Sunday Commentary: Affordability of Housing on Campus Could Be the Next Local Housing Crisis

When the student housing crisis started to gain focus late in 2015 as UC Davis was launching into their LRDP process, I looked at the numbers—UC Davis had only 29 percent on-campus housing, second-lowest figure in the system and well below many of the other campuses.

The university providing 100 percent of new enrollments with housing on campus and 50 percent overall made sense to me.  I parted ways with some who wanted UC Davis to build all of the new housing and thought it made sense for the city provide some of it—and thus was supportive of Sterling, Lincoln40, Davis Live, and, of course Nishi.

But as we started to look deeper there were flags.  We looked at the cost of housing on campus versus off campus and there was a huge gap at UC Davis—more than most of the UCs, but pretty much anywhere University of California campuses were struggling to build market rate or below market rate housing on campus for their students.

Matt Dulcich, speaking at several different forums for the Vanguard and representing the university, could not commit to providing substantially lower cost housing for students.

What is now becoming clear is that, while the answer of more housing on campus made political sense and perhaps from the standpoint of equity, it might not make practical sense from the perspective of the students.

As we discussed last week with some of the leaders from ASUCD on our podcast, UC has not figured out how to provide affordable housing (small “a” for the most part) for its students.

Adam Hatefi explained, “UC is having trouble providing affordable housing—yes, but it’s not just the UC, it’s the entire state.  It’s not just students, although students are affected by the issue but affordable housing across the state of California is a huge problem.

“The supply of housing in the state of California is dramatically lower than what it should be,” he said.

UC is not the only party here for sure, and we have covered a lot of the housing crisis and will continue to do so.  But we were told that the solution to the student housing crisis was that UC Davis needed to step up to provide more housing—and they are.

If you think about it, UC Davis owns the land.  UC Davis can build on that land.  They should be able to figure out ways to reduce costs or subsidize those costs.

“But they don’t,” Adam Hatefi pointed out.  UC Davis this year, for the first time, didn’t even “guarantee housing for freshmen because we physically don’t have enough housing on campus.”

But as we know, that problem at least will be temporary.  UC Davis is building housing.  You can see it off Russell with the work progressing on West Village.  We saw a presentation of it a few weeks ago at the State of the City address.

“The university doesn’t have enough housing,” Mr. Hatefi continued.  “One reason for that seems to be the reluctance to build taller, denser housing developments.”

In Cuarto, they are rebuilding buildings, but “they went from three floors to four floors.”  He asked, “What is the point of that?”

Why not six or seven stories, he asks?  It’s a good question.  Davis Live is about to go to seven.  University Mall is proposing seven.  Why can’t UC Davis do it?

As I point out, they have plenty of space as well on the ground.  It’s not like they can’t extend West Village to the north or the west more to build additional housing.

“They could absolutely build taller, they could absolutely build wider,” Adam Hatefi says.  “They’re not.”

But then we get to the core of the problem, in that “it costs the university more money than other entities and I still don’t know why that is the case.”

ASUCD President Justin Hurst gets to the crux of the problem.  The key issue is not just supply —which again by and large is coming—but affordability.

“Affordability in university terms is below market rate,” he said.  And the problem: “Market rate is higher than most people can afford.”

The question of what affordability is, is very important to this discussion.

“The definitions we offer for how we define affordable always fall short of what are required to meet both the needs of the tenant and the needs of the people who own these properties,” he said.  He pointed out that while the developers often make a lot of money, they have lots of costs and needs going into the project “and if they can’t make a certain level of revenue within the first couple of years then they can’t keep owning those properties.”

This is a frustrating issue.  Over the course of the student housing discussions, I tried to raise the point that providing housing on campus is not more affordable for students—it’s actually much more expensive.  They not only can rent for less money off campus, they can also save by skimping on food, not having a car, and more and more rental places are covering the other basic costs—cable, internet, water, even electricity.

There seems to be little reason why the university can’t do this stuff for cheaper—they don’t have land costs and, more importantly, they don’t need to make a profit off the housing.  They only need to be able to pay their bills.

And yet, without those considerations, they cannot get this thing to be at or below market rate.

Adam Hatefi points out: “For one bed in a three-bed dorm room, it is more expensive right now than doubling up in a room in an apartment in the city of Davis.  That makes no sense.”

There is a consequence here.  One of the reasons we saw the Graduate Student Strike at UC Santa Cruz where they are begging the university for COLA is to cover the cost of housing.

