Monday Morning Thoughts: Affordable Housing Discussion Starts This Week at Planning Commission

On Wednesday, the Davis Planning Commission will get the first crack at looking at the new Affordable Housing Ordinance (see our article from last week).  Staff is asking the commission to make recommendations to the council on four key issues related to affordable housing requirements for rental development projects:

  1. What is an appropriate expectation for percentage of affordable units (or ranges of percentages) within a non-mixed use multi-family rental development? Should the percentage vary based on prototype and/or location?
  2. Should the City allow by-the-bed or by-the-bedroom leases, or only by-the-unit leases?
  3. Is there a preferred income target for affordable rental housing? Extremely low income, very low income, or low income?
  4. When, if ever, should the City accept land dedication or fees in lieu of on-site affordable apartments?

One point that was made with respect to the now-approved WDAAC (West Davis Active Adult Community) is that, given where the likely housing is going to come from in the future – with a heavy focus on infill, redevelopment and mixed use, we may not have another major affordable housing project for some time.

A major point of debate not contained in these questions is the question of vertical mixed use.  This is a problem that has been raised by a number of community members – and it is likely to become a bigger problem because, if we look at the next wave of housing, starting with the U-Mall redevelopment, it is likely to be vertical mixed use.  You have it there, you have it with URP (University Research Park), and you will likely have it with the downtown.

The problem we face comes from the report which says that “under current economic conditions – the Downtown Core Mixed-Use and Large Urban Mixed-Use are unlikely to be feasible, even without inclusion of any affordable housing requirements.”  They write: “The inclusion of on-site affordable housing obligations under the standard requirement renders all development scenarios infeasible.”

The report concludes that “including affordable housing requirements will increase the challenge of feasibly developing multi-family rental housing and will tend to discourage production of such housing.”

The bottom line is that construction costs and other city requirements have made it hard to build vertical use as it is, and if we add an affordable housing requirement to that, they won’t happen.

It sounds good that we want affordable housing, but if the result of those requirements is that housing doesn’t get built, then zero percent of zero is, in fact, zero.

Staff does suggest: “Changes in City requirements, such as parking standards, can make development more or less feasible.”

The bottom line is that there are tradeoffs here.

A second point that we should re-examine is our overall affordable housing strategy.  When we were developing a large number of high density student-oriented apartments, it made sense to attempt to get 15 percent of the beds be affordable on site and integrated.

But we are getting toward the end of the wave of student housing, at least for the next probably 15 years, I would wager to guess, and so that strategy of providing affordable housing by the bed no longer makes a lot of sense – other than for a very small subsection of the remaining rental population.

To me what makes a lot more sense is attempting to pool resources.  For a time the council shied away from in-lieu fees, where the developer would contribute about $75,000 per required affordable unit.    Again when you were talking about student affordable housing, it made sense to require the developers to put the beds on site.

But what might be a better idea going forward is figuring out a way to pool our resources.  There are several ways to get money.  One is in-lieu fees, whereby the developer will contribute directly to the affordable housing fund.  The downside of that is that there may not be a lot of projects in the next ten years that have affordable housing requirements.

Second, as we saw with WDAAC, if the project has available land, land dedication is a good way to set aside land and allow a non-profit affordable housing developer to raise the funding to build the site.  That is what happened with Creekside.  It will happen with Sterling’s affordable site. That will happen with WDAAC.  But it’s not clear where the next one will be.

There is also state funding.  The city will probably get some money through the affordable housing funds of SB 2, signed last year, which could generate $250 to $300 million per year to fund affordable housing.  A big question, now that Gavin Newsom is set to replace Jerry Brown next year, is whether there will be some sort of replacement for redevelopment to fund affordable housing.

The city could also reconsider its $50-a-year parcel tax to fund affordable housing itself.

One idea could be to pool the money in order to purchase five or six acres at a time, turn it over to an affordable housing developer and allow them to develop their own project.

There is another possibility as well – one that we floated here in the other article.  Right now affordable housing projects are exempt from Measure R votes.  So if the city could get enough money to purchase an affordable housing site, that could be built on the periphery without a vote.  Another possibility is we alter Measure R to make it possible for a 50/50 affordable/market rate site to be exempt.

