Commentary: Council Needs to Push for 25 Percent Affordable on Peripheral Projects

By David M. Greenwald
Executive Editor

Davis, CA – The city council on Tuesday night will determine what the new “permanent” affordable housing ordinance will look like.  Staff continues to recommend 15 percent—split evenly between extremely low (30% Annual Median Income), very low (50%), and low (80%).

While I think that’s entirely reasonable for infill, I think we should discuss whether peripheral and its ability to have land dedication sites should have a higher threshold.

As staff explains, in 2017 when Governor Brown signed a 15-bill housing package into law which included AB 1505, overturning the 2009 Palmer decision and restoring the legal authority of cities and counties to require affordable housing in rental development projects, it came with a limitation.

In the past, as staff explains, “the City of Davis was able to require that 35% of all units be made available as affordable housing.” At the time, “the economics of development were different.”  Staff notes that larger projects were “able to take advantage of greater economies of scale due to the size of the project.”

Staff notes, “Land dedication for the purposes of providing affordable housing is much simpler on a large, multiacre property than on an infill project site.”

Staff therefore concludes “to require more than 15% inclusionary units, is both legally and practically difficult. AB1505 requires that the City of Davis be able to demonstrate that a project, constructed in Davis today, would be able to come to fruition with anything more than a 15% inclusionary requirement.”

So basically, 15 percent is as high as the city can mandate on what are essentially non-discretionary projects.  Those are projects that council basically has no discretion over—such as anything now in the downtown that adheres to the Downtown Plan, for example.

Not only does the council not have the ability to go higher for those projects, it doesn’t make a lot of sense to do so, even if they could.  And yes, the Builder’s Remedy has a 20 percent threshold for affordable, but the city’s 15 percent ordinance has both extremely and very low components, whereas the 20 percent Builder’s Remedy threshold does not.

At the same time, on the larger peripheral projects, the city could in fact demand more than just 15 percent affordable.

This is a point that a number of folks have made recently.  One idea is creating a Measure J exemption for high affordable projects.  Groups that have summitted alternative frameworks for peripheral housing including the students and Corbett’s group have talked about a 25 percent minimum for peripheral projects.

“The Council should require 25 percent for annexed land,” David Thompson recently posted.  “As a city, we are knowingly planning to lessen the doors for the poor. A few more acres set aside for VLI and LI units would go a long way to being welcoming and inclusionary but not on the cards.”

Thompson noted, “When David Taormino asked me to do the affordable housing for Bretton Woods I said I would if he doubled the land required for affordable housing. David provided land for 150 VLI and LI apartments instead of the required 68.”

On a land dedication site, there are advantages in that the developer only has to provide the land to an affordable housing developer, usually some sort of non-profit.  They can then tap into state and federal funding for affordable housing as well as grants and put together the funding needed to provide the housing.

This is what eventually happened at Creekside which became housing for those in danger of becoming homeless—though that came together over 20 years after Mace Ranch was completed.

Clearly, even on a few acres, an affordable housing developer can get the funding to put dense, low-income housing in place.

As City Manager Mike Webb pointed out to me, “15% represents the floor, not the ceiling, for discretionary project (which include anything under Measure JRD).”

He said, “(It) may be possible to go higher with land dedication depending on the project, but that will be up to a specific project review and DA, economics and land area.”

He continued, “The key to land dedication is density… to achieve higher unit count in a senior only complex where all the units are very small singles or very small doubles is fairly easy.”

But what happens if you want affordable housing for families?  And you have to build more traditional 1-3 bedroom type housing—which could be apartment or condos or it could be townhouses or even detached single family homes—it becomes much more challenging.

That doesn’t mean we cannot go higher than 15 percent for such projects, but it does seem that the city wants to have that sort of discretion to decide.

As Mayor Will Arnold has put it as times, it’s a “balancing act.”

If you can’t build the project, 25 percent of zero is still zero.  For every project not built, we get no affordable housing at all.

At the same time, if you leave the number at 15 percent as a minimum, many projects will simply stop there, say they met the city’s standard and call it a day.

My suggestion: set 25 percent as the target for peripheral projects with a preference towards land dedication sites.  But give the applicant the flexibility to get creative and set 15 percent as the absolute floor.

