Nishi’s Affordable Proposal Shows the Advantage of a Land Dedication Site
There are a number of advantages to having integrated affordable housing, and that was clearly the stated preference of the Social Services Commission last week when it met to discuss the Nishi affordable housing proposal.
Even prior to that, many on the council have supported the notion of integrated affordable housing rather than a land dedication site.
For example, in October, Mayor Pro Tem Brett Lee stated that 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.
But there are advantages to going the land dedication route.
In this analysis we look at the two proposals for Nishi. It appears that the Social Services Commission prefers the integrated model over the land dedication model – but as we will show there are some advantages to the land dedication model.
Either way, they are assuming a scenario where there are 1696 market rate beds (which appears somewhat lower than the proposed size of the project) and 204 affordable beds. In this case, that represents 12 percent of the beds.
As described in the affordable housing narrative: “Under this program, the 204 affordable beds would include: 50% or 102 beds with rent appropriate for the extremely low income one person household bracket which today would result in a $404 per month rental rate for each person in a double occupancy bedroom.
“The remaining 102 beds would be priced for the next very low income bracket of approximately $673 per student bed again in a double occupancy bedroom. Accordingly, all beds equal to 12% of the market rate beds would be rented at extremely low or very low income brackets.”
As Tim Ruff told the commission last week, the developers here were committing to build and complete the land dedication site (which contrasts to Sterling where they dedicated the land and $2 million, but had no commitment to actually build the affordable housing and in five years it would revert to the city).
At Nishi they plan to finance it, build it, manage it, and turn it over to a non-profit which does not pay taxes, or set up a non-profit. And the plan is to internally subsidize the land dedication project from the market rate units – which means they are not relying on external money from the state or the city to build it.
The major advantage here of course is that half of the affordable units would be “extremely low” and therefore just above $400 a month with the other half at the “very low” level, or about $680 a month, which is what Lincoln40 has with a few at the “low” income level at $800 a month.
Both projects use the same formula based on Yolo County median incomes, and rent in both projects includes utilities – gas, electric, water, internet and cable. The advantage of the land dedication site is that it allows Nishi to target a completely lower bracket.
The alternative, and apparently the preferred alternative for the Social Services Commission, is the fully integrated site.
As the narrative indicates: “This alternative would also provide a 12% ratio of double occupancy beds with these beds each renting at the very low income bracket. This program would incorporate the 204 affordable beds within the greater market rate footprint. Rather than being limited to a specific unit plan, normally a four bedroom platform, some effort could be made to mix in another, such as a two bedroom configuration, permitting a more intimate group setting. This would address differing resident preferences.”
But there are disadvantages to the fully integrated alternative.
First, what disappears is the 102 beds that would go to “extremely low” income students. That means that the rent goes from $400 or so per month to $670 or so a month.
Second, as the narrative indicates: “Because this more integrated alternative would not likely benefit from tax exemptions and possible financing economies the affordability would require greater private subsidies.”
Again the commission favored the integrated model even though there seem to be some huge advantages to going to the land dedication site. Moreover, the commission made it a point to say there would be no credit for going to that lower category.
Frankly, while there are clear reasons why a fully integrated model makes sense at times, particularly, given the social stigma associated with low income housing, in a student housing situation some of those concerns are probably reduced and the advantage of internal funding mechanisms combined with the lower income category would seem to outweigh those disadvantages.
This seems like an issue the council should take up before the Nishi project goes too far down the road.
—David M. Greenwald reporting