Sunday Commentary: What Would a Realistic Housing Assessment for the Housing Element Look Like in Davis?

By David M. Greenwald

Davis, CA – During the week, the comment period closed in Davis on its Draft Housing Element—the process has been contentious with the Housing Element Committee pushing the envelope, a number of citizens pushing back, and the council in some ways splitting the baby as the draft will now go back to the Planning Commission and then the council for approval.

As pointed out earlier, “The City does not currently contain enough vacant land appropriately zoned for the development of the housing necessary to meet the City’s estimated housing needs for the period between 2021 and 2029.”

If you look at the Housing Element from 2008, they have listed 20 “green light” sites, and, of those, seven have been approved for any kind of development and just a few have any housing built.

The committee chose to go primarily with aspirational.  While Grande and Verona came to fruition, most of the rest—DJUSD Headquarters, Nugget Fields, the Downtown and PG&E Service yard—were not realistic in the short term, if ever.

But with those sites alone, the city was able to show the potential for 1401 to 2459 units, including 460 to 1000 units at Nishi (access via UC Davis only) which actually did get approved (albeit not during that cycle).  The other big project was Cannery, projected at 333-776, which has not only been approved but built.

The numbers are of course inflated—PG&E (227 to 495) and Transit Corridor (235 to 420).

None of that ends up hurting the city for the purposes of RHNA and the Housing Element, because the city is not required to built the units or have a realistic assessment of how much could potentially get built.

This reality makes the flap over the housing element from a few weeks ago all the more amusing—a lot of time was spent on the 2008 Housing Element, much of which identified spots that were not viable then, let alone now.

UC Davis Law Professor Chis Elmendorf presented an interesting tweet stream on Friday, noting, “LA’s draft housing element just dropped. It’s an exemplar, a huge deal not only for LA but for cities across California.”

He said, “LA is the first city to realistically assess development potential under current zoning, and the results are stunning.”

He tweets, “As I’ve explained many times before, cities’ assessment of capacity traditionally assumed that every site with near-term development potential *will* be developed during planning period…”  The problem, as he points out, “This assumption is patently false.”

In a paper, he argues that “recent changes to state law empower @California_HCD to require cities to discount site capacity by a rough estimate of the site’s likelihood of development during the planning period.”

Think about the ramifications for that just in the 2008 Davis HE estimates.  Those top three sites—PG&E, Transit Center and Nishi—in unit estimates account for just under 1000 of the 1491 primary sites listed for 2008 at the low density, and about 1900 of the 2459 on the high density end.  Nishi was not approved until 2018, after the 2008 cycle ended.  The other two were completely unrealistic.  Add in neighborhood shopping centers which were also for the most part not realistic, at 158 to 207 units, and you get the idea that, while Davis could show the sites on paper, most of the cities were not going to get approved in the cycle—if ever.

Elmendorf notes, “Subsequently, @California_HCD issued guidance that embraces our idea, but equivocates on whether it’s a requirement or a recommendation.”

The first big city to submit a housing plan, San Diego, relied on the old plan.  Writes Elmendorf: “HCD told San Diego to submit amendments addressing likelihood of development. City’s response was a dud. It should be decertified.”

On the other hand, Los Angeles has recruited a firm to “model sites’ likelihood of development as function of base and density-bonus zoning, price, and several other predictors.”

Elmendorf then shows the difference in the two methodologies.  The study shows, if you assume the old formula, that Los Angeles has enough capacity under current zoning to accommodate the entire 1.4 million unit regional need of the entire Southern California region, even without density bonus.

But when they analyze it further, “analysis also shows that share of sites w/excess capacity that get developed in any given year is tiny, roughly 0.012 for the 5-year period from 2015-2019.”

Elmendorf tweets, “Adjusting the projection period from 5 to 8 years, and incorporating estimates of number of units conditional on development, LA projects that it has realistic capacity for about 47,000 new units on these sites (well shy of 1.4m!).”

“In effect, LA’s housing plan assumes that it will realize (as new housing units) only 3.5% of aggregate zoned density of its sites. San Diego, by contrast, assumed that it will realize 90% of zoned density,” he continues.

He tweets that “whereas San Diego’s ludicrous assumptions allowed it to claim that it has no need to rezone in order to accommodate its share of regional housing need, LA promises a massive rezoning program.”