I also, once again, would suggest that the council look into an array of options to avoid a Measure J vote altogether, that would include projects with high levels of affordable—I would say the floor there might be 40 percent with a certain percentage set for extremely and very low, so the applicant can’t satisfy the requirements with ADUs at 80 percent AMI.

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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  1. Alan Pryor

    In addition to raising the minimum requirements for increasing the amount of affordability to 25%, there are a number of other substantial changes recommended to the Council by the Sierra Club Ylano Group Management Committee, as follow;

    1) Completely Eliminate the Maximum 50% Allowance for Accessory Dwelling Units (ADU) – The Accessory Dwelling Unit is typically viewed as a very modestly-sized standalone, self-contained structure on a private property parcel which has its own entrance, bathroom, and kitchen facilities. The current Affordable Housing Ordinance allows for up to 50% of a project’s required affordable housing component to be satisfied by the placement of ADUs in a project.

    However, there is not even a rudimentary definition in the existing Davis Affordable Housing Ordinance of what constitutes an acceptable ADU in terms of its size and required amenities. Allowing ADUs to partially satisfy the requirement for affordable units in new projects is believed to have been first implemented when The Cannery housing project Development Agreement was being negotiated. At the time, the stated understanding was that that the units would be subsequently rented by homeowners to lower income workers or students and thus decrease demand for other low income housing stock in the City.

    However, there is absolutely nothing in the Affordable Housing Ordinance that mandates the units be rented at all, much less rented at an affordable price.

    Further, to our knowledge the City has never polled owners of ADUs in The Cannery to verify that any of the units have been rented and at what rate. It is believed the vast majority are used simply as office space or for living quarters for other family members of the primary household and not rented at reduced or subsidized rates to low income renters. Thus, the entire premise for allowing ADUs to replace subsidized purchase or rental by low-income residents has been circumvented to the developers’ obvious financial advantage.

    If ADUs are allowed to replace subsidized ownership or rental housing as partial fulfillment of developers’ affordable housing obligation, it must be accompanied by a) a strict definition of what is an acceptable ADU and b) a mechanism for monitoring to ensure that the units are actually subsequently rented and at a price making them accessible to true low-income renters.

    However, given the costs and difficulties of implementing such a monitoring mechanism, we recommend that ADUs simply no longer be allowed to count as Affordable Housing, period. In summary, we believe ADUs can be a valuable way to increase the amount of available housing overall, but they are a very poor way to provide subsidized Affordable Housing and functionally impossible to monitor ongoing compliance.

    This proposed change can be easily accomplished by simply deleting the following section of the Affordable Housing Ordinance:

    18.05.050 (a) (2) (C) (ii) On-site construction of accessory dwelling units for rental to fulfill up to half of the requirement;

    2) Substantially Increase the In-Lieu Fees Allowed for up to 50% of the Affordable Housing Unit Requirements to Make it Financially Disadvantageous for a Developer to Employ – The Affordable Housing Ordinance should always require subsidized ownership or rental housing to be built if at all physically possible. In rare instances where site considerations may preclude construction of Affordable Housing on the site, in-lieu fees may be an appropriate alternative means of satisfying the developers’ Affordable Housing obligations. Under the current Affordable Housing Ordinance, up to 50% of the Affordable Housing obligations can be satisfied by payment of in-lieu fees which are not specifically defined and are variable under the current Affordable Housing Ordinance.

    However, there is potentially substantial downside to the City and the low-income community and substantial upside financial impacts to the developer(s) when this alternative mechanism is used to satisfy the affordable housing obligations. That is, if the in-lieu fee is so low as to provide a financial incentive to the developer to simply pay in-lieu fees to avoid actual construction of affordable housing, this will likely result in less construction of affordable housing. The Staff Report indicates the current In-Lieu fee is $81,979.

    But the cost to construct even a very modest 2-bedroom apartment by a developer for use as subsidized rental housing is now in the range of $250,000 or more. Clearly there is an enormous advantage to a developer to forego construction of an affordable housing unit if they can otherwise just pay to the City a fee that represents only about fraction of that amount.

    Further, way too much latitude is given to Council to change the minimum in-lieu fees based on what a developer can convince them is feasible. Davis has a history of concessions given to developers who claim that requirements normally demanded for projects “don’t pencil out” and then they are given waivers by the City because the City Staff and Council do not have the financial acumen and experience to push back.

