Guest Commentary: More Housing, Not Houses

by Alex Achimore

We’ve already got plenty of houses, and a huge proportion of them are rolling over as seniors like me move on. We need more housing in Davis, but let’s build what more people can afford.

Like me, many Davis residents believe we should expand our boundaries to build our fair share of additional housing that our state and region needs, but to build exactly what? If the perfect storm of the housing crisis colliding with the climate crisis isn’t enough to convince those who believe in expansion that we should stop building a disproportionate number of detached, single-family houses, maybe this will: in our city, about a third of the existing houses, i.e. upwards of 4,000, are owned by people over 65 (full disclosure—me included). They (we) will be selling soon enough and people with the means to afford our million-dollar homes (in Davis, our age generally correlates with a substantial amount of home appreciation) will over time have lots of opportunity to move here. In the meantime, their relative wealth affords them other options, including private school for their children in a city with a less-stellar school system.

But if we are going to expand our boundaries, I think it should be for those who have been squeezed out, a.k.a. the “missing middle,” who earn what used to be considered decent, middle-class incomes and used to be able to purchase here. And to make homes affordable to that income bracket, they can’t be more detached houses because in Davis our nutso market demands at least $700,000 for a detached house of virtually any size or age (beyond the means of families earning less than $160,000).

I’d better back up with some key assumptions that not everybody shares, so you don’t have to waste time reading the rest of this if you don’t agree.

I believe Davis needs to build more housing not just because the State housing laws and our Regional Housing Needs Assessment (“RHNA”) requires it, but because California has fallen way behind on building enough to keep up with the growth in population and we need to catch up. You think it’s peaked? Maybe, maybe not—after stabilizing and declining slightly it has begun to grow again—but housing production has not kept up with the actual growth of the last 20+ years, and we have long been in deep deficit.

And I don’t believe it can all be done with infill. In THEORY, if you bottle up land expansion, growth has to happen on the inside, but unless there are totally open sites (and there aren’t many left in Davis held by willing landowners), there’s a cost to clear and often relocate existing facilities like the City’s Corporation Yard and the school district’s administration offices. Both are certainly prime opportunities but will take time and will have to bear a cost burden that will make the units there generally expensive when not subsidized. And that added cost, as well as the very positive intentions of densifying more of the city, will dictate multi-story, and mostly rental buildings. Those are fine for many, not as great for children (depending on proximity to parks and schools), and renting is generally not as desirable as owning. Expanding our city limits could provide ownership opportunities for more affordable low-rise products with individual small yards that would appeal to the young families currently priced out of our excellent school system.

Davis has had a big hand in repressing new housing development for several reasons, some well-intentioned and some not, and I think we have a responsibility to be part of the State-wide solution going forward. In our city the problem is most apparent in the lack of housing affordable to much of our workforce, including first responders, teachers (like my son, now in his 7th year teaching at Davis High–yeah, I’m proud), and, more recently perhaps even folks like me, who had a solid mid-management position at the University and a decent professional salary, but might face a lot less choice today.

Watching my own neighborhood roll over and leave far fewer University employees than when I arrived, it feels a safe bet I will end up selling my home to someone in a higher income bracket than I was, and over time the percentage of our city’s population in that bracket is naturally increasing. That trend is due to housing prices rising faster than wages, which has been occurring around us for some time, and it’s a phenomenon beyond our local control. Certainly, high income folks have as much right to move here as anyone else, but increasing the inventory of what only they can attain would suggest they are a little more welcome than others. I don’t think anyone has that intention but sometimes marching along in the same direction without noticing how much has changed can lead to unintended consequences. Wouldn’t it be better to focus on backfilling the middle with products in the price ranges we have lost to the upper tier?

And yet, the two major new proposals to expand our periphery—Village Farms and the property formerly owned by the Shriners Hospital (I’ll call it “Shriners” even though there’s no affiliation)—are proposing substantially more single-family detached houses. Village Farms includes 980 out of their total 1,800 (yes, there is a discount program for some of them, but it is a one-time grant and does not create permanent affordability), and Shriners calls for 700 (not crystal clear how many might be attached; and some may be discounted, but also not spelled out how or what terms).

It’s hard to know how much of that is driven by the beliefs of the developers themselves about continuing a lifestyle and some form of “The American Dream,” verses economic necessity to subsidize the limited number of units provided below cost. As to the former, that dream was never available to a large swath of our population, and simply holding to the existing count of single-family homes in Davis certainly won’t extinguish it. As to the latter, it’s often assumed by the public, though never spelled out by the development community, that the profit from a certain number of expensive houses is necessary to cover the truly Affordable units (i.e. subsidized; I’ll call them “Affordable” with a capital “A”). But we don’t have a transparent forum to discuss that trade off or negotiate a different balance, and simply jacking up the Affordable component until builders stop building is a crude and inefficient tool.

Stripped to its core, the American Dream consists of a stable tenancy—unlike renting or rolling the dice with an adjustable-rate mortgage—and an opportunity to gain wealth through appreciation of equity in your residence. A detached single-family house on a fee-simple lot is hardly the only way to provide that. In other parts of the world, including Hawaii where I grew up, there are a number of other formats not as common here, including condominiums and cooperatives (from townhouses to high rise flats), and many on leased land that have all provided family wealth through appreciation. In the greater US, most of those other formats have been distilled out of the mix, leaving only one form of “rent” or “buy,” but that was before homeownership became less affordable to what we’ve generally considered the middle class. Still, for many people any form of equity participation may remain out of reach as it is in much of the world, but we should at least not let the opportunities here shrink.

