Commentary: 2024 Emerges with Housing Back on the Forefront of Community Concerns

Photo by Liz Sanchez-Vegas on Unsplash

By David M. Greenwald
Executive Editor

Davis, CA – Welcome to 2024.  This—as always—figures to be an interesting year here in Davis.

On the housing front we are going to watch a number of things this year.

First, the city says it is finally going to launch its General Plan update.  That’s been a long time coming and obviously will be a several year process but the discussions and process will start as soon as this month and will help guide a lot.

Second, the city in November will see City Council races in three districts.  Already, there is an expectation that Will Arnold will not seek a third term—he has not announced it yet and surprised many four years ago by running for a second term.  But already lining up for that seat are three candidates: Dillan Horton, Linda Deos and Victor Lagunes.

There are two other seats up—Donna Neville who was just elected last year in a special election, and Josh Chapman.  No one has emerged yet to challenge either of them.

Third, will the city council put forth an amendment to Measure J and what will that look like?  The council has hinted that this could come, but if it does, obviously that will be as contentious as any land use issue.

Finally, the expectation is that one of the Measure J projects—most likely Village Farms—will be on the ballot for Spring 2025 in a special election, but that process will start to play out this year as well.

There is also a big unknown—will there be a challenge to Measure J from an outside entity?  There is some speculation that an outside entity such as Legal Services, or potentially the state, could file a suit in court to invalidate or force the city to modify Measure J.

The time may not be ripe for that.

From the perspective of the community, I think the community would be better off reframing the housing debate.  For years, the debate has been whether and how fast to grow.  That debate should shift towards a debate over what housing should look like and how that housing can shape and reshape this community.

Along those lines, I want to address a few of the points that Matt Williams raised in his comment yesterday.  (I am not going to address whether this is unique to Davis, but the underlying points).

First, “Davis does not need unaffordable market rate ($900,000 to $1 million sale price) housing units. What it needs are affordable ($500,000 to $600,000 sale price) housing units.”  This is a fundamental point that I disagree with.  It is not that I don’t believe that Davis needs more affordable housing units (however you want to define the term affordable), but rather that I also don’t believe that Davis has enough housing units at all.  If you look at monthly sales in Davis—a point I have made a number of times—you will see there is not much housing sold at all, at $900K or above or $900K or below.

That in my view, creates a stagnant market, and drives up prices.  In addition, from a viability perspective, developers and underwriters and investors need to see a return on investment (ROI) and a lot of that return is going to come on the market rate and likely the upper end of the market.

So in order to make housing work, there has to be a give and take and a sweet spot whereby both needs are addressed.

At present, Village Farms is talking about 37 percent of its units for low- and middle-income households.  One of the discussions that needs to happen in this community is whether that’s sufficient and whether it is viable to build a higher percentage.

That gets to a second point: “Davis developers do not want to build $500,000 housing units and they do want to build $1 million housing units…”

I don’t know if they don’t want to build lower end housing units.  The real problem is viability.  Are people who want to live in Davis willing to purchase smaller units in order to live here?  That’s one of the issues that Village Farms is attempting to address with their subsidy program.

That dovetails with another point that Matt Williams made, “… the state has established an unattainably high bar without offering funding to help meet them.”  That is true and a problem.  The state has thus far not been willing to find a way to reimplement the defunct RDA.  At the same time, the state realizes that a lot of the problems at the local level are really due to local resistance to housing.

Would we need as much in the way of subsidies if California cities—Davis included—were willing to build more?

And if cities would build more they could use those profits to subsidize low- and middle-income housing.

I will get to Measure J shortly, but Matt Williams, recognizes, “Davis has a shortage of undeveloped land within its City Limits.”

This is a problem now—and we saw how much the city council struggled to find spots for infill housing.

Will Arnold and Bapu Vaitla have basically said we are going to need to go peripheral because we will not be able to meet our housing needs with infill.

And then comes the catch-22.  Davis will have difficulty doing so because of Measure J and there is no certainty that voters will approve peripheral projects.

These two points are related.  One reason that Davis does not have space internally is because Measure J forced a high percentage of infill over the last 25 years.  And now, Davis will struggle to address housing internally because of this and struggle to address housing peripherally because of Measure J.

You can add in the presence of UC Davis which is driving housing and other growth pressures on Davis, plus the migration from the Bay Area, and that is adding to the pressure cooker.

To the extent that those three points are unique to Davis—the extent to which I made my point yesterday—but I think the other point that needs to be made is that if Davis now has a pressure cooker situation, where is the release valve?

Right now, what we are seeing is rising housing costs and an aging population which is putting pressure on a number of things including schools.

Those are the issues that Davis is going to have to grapple with in 2024 and into 2025.

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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6 Comments

  1. Tim Keller

    I don’t think it makes sense to looking at the exising market and the prices and then trying to draw any conclusion about what the city should approve.   Government exists precisely to make things happen that the free market wouldn’t do on its own.   There are NO good examples of well planned communities arising from spontaneous action of the private market.  None.  This is WHY we have urban planning.

    In this case, the market “wants” to see short-term profits by developing low-value land into forms of housing that give them the highest return on invested capital (ROIC) during development.    That means single family McMansions, and there are multiple reasons, economic, traffic, social, and environmental why that preference from the developer is not in our best interest as a city.