    Thus, we strongly recommended that in-lieu fees be immediately increased to eliminate the financial incentive for developers to pursue them. Of course, this will have the added benefit of providing additional funding to the City for future construction or maintenance of Affordable Housing projects.

    The Staff Report acknowledges this by stating, “Both the Social Services Commission and the City Council have expressed interest in recalculating the in lieu fee to represent the full cost to build an actual unit. It is staff’s intent to return with a proposed fee that represents this concept. This fee would then be included in the guidelines, which would be approved by resolution.

    1. Ron Oertel

      Seems to me that Step #1 for the local chapter of the Sierra Club is to determine whether or not they support sprawl in the first place, rather than create “rules for sprawl”. (The latter of which would presumably lead to endorsements of sprawling development proposals.)

      And for that matter, the “sprawl rules” might be viewed as a “starting point” (e.g., “negotiable”).

      I’m increasingly glad that I dropped my membership many years ago, at this point. Right around the same time that they became more concerned about social justice, rather than the livability and sustainability of the planet itself.

      1. Alan Pryor

        Step #1 for the local chapter of the Sierra Club is to determine whether or not they support sprawl in the first place, rather than create “rules for sprawl”

        Mr. Oertel – These comments/recommendations were also submitted to the Davis City Council and are only about affordable housing wherever a development is proposed in Davis. They are independent of whether any project is infill or a peripheral development. Had you bothered to fully read the comments/recommendations more carefully and get your facts straight before you decided go off the rails and take a cheap shot at the Sierra Club, perhaps more people might take your comments more seriously in the future.  Employing such distasteful tactics (e.g. trying to “shoot the messenger”) diminish you and make even your sometimes more thoughful comments appear to be less than objective.

        That said, the Sierra Club  would still welcome you back as a member (albeit dues-paying).

        1. Ron Oertel

          Alan:  You can call me by my first name, as we always both have.  I have nothing against you personally (at all).  I fully expect to remain friends with you. (Hopefully, after Covell Village, Part II experiences the same result as Part I.)

          But you started supporting Covell Village II even before these guidelines (which include sprawl) were created.  For reasons that no one seems to understand.

          But yeah, I’d first like to see a statement that the local chapter doesn’t support sprawl.  And I’ve yet to see that forthcoming.

          Instead, what we’re seeing is “conditions” in which the local chapter would either support sprawl, or at least not oppose it.

          Some of my comments (regarding the Sierra Club) go beyond the local chapter.  They started pursuing social justice a long time ago, and seemed to have lost their way.  If you look at the Sierra Club’s website, you’ll find very little information or “news” – mostly just an appeal for a “donation”.

          Bottom line is that Affordable housing is primarily a social justice issue, not an environmental one. Which is fine, but not one I’d want to see at the forefront of an organization which is supposedly concerned about sprawl. (I suspect that they’re probably taking a position regarding transgenderism, by now as well – as corporations often do.)

          How about taking a position on rent control, for that matter?

          Again, I’m not opposed to “any” of these attempts at social justice, UNLESS it results in some Affordable housing developer “teaming up” with a market-rate developer in support of sprawl. Which we’ve seen several times, now.

          Usually, resulting in the Affordable housing being the “last thing” that’s built anyway (see Creekside, in reference to Mace Ranch). Only took about 25 years.

          1. David Greenwald

            “Bottom line is that Affordable housing is primarily a social justice issue, not an environmental one.”

            This pretty much says it all.

        2. Ron Oertel

          It does.

          So why is the Sierra Club putting that at the forefront of its “policy”?

          Aren’t there already commissions, organizations, and individuals (including YIMBY groups and the Vanguard itself) which supposedly have that as their “mission”? (Regardless of whether or not you believe they actually do.)

          Isn’t the Sierra Club (supposedly) concerned about environmental protection and sprawl? One wouldn’t think so, given what’s been transpiring lately.

          But again, they actually started losing their way a long time ago. It’s just that we’ve never seen a leader of a local chapter become an “honorary chairperson” (so to speak) for a particular 400 acre development on farmland, and then participate in ways to “justify” it. 🙂

          (God, I hope he doesn’t take that personally, as I don’t actually intend it that way.) For that matter, Shriner’s is probably even worse (except that it’s a lot smaller).

