Sunday Commentary: Affordable Housing Deal Looms Large

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A deal that was cut back in November 2012 looms large in the current campaign for Nishi.  A provision was included in the pre-development agreement that would exempt the project from affordable housing: “If residential density is greater than 30 units per acres gross, no affordable housing obligation or fees.”

Under the terms of the city’s affordable housing program, one-quarter of the 650 units should have been designated as affordable housing units, or the city should have received in-lieu fees that could have totaled somewhere between $6 and $11 million.  Instead, the city has received $1 million, which the council insisted on receiving during negotiations this year with the applicant.

While the legal battle has been engaged on one front by Michael Harrington, the Vanguard believes the bigger issue here is not legal, but rather political. The Affordable Housing Ordinance is a municipal ordinance, written into the municipal code. It can be changed with three votes and the council has the ability to exempt or modify on a case-by-case basis.

One key reason we believed that the Nishi Measure R vote might be more successful was the student housing crunch.  A number of students showed up in January and February to advocate for the project, which could deliver up to 1500 beds.

However, when the ballot arguments came out, amid the list of “usual” suspects opposing Nishi like Alan Pryor, Mark Spencer, Pam Nieberg and Nancy Price, was Joaquin Chavez, who is co-chair of Davis Citizens for a Living Wage and Vice President of UPTE-CWA (University Professional & Technical Employees – Communications Workers of America) Local 9119.

On the rebuttal arguments, amid Marilee Hanson, Johannes Troost, Steve Tracy and Susan Rainier, is Duane Wright, another activist.

The affordability issue looms large in the opposition.  They argue, “Nishi’s housing will not be affordable nor designed for students as promised. Because the City exempted the project from its low-income housing requirements and millions in alternative in-lieu fees, Nishi’s housing will all be luxury rental apartments and for-sale condominiums. Independent analysis projects rent for an average 1,100 sq. ft. 2-bedroom, 2-bath apartment at over $2400 a month!”

In the rebuttal they add, “Rental units are not ‘oriented towards students…with small units,’ as claimed. Instead, apartments are very large (average is 1,100 sq ft 2-bedroom, 2-bath) and affordable only to the richest students.”

The Vanguard asked Tim Ruff about the cost of the units, but he only referenced the Development Agreement which contains the unit breakdown.  The breakdown is as follows: 44  580-square-foot studio apartments;  132  780-square-foot one-bedroom apartments;   88  1100-square-foot, 2-bedroom apartments;  44  1320-square-foot, 3-bedroom apartments;  and 132 1600-square-foot, 4-bedroom apartments.

There is no cost breakdown.

Joaquin Chavez told the Vanguard, “With the impending displacement of student families from the Solano Park apartments, the crisis of available housing for UC Davis students will only deepen.”

He argues, “This is a crisis that Nishi will do nothing to alleviate, with its plan for massive, exorbitantly high-rent luxury apartments that will only compound the injury done by the development’s exemption from the city’s affordable housing requirements.”

He added, “Nishi will also impose massive costs on the city in the form of new infrastructure development and traffic impacts on the already-impacted Richards Blvd. underpass. Our city should not approve any project which fails to meet our needs for more affordable housing and will exempt big-money developers from their responsibility for costs borne by the community.”

But others, while concerned about the affordable housing deal, are more circumspect, arguing that, while the affordable housing deal is problematic, there is a large need for more rental units in the city.

While there is a belief by some that affordable housing is being used as a reason to oppose the project, some of the people who have signed up to oppose it clearly hold that issue in high regard.

The overriding belief by those who justify the current project is that increased supply will help to reduce price pressures that are being pushed upward by the extremely low 0.2 percent vacancy rate.

Pushing back against the notion that the city gifted the developers $10 to $11 million on affordable housing was Mayor Pro Tem Robb Davis, who noted that “this project IS different than most others in this city in that there is a $10-12 million price tag on gaining access to it.” He is referring to infrastructure for the grade-separated crossing, about which he notes, “The university has committed zero dollars to this and we negotiated this agreement to exclude the possibility of the City paying for it.”

