By David M. Greenwald
Davis, CA – At a recent forum, the issue of housing was discussed and many of the candidates are pushing for infill first – and for good reason when one considers the difficulty of getting approval for peripheral housing in Davis.
Dan Carson noted, “We are nearing completion of a new plan for our downtown that will add 1000 market rate and other types of units for about 2200 people over time.”
But will the Downtown Plan really add 1000 market rate units in Davis? The city is certainly counting on it, especially to fulfill their steep allotment of affordable units.
There is a cautionary tale from 2018, when the Bay Area Economic Group ran a proforma that should caution us against expectations that housing in the downtown is going to be feasible.
BAE concludes: “These results indicate that under current conditions, it will be very difficult for developers to undertake projects similar to the prototype projects, with a few exceptions. As mentioned previously, it appears that a medium-sized mixed-use project incorporating high density for-sale residential units could be feasible.”
They add that “development feasibility in Downtown Davis is challenging under current conditions.”
If anything, those current conditions are worse now than in 2018.
The cost of housing construction is a problem across the state and its not getting better.
The NY Times for instance argued last week that California is actually making progress on building more housing.
They focused primarily on SB9 and SB 10 which limits the ability of local government to thwart development through single-housing zoning.
Binyamin Appelbaum, on the NY Times editorial board notes, “California has a long way to go. Mr. Newsom was elected in 2018 on a platform of full-throated support for more housing, declaring that the state needed a “Marshall Plan for affordable housing.” He set a goal of 3.5 million new housing units by 2025, consistent with expert estimates of the state’s need. Meeting that goal would require 500,000 new housing units annually, but last year, in 2021, local governments issued permits for only about 120,000 units.”
As Dan Walters notes, even a more modest 180,000 unit per year goal has proven difficult to manage.
He writes, “at best we’re seeing about 120,000 housing starts and when the housing lost to fire, old age and other reasons is subtracted, the net gain is no more than half of the 180,000 figure.”
Walters argues, “The major constraints are financial — ever-rising costs of construction and the insufficient private sector investment due, in part, to those costs.”
We are having trouble building market rate housing, but the state’s most pressing need is housing for low and moderate-income families.
Walters argues that those type of projects “not only draw the most local opposition but are becoming prohibitively expensive to build.”
Last month the SF Chronicle reported that it now costs “almost $1.2 million to build a single affordable home in San Francisco.”
The Chronicle noted, “Though exorbitant building costs have long been a Bay Area norm, housing researchers say the trend has been compounded by increasingly acute worker shortages, pandemic-era inflation and familiar political issues like long and unpredictable approval processes.”
Experts warn, “a series of events… will help determine whether seven-figure costs become the new normal, or a relic of the height of the housing crisis.”
“Building affordable housing in San Francisco is usually very expensive,” said Muhammad Alameldin, a policy associate at UC Berkeley’s Terner Center for Housing Innovation. “They haven’t built housing for decades. They’ve pushed out all the workers. Now if they want to build housing, it’s going to come at a premium.”
It’s easy to point the finger at San Francisco, but it’s not as though the rest of the state is that much better.
In June, the LA Times reported “More than half a dozen affordable housing projects in California are costing more than $1 million per apartment to build, a record-breaking sum that makes it harder to house the growing numbers of low-income Californians who need help paying rent, a Times review of state data found.”
“We haven’t seen any relief on any of those [cost] drivers,” said Elizabeth Kneebone, research director for UC Berkeley’s Terner Center for Housing Innovation, which published one of the reports. “We’ve only seen more challenges piling on top of each other. There’s been nothing to bend the curve. It just rises further upward.”
The good news is that Governor Newsom signed legislation that will make more commercial property available for low income housing.
But as Dan Walters warns, “The land that Newsom and the Legislature have opened for housing needy families will go largely unused if development costs continue to soar.”
This is a huge problem that the city of Davis also faces. The city believes that it will be able to meet the 930 low and very low income unit requirement from RHNA this cycle.
The city is required to build 580 very low and 350 low income units for a total of 930 low income units. In the pipeline, the city lists 284 very low and 37 low income units. They are also planning on 83 additional units at vacant or underutilized sites and 54 ADUs to create a total capacity of 458 or 472 short of the requirement.
As noted in the housing element, “the City of Davis has a shortfall of 472 units to accommodate its lower- income RHNA (930 units). Per State law, the City must rezone land within three years of the Housing Element adoption deadline that allows at least 30 units per acre with a minimum density of 20 units per acre.”
But perhaps we should be skeptical of even that 472 shortfall number. Of the 83 units at vacant and undertilized sites, the city is relying on downtown redevelopment for all of them. 53 of those low income units are in a redevelopment of the E St Plaza, 17 would be along 2nd and G, and 13 along Fourth St – all of those are redevelopment sites.
Given the cost of housing, are we really going to be able to build what we need? That seems unlikely. I would think some sort of analysis of our housing situation should be what this city council campaign focuses on.