A few months ago as I was interviewing students to do a story, I was informed by student leadership that the fight for housing was about to shift. Once the university agreed to go up to 8500 units with Sterling, Lincoln40 and maybe Nishi coming on-line, the housing crisis was going to take on another issue – affordable housing.
If you watch our townhall meeting from last year (still viewable here: https://www.youtube.com/watch?v=CU3ee_Yd8xY&feature=youtu.be), you will see that more than anything the students are hammering Matt Dulcich on affordability rather than building more units. And yet, on the student housing posed by the Sierra Club – posed prior to the townhall meeting that six of the candidates attended, the issue of affordability of on-campus housing barely was even mentioned and the issue of getting to 50 percent (from 48 percent) came up at least four times.
Last week, I was asked by a local resident, why aren’t the students demanding 35 percent affordable housing at Nishi? One of the two council candidates opposing Nishi, Ezra Beeman (with Larry Guenther being the other) has consistently criticized the project, claiming it needs “35-percent affordable housing.”
The problem with affordable housing is it can be a tricky issue. Toni Sandoval – a single mother who lives at Solano Park, which is purportedly affordable family housing for UC Davis students, in particular graduate students – pointed out that a single bedroom costs $766 a month at Solano Park. That comes to roughly 449 square feet. A two bedroom, which runs at about $900, is about 559 square feet. Affordability on campus is therefore done in part through designing small living spaces.
But there is a bigger problem here in trying to get up to 35 percent affordable housing – as the council has pointed out on a number of occasions, that number was created in a world of the Redevelopment Agency (RDA) funding. That meant that the city received something on the order of $2 million a year for affordable housing. It was therefore easy to require 35 percent because the city could help to 
subsidize the costs of affordable housing.
That money is gone – and at least under the current governor, not coming back. I still have hopes that in the future it can be recreated in form and the state has also looked into other funding mechanisms for affordable housing through fees and by proposition. The city also briefly looked at a social services tax that could have helped as well.
Ironically, many of the same people demanding 35 percent affordable were opposed to the notion of a $50 a year social services tax.
At the Planning Commission meeting for the West Davis Active Adult Community, several people who are opponents of Nishi stood up during public comment to applaud the affordable housing project in west Davis. They pointed out that this shows 35 percent is possible.
It is possible to get to 35 percent with some projects. The way West Davis is able to do it is that they are basically dedicating land to non-profit affordable housing developers, who can then apply for grants and matching funds to help finance the project and run the affordable housing.
Land dedication sites make a lot of sense if you have a larger peripheral project like West Davis. However, land dedications are not universally supported. At the meeting, Darryl Rutherford was not a fan of the affordable proposal. Many support integrated affordable housing, which mixes affordable housing with market rate housing and reduces the stigma of people living in such arrangements.
Smaller sites may not be able to sustain their own dedicated site.
But Nishi is large enough to have its own land dedication site. So why would they not do so? There is a simple answer there – if they did a land dedication site, they would not be able to provide 
affordable housing for students and they made the decision, along with Lincoln40, to provide affordable housing options for students, who do not have the option anywhere else in the city – and really, even on the university campus, they do not have rental housing options starting at $400 and $500 per month like they do at Nishi.
Once Nishi decided to go to student affordable housing, that took them away from a land dedication site and to integrated affordable housing. That means that no one will be able to know which students are renting affordable beds and which are renting market rate beds.
So why can’t Nishi get to 35 percent? Some have suggested that the developer can afford it – after all, they got the land itself on the cheap and have plenty of resources. For fun, I did a back-of-the-envelope calculation as to what it would cost.
Part of the problem here is that the affordable component, as it is set up, has to be internally and privately subsidized. That means that market rate renters are basically subsidizing the reduction in costs.
I calculated, based on the difference between the market rate units and affordable units, that to get to 35 percent it would cost the property owners about $1.8 million annually. In this case, it is not a matter of building the units – the units will be built regardless, it is a matter of recouping the difference between market and affordable units on an ongoing basis.
The fiscal analysis as it was suggested is that the affordable project would lower their return on investment, and one would have to assume, without knowing for sure, that it would be difficult to finance with an additional $1.8 million ongoing cost.
