By David M. Greenwald
Davis, CA – Set to expire next month, the council is being asked to extend the sunset date of the current temporary ordinance to allow the city to complete its Downtown Plan and General Plan Update.
When the Planning Commission initially made their recommendations to City Council back in November 2018, they “recognized that it might be worth considering extending the current ordinance to be in conjunction with the Downtown Specific Plan, the Housing Element update, or another appropriate effort.”
The extension until November 30, 2021 was made with the idea that the city would be able to make progress on the Downtown Plan as well as complete the Housing Element which had initially been expected by May 2021.
Staff however, acknowledges, “delays due to the COVID-19 pandemic, as well as shifting certification requirements from the California Department of Housing and Community Development (HCD) throughout the development of the document resulted in the 2021-2029 Housing Element not being adopted until August 2021.”
With the Housing Element adopted, the effort to amend the rental requirements found in the Inclusionary Housing Ordinance, staff writes, “can now benefit from a more informed and strategic approach for a more comprehensive update to the permanent inclusionary housing ordinance.”
Furthermore, “the Draft Downtown Specific Plan and accompanying form-based code are at a point where the documents could also inform the update.”
Staff intends to solicit proposals “from qualified consultants to prepare financial modeling and recommendations for permanent modifications to the Inclusionary Housing Ordinance.”
The current ordinance, adopted back in 2018, after AB 1505 reestablished local authority following the Palmer Decision, “temporarily establishes an alternative affordable housing target of 15% by the bed, bedroom, or unit with a 5% extremely-low, 5% very-low, and 5% low-income mix.”
Further, “The current ordinance also temporarily allows the City Council to consider a myriad of factors in determining whether to approve an alternative affordable housing proposal, such as whether the developer makes a large infrastructure or transportation contribution.”
In December of 2018, the council modified the ordinance to include inclusionary requirements for stacked flat condominiums and vertical mixed-use development.
At the time, the council voted to replace the previous exemptions to the affordable housing ordinance for such developments and replace them with a more flexible requirement that allows the council to adjust the inclusionary percentage up or down, based on the size of the project and the targeted income levels.
Councilmember Will Arnold said that, at the bottom line, “we want to see these things built.” He was concerned that if they made the requirements too high, “nothing would be built.”
Councilmember Arnold said that “35 percent of nothing, is nothing. So if the thing doesn’t get built because we’ve put an onerous requirement on there, then no one gets to live there… So that’s the balancing act that we have in front of us.”
If the council were to take no action, “the alternative option will expire and the City will need to enforce the standard option of 35 percent affordability.”
Back in 2018, the city asked Plescia and BAE to review the ordinance – the report evaluated development economic feasibility, based upon project economics at that time.
The report concluded 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.”
The study specifically assesses the 35 percent requirement in the city’s base regulation. The study asks, if 35 percent is not feasible, what is?
The report finds: “Using the same rent and income limit assumptions from the economic analysis, the interim affordable housing requirement of 5% at the extremely low, very low, and low income categories equates to an approximately 10% operating income reduction to an otherwise market rate project. A lower on-site requirement at higher income levels, such as 10% of units affordable to low income levels, would result in an approximately 5% operating income reduction (instead of 10%).”
Affordable housing advocates have been critical of the 15 percent goal however.
Social Services Commissioner Donald Kalman back in 2018 called the consultant report “very disappointing.
“This is the death knell for affordable housing in Davis, is how I read this report,” he said. “We’re obviously not doing 35 percent anymore, those days are over.”
Greg Rowe, a Planning Commissioner speaking as a private citizen, stated, “The 35 percent goal is not feasible without RDA [Redevelopment Agency funding].” He went so far as to say that “15 percent is going to be really hard to achieve unless it’s a student rent” and that the Interim Ordinance number of 5-5-5 “may not work.”
The city is continuing under the operating assumption that “the 35 percent affordability requirement infeasible under several defined scenarios.”
Part of the staff item will be to allocated $20,000 awarded from SB 2 Planning Grant provided by HCD to retain a consultant to complete financial modeling, issue ordinance recommendations and to present them to the City Council for final action.