He added, “I am gratified to see so many people concerned about affordable housing in Davis. “

He wrote, “Perhaps they will consider supporting my concept of establishing a parcel tax to create a Davis voucher program – a much more efficient way to get people into affordable housing than relying on one-off in-lieu fees and uncertain tax credits to build affordable-only buildings.  Why, with a parcel tax no larger than our open space tax, we could immediately house an additional 85 families within existing units without having to build anything new.”

The mayor pro tem added, “We need a revenue stream for affordable housing and there are few options. We need an efficient means to get people into rental housing. This is not all that complicated.  The good news is, it’s a special tax with guarantees on how it is spent.”

While the mayor pro tem offers an interesting outside-the-box proposal, in the longer term, we need to figure out ways to address the rental housing supply, which can in turn increase affordability.

In the meantime, the developer needs to get on top of the issue of affordability and to get us alternative numbers to work with in terms of rental costs, or he risks losing the vote on the strength of the project – the ability to provide 1500 beds to a market that is in desperate need of rental units.

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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41 thoughts on “Sunday Commentary: Affordable Housing Deal Looms Large”

  1. Tia Will

    There is no cost breakdown.”

    Is there ever ? When talking with developers prior to implementation of their projects including the Cannery, Nishi, MRIC and other apartment projects going as far back as North Star about 20 years ago right up to Trackside and some other currently in development projects, one thing that has been consistent is the developers reluctance to discuss how much the units will actually cost.

    While speaking with friends about the outcome of this kind of sticker reticence is often some version of the following. “I am supporting it because it is the kind of project that I would like to live in”. Unfortunately, once the development is built, these same folks rapidly become aware that the units are priced well above what they can afford, and they make too much to qualify for any kind of assistance. Repeatedly, the developers and those who are supportive of them rely on an optimistic tale of how the development will help ease the city housing crisis while providing the kind of place they ( whether the “they” is young professionals and affluent empty nesters seeking luxury downtown digs as in the case of Trackside, or students as recently seen in the recent Nishi support from that same demographic) would like to live. What is missing is any discussion of how much money they will have to make, or be able to borrow to actually live there.

    So once again, by making exceptions and/or allowing the payment of in lieu fees, we have developers and investors provided with profits without fully addressing the needs of the city. In the case of Nishi this has been done in a way that is transparent on the part of the city council ( kudos to Robb and Brett who have both been very willing to discuss these issues openly) but has been anything but transparent on the part of the developer who is very good at presenting an attractive project description while avoiding any mention of what will be the bottom line for many.

    From my perspective, we, as a city, are very consistent in providing aide to those who really do not need any, namely developers and investors, while withholding our assistance from those who truly are in need….namely the poor…..whether working outside the home or not.

    1. SODA

      Thanks Tia, I have often thought the same thing and was thinking that when reading this article. I have heard enough developers plead with the Planning Commission and/or CC for their projects to be approved, citing affordability etc but there is never any mention of price to my understanding. On the other hand, it is a free country and am sure there are overrides and over budget costs over the planning for them. Could the process include a range? Is that ever done?

      Am sorry but am still confused about Nishi and affordability. I read the article yesterday about the Harrington suit and thought I understood it, but now in this article, it seems that Nishi DOES quality NOT to include affordable units. Is it we agree to disagree until a judge decides?

      Has UCD made any decisions on Solano? That seems to be the best decision, rehab them for students.

    2. Mark West

      Tia:  “From my perspective, we, as a city, are very consistent in providing aide to those who really do not need any, namely developers and investors, while withholding our assistance from those who truly are in need….namely the poor…..whether working outside the home or not.”

       

      It is truly fascinating to me that the folks who make the greatest demands of developers are the same ones who complain the most about the high cost of the resulting homes. Somehow, they don’t see the connection between their demands and the resulting costs. Toy farms, grade-separated crossings, open space, land mitigation, density limits, height limits, protecting existing neighborhoods, building restrictions, fees and taxes, all add to the cost of new housing. You cannot claim to be supporting ‘those who truly are in need’ if you are at the same time demanding the very things that make the City too expensive for them to live in.

      If we truly want affordable housing then we need to build truly affordable housing. Everything else is just make-believe.