So the answer to the community member’s question appears to be rather simple – why aren’t students up in arms about the 35 percent figure? Because this appears to be the only way that the students get something in the way of affordable housing. At 35 percent, Nishi would go the land dedication route and students wouldn’t be eligible for affordable housing at all. In another way of putting it – 35 percent of zero is still zero.
Back in February, The council asked Aaron Latta, who has emerged as one of the leaders in the student housing fight, for his perspective and the student perspective on the Nishi affordable proposal.
He said, “At the bottom line, any level of affordability for students is a good thing. This is the second project that exists that has it.”
He pointed out, “Every single one of these numbers are people, but if we don’t get this project passed, it’s that many more people without an affordable place to live.”
Mr. Latta said that the affordable housing plan for Nishi was “beyond my expectations” and he was “amazed by the affordable housing plan for Lincoln40.”
Bottom line – the students see the Nishi proposal for what it is – the best opportunity to produce student affordable housing. The 35 percent figure is a straw man and in many ways a poison pill that would destroy any chance at all for student affordable housing.
—David M. Greenwald reporting
> That means that market rate renters are basically subsidizing the reduction in costs.
Thanks for pointing that out. And not only that, paying ABOVE market because of the subsidy. Not a problem for the rich student, subsidized by parents. A great problem for the working poor, just above the eligibility line, the ones who always get screwed.
Alan
I would have worded it differently, but you are not wrong.
It’s not clear that renters at either L40 or Nishi will pay above market rate.
The economic analysis for Nishi for example: “Therefore, the requirement of payment for off-site infrastructure and provision of 12 percent of the beds for affordable housing suggests the developer will obtain a lower return on investment than is typically targeted for new development in Davis. Assuming the developer is willing to accept a lower return on investment, the proposed infrastructure and affordable housing requirements are reasonable.”
As someone pointed out to me this morning – there is no guarantee that the projected prices hold, but then again, there’s no guarantee that the rents at an existing place will stay the same for next year. The best guard against those issues is simply creating more supply.
Alan makes a great point that the working poor are always the ones that get screwed. They will almost never admit it, but the well educated ruling class generally hates the working class more than anyone else and does not want to ever see them. While the rich don’t hang out with the poor they often see them as “pets” and it makes them feel good to have a chunk of people in town that they can provide food and housing for (with other people paying for it).
Thirty years ago Davis had a lot of working poor but slowly (even in East Davis) I see homes one by one getting yuppified. As a white kid who grew up as working poor it seemed like everyone else had a better deal, the kids that were poorer got free healthcare and free college tuition (and sometimes even free housing) and the kids that were richer had their parents pay for healthcare, college tuition and college housing.
That post explains so much.
Definitional items… what is “working poor”? I always thought of it as those at near poverty level, who had one or more folk working… usually substandard housing… suspect that definition has morphed, for some…
What is “the working class”?
> Definitional items… what is “working poor”?
Yeah, OK, KA., I think we’re on the same page about economics, but do you have to poop on the argument by making sweeping, angry, weird generalizations about people’s motivations? Doesn’t help.
As for working poor: what I mean is those in the low and very low income categories — often not working — get subsidy for housing. Those who have a certain income level can afford to live here. Those who work but make just enough not to be eligible for subsidy are what I used the shortcut “working poor”, perhaps not the best term.
But the point is, if you don’t have subsidy, the very low income can’t live in Davis in great numbers. If you subsidize the very low income, there is a certain level of income that can’t afford to live here now because the rents and/or taxes are higher to pay for the subsidy, and those hardest hit are those working but now unable to live in Davis.
I would argue a “lower-middle” income class of folk are the very people we want living in Davis in high numbers, and the very people our subsidized housing and urban limit system have pushed out in high numbers. Rather than a healthy mix, we are top and bottom income-level heavy, and heading for more of that.