There are some caveats to this.  Elmendorf notes that the realistic capacity “nearly doubles” when taking into account a track record for variances and rezonings.  He also notes that a lot of development occurred in LA on sites previously classified as having no residential capacity at the start of the period.

He notes, “LA doesn’t claim credit toward RHNA for this ‘hidden capacity,’ but cities ought to receive credit if they show a track record of entitling projects at greater than zoned density, just as they’re rewarded for track record of ADU production.”

He also pointed out: “While most cities don’t have staff capacity or consultants to do their own version of LA’s analysis, the regional councils of govts should be doing it for them.”

The city of Davis probably can’t do the exact calculations, but we could probably eyeball which projects are likely over the next eight years.  For example, if we are counting on the Davis Downtown, it seems highly unlikely that those units get built in the short term.  Other potential sites might be more realistic.

But can you imagine the fight if we did an assessment in Davis like they did in Los Angeles?  But it is the difference between paper compliance at the minimal standard of the law and a commitment to actually provide the housing promised and needed for the community.

—David M. Greenwald reporting

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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16 Comments

  1. Ron Glick

    You mean that an honest assessment would show that because of Measure D Davis can’t provide the housing needed. Who would have ever guessed?

  2. Alan Miller

    The numbers are of course inflated—

    Why ‘of course’ ?  Why ‘inflated’ ?

    PG&E (227 to 495) and Transit Corridor (235 to 420).

    Are you sure it’s not (495 to 227) and (420 to 235) ?  Let’s do the unit warp again!

    What is “Tranist Corridor” ?

    —a lot of time was spent on the 2008 Housing Element, much of which identified spots that were not viable then, let alone now.

    Reanalyzing the not viable.  Good strategy.

    Those top three sites—PG&E, Transit Center and Nishi—

    “Transit Center” ?  Is that the same as “Transit Corridor”, above?

    while Davis could show the sites on paper, most of the cities were not going to get approved in the cycle—if ever.

    Now Davis is trying to approve whole cities rather than projects?  That’s a creative way around Measure JeRkeD!

    cities ought to receive credit if they show a track record of entitling projects at greater than zoned density

    Yes, have zoning and then ignore it; cities should get credit for that  😐

    “While most cities don’t have staff capacity or consultants to do their own version of LA’s analysis, the regional councils of govts should be doing it for them.”

    Like SACOG, or a local BLOG ?

    Here we go SACOG, here we go!  Shish Boom Bah!

    The city of Davis probably can’t do the exact calculations, but we could probably eyeball which projects are likely over the next eight years.

    The City can’t do the exact calculations, so the local blog will ‘probably eyeball’ – oh, look, it’s eyeballing already . . . that didn’t take long!

    Eyeball #1:

    if we are counting on the Davis Downtown, it seems highly unlikely that those units get built in the short term.

    Now that’s an eyeball.

    Eyeball #2:

    Other potential sites might be more realistic.

    Imagine how much City staff time those eyeballings saved taxpayers!

    But can you imagine the fight if we did an assessment in Davis like they did in Los Angeles?

    Commenters on blogs could be very upset  😐

    But it is the difference between paper compliance at the minimal standard of the law and a commitment to actually provide the housing promised and needed for the community.

    Who is ‘committing to provide’ in this scenario?

  3. Matt Williams

    Historically the City has done much of what has been suggested in the article.  The following is from the 2009 Residential Development Status Report provided by staff to Council on June 2nd of that year.

    Attachment 6

    Basis for Determining Anticipated Development in Tables
    March 31, 2009

    Staff used the following as the basis for determining the anticipated timing and types of development on various sites.

    General. The current lack of available capital and credit in the financial market will likely mean minimal housing growth in 2009 and some growth starting in 2010 with a gradual increase through 2013.

    Staff generally used the midpoint of number of housing units recommended by the Housing Steering Committee. Where available, however, staff attempted to reflect input received from property representatives on latest development proposals in terms of development timing, number of housing units and housing types.

    Staff assumed that the processing of planning entitlements will require at least one to two years prior to building permits.