The UC Santa Cruz this week on Friday “issued termination letters on Friday to 54 graduate students who have been waging a months-long strike for a cost-of-living-adjustment amid soaring rents.”

This is a student housing issue at the core of this strike.  And this is an issue that the students we talked to said could very well come to UC Davis as well.

As Adam Hatefi put it: “There is no clear solution for how to resolve the situation.  Nobody really knows how to make sure that these graduate students have the ability and are being paid enough to live and be able to actually afford housing and to live in these areas.”

So we may have addressed the supply problem, both with housing on-campus and off, but that might be just the tip of the iceberg.

—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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23 Comments

  1. Ron Oertel

    From article:  “Market rate is higher than most people can afford.”

    If it’s too “expensive”, than it will remain vacant.  Seems doubtful that will occur.

    But then, maybe the Vanguard will start focusing on the vacancy rate in campus housing.

    As far as the cost goes, one would have to determine how that’s being calculated. Perhaps (unlike developments in the city), the full cost is being allocated to the residents, including infrastructure needed for those residences, maintenance, services, etc.

    And again, if there’s a low vacancy rate in the city, that might indicate that there’s “room” to raise rents higher (in the city).

    1. Ron Oertel

      There’s a wide range/background of students attending UCD, including those who can afford approximately $44,000 annually, for undergraduate (non-resident) tuition.

      I’ve heard of parents who buy houses for their kids, just to attend UCD. 

      There are parents who allegedly “pay” vast sums of money, just to ensure that their kids get into the college of their choice.  We’re seeing the result of that playing out in the media and court system. (Ironically, those kids probably didn’t even “need” to attend college or have a career of their own, given their parents’ wealth.)

      There are (no doubt “many”) undergraduate students who could have stayed home for the first couple of years of their education, ultimately receiving the exact same degree as those who attended UCD for their entire 4 years.

      Then, there’s those who struggle, and compete with those who do not struggle for housing, etc.

      That’s the free market at work.  The same system that some advocate for those struggling throughout California.

      Again, if there’s no market for the housing on campus, it will remain vacant.  Which is unlikely.

    2. David Greenwald

      “If it’s too “expensive”, than it will remain vacant. ”

      Or people will overpay and end up cutting elsewhere which is what is happening across the board.

      1. Ron Oertel

        It’s not an “either/or” scenario.

        But again, if it’s “too expensive” (in terms of what the market will support), it would remain vacant.

        That’s how the supply/demand model works.

        1. Bill Marshall

          David… other than tuition, housing, food (provided in most dorm plans), where would students cut?

          In the 70’s when I was a student, tuition (although I had a NMS), housing, food, textbooks, took up almost all my resources, and what my parents were in a position could provide (and there were sacrifices to them)… I had no car… rode bike…

          So where would current students cut? Or are they more privileged?

        2. David Greenwald

          Bill – Seems like cars and food get cut – and some are taking on more debt.

          Ron – I’m talking on-campus, not off-campus housing.

  2. Don Shor

    Housing is considered an auxiliary activity, and is expected to be self-supporting.

    Auxiliary enterprises bear all direct costs and, to the extent required under the University’s direct costing policies, a share of their own indirect costs, such as utilities, custodial services, and other maintenance and business services.

    It seems the chancellor has discretion about this.

    While it is anticipated that auxiliary enterprises are essentially self supporting activities, auxiliaries are not required to be entirely self-supporting. Chancellors may subsidize auxiliary enterprises with appropriate available campus funds.

    So direct appeals to Chancellor May to find subsidies for some on-campus housing might work.

    I seem to recall that the housing at UCD is managed by private contractors and that the rent rates they charge are set in the terms of their contract with UCD or UCOP, at least for the minimum. So they may have little room to modify rates downward. Changing the policy to allow more students per bedroom was probably the only thing they could do (and did) and I’d imagine that required some contract discussions with UCD.

    Bottom line: UC expects to make money on housing. It isn’t part of their core mission to house their students. Our local political leadership along with ASUCD reps may have to work directly with the chancellor’s office on this, and it might require appealing to the UC Office of the President.

    Memo for quotes above: https://policy.ucop.edu/doc/3410196/AM-A783-1

     
    I’m interested in any corrections to this analysis via donshor@gmail.com

    1. Bill Marshall

      UC expects to make money on housing. It isn’t part of their core mission to house their students.