    My current understanding is that more responsible forms of housing do indeed pencil out in this market (as witnessed by the fact that we have lots of denser forms of housing in this town already). but those kinds of projects have lower ROIC so if left to their own devices, developers will prefer to develop single family IF GIVEN THE CHOICE.

    We have no reason to give them that choice.   The only fear about planning for the bulk of our growth to come in more sustainable forms is the fear that developers wont build it, but again, we ARE seeing development of multi-family housing in this market, so I don’t think that is a reasonable concern.

    The other concern you raise is whether people will actually occupy this denser housing, which is also a concern that I don’t share at all.      Lets just refer back to our numbers:   We need under 2000 units to satisfy our RHNA allocation.   We have 10x that number of people currently commuting into town from elsewhere.

    I will say it again:  the housing we are looking to provide at a minimum is only ONE TENTH of our current housing shortfall.   So the question of whether ALL of those people would take advantage of the higher density housing we are talking about is a silly one.   We cant provide that much housing in the short term under ANY scenario, and when you consider that there is not an appreciable vacancy rate in any housing category at all, that concern becomes even less important.

    Because of this mis-match between capacity and demand we can do a very natural experiment:  lets build our 2000+ units of housing using best practices for modern city design, (transit oriented, mixed use medium density “walkable neighborhoods) and THEN lets see if there is any vacancy at all.

    If there isn’t, then we can build more of that kind of sustainable housing until we see ACTUAL vacancy rates start to climb.   A litte bit of competition is necessary in a healthy market:  It keeps prices in check and keeps landlords investing in the quality of their offerings.    If we want infill housing to occur at any level, this kind of competition is absolutely necessary to incentivize the owners of older apartment complexes to re-build.

    So lets do all of THAT before we consider planning even a single unit of single family housing which we KNOW to be the worst kind of housing for the environment, for traffic, for our economy, and our society.

    It would be insane to allow ANY of that kind of development in a greenfield context when there is still remaining demand for higher-density, lower cost housing, especially in light of the fact that we know that single family housing is likely NOT to be sold to the local workers we most want to re-patriate.

    The only viable reason for allowing SFH is if it is necessary to offset the cost of land dedication for capital-A affordable housing.   Outside of that, it is not in our best interests.

  2. David Thompson

     Dear David,
     I agree with your suggestion.
     “That debate should shift towards a debate over what housing should look like and how that housing can shape and reshape this community.”
     And for me, ‘what should housing look like” is crucial.
     I am of the perspective that the main thrust should be what type of housing do we want to best meet the needs of our community.
     While Village Farms takes some steps in this direction it does seem to ignore other major needs. For example;
     The 300 permanently affordable apartments at 16.7% of the total is the lowest total for any project in 30 years. Why not 25% as other major projects have done? This low income category is the hardest to meet in Davis.
     In Village Farms there is land to meet the 25%. So why not build them?
     Secondly, through; Dos Pinos (limited equity co-op), Greene Terrace (limited equity condo), Aggie Village (UCD Land Trust) and the city’s own for sale single family homes (limited gain) we have over 200 permanently affordable for sale homes. These have all helped bring housing costs down and provided moderate gains of equity for hundreds of median income families since Dos Pinos in 1985 and they all go on serving middle income families on into the future.
     Why none of those models?
     Only 16.7% of the units at Village Farms are permanently affordable. The other 17.2% go to market rate the day after they sell ((310 homes immediately lost in a day).
     So I think it wrong to say that 33.7% is the total number of units of affordable housing.
    .David J Thompson, my own opinions and not representative of Neighborhood Partners, LLC or Twin Pines Cooperative Foundation.

  3. Tim Keller

     Only 16.7% of the units at Village Farms are permanently affordable. The other 17.2% go to market rate the day after they sell ((310 homes immediately lost in a day).

    Wow… are you saying that i could buy one of those homes, build it, and then immediately flip it for a higher price?

    If that is the case, we can probably expect 100% of those houses to be purchased by professional real estate investors and re-sold…  So NONE of them would actually ever truly be “affordable”. ?

    1. Mark West

      “Wow… are you saying that i could buy one of those homes, build it, and then immediately flip it”

      Yes, based on the history of affordable housing programs in town. Primary reason why I argue that the City should have no involvement in any for-sale affordable housing program.

  4. David Thompson

    Dear Tim,

    As best I understand the Villlage Farms program the day after those ‘starter’ homes are bought they go to market value. There will likely be a requirement that you must hold it for two years.

    However, in  reference to Mark’s comment, the previous programs have all been ‘played’ and a number of buyers have walked  away with the full windfall before the two years are up.

    I intend to write an article about the affordable for sale bonanza. You’ll’ be shocked at what I will reveal.

    That is why I promote limited equity co-ops and condos, housing trust models and the city’s own limied gain for sale homes to ensure long term affordability of those homes for moderate income families.

    We should not be using government planning approvals to award private windfalls to lucky individuals.

    David J Thompson, my own opinions and not representative of Neighborhood Partners, LLC or Twin Pines Cooperative Foundation.

     

    1. David Greenwald

      David –

      As Whitcombe explained to me last year, it’s a bit more complicated. The way they are doing it is by retaining about 15% of the ownership on the house. So the initial buy – the buy gets 85% ownership, his company retains 15%. So for a $600,000 home, the buy pays $510,000 that they only have to take a loan on that amount. But it also allows them to retain the ownership over time, so that when the house sells, they retain that 15 percent ownership and the reduction in cost is passed on to the next buyer.

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