    Planned and zoned sites. The breakdown of assumptions used for these sites is shown in Attachment 5. The anticipated housing development is minimal in 2009 with some growth starting in 2010 and gradually increasing through 2013. Based on previous interviews with property representatives and recent comments by individuals with knowledge in local real estate.

    Green light sites.

    — Kennedy Place. The property owner / developer is interested and expects to apply soon. Grande school site. Planning entitlements were approved in December 2008 but development is not anticipated until 2011.

    — Nugget Fields, Wildhorse. The School District (DJUSD) has declared this property surplus. The timing assumes that a developer purchases the property in 2010 and building permits are issued approximately two years later (after General Plan amendment, rezoning and engineering).

    — Sweet Briar Drive. Development timing is dependent on completion of remediation of hazardous wastes on the site.

    — Second units with program changes. The tables show first units resulting from program changes in 2012. Changes require commitment of staff, citizen involvement to facilitate code changes. No units are shown “post 2013” because there is not an end date for these units.

    — Verona, Mace Ranch. Planning entitlements were approved in 2008 but construction of units is not anticipated until 2011.

    — PG&E service center. PG&E has not been interested in initiating a relocation / redevelopment, but would consider a developer proposal.

    — Transit corridor – Anderson Road. 23 units are shown post 2013 to reflect a possible pilot project along a first block face in the corridor.

    — Simmons / Chiles Ranch. The development information is based on the latest development proposal as of this date. Assumes planning entitlements are completed in 2009 and engineering and infrastructure are completed in 2010.

    — City/DJUSD corp yards, E. Fifth Street. The redevelopment of these sites requires further study of costs including relocation, development feasibility, planning entitlements, engineering and building permits. Development potential shown as post 2013.

    — RHD zone, Oxford Circle. The property owner has shown interest, but no applications have been received to date. City initiation of a General Plan amendment to allow the existing densities in the area would facilitate a specific proposal.

    — Fifth Avenue Place. The property owner expects to submit planning applications in phases, starting in mid 2009. An overall net increase of 34 units is likely to be proposed and completed by 2013.

    — Willowbank Park, Mace Boulevard. The development information is based on the latest development proposal as of this date.

    — Civic Center fields. Assumes housing (possibly for seniors) and replacement ball fields are developed prior to 2013.
    Willow Creek neighborhood commercial. Assumes that the Willow Creek Commons project is developed immediately to the south within the next two years and this site is developed prior to 2013.

    — Nishi property, option with access via UCD only. Assumes that a first phase of 250 units (of 730 units total) is developed prior to 2013.

    “Yellow light” sites.

    — Lewis cannery. The Cannery Park planning applications were withdrawn on March 16, 2009. A new number of housing units and time frame is not shown for this “yellow light” site.

    — Wildhorse horse ranch. The number of units and time frame are based on the latest development proposal as of this date.

    — New Harmony affordable housing, Cowell Boulevard. Planning entitlements were approved by City Council on March 3, 2009. The developer is expected to follow through with building permits soon.

    1. Ron Oertel

      If true, that sounds like that might be for a single-family dwelling, since there’s rent control in California for apartment units.  Did your friend say how long the rent had been maintained at $2,500?  And, is it actually rented at $4,000?

      Rent Increases: AB 1482 restricts the allowable annual rent increase to 5% plus a local cost-of-living adjustment of no more than 5%, for a maximum increase of 10%. The law is retroactive, calculating the starting rent from March of 2019. There is no maximum rent or limit on how much landlords can raise rents between one tenant and the next.

      https://bungalow.com/articles/californias-rent-control-law-explained

      Of course, many renters across the state have recently received the “ultimate” in rent control in the form of eviction moratoriums – even when they don’t pay rent.  Apparently, there’s been significant problems regarding the distribution of government rent relief money.

      Small landlords left struggling when renters stop paying

      https://calmatters.org/california-divide/2021/03/small-landlords-left-struggling-when-renters-stop-paying/

      Landlords are waiting for rent payments – and some can’t hold on much longer

      https://www.latimes.com/business/story/2021-04-05/los-angeles-landlords-struggle-covid-19-rent-accumulates

      It’s going to be interesting when the eviction moratoriums, rent relief, and extended unemployment benefit programs end. Probably not a good time to be a tenant OR landlord, at that point.

    1. Keith Y Echols

      By adding massive supply.