       

       

       

       

      1. Tia Will

        “”Somehow, they don’t see the connection between their demands and the resulting costs.”

        I do not know if this reference was to me, but I absolutely understand the connection. I also understand that if only the developer knows how much it truly costs to build, and how much profit they expect for themselves and their investors, then everyone else is working in the dark. If those who are aware of the true costs from a career of making these estimations, and seeing how close or far off they have been were to freely share this information with the community that is making the judgements on what is of value then perhaps more realistic assessments could be made.

        In most other transactions that I can think of in our society, both parties know what the price is. When we buy clothing, food, cars…..almost everything, we know the cost in advance and can decide if the trade off is worth it to us. There are two areas that come readily to mind that do not meet this model and both quite frankly are a mess. One is hospital care where it is a herculean effort to sort out exactly what your bill actually represents. The other is community development where enormous amounts of time and energy are necessary to understand just what the true costs and trade offs are.

        While I agree with you that if we want to build “affordable housing” we need to build “affordable housing”. But unless the developers are open and honest about the true costs, there is really no way for the rest of us to know exactly what that means. And I have consistently found them very reluctant to do so.

        1. Mark West

          How much did it cost the manufacturer to produce the car that you own?  We rarely know how much profit is built into the products that we buy, or the raw materials that go into that product, we just know the final price.  Your premise is false because you are comparing the price of a finished product (house) with the cost of manufacturing (community development).

          Developers and investors generally work on ‘return on investment’ rather than a simple profit dollar amount.  They want to see a percentage return (profit) that is based on their total costs (their risk). As total costs increase, so too does the necessary profit dollar amount in order to maintain the desired percentage return. What that value is, is nobody’s business other than the developers, their investors and their financing partners. If the project does not have a reasonable rate of return, it won’t be built. When we drive up the costs of a project with ‘add-ons,’ we don’t reduce the developers profits, we just make the project more expensive for everyone who ultimately buys a house there.

           

  2. Tia Will

    Happy Easter Soda !

    Could the process include a range? Is that ever done?”

    The only times that I have ever heard it done in public have been by me when I would push at a public forum for a price range, and only then in terms of grudging agreement that the range that I proposed might be “in the right ball park”. Over the course of many, many public information meetings over the years,I have never heard a developer willingly state a proposed range.

  3. Alan Pryor

     

    A provision was included in the pre-development agreement that would exempt the project from affordable housing: “If residential density is greater than 30 units per acres gross, no affordable housing obligation or fees.”

     
    David – This phrase in your lead paragraph is incorrect. You state the above language is in the Pre-Development Agreement signed in November 2012. In fact, that phrase is only in the Staff report accompanying the Resolution and Rre-development agreement sent to the Council that night for approval. It is NOT in either the resolution or the Pre-Development Agreement signed by the City.
     
    So that phrase only shows us what was Staff’s intent was at the time. But since that language is not in either the Resolution or Pre-Development actually approved by the Council, this Staff report means nothing legally.
     
    However, even if that provision were applicable and legally justified in light of the obligations in the applicable Affordable Housing Ordinance, the project would not qualify. According to the project description, the Nishi site is 46.9 acres of which 22 is for the Office/ R&D parcels. So 46.9 acres – 22 acres means 24.9 acres are for residential development. 24.9 acres x 30 units/acre = 747 units. But there are only 650 units altogether on the 46.9 acres (440 rental and 210 for-sale units). So the density of the residential portion of the development is only 26.1 units per acre (650 units / 24.9 acres) – which is less than 30.
     

  4. CalAg

    Alan Pryor’s analysis is correct. Here is a link to the pre-development agreement.

    http://city-council.cityofdavis.org/Media/Default/Documents/PDF/CityCouncil/CouncilMeetings/Agendas/20121127/Packet/08-Nishi-Land-Use-Cost-Sharing.pdf

    The affordable housing exemption was a “preliminary anticipated deal point” proposed by staff and not adopted by the City Council. Had they actually adopted the exemption language, the project still does not meet the density target. The target was based on gross acreage (which includes roadways, open space, detention, surface parking, etc).

