Guest Commentary: The Legislature, Student Housing and Affordable Housing

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Affordable Apartments, Davis CA Davis VanguardBy Matt Williams

On Tuesday, October 2nd I posted a comment that described the circumstances that caused City Council to modify the Affordable Housing Ordinance in February earlier this year.  That comment can be accessed HERE.

In response to my posting of the AB 1505 information in that comment, I received two interesting responses, one was from Rik Keller here in the Vanguard about the Council decision to lower the Affordable percentage to the State’s new 15% benchmark.  You can read my response to Rik’s question HERE.  The second response was an e-mail from a Davis resident, who raised very important issues, which I believe we as a community need to be discussing. The e-mail read as follows:

Matt, I read your Vanguard comment about the State’s passage of AB 1505 with considerable interest.  Given your history as a Vanguard commenter, Chair of the Finance and Budget Commission and past City Council candidate, the fact that your comment was thought provoking did not surprise me.  As follow-up to your comment — and the Vanguard dialogue with Rik, David and Ron that followed it — I believe all citizens of Davis and their elected representatives should seriously consider that the largest part of our city’s affordable housing problem has been caused by the State and the Regents.

When the Governor and our legislators were drafting AB 1505, did they ever give any thought to or worry about “affordable housing” for California’s university students?  The available evidence says “no they did not” — and that is just the latest example of a long series of actions by the State and (to a lesser extent) the Regents that have had serious consequences for Davis.

  • First our state legislators mandate that its universities MUST enroll increasing numbers of students,
  • Then it dumps the planning and land use impacts on the universities and their local host communities to resolve — resulting in decades of corresponding, unmitigated consequences for any of those communities that are seeking financially – as well as environmentally – sustainable, long term development strategies. 
  • Then, in 2000, the legislature decided that all projects involving state subsidies must be constructed with prevailing wages – with no exemptions made for schools and universities — thereby insuring the highest possible construction costs to house such mandated growth. Achieving housing affordability while incurring the highest possible construction costs is a daunting task.
  • And, then we are told these actions and resulting consequences for local host communities categorically cannot be considered CEQA triggers resulting from the mandated growth targets.

Sure as the sun will rise, the WDAAC development — along with our declining trends in local K12 school enrollment at the other end of the spectrum — are the clear and direct outgrowth of consequences and attendant results, such as the following:

  • Given the land use constraints mandated by the Davis community, this city — and particularly following the most recent series of multi-family housing approvals — may very well have one of the highest ratios of “affordable by design” living options of any city in the state. 
  • Take a close look at the absolute number of university student residents housed in the city of Davis.   Clearly, this important and growing category of Davis residents must be considered a target demographic for “affordable housing”.  And, importantly, over the decades – this city has responded.
  • In responding, however, the community has been forced to take on significant responsibilities — not the least of which is the financial responsibility resulting from having such a large percentage of non-working residents of modest means.

Under such circumstances, should a local host community — interested in supporting and encouraging both fiscally and environmentally sustainable growth — not have any rights in determining responsive strategies, or not be allowed the tools necessary to address the very real challenges presented by actions of this same legislature-based-upon policies it seems helpless to revisit or amend?

If not new developments like WDAAC, responding directly to internally generated needs resulting directly from sustained local enrollment pressures from the university, what exactly are the legislators willing to accommodate in their quest to encourage more affordable housing construction in California — not to mention more affordable schools and housing for its students?

When I finished reading the e-mail I went back and read it again just to be sure I had read it correctly.  The points made are powerful, and thus far they have not been part of our community dialogue about either affordable housing or community sustainability.  They are points that are also very clearly made.  I will be very interested in hearing the community dialogue that they provoke.


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About The Author

Matt Williams has been a resident of Davis/El Macero since 1998. Matt is Chair of the Finance and Budget Commission of the City of Davis (FBC), and a member of the Downtown Plan Advisory Committee (DPAC) and Broadband Advisory Task Force (BATF), as well as Treasurer of Davis Community Network (DCN). He is a past Treasurer of the Senior Citizens of Davis, and past member of the Finance Committee of the Davis Art Center, the Editorial Board of the Davis Vanguard, Yolo County's South Davis General Plan Citizens Advisory Committee, the Davis School District's 7-11 Committee for Nugget Fields, the Yolo County Health Council and the City of Davis Water Advisory Committee and Natural Resources Commission. His undergraduate degree is from Cornell University and his MBA is from the Wharton School of the University of Pennsylvania. He spent over 30 years planning, developing, delivering and leading bottom-line focused strategies in the management of healthcare practice, healthcare finance, and healthcare technology, as well municipal finance.

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10 thoughts on “Guest Commentary: The Legislature, Student Housing and Affordable Housing”

  1. Rik Keller

    Matt: can you clarify the following? If I am not misreading it, the author of the letter you quote appears to be mistakenly saying that the WDAAC project consists of student housing:

    “…new developments like WDAAC, responding directly to internally generated needs resulting directly from sustained local enrollment pressures from the university…”

    1. Matt Williams Post author

      Rik, I can’t speak directly for the author of the e-mail, but my reading of the passage you quoted is not simply restricted to internally generated student housing demand (herein after referred to as “the former”), but also internally generated faculty and staff and UCD retiree housing demand (herein after collectively referred to as “the latter”),.  WDAAC addresses the latter, but as you correctly point out does not address the former.