      It’ll never happen.  Private builders would ever do that.  I don’t think anything like that has been done since the Levittowns built in New York and Pennsylvania.   Builders will constrain supply (the development of lots and the release of new homes) to get the maximum sales price possible within a set term.

      1. Ron Glick

        Depends on the margins and what maximizes return. Still adding any new supply helps mitigate rent increases in existing supply the issue Matt was asking about..

        1. Ron Oertel

          There were no megadorms (or any other large-scale apartment complex) proposed, until recently.  Apparently, rent had to rise high enough for such proposals to be viable.  The rent at Sterling is more than $1,200 per bedroom, and more than $2,200 per studio/single bedroom unit.

          The studios and 1-bedrooms sold-out a long time ago.  So apparently, some students have money (and don’t like “student housing”).

          https://www.sterlinghousing.com/davis-ca/sterling-5th-street/floor-plans

          I guess we’ll see what the rent will be at the others, when they’re complete.

          Too bad that the city may not get full RHNA credit for the megadorms. Apparently, SACOG does not consider student housing to be a “city need”. (Nor does SACOG consider it to be a “UCD need”, from what I understand of RHNA requirements. I don’t believe that UCD has RHNA requirements at all.)

           

           

        2. David Greenwald

          You get RHNA credit for projected housing units on zoned land.  Nishi was already included back in 2008 as noted in this piece.  This simply slightly offsets all of the units that were never buildable.

        3. Ron Oertel

          At the recent planning commission meeting, I recall that Greg Rowe noted that multi-bedroom units don’t count at all, toward RHNA requirements (so far).  (I think he said anything above 3 bedrooms, but I’m not sure.)  He sounded quite frustrated when he said that, apparently because the city council disregarded that warning.

          I understand that this is documented somewhere, as well.  But that the city is still trying to get those units “counted”.

          Surely, you’re aware of all of this, as it’s been brought up multiple times on here, as well. Not just by me.

          I don’t recall the bedroom breakdown at Nishi, but this was in reference to all of the recently-approved megadorms.

          This simply slightly offsets all of the units that were never buildable.

          I don’t know what this means, or what it refers to.

        4. Bill Marshall

          As to David and Ron O’s posts above… key term is “units” and the definition thereof… it is squishy… clarity by RHNA would be useful… not so much as how “we view” the term…

          Just saying…

        5. Keith Y Echols

          Depends on the margins and what maximizes return. Still adding any new supply helps mitigate rent increases in existing supply the issue Matt was asking about..

          *Sigh!*  Ron Glick, I thought we’d gone over this already.  But you’re still clinging to a simple understanding of supply and demand in relation to the housing market….as well it seems a lack of understanding of the home construction industry.

          Yes if you exceed demand by flooding the market with supply it will decrease demand and lower (or stabilize prices)…that is the simple way to understand the market.  But if you simply incrementally add supply while letting demand forces keep increasing; the result is higher prices.  In fact you’ve likely increased home prices (and rent prices by extension) because home builders generally build homes that sell at a premium over the existing homes market.  How many CA housing markets do you know where there was a flood of housing where home prices dropped?

          Materials, man power and FINANCING limit how quickly a private homebuilder will be able to build homes.  And flooding the market is what is called building on spec.  That’s VERY risky.  Whatever financing you secure is going to require a significant return on it’s investment to make up for the risk of building on spec.   Think about new home developments you see out there.  Are there ever more than a few houses (or often times none) available?  No, usually they get home buyers to put a deposit down and then buy the home as soon as it’s built.

           

    2. Richard_McCann

      If I was a landlord with a qualified dwelling and saw the passage of AB1482 as a harbinger of future rent control, I would increase my rents as much as possible now to establish a higher base under a new law.

  4. Keith Y Echols

    Ha!  I’ve been saying all along that the unicorn fantasy that infill is the solution to most of the housing issues is laughable.  (keep in mind I LIKE mixed use urban areas).  There’s no market to support this kind of construction and development in Davis (to a significant degree).  That makes it financially difficult to justify building these infill projects.  I think even David has acknowledged at times the limitations of infill as a sole solution to Davis’s housing issues.  So what’s left…build new homes in new areas of the city (annexed)?  Oh wait…that’s not going to happen.

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