     

  5. Anon

    A 2 bedroom rental unit @ $2400 is quite affordable for 4 students @ $600 each.  Each bedroom would hold 2 students, which is not unreasonable.  So to call these apartments unaffordable to students is hogwash IMO.

    Nishi is exempt from the affordable housing requirement as explained in the city staff report.  If opponents want to fight this out in court, it will end up costing the city/taxpayers a ton of money.  However, my hope is the city stands firm in its position and fights back in court if necessary.  I don’t want to see any settlement as happened in the case of the surface water project.

    1. CalAg

      The City Staff report does not adequately explain or justify the affordable housing exemption.

      The relief from the City’s affordable housing requirements – regardless of whether that was a good idea or a bad idea – was improperly granted.

       

  6. Alan Miller

    Anything new (that isn’t offset by a government subsidy or write-off) will have high, if not the highest, rents.  This is due to the need to offset the debt of new construction.  Also, if the place was purchased in the last few decades, there is not Prop. 13 exemption, massively increasing property taxes.  So a new development can’t also have cheap rents.  A real estate analysis should give a pretty close analysis of market rent.  Other rents in town may creep up slightly with a new supply of high-rent housing, or creep down slightly if there is any vacancy, which there may never again be in Davis.  If there is government subsidized affordable housing, it may bring in people from out-of-town who wouldn’t otherwise live in Davis, thus a percentage of the units would not solve the problem of affordability for current residents, and creating a split market, where the losers are the working poor who are just above the income level to qualify (while the “poor” with higher but off-market incomes, do qualify for so-called affordable housing).  Meanwhile some of the money is siphoned off for the government machine, not into rent.  The only solution is to dump J/R but it won’t happen as the incentives for voters (home owners for the most part) is to keep property value high.

  7. Tia Will

    The only solution is to dump J/R but it won’t happen as the incentives for voters (home owners for the most part) is to keep property value high.”

    Unless your idea of a “solution” includes acquiring land and building until we have covered every open bit of space available and merged with Vacaville to the west and Woodland to the north, I fail to see how this provides a “solution” to the housing situation. The final consequence of this “solution” is that we build to the point where Davis is no longer seen as a unique and desirable place to live in which case fewer people except students are wanting to live here, or the university decides to downsize. I am not holding my breath for the latter. So how is this continuous growth by vote of three a solution ?

     

    1. Misanthrop

      Supply meet demand.

      Restricting supply raises prices making a college education less affordable. Davis will always be a unique and desirable place to live because of its proximity to UC Davis. It might not be your utopian vision of what you would like it to be but your premise that Davis is just another community that will become undesirable as it grows to meet the desire of those who wish to be here is flawed because it neglects to consider the value in being a host community for a major, world class, university.

      As for those three votes they are an aggregate of the will of the voting community so they represent much more than the votes of three individuals.

      1. Tia Will

        your premise that Davis is just another community that will become undesirable as it grows to meet the desire of those who wish to be here is flawed because it neglects to consider the value in being a host community for a major, world class, university.”

        Not at all. There are many cities that have universities without having the unique small city atmosphere of Davis that is loved not only by me, but by may who live here. Los Angeles, San Diego, Berkeley to name a few. It is entirely possible to destroy the nature of our community while still having the presence of UCD.

        “As for those three votes they are an aggregate of the will of the voting community so they represent much more than the votes of three individuals.”

        Sometimes this is true…..and sometimes the three votes represent the aggregate will of whomever has the ear of the three who are voting, be it developers, or environmentalists, or firefighters or local business leaders….many examples. Some are more susceptible to these voices, some are more independent thinkers. But I am sure that the “aggregate will of the voters” is not the only influence.

         

      1. Justice4All

        The MIT living wage calculator is skewed because it uses census data, which is based on county statistics and averages. The cost of living in Davis is significantly higher than the average cost of living in other parts of Yolo county like West Sacramento or Woodland. Thats why using county data to calculate the cost of living in Davis is imprecise at best.

