearly $7.5 million would have been loans for just 49 units.  This should not be read as judgment against either project, but that just does not seem to be the best use of city resources.

If we went to a loan program, that $7.5 million could be spread, $10,000 at a time to 750 people.  There is of course some risk to helping to guarantee loans for low income residents, but then again, the city has undergone considerable risk with the loans it has made to DACHA which remain in danger of default at this point unless something has changed in the last three weeks.

The point here is that the city might be able to bring about much more in the way of low income housing if they change the way they finance these projects.  Given the tight housing market right now, the city actually has an opportunity to proceed if it were prepared to do so.

The city has two opportunities to look into these new proposals.  First, the City Council is set to review the city’s affordable housing program.  That is on the long range calendar but ought be looked at sometime before the end of the calendar year.  Also following the Vanguard’s story on the city’s affordable housing program on Monday, a member of the Social Services Commission contacted the Vanguard about possibly having some sort of workshop with that Commission.

For once, the City Council took a step back before plunging in with additional funding for a project without thinking through the ramifications fully.  It is not that this project was unworthy and at the original rate of investment, just over $30,000 per unit, it made some sense.  At over $100,000 it seems there could be far better and more efficient uses of Redevelopment Funding and the city should seize the moment to actually jump on the possibilities.

—David M. Greenwald reporting