      That is wrong, if they do… based on their ‘core mission’ it should be like “fees”… ‘break-even’ … no more, no less… not a ‘profit center’… the City could be empowered to make recreational programs, other non-core services a ‘profit center’, I suppose…

        1. Don Shor

          Amounts shown are in thousands. We need to know how much of this category is housing. Systemwide they are revenue generators. At UCD they are apparently not showing a net profit on them presently. That may be an issue.

        2. Bill Marshall

          Don… while it appears you are correct as to where revenue from housing is classified, the cite does not identify quantity… nor, the expenditures associated with the housing…

          I say again, those should balance… IF NOT, that is WRONG (ethically, if not legally) and needs to be corrected by UC and/or the legislature…

  3. Ron Glick

    The Governor should build a huge amount of student housing on public university land and rent it out cheap to in state students of modest means. No Wiener type legislation needed. UC and the state can pretty much do as they please on UC land.

    Newsom could achieve many of his housing goals all at once but it would require moving university education away from being a profit center for bankers and real estate developers.

  4. Don Gibson

    David and Adam in the podcast hit on some key points I also found studying the housing issues.

    Vacancy Survey is Inadequate. Although it has been useful in measuring vacancy and rent here in Davis somewhat accurately, there are a few big holes. 1st is that it does not measure on campus vacancy right. I have heard rumors of the on-campus vacancy rate being far higher than the current 1% in Davis. Secondly, this is reporting from the apartment managers and not the renters. Although the overall rent per unit appears to line up when we ask renters, the actual density of the apartments appears to be much higher than the self-reported. This is because students do always tell their landlord the full picture of numbers living in a unit.

    On-campus housing is newer, thus more expensive. The public-private partnership apartments (P3) were built when the city of Davis properly stopped building new apartments. By the nature of housing, newer units are almost always more expensive than the market rate. That being said a focus on lower amenities specific subsidies for those who

    Affordable Housing Specialist Builders Needed. UC is limited to only a few housing developers across the system. Yet, to my knowledge, none are specialists in Affordable housing. Students often try to focus on what is the most affordable unit, and more creative designs to reach greater affordability should be the number one focus for featured development.

    Lack of Public Hearing Process for On-Campus Developments. There is minimal opportunity for direct accountable public input in Davis on proposals for new housing.  Many of the public meetings are held at UCOP meetings, making it near impossible for someone to give input on in public.

    On-Campus P3 is more expensive than in the private market in Davis. “The occupancy of affordable units (indexed as costing 15 percent of the mean market rate or less) is higher in the private Davis rental market than in university-affiliated housing: Almost 27 percent of students living in off-campus apartments benefit from affordable pricing. Only about 15 percent of students living in P3 apartments benefit from affordable pricing.” – Saper 2019

    If any wants to read additional findings here are a two links:
    Saper 2019 “UC Davis Student Housing Affordability and Insecurity Report for 2017-18” https://ucdavisgsa.wordpress.com/housing-survey/
    Summary of Key Findings Slide Deck
    https://drive.google.com/open?id=1YJbqBHzGtxhuFjtUntKoDuDD6-cyGUde

    1. David Greenwald

      Don – when we looked at it a few years ago, it appeared West Village was at about 17%. But the university claimed at that point that the figure was misleading and we have not followed up on it recently.

  5. Matt Williams

    Matt Dulcich speaking at several different forums for the Vanguard, representing the university, could not commit to providing substantially lower cost housing for students.

    Is there any surprise there?  Matt Dulcich is far removed from policy-making.  His role is to be the messenger of messages framed by others much higher in the UCD food chain.  He performs his role very well, but “commit” is not a word in the vocabulary of what he does.

    With that said, arguably UCD doesn’t have the unrestricted fiscal resources to be able to solve the on-campus housing affordability problem.  Arguably the UC Office of the President doesn’t have the resources either.  In my personal opinion, any “commitment” to greater housing affordability at UCD (and at all the other UCs as well) is going to have to come from Gavin Newsom.  In November 2019 the Sacrameno Bee front page headline read “California is on track for a $7 billion budget surplus. Where will the money go?

    Newsom may be waiting for Tuesday’s election results to see how well Bernie Sanders does, given Sanders’ commitment to affordable higher education.

  6. Richard McCann

    The reason that UCD housing is expensive is the same reason why UCD switched from single family to multi family housing in West Village in the latest phase–UCD (and its developer proxies) must pay prevailing wage for construction labor. This is implicitly the union construction wage. I am not judging whether this is good or bad, rather just stating a fact.

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