      1. Rik Keller

        thanks Matt! I’m still confused by what the author meant though.

        I would consider defining student housing demand as “externally-generated” as it is based on UC Davis enrollment decisions. I don’t know how others define it.

    2. Matt Williams Post author

      Rik, it isn’t just in housing that the impact of faculty and staff and UCD retirees is felt.

      The Business Insider article The Way Old People Spend Is Bad News For The Economy makes some important points that directly pertain to Davis.

      Household spending peaks at around age 45 for the average American. This is according to Census data analyzed by JP Morgan Asset Management.

      As you can see in the chart below, spending in most categories begin to decline after age 45.
      https://amp.businessinsider.com/images/533025dcecad04b26ed76094-1136-870.jpg
      From an economic and policy standpoint, it’s critically important to understand evolving spending behavior especially as demographics shift. As America’s population ages, expect the older end to spend less and less. And don’t forget, consumption accounts for around 70% of GDP.

      .
      Davis has seen a substantial increase in its population over the age of 45. The proportion has risen from 14.9% in 1970 to 15.3% in 1980 to 18.6% in 1990 to 23.3% in 2000 to 27.9% in 2010.  In that same time period the absolute numbers for 45+ have risen from 3,489 to 5,618 to 8,598 to 14,063 to 18,282.

      That is a whole lot of people spending substantially less than they did between the ages of 25 and 45.  And what makes matters worse, in Davis the amount that is actually spent is done so outside the City Limits.

      Add to that the fact that a substantial proportion of those Davis residents can (and frequently do) opt out of having to pay some of their local taxes, and you have a substantial fiscal burden.

      1. John D

        Matt,

        Adding to your comment about Davis residents spending out of town – it appears such spending can be measurably influenced by where they work, according to the fourth segment in BAE’s spending analysis:
        Category                                                                          Average Annual Per Capita Spending
        Annual Office Worker Spending near their building:                           $ 4,896
         

         

         

         

  2. Richard McCann

    I think this passage needs much more empirical substantiation. Typically, these students bring in significant amounts of outside income (their parents’ support) to the community. Most college towns, especially ones that are isolated in rural areas, are much more prosperous than their neighbors.

    In responding, however, the community has been forced to take on significant responsibilities — not the least of which is the financial responsibility resulting from having such a large percentage of non-working residents of modest means.”

    1. John D

      “More prosperous than their neighbors” is very likely true, particular in the case of “isolated, rural areas” where the township with the university presence and cultural amenities, together with the prosperity enabled by its faculty and staff, might also be serving as the “regional Downtown and traditional gathering center” for a number of even smaller, adjacent townships.  Additionally, it is not unusual for such university communities to be located an hour or more from a major metropolitan center.

      More specifically, in the case of Davis, how do you square the ongoing conversations about student housing insecurity, couch surfing, and living out of cars – together with the Chancellors recent article addressing student “food insecurity” – with this notion of students bringing in significant amounts of outside income?

      After tuition, room and board – how much additional student spending do you figure the average “parents” and family are willing to support?

      The City’s most recently completed economic study completed by BAE for the DPAC in April of this year, reports the following:

      Category                         Average Annual Per Capita Spending

      CA Statewide                                                 $11,297

      City of Davis                                                    $ 8,935

      Student Personal Discretionary                  $ 2,500

  3. Jim Frame

    Then, in 2000, the legislature decided that all projects involving state subsidies must be constructed with prevailing wages – with no exemptions made for schools and universities

    I’ve always operated work the understanding that any public works project partially funded by public money was subject to prevailing wages, so I don’t know what changed in 2000.

    In any case, UCD obtained a ruling that PW didn’t apply to at least one of the housing projects in West Village.  The initial ruling was to the contrary, but DIR later reversed itself.  I don’t know if the conditions at the other projects in the UCD housing pipeline are the same.

     

    1. Matt Williams Post author

      Good question Jim.  I will send an e-mail response and ask that question.

      With that said, the point the e-mailer is making appears to be as simple as housing build at prevailing wage will be (significantly) more expensive on a $ per square foot basis than housing built at market wage.  Is that your reading as well?

      I felt the timing of my receipt of this e-mail was made even more interesting by the amazon.com announcement (see HERE) of its new minimum mage for all employees of $15 per hour.

    2. John D

      Jim,

      Looks like you are correct.   It appears the Davis Bacon prevailing wage ordinances have existed in some form since 1931.  Reference to 2000, may have been directed to the actions by Governor Gray Davis.  Here is brief history:  http://www.sbctc.org/doc.asp?id=191

      From the cite, it appears the modern version was re-upped by Governor Davis in 1999 – around the same time he was signing off on the increased pension benefits formula without any provision for increased funding.

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