        What is lost in this discussion is the loss of quality of life for renters. If you live in a 2 bedroom apartment with 4 other people, you have very little in the way of privacy of any kind. Low wage workers in Davis often spend more that 50% of their income on rent. That high cost will not even buy you the ability to have your own room, where a measure of quiet time, or restful sleep, or basic privacy is possible. Imagine a situation where your space is never really yours. 4 people to a single kitchen, single fridge, and a single common space is a recipe for a low quality of life even if the room mates are quiet and respectful.

         

        1. Don Shor

          The rent range for a 2-bedroom apartment in Davis, according to the 2015 Apartment Vacancy survey, was $925 – $2178 per month, with the average being $1462.00. 3 people can rent that for $500 per month each.

          1. Don Shor

            Contrary to popular belief, rents in Woodland are not that much lower than Davis (actually about the same according to rentmonkey.com), and only about 5% lower in West Sac. The big difference is what types of units are available.

    1. South of Davis

      Justice4All says that $600/month to share a room is not affordable.
      True, but I know people in Davis that share a room for half that and at least a dozen people that rent their OWN room for LESS than $600 in town.
      Can anyone name an apartment in town that rents 2 bedroom units for $2,400?

  8. CalAg

    “A deal that was cut back in November 2012 looms large in the current campaign for Nishi.” David Greenwald

    Any deal that was cut was strictly back-room. Council took no specific action regarding an affordable housing exception for this project. For that matter, where is the affordable housing plan for the project? I believe there is a legal requirement for the applicant to file an affordable housing plan as part of any exception determination.

    “The Affordable Housing Ordinance is a municipal ordinance, written into the municipal code. It can be changed with three votes and the council has the ability to exempt or modify on a case-by-case basis.” David Greenwald

    Except it didn’t. That requires a properly noticed public hearing and appropriate findings. In addition, I thought it was now uncool to “plan by exception.” If the rules are unreasonable, then they should be changed for all projects – not just for projects with an owner named Whitcombe.

    Pushing back against the notion that the city gifted the developers $10 to $11 million on affordable housing was Mayor Pro Tem Robb Davis, who noted that “this project IS different than most others in this city in that there is a $10-12 million price tag on gaining access to it.” David Greenwald

    This is finally getting to the truth of the issue.

    The initial justification that was floated for the affordable housing give-away was the pre-development agreement. The next explanation was that the Whitcombe apartment complex would be vertical mixed use. When that failed the smell test, Mike Webb floated the latest explanation, hinting that because of the project’s unusually large infrastructure burden it was given relief from its affordable housing obligations to bring the infrastructure costs to levels comparable to other projects.

    The problem is that this means the UPRR undercrossing is being paid for on the back of the City’s affordable housing program – not by the developer … even though developer-financed infrastructure is one of the main talking points for the proponents of the project.

    Given the circumstances, I don’t think the proposed parcel tax to back-fill the City’s funding needs for affordable housing is going to fly.

    1. Matt Williams

      CalAg said . . . “The problem is that this means the UPRR undercrossing is being paid for on the back of the City’s affordable housing program – not by the developer … even though developer-financed infrastructure is one of the main talking points for the proponents of the project.”

      When I read the statement above I am very troubled by the transparency of the process that happened in the December 2015 and January and February 2016 FBC meetings when the members of the FBC discussed the funding of the construction underpass.  When the FBC members discussed the recommendation that no City dollars be spent on the underpass construction, no one from staff discussed the redirection of Affordable Housing Program dollars to fund the construction of the underpass.  Given the clear connection between the two, it is hard to understand why staff remained silent.

  9. Michael Harrington

    CalAg:  ” Given the circumstances, I don’t think the proposed parcel tax to back-fill the City’s funding needs for affordable housing is going to fly.”

    You have that correct.

    1. Paul Thober

      CalAg:  ” Given the circumstances, I don’t think the proposed parcel tax to back-fill the City’s funding needs for affordable housing is going to fly.”

      Mr. Davis cannot be serious. He thinks the council can give away $11,000,000.00 to wealthy developers and then expect that 2/3 of the citizens of Davis will vote themselves another regressive parcel tax to replace it?

      Unbelievable.

