By David M. Greenwald
Davis, CA – It was an interesting experience watching the city council discussion on the inclusionary housing ordinance. To me there were almost three independent discussions going on simultaneously.
One was by members of the community who were pushing for as much affordable housing as possible. It was striking to me, however, that many of the people who were speaking about the need for more affordable housing are the same people pushing against housing more often than not.
I heard push back against, for instance, the Cascadia report—which in my mind simply replicated what we already knew from previous affordable housing/inclusionary housing studies.
On the other end, I heard from a lot of the applicants and potential applicants who know just how hard it is going to be to build anything in this economy, and then you add on affordable housing requirements on top of them, and you quickly see that we could end up exacerbating the overall housing crisis as we attempt to build more affordable units.
This is the point that City Attorney Inder Khalsa made.
She noted, “A few years ago I would’ve said that HCD was warmly supportive of inclusionary ordinance, but that has changed over the last few years, and they’re now looking at them more critically in the context that some of these inclusionary requirements are so onerous that they’re preventing the development of any housing, market rate or otherwise, and therefore contributing to the overall housing crisis.”
In the middle of the conversation was the council. On one level, they seemed to understand the tricky dynamics.
Bapu Vaitla said, “I think in the past we’ve been hamstrung a bit by the fact that some developments can afford to provide a lot more affordable units and some can’t.”
Gloria Partida acknowledged, “To be clear, this inclusionary ordinance is not going to be the end of how we solve our affordable housing requirements.” She noted, “We have a certain number of units that we have to build, and through the inclusionary housing ordinance, it’s not how we’re going to get all of these units.”
Partida’s point in my view needs to be underscored. Let’s say we have a 120-unit vertical mixed-use project. A 5 percent affordable would be 6 units. A 15 percent would be 18 units.
By the logic of the public, we should push for the 15 percent because obviously 18 is better than 6. But consider two counter points here. One is 6 is better than zero. In other words, if we make the requirements too onerous, the project just doesn’t get built.
This isn’t hypothetical, I was literally texting with someone in plans to submit a proposal to the city, but if their vertical mixed-use project has to go to 15 percent, they aren’t going to bother. That means we don’t get any affordable units.
But the second point that gets lost is whether it’s 6 or 18, neither of them makes a dent into the 900 or so units we have to plan for this RHNA cycle. In other words, as Partida noted, we aren’t going to solve our affordable housing requirements on 120-unit infill sites anyway. So let’s get what we can built and focus on the projects that are going to move the needle in this respect.
As such, the council spent way too much time on whether the minimum should be 20 units or 7. At seven units you are looking at one affordable unit. Again, are we losing sight of the end goal here? Providing sufficient affordable housing for our community.
There is a lot of distrust here. It came out in the community comments but also the council proposals.
Some of that discussion focused around a notion of transparency or “show your work,” a potential requirement that a prospective developer demonstrate in writing why the project cannot include inclusionary housing.
Gloria Partida noted, “You hear often that either we’re not holding developers accountable or that there’s not enough transparency in the process.” She said, I think that this is an important piece to start a conversation if someone comes forward and says we can’t meet 15 percent.”
Vaitla added, “I think the show your work requirement for discretionary projects is a reasonable request to say that there needs to be some evidence more than just your word. That certain requirement is not feasible.”
He also suggested that the city hire consultants or analysts to check that claim.
I do agree with council here to a point. We often hear from developers that they can’t make certain things pencil out. Sometimes I have gotten them to walk me through their calculations on the back of the envelope. Often I have begged to be able to put them on the record and they aren’t comfortable with it.
But it’s a problem. The public and council need to have a realistic understanding of what the economics are here.
We all can lose when this doesn’t happen. For instance, University Commons. The council, negotiating on the dais, got an agreement to lower the building height in order to forge a compromise with neighbors concerned about impacts.
But as it turned out that compromise made it such that the applicant could not find a builder willing to do the project. The result was they dropped the housing component.
Think about it, we lost about 264 units across the street from the university at an underutilized but prime location.
Had we slowed down the process, had the council paused the discussion and been able to understand the economics of what they were proposing, maybe that problem could have been averted.
Finally, what we are seeing is that too high an affordable requirement can end up not producing any housing.
San Francisco provides us with a perfect example. Data last week showed that San Francisco only approved about eight permits PER MONTH of new housing in February, March and April.
Assemblymember Matt Haney this week reacted on Twitter, “It’s a shameful, embarrassingly slow start to a binding commitment by the city to build 82,000 units of new housing over the next 8 years in a city with some of the highest rents in the country.”
The Chronicle reported that the problem stems from “high interest rates and excessive construction costs” not to mention the ailing economy downtown.
The city has higher than state average affordable requirements with 22 percent of rental units and 24 percent of condos required to be priced below market rate.
Mayor London Breen and Supervisor Aaron Peskin are suggesting the city reduce those percentages to about 12 percent for those that have been approved but not moving forward.
For those arguing we need more not less affordable housing in this community—I completely agree. But we aren’t going to get that by extracting 18 units at a time from 120-unit apartment complexes. We are going to need either the city to have the funds to entitle entire sites as affordable or, more likely, large peripheral projects with land dedication sites.
I think on land dedication sites, the city can easily move the needle from 15 to 25 percent and perhaps higher if we can throw in additional inducements such as waiving Measure J requirements altogether.