        3. Ron Oertel

          But now that I think about it, the Vanguard is (usually) arguing against strengthening Affordable housing requirements.

          So apparently, up is down, and down is backwards.  Or in other words, “Go Ask Alice” – though she probably won’t know either.

          Apparently, everyone has had “some kind of mushroom”, or is engaging in “hookah-smoking”.

          (Jefferson Airplane)

          Though truth be told, I suspect the (actual) reasons are generally a lot less mysterious than that.

  2. David Thompson

    25% for annexed land is very doable.

    The vacant parcel is no cost for the developer (except for land cost) a 5 acre parcel at 40 units per acre = 200 affordable units.

    There are 388 acres in the Village Farms proposal,  surely five acres can be inserted into the existing plan.

    If the cost to the Developer is just land costs then swapping five acres elsewhere in the proposal is no net cost.

    Bretton Woods gave almost five acres right on Covell. Could have been 200 units of family housing just like it could be at Village Farms and Eastside (former Shriners) Those extra affordable units could bite a chunk out of the RHNA targets for VLI and LI.




    1. Ron Oertel

      Honestly, one of the worst things that can occur is when an Affordable housing developer “teams up” with a traditional (sprawl) developer.

      And this is why I now vote against every single Affordable housing initiative that I’m provided with on ballots.

      Supporting Affordable housing funds is ultimately a de facto vote for sprawl.

    2. Alan Pryor

      The vacant parcel is no cost for the developer (except for land cost) a 5 acre parcel at 40 units per acre = 200 affordable units

      The developer is proposing 210 units of affordable housing of which 65 are for extremely low income. I believe they are going on about 5 acres of land. So what’s the beef?

  3. Ron Glick

    “I also, once again, would suggest that the council look into an array of options to avoid a Measure J vote altogether, that would include projects with high levels of affordable—I would say the floor there might be 40 percent with a certain percentage set for extremely and very low, so the applicant can’t satisfy the requirements with ADUs at 80 percent AMI.”

    Dude, you need to get over it. We have the system that we have. You supported it now you need to live with it. All this fantasia trying to reinvent the wheel is a total waste of time. You’ll get your chance in 2030 and there is no barrier to starting to ask for a timely and open discussion about amending Measure J upon renewal. I think it should be an important election question in both 2026 and 2028. But for right now we have the rules setting the process that need to be addressed and that is what we need to focus on.

    As for Affordable Housing I’m sure it will be an interesting debate with many competing interests and a lot of money at stake. I don’t really have strong feelings or the understanding to take a position on how much is enough Affordable Housing but I agree with Mayor Arnold that some of some is better than plenty of nothing.

    What I do want to support and I do feel strongly about are  starter homes where young professional families can start to build equity and intergenerational wealth. I’d like to see a large portion of the housing be built with that market in mind.

  4. Tim Keller

    What are the units around this 20% affordable?  Acreage?  # units?

    Assuming its #units….

    If the site is developed at higher density, lets say the 20du/acre instead of 10… is 25% the right number still 25% or could it be lower?

    If you did twice the density for the project on average you could do lower percentage capital-A affordable and still get more affordable units overall, and the remaining market rate units would be more affordable as well… right?    Perhaps that is an incentive towards density?

    ( Actually, I dont think developers need an incentive for density… they would rather develop more densely, they are just afraid of losing their measure J vote if the propose anything other than single family housing)

  5. David Thompson

    Dear Alan,

    I support and thank you for your earlier comments on housing policy changes needed.

    Here is my response to your query.

    First though let’s admit we are hemmed in by having a dialogue about what developers want to have. We are responding to what is on our plate.

    I would much prefer to see Davis plan for what they want our community to be. I think the outcomes would be very different than what we are looking at.

    If Davis gets 65 VLI units per each annexation, we are never going to meet the RHNA target for VLI no matter what RHNA cycle we are in. For example, to meet the existing RHNA target of 580 VLI units at this rate we need eight additional annexations of 300 plus acres each meaning another 8,000 sprawling single family homes. 
    I may see it differently than you but we have to catch up with affordable housing or else we’ll be required to sprawl again and again.
    Five acres for affordable housing is 1.3% of 378 acres. So is the future of affordable housing in the inclusionary Davis going to be 1% of the future land for the poor?

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