  10. Michael Harrington

    I’ve been reading the back and forth.  I don’t have all the CC and staff and developer emails yet, and I have not watched or transcribed the tapes yet, but there is a very sneaky flavor of what I am seeing so far.  The true deal was to gift the AHO benefits to the developer for the under RR tunnel, but that is hidden and not in the publically available documents posted on the City’s web site.  Then the City beats its chest over and over about how there are NO public funds paying for that tunnel … oh really??

    1. CalAg

      “but that is hidden and not in the publically available documents posted on the City’s web site” Michael Harrington

      That’s a pretty serious accusation. What makes you believe there is a paper trail? Are you suggesting that Rochelle Swanson and Robb Davis (the Development Agreement negotiation subcommittee) were aware of this paper trail? Do you think it was discussed in closed session with the full council?

      I’m more inclined to believe that the developers and their allies on the staff duped the council with the vertical mixed use BS, and then they (the council) didn’t have the political courage to enforce the AHO when they realized at the 11th hour that the affordable housing story was bogus.

       

  11. skeptical

    Nishi is a sham.  Even its proponents are abandoning the cause, trying to shift the conversation to blaming Measure R (irrelevant), blaming Harrington’s lawsuit (clearly a solid case), and making excuses for improper planning, botched affordable housing policy, etc.  The City should pull this sham off the June ballot, and spare any further embarrassment.

     

    1. Don Shor

      Even its proponents are abandoning the cause,

      Actually, those of us who support the Nishi project are struck by the shrill tone of the opponents, the scattergun attacks, and the internal inconsistencies of their approach. Obviously we’re not going to debate publicly with people who litigate compulsively and use innuendo and ad hominem attacks.
      This is simple. The developers were allowed to forego the affordable housing fees, paying instead for expensive infrastructure costs up front. If you don’t like that, vote against it. Better yet, stop trying to obstruct everything and just put up a candidate for council. Planning by lawsuit is wasteful, disrespectful of the public officials who work on these projects and issues, and frankly tiresome. And probably it would be a good idea to cool the vicious rhetoric if you want to actually have a conversation. But maybe that isn’t the goal.

      1. CalAg

        “This is simple. The developers were allowed to forego the affordable housing fees, paying instead for expensive infrastructure costs up front. If you don’t like that, vote against it.” Don Shor

        Arbitrary enforcement of city ordinances isn’t legal.

        1. CalAg

          “Actually, those of us who support the Nishi project are struck by the shrill tone of the opponents, the scattergun attacks, and the internal inconsistencies of their approach. Obviously we’re not going to debate publicly with people who litigate compulsively and use innuendo and ad hominem attacks.” Don Shor

          Great. Vote for it.

          … oh sorry, I forgot. You can’t vote. On the project. ‘Cause you don’t live here.

          Well, anyway, thanks for the unsolicited advice.

          1. Don Shor

            ‘Cause you don’t live here.

            Correct. I just pay taxes here. And collect taxes here. And employ people here. And contribute to the schools and social service organizations here.
            That’s all.
            But I can see this is going to be an ongoing theme, especially from anonymous posters. Where do you live and work?

        2. CalAg

          Davis/Davis

          Just to be clear, you are the one casting aspersions.

          Open message to the founder, editor, and executive director – You need to reign in your moderator. No one likes to be harassed by this individual for posting on the Vanguard. We create free content for you. This content makes your blog considerably more interesting to read, and drives significant traffic to the site.

        3. CalAg

          DG: This is specific to the conduct of your moderator on this thread. I’m getting tired of being periodically stalked and harassed by your moderator.

          Moderator participation was a bad policy decision. It should be handed off to an intern.

           

  12. ryankelly

    Any discussion about affordable housing at Nishi is useless at this point.  It is out of the hands of the voters.   Harrington has made it clear that he will tie up this project indefinitely in the Courts if it passes, but voters just need to focus on the overall project and vote to approve or disapprove it.  Let Harrington try to convince a judge on whether the developer should pay more fees.  If the City did something wrong, then the developer can be made to pay more.   Same with the environmental concerns.  Harrington seems to think that a judge should determine whether the plan includes the planting of enough trees.  Either issue will be resolved in court, according to Mike and Don.

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