Sunday Commentary: Can We Solve Our Affordable Housing Problem?

By David M. Greenwald
Executive Editor

Davis, CA – We have now completed our speaker by speaker coverage of the Community Conversation on Housing (you can read the full series here).  As a result, I want to return to a critical question—if the solution is a housing trust fund, can we fund it?

Vice Mayor Bapu Vaitla made a critical point, “specifically to the point of how difficult it is to build permanent supportive housing and housing for extremely low-income families. We need dollars for that. We need dollars to subsidize nonprofit developers. We need dollars to acquire land on which that kind of housing can get built.”

And then he said, “We need really much, much higher levels of funding than we’re getting right now from our sources.”

Something else that struck me was in the comments by Assistant City Manager Kelly Stachowicz.  Redevelopment was kind of the holy grail of affordable housing funding.  But Stachowicz pointed out that at its height the city was getting up to $2 million a year from redevelopment which was funding through the increment tax.

Nothing that the state has done in the time since it was ended in 2012 comes even close to that kind of money.

And don’t get me wrong, $2 million a year is a lot of money and a lot better than any ongoing source we have now, but even that is probably not going to solve our affordable housing problem.

Here’s the problem—as a long time and very respected community member who has spent years working in the affordable housing space pointed out to me, right now with the cost of each affordable unit being about $650,000 to build, how much is $1 million (which is what they are talking about for the Housing Trust Fund) going to get us?

Not very much.  And even $2 million a year is not going to solve this funding problem.

Then again, we don’t have to build new housing, we can purchase existing housing.

Another person was telling me that there is probably going to be a triplex purchased that will be converted into affordable housing.  That will cost around $1 million.  That’s a good thing, but it is still only creating three affordable units for $1 million.

It’s a good thing, but it illustrates just how difficult it is going to be to dig our way out of this.

That bottom line, as the vice mayor pointed out, is we need money that can be used to subsidize non-profit developers and money that could be used to buy the land that this kind of housing could be built on.  Creating a fund will definitely help.

There are other ways to help as well—for instance, downpayment assistance for first-time homebuyers.

One of the ideas offered up by Georgina Valencia is the need for a downpayment assistance program.  She made the point that for about $20,000, the city could assist a first-time home buyer.  But that is predicated on the notion that we have housing available at around the $400,000 level for people to buy.

I’m reminded of a story another person in the real estate space told me a few months ago.  A home went on the market for about $600,000 (and, by the way, it was going to be in need of capital for repair and upgrade).  That generated 32 offers.  Someone purchased that home in cash within days of it going on the market.

That’s what we are up against.

The bottom line—as another developer pointed out to me the other week—is that the cost of housing construction is going up about 5 percent each year.  That means that the cost of building homes is getting more, not less, expensive and the amount of money we are talking about the city getting in an ideal circumstance is not enough to solve the housing crisis.

The state can help, the city can help, local revenue can help, a new RDA would help a lot more, but at the end of the day, we’re not going to solve this problem that way.

The best case scenario in my view is that we can create a sufficient fund to help subsidize additional affordable housing within larger projects.  We used to use RDA to get to 35 percent affordable—and, even then sometimes it took years to build that housing.

To do that, we are most likely going to need these bigger peripheral projects.

During his talk, Vice Mayor Bapu Vaitla acknowledged that we are going to need peripheral— “If we want to solve the housing crisis before a generation and a half passes, we’re going to need some peripheral development.”

How we get there, I think, Vaitla acknowledged is “controversial.”

He said “This is a controversial issue with a lot of difficult, difficult conversations that need to be had.”

The idea that can solve our housing crisis through state and local expenditures for affordable housing I think is not realistic.  Using that funding as a tool to help subsidize more affordable housing and different types of affordable housing is more doable and should be what we are aiming to do.

As I have pointed out to people, not only do we not have nearly enough affordable housing and nearly enough missing middle housing, we don’t have nearly enough housing, period.

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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8 Comments

  1. Matt Williams

    David, the answer to your question was provided by the chair of the Planning Commission several years ago in an official comment from the dais during a Planning Commission meeting.  His comment was as follows, “Affordability by design, is elusive at best.  Affordability by size is the only way to build truly affordable homes.”

    Following that advice, instead of designing 3,000 square foot homes with large lots and then trying to shoehorn them into an Affordable Housing program, build 1,500 square foot homes with considerably smaller lots.  The 61.1% and 18.5% building costs and lot improvement costs that Don quoted yesterday will still apply … generating a healthy profit for the developers.

    With that said, I will ask you the same question I asked Don … Do you believe the homes that were built in Davis over the past 10 years were “average” sized homes? … which is reported to be 1,860 square feet in California.