As I suggested in the other article, there would need to have strict requirements on the amount of land dedicated and the timing of the development, but it might be a way to get additional affordable housing – if that is a priority for the community.

—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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6 Comments

  1. Craig Ross

    The people who felt that Measur L didn’t go far enough on affordable housing, I’m interested in knowing how we are going to get additional affordable units in the future.

    1. Matt Williams

      Craig, although I don’t qualify for the first part of your question, I do have some personal thoughts about the second part.

      I believe Davis is approaching Affordable Housing bass-ackwards.  Trying to make new housing affordable , with new materials costs, current labor costs, current land prices, current entitlements costs, etc. is pretty much a fool’s errand.  You are applying a “discount” to buildings/units that have the highest cost per square foot in the city.  The end result of that is creative approaches to “affordability” like the programs at Nishi and Lincoln 40.  They target a niche demographic that is willing to rent a bed rather than rent a unit or rent a room.  That isn’t “faux affordability” as some people have accused, but rather it is very narrow (dare I say exclusionary) affordability for a specific demographic cohort rather than broad, inclusive affordability for anyone and everyone seeking housing in the city.

      When I moved into the city in 2014, I didn’t look for a rental in one of the new complexes.  They cost much more per month than I was willing to spend.  Instead, I looked for housing that was built with  old materials costs, past labor costs, past land prices, long since expired entitlements costs, etc. I was able to rent a room that cost less than half the cost of a room in one of the new complexes.  That is true affordability.  In my opinion the City should be structuring its Affordability Program so that the individuals and families seeking affordable housing have improved access to housing that starts with modest monthly rental fees, and where the individual or family means qualifies, there is additional help in paying the monthly rent from the City.

       

      1. Howard P

        Think Matt is on to something, BUT!… owners of current housing stock can price their “product” as if it is “market”, like new housing stock, except for “depreciated condition”… so even tho’ they have lower prop taxes, housing already paid for, on land developed 40 years ago, they can get pretty much 2018 prices for rental or purchase… and why wouldn’t they?

        When we talk about AH, need to be clear about a place to live (rental) and a place to own.  Home ownership, @ “affordable levels” will be a very tough row to hoe.  Condos and MH (hybrid of ownership/rental) seem best for that.

        Manufactured housing cuts costs, but the self-righteous snobs don’t want THAT anywhere near them!  Principle, and somewhat, aesthetics.

        No simple solutions.

      2. David Greenwald

        Matt: It does appear that you are conflating “affordable” – meaning affordable by design with “Affordable” meaning subsidized. Is that your intention?

        1. Matt Williams

          David, are you asking Howard or me?  If me … as you pointed out in your article there really aren’t likely to be any peripheral projects in the near future, so implementing an affordable by design strategy is not likely to produce any meaningful incremental inventory of either affordable or Affordable units.  As a result any progress we are going to make as a community with respect to affordability will need to be done using a holistic (city-wide) approach.  If that meets your definition of “conflating,” then appearances are reality.

          P.S. I will once again repeat Planning Commission Chair Rob Hofmann’s words from the dais … there is no affordability by design, only affordability by size.  The reason Rob’s comment is spot on is that trying to reduce the $ cost per square foot of new (newly designed) construction is not going to produce any meaningful results.  However, reducing the square footage of each newly constructed unit by 10% will result in a unit that is 10% more affordable.  Reduce the square footage of each newly constructed unit by 20% will result in a unit that is 20% more affordable.

  2. Ken A

    When Howard says “owners of current housing stock can price their “product” as if it is “market”, like new housing stock” I don’t know if he has no understanding about the rental property market of if he thinks that the 90% of apartment owners in Old North Davis are getting less than half the rent of the new building on B Street just to be “nice”?

    P.S. If the link below is not working the newest nicest 2 br apartment in Davis is asking $3,300/month and I don’t think Howard can find an apartment in the area asking anything close to that…

    https://sacramento.craigslist.org/apa/d/meridian-place-modern-urban/6741761369.html

    As Matt has pointed out the real “affordable” housing in town is the older stuff…

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