The assumption that the American Dream could only be provided through sprawling detached-housing suburbs has also become a prime contributor to climate change. I was in Architecture school when the first Earth Day was declared (do the math), and at least in the academic world it was well understood by then that our suburbs required significantly more car trips, construction materials, and additional heating and cooling energy than more compact and traditional forms of housing. The impact on climate was debated for years, and as recently as 2000 derided as “fuzzy science,” but even as a long-ago believer, I admit to being surprised how quickly glaciers began to melt. I can’t really point to responsive changes to housing patterns, however, and for some time, the average size of new detached houses has been increasing (along with cars and trucks). Indeed, I have lived in a single-family detached house all my life except college, and so have my adult children. But I worry about my grandchildren, and hope there are wider and more affordable choices available when they leave home.

One of the corollaries of the desirability to live in Davis is that you can pretty much sell or rent anything, and so we are in a better position to reintroduce some of those other formats and explore new ones than our adjacent less expensive neighbors of Woodland, West Sacramento, and Dixon. I would argue that we and other expensive, desirable cities in fact have a responsibility to steer housing away from the limited choices of renting an apartment or buying a detached house, as we can help make the cultural adjustment here in the US to find the other formats more acceptable.

OK, so how to work with our developer friends (I say that without sarcasm or irony—I’ve been a developer myself) to move in different directions? The deal I’d like to see the city strike with our peripheral landowners is yes, move forward but only to replace price points that have been lost to the upper tiers. That can’t be a massive subsidy and price control program, which will have to remain available for the Low- and Very Low-Income units, but building more units at a significantly higher density can help lower market prices—an attached unit is inherently less valuable than a free-standing one—and it comes with substantial environmental benefits. Not the entire solution to the housing crisis but could take a big bite.

I would also pursue simplifying the Affordable housing requirements by relying on land dedication, taking the effort of planning, building, and managing those units off the master developers’ hands and shifting to nonprofits that lease land from the city. Affordability is a society-wide issue that hasn’t been caused by developers or the purchasers of expensive homes, and I believe the subsidies for deeply discounted units should be borne by all of us. In California there are new and expanded pots of monies for low-income housing, which I think offer a fairer venue than relying on and even incentivizing the most expensive patterns of development. And in the current formula, we will need upwards of 7,000 new units to provide the likely next cycle of RHNA below market numbers.

Is anything like the above economically feasible, let alone acceptable to the development community? Theoretically there’s always a way to achieve the same earnings from a given number of high-margin products as a larger number of lower, but we have no way to even begin such discussions. So at the moment, developers are left guessing what might pass a Measure J vote, throwing in sweeteners like temporary discounts (Village Farms) or funding disability programs (Shriners) that don’t directly trade off the critical items. There’s got to be a better way than our voting everything down—well, until the State steps in, voids Measure J, and anything that is some form of housing is automatically approved. Far better to retain local control of our destiny and create an entitlement process (read, changes to Measure J) that leads us there. I will get into possible scenarios of that in a future article, but it’s of course important to figure out where “there” is first.

Expanding our city limits is a huge step that will be opposed by many no matter what is proposed. I’m definitely in favor of expansion but not for more of what’s plentiful now. The developers of Village Farms and Shriners can go down closing out the era of sprawling suburban development or be the ones to turn the corner to more sustainable and equitable patterns. I certainly hope they pursue the latter.

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3 Comments

  1. Don Shor

    Here is the distribution of housing types for the five projects that are in the planning process right now.

    Shriners isn’t as far along in the planning process and the specific housing types are a little unclear. Here is the described breakdown, but the MDR category includes both single-family and multi-family projects.

  2. Tim Keller

    I’m definitely in favor of expansion but not for more of what’s plentiful now. The developers of Village Farms and Shriners can go down closing out the era of sprawling suburban development or be the ones to turn the corner to more sustainable and equitable patterns. I certainly hope they pursue the latter.

    Unfortunatley, I think the key dynamic at play here is that the $$ / acre that developers can make is simply higher than any alternative.. so as long as the large planning decisions are initiated by the developers, THAT is what they are going to propose first…

    They don’t care about the status of their project along the continum of urban planning theory.   Its just about money.

    But that is EXACTLY why we have governments:  to do the kind of regulation and direction that the free market is incapable of.

    The city has every right, and should have every incentive to be proactive in specifying more sustainable forms of urban planning.   Yes it is up to the developers to build or not… its their property… but it is up to US to decide if we are willing to further perpetuate the sin of the single family suburb any further, or “turn the corner” as you say, and embrace something better.

    I don’t think the developers are going to come around.   Everyone that I know who has had conversations with them, (all of us communicating basically the same objections) have come away with the same read on their intent: “they are NOT going to revise this proposal”

    Which puts us in a very uncomfortable position:  We are VERY pro-housing, but might end up voting AGAINST the only two housing projects that are being proposed because its the wrong kind of housing, and these bad land use decisions, once made, are effectively permanent.

    I think that in this developer-driven system we have, that is the only way to get them to change their tune.  But it cant just be a responsive  “no” it has to be a prescriptive YES… laying out what we DO want, and agreeing to vote for and champion projects that comply with those preferences.

    1. Richard McCann

      But that is EXACTLY why we have governments:  to do the kind of regulation and direction that the free market is incapable of.

      Unfortunately too many people misread Adam Smith. The “invisible hand” of the market is a tool, not the be all and end all of good public decision making. Smith had many other warnings about unfettered market activity. (And modern day economists can give you a very long list.)

      The government is “us” acting collectively, not an “other” although at times bureaucrats do seem act in that manner. It’s our job to take back that decision making power through deliberative processes and to present voters with sufficiently refined options that the implications are easily understood. Unfortunately, too many forces today are polluting that process, even locally.

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