     

    Average
    Median

    Rank
    square feet
    Price
    State

    1
    2,800
    $259.05
    Utah

    2
    2,464
    $279.55
    Colorado

    3
    2,311
    $286.85
    Idaho

    4
    2,285
    $189.87
    Wyoming

    5
    2,277
    $223.75
    Delaware

    6
    2,262
    $180.61
    Georgia

    7
    2,207
    $234.53
    Maryland

    8
    2,200
    $324.53
    Montana

    9
    2,190
    $139.12
    North Dakota

    10
    2,185
    $335.73
    Washington

    11
    2,170
    $194.87
    Texas

    12
    2,158
    $238.21
    Connecticut

    13
    2,157
    $213.79
    Tennessee

    14
    2,152
    $213.62
    North Carolina

    15
    2,146
    $155.82
    Alabama

    16
    2,123
    $181.72
    South Carolina

    17
    2,105
    $209.76
    Virginia

    18
    2,087
    $182.27
    New Mexico

    19
    2,065
    $130.46
    Mississippi

    20
    2,060
    $281.85
    Nevada

    21
    2,049
    $269.26
    Arizona

    22
    2,045
    $180.82
    Pennsylvania

    23
    2,026
    $197.46
    Minnesota

    24
    2,020
    $135.92
    Kansas

    25
    2,016
    $169.26
    Nebraska

    26
    2,011
    $153.55
    Indiana

    27
    2,000
    $232.92
    Vermont

    28
    1,960
    $265.08
    Florida

    29
    1,955
    $149.65
    Louisiana

    30
    1,953
    $155.86
    Kentucky

    31
    1,946
    $307.86
    Oregon

    32
    1,941
    $167.50
    Oklahoma

    33
    1,934
    $267.29
    New Hampshire

    34
    1,915
    $181.86
    South Dakota

    35
    1,913
    $270.42
    Rhode Island

    36
    1,910
    $227.69
    Alaska

    37
    1,860
    $442.70
    California

    38
    1,860
    $134.74
    Arkansas

    39
    1,848
    $162.46
    Missouri

    40
    1,822
    $185.48
    Wisconsin

    41
    1,803
    $146.77
    Ohio

    42
    1,800
    $398.77
    Massachusetts

    43
    1,753
    $266.77
    New Jersey

    44
    1,752
    $119.56
    West Virginia

    45
    1,726
    $178.57
    Michigan

    46
    1,700
    $181.70
    Illinois

    47
    1,680
    $231.96
    Maine

    48
    1,623
    $187.99
    Iowa

    49
    1,490
    $421.49
    New York

    50
    1,164
    $743.86
    Hawaii

     

     

  2. Matt Williams

    David, the answer to your question was provided by the chair of the Planning Commission several years ago in an official comment from the dais during a Planning Commission meeting.  His comment was as follows, “Affordability by design, is elusive at best.  Affordability by size is the only way to build truly affordable homes.”

    Following that advice, instead of designing 3,000 square foot homes with large lots and then trying to shoehorn them into an Affordable Housing program, build 1,500 square foot homes with considerably smaller lots.  The 61.1% and 18.5% building costs and lot improvement costs that Don quoted yesterday will still apply … generating a healthy profit for the developers.

    With that said, I will ask you the same question I asked Don … Do you believe the homes that were built in Davis over the past 10 years were “average” sized homes? … which is reported to be 1,860 square feet in California.

     
    _______ Average _____ Median
    Rank __ square feet__ Price _________ State
    1 ______ 2,800 ______ $259.05  ______ Utah
    2 ______ 2,464 ______ $279.55  ______ Colorado
    3 ______ 2,311 ______ $286.85  ______ Idaho
    4 ______ 2,285 ______ $189.87  ______ Wyoming
    5 ______ 2,277 ______ $223.75  ______ Delaware
    6 ______ 2,262 ______ $180.61  ______ Georgia
    7 ______ 2,207 ______ $234.53  ______ Maryland
    8 ______ 2,200 ______ $324.53  ______ Montana
    9 ______ 2,190 ______ $139.12  ______ North Dakota
    10 ______ 2,185 ______ $335.73  ______ Washington
    11 ______ 2,170 ______ $194.87  ______ Texas
    12 ______ 2,158 ______ $238.21  ______ Connecticut
    13 ______ 2,157 ______ $213.79  ______ Tennessee
    14 ______ 2,152 ______ $213.62  ______ North Carolina
    15 ______ 2,146 ______ $155.82  ______ Alabama
    16 ______ 2,123 ______ $181.72  ______ South Carolina
    17 ______ 2,105 ______ $209.76  ______ Virginia
    18 ______ 2,087 ______ $182.27  ______ New Mexico
    19 ______ 2,065 ______ $130.46  ______ Mississippi
    20 ______ 2,060 ______ $281.85  ______ Nevada
    21 ______ 2,049 ______ $269.26  ______ Arizona
    22 ______ 2,045 ______ $180.82  ______ Pennsylvania
    23 ______ 2,026 ______ $197.46  ______ Minnesota
    24 ______ 2,020 ______ $135.92  ______ Kansas
    25 ______ 2,016 ______ $169.26  ______ Nebraska
    26 ______ 2,011 ______ $153.55  ______ Indiana
    27 ______ 2,000 ______ $232.92  ______ Vermont
    28 ______ 1,960 ______ $265.08  ______ Florida
    29 ______ 1,955 ______ $149.65  ______ Louisiana
    30 ______ 1,953 ______ $155.86  ______ Kentucky
    31 ______ 1,946 ______ $307.86  ______ Oregon
    32 ______ 1,941 ______ $167.50  ______ Oklahoma
    33 ______ 1,934 ______ $267.29  ______ New Hampshire
    34 ______ 1,915 ______ $181.86  ______ South Dakota
    35 ______ 1,913 ______ $270.42  ______ Rhode Island
    36 ______ 1,910 ______ $227.69  ______ Alaska
    37 ______ 1,860 ______ $442.70  ______ California
    38 ______ 1,860 ______ $134.74  ______ Arkansas
    39 ______ 1,848 ______ $162.46  ______ Missouri
    40 ______ 1,822 ______ $185.48  ______ Wisconsin
    41 ______ 1,803 ______ $146.77  ______ Ohio
    42 ______ 1,800 ______ $398.77  ______ Massachusetts
    43 ______ 1,753 ______ $266.77  ______ New Jersey
    44 ______ 1,752 ______ $119.56  ______ West Virginia
    45 ______ 1,726 ______ $178.57  ______ Michigan
    46 ______ 1,700 ______ $181.70  ______ Illinois
    47 ______ 1,680 ______ $231.96  ______ Maine
    48 ______ 1,623 ______ $187.99  ______ Iowa
    49 ______ 1,490 ______ $421.49  ______ New York
    50 ______ 1,164 ______ $743.86  ______ Hawaii
     

