As SB 2 Takes Effect, Impact on Davis’ Affordable Housing Remains Unclear

Effective this week, pursuant to Senate Bill 2, the Yolo County Clerk’s Office announced that documents accepted for recording “may be charged an additional $75.”  SB 2 was passed last fall to create a permanent source of funding for affordable housing, and is projected to collect $1.2 billion statewide over the next five years. In total, including federal, local and private matching funds, committee estimates expect SB 2 will collect nearly $5.8 billion.

The fees of $75 and no more than $225 “shall be paid at the time of recording of every real estate instrument, paper, or notice required or permitted by law to be recorded, except those expressly exempted from payment of recording fees, per each single transaction per parcel of real property,” the clerk’s office announced.

SB 2 was one of many bills passed in September attempting to alleviate the housing crisis.  The impact on Davis remains unclear.

City Manager Mike Webb told the Vanguard that the funds for SB 2 are supposed to be distributed in a way similar to CDBG (Community Development Block Grant) dollars.

“We are looking to see if we can develop an estimate for what Davis would receive.  The funds are supposed to be limited to affordable housing so would arguably go to the affordable housing trust fund,” Mike Webb told the Vanguard.

At first glance, SB 2 would seem to only generate a modest amount of money, collecting perhaps $200 to $300 million per year in real-estate document fees.  However, the state estimates the bill would generate more than $5 billion over the next five years once the fees are matched with federal, local and private matching funds.

That funding would go to the development of housing for low-income residents – those making 80 percent or less of the median income in the community.

A big challenge for local communities is generating funding to build while also maintaining affordable housing stock.

In October, Robb Davis noted that the city used to get about $2 million a year from Redevelopment Agency (RDA) funds, which could support such affordable housing projects.  With the loss of RDA, that
revenue stream is gone.

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

The revenue stream for affordable housing will not come right away.

In a release from Senator Toni Atkins last September, it noted that half of the revenue generated this year from SB 2 will go toward reducing homelessness throughout California while the other half will go “directly to local governments to update community plans in order to improve neighborhood quality of life and spur housing growth in locations where it makes the most sense.”

After year one, “70 percent of the revenue will go directly to communities to create affordable housing and 30 percent will fund existing state housing programs.

“Homelessness has become a humanitarian crisis in many areas of California, and my home city of San Diego has been hit hard. There’s far too much suffering on our streets,” Atkins said. “SB 2 will help by providing desperately needed funding for permanent housing with supportive services to stabilize people who are living with significant medical or mental-health issues.”

Lisa Hershey, executive director of Housing California, a sponsor of SB 2, said, “The package of housing bills passed this year would not have resulted in construction of affordable homes without state investment – Senate Bill 2 offers that first influx of funding. Housing California is thankful to Senator Atkins for her years of leadership and fortitude alongside advocates, residents, multisector allies and other legislative champions to break through barriers and spring-board solutions that will start to create access to a more equitable and inclusive California.”

Ray Pearl, executive director of the California Housing Consortium, another sponsor of the bill, said, “It is a remarkable victory that California secured this significant investment in affordable homes to help struggling families and seniors in all communities across our state. The housing community is proud to be part of the massive effort to turn the tide on the crushing housing catastrophe, and we are incredibly grateful for the persistent leadership of Senator Atkins, who tirelessly fought to make housing a top priority for years.”

In the meantime, as the Vanguard has reported, the city will also look at a social services tax that generates from $500,000 to $750,000 annuals for affordable housing.

Mayor Davis explained in December that, while it will not fill the gap for the loss of RDA, “it provides critical resources for affordable housing and services for homeless and vulnerable individuals.”

He explained that “the revenue can support our housing trust fund to help maintain existing affordable housing stock in the city. The trust fund can also be leveraged to build new affordable units if and when land dedication sites come forward.”

Between the local sources and state funding from SB 2 and SB 3, if approved, the city could have a lot of the funding it lost under RDA.

But, even with funding, the challenges remain in finding the land and the developers to build the affordable housing we need.  Right now the city is relying on relatively small infill sites to build rental housing, in an attempt to provide for student housing and improve the vacancy rate.

Right now, however, it is unclear how this process would work.

—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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2 Comments

  1. Jeff M

    Two related questions come to mind.

    1. As individuals, are we entitled to live where we cannot afford to live?

    2. As communities, what is the extent of our responsibility to provide affordable housing?

    My perspective is to let market forces manage supply and demand.  But when cities like Davis restrict land-use with such extremism the market forces are broken and hence there can be no supply-demand balance.

    Nevertheless, this is the reality of the community and it has decided it wants to be an expensive place to live.  And I think generally people should not be entitled to live where they cannot afford to live…. except (and this gets to my #2).

    I think as a community Davis should accept responsibility for allowing/providing adequate affordable housing for the college-age students.  The reason is that this cohort has not yet launched to their careers where they earn their own living to decide what they can or cannot afford.   I believe we have a moral obligation for young people in general… to help them succeed in their education so that they are more successful and more productive members of society.

    Next, I believe that we should develop a number of shelter beds that is some percentage of our general population, and then implement a no-camping, no-loitering and no pan-handling ordinance that is strictly enforced.   Basically require everyone to have a bed assignment or make them unwelcome.

    Lastly, I think we need a public service to deal with the 15% of homeless that are drug addicts and mental health cases.

    1. David Greenwald

      While I understand your perspective, my answer to your question 1 is that I don’t think the question is whether people are “entitled” to live in a place they can’t afford, rather do we as a community want to price people out of this community or do we wish to provide some housing for more modest income people.  Keep in mind, we are talking about – in general housing for people making 50,000 to 70,000 (for the most part).

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