     

    1. Don Shor

      Do you believe the homes that were built in Davis over the past 10 years were “average” sized homes?

      I don’t understand the question, much less its relevance.

      1. Matt Williams

        Don, my apol;ogies for causing your confusion.  Let me try an clarify.

        The question is as simple as this … The average square footage of a detached single family residence in California is reported to be 1,860 square feet.  How does that 1,860 square foot average compare to the amount of square footage of new single family detached residences built in Davis over the last 10 years?

        As to the relevance of the question, Grande Village provides an illustrative example.  The 27 “Market Rate” residences have an average square footage of just over 3,100 square feet.  The 6 “Middle Income” residences have an average square footage of just over 1,577 square feet.  The 8 “Low/Mod Income” residences have an average square footage of just over 1,246 square feet.

        Then looking at Zillow, the current home price of the 27 residences with 3,100 square feet ranges between $1.07 million and $1.79 million.  The current home price of the 6 residences with 1,577 square feet ranges between $764,000 and $770,000.  The current home price of the 8 residences with 1,246 square feet ranges between $308,000 and $505,000.

        That is “affordability by size” at work.

        Did I remove your confusion, or do you have additional questions?

         

         

    1. Matt Williams

      Don, in the information that has been shared to date, the tax has been most frequently described as a Utilities Tax.  There are lots and lots of questions, such as

      — What utilities will be taxed?
      — How the specific utilities usage will be taxed?
      — How many total dollars will be raised/levied each year?
      — How the money will be spent? and
      — What accountability steps/measures will be provided?

      … are just some of the questions.  Councilmember Neville was the Chair of the DJUSD Measure M Bond Oversight Committee, and is a past Chair of the City’s Finance and Budget Commission, so she will have some very useful input on the last two of those questions.

      When a past Council was considering a Utilities Tax, they formed an ad hoc citizens committee that wrestled with key questions that existed at that time.  Assistant City Manager Kelly Stachowicz led that effort, but given the timeline set by the County Elections Office that exists for finalizing Ballot language in July for the November Ballot, there really isn’t time to convene such a citizens committee.

      Given the fact that each year the City starts out its Budget process with $14 million less Revenues than necessary Expenses the answer to the third question should probably be $14 million each year.  To put that into a general context, the City’s wastewater system serves 15,238 residential connections, and 50 commercial, industrial and institutional customers (as of 2019).”  Dividing $14 million by 16,000yields an average of $875 per average customer … but actual utilities usage will mean some customers would pay more than $875 and others would pay less based on their actual usage.

      rn

  3. Keith Y Echols

    Bah!  This town’s only solutions for funding things is to raise taxes or beg from the state or feds.  I guess it’s in this town’s DNA; all the academics are used to applying for grants.  Raising the sales tax or creating a new property tax isn’t going to solve anything.  It’ll be a small drop in the bucket for creating real housing solutions.  There’s no thought to fixing the problem yourself….CREATING NEW SOURCES OF FUNDING THROUGH ECONOMIC DEVELOPMENT.   The city needs to aggressively facilitate the creation of new business parks, commercial parks and business districts to help generate more sales tax revenue.  There’s no reason the city itself can’t become a developer and landlord of market rate, workforce and affordable housing which would be able eventually fund itself and perpetually subsidize the creation and maintenance of affordable housing.

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