Alan… clarification… you seem to address KA, but you quoted my question… will assume you were addressing KA…
I happen to find little sympathy for KA’s narrative…
Sorry if it seems weird but the super well educated in Davis are a strange bunch (even worse than the super educated in SF) and for some reason many think I am “one of them” (I’m not sure if it the lack of neck tats or a wife with a couple Ivy League degrees) and not a week goes by when I don’t hear someone making disparaging statements about the working class often within minutes of making “virtue signaling” statements about how much they care about the poor the undocumented or the environment. If you are a “kind of well educated kind of left leaning” person you will often miss it the way a “kind of Christian” guy can easily miss the anti-semitism of many new testament thumpers in the south (a business trip years ago with a Jewish co-worker with a non Jewish name pointed a lot of stuff out to me that I missed on previous trips to TX without him). My definition of “working poor” is the people that make “just” enough to not get anything for free (Section 8, EBT, WIC, etc.) . My definition of “working class” is the people who have made a decision to keep earning a living in a job that does not require a lot of education (and more often than not don’t have a 4yr degree). A guy working to get a degree in plant science who loads trucks at UPS at night would not be “working class” but a plumber will still be working class if he actually goes out and fixes leaks even if he graduated from Sac State and makes more money than 99% of the guys with degrees in plant science…
Thank you for clarifying how you use the terms “working poor” and “working class”… they seem, for the most part, understandable and reasonable… mine differ, but not in substantive enough ways to get into a discussion on “terminology”…
Appreciate your response, Ken A… sincerely…
David
“one would have to assume, without knowing for sure, that it would be difficult to finance with an additional $1.8 million ongoing cost.”
You have clearly identified one of the major areas of uncertainty and lack of transparency. “One would have to assume…” What if one didn’t have to assume or guess about financing? What if developers were to honestly reveal what was and was not economically feasible for them allowing the decision then to be made on economic facts, not unsubstantiated claims such as “we are building it for the good of the entire community” vs ” the developers are greedy and are only out for profit” which come from both sides. Financial certainty would do away with the emotional appeals of both sides.
I think in part because everything is an estimate and financing really depends on the ability to get investors.
David
I agree. But there is nothing, except their will not to, to keep a developer from honestly disclosing the financial facts involved in their ability to get investors or financing of any type. This question was asked from the dias with regard to the Trackside project and the council decided to accept the developers word for it without any evidence. I honestly do not think we should be accepting the word of one side while disparaging the motives of others which we have seen with regard to several recent projects.
“The council decided to accept the developers word for it without any evidence.”
I’m not sure that I agree with you. I had long discussions with both Mike Webb and Ashley Feeney on this question and the city actually has a pretty good idea of the costs of a project and they hire consultants to do economic analysis to make sure the project is feasible. So what they have is not “without any evidence” rather they don’t have full access to the books. You’re forgetting that the city can account for most of the costs here. Then it’s simply a matter of subtracting some in one area or adding them in another area.
There are few financial “facts” in a development deal and Tia is free to “guess” the price of lumber, the market rents and vacancy rate in Davis four years from now just like the developers (and may even do a better job since developers that go BK just slightly less often than restaurant owners are almost always super optimistic) …
I feel as though I need to provide a rebuttal and clarify my comments in David’s commentary above. I believe my comments were taken out of context. As a Planning Commissioner, my comments are my personal beliefs as a private citizen of Davis and shouldn’t be represented as coming from the Sacramento Housing Alliance unless I explicitly state that I’m speaking on behalf of the organization. I’ve spent nearly the last 15 years working on affordable housing issues where I have been an advocate for inclusive, safe, decent, accessible affordable homes, which is one of the reasons why I was appointed to the Planning Commission. Contrary to what the article alludes to, I am a fan of land dedication but I believe more could be done to make the affordable site at WDAAC better for those who will benefit from living there. In fact, over the last couple of decades land dedication in Davis has been the primary source of developing affordable homes albeit with contributions from the redevelopment fund.
David, please revise the article so that it doesn’t look like the comments are coming from Sacramento Housing Alliance. Thanks.
I removed reference to your place of work
David
“I had long discussions with both Mike Webb and Ashley Feeney on this question and the city actually has a pretty good idea of the costs of a project “
That may be the case as I have no “behind the scenes” knowledge. Perhaps I would be better off saying that neither the developer nor the city staff nor council willingly share this information with the citizenry so that reasonable assessments can be made about whether to support or oppose a project.
I reference one particular meeting at which I had to ask repeatedly to get Mike Webb and Ash Feeney to provide any information at all about the likely prices in a development being planned at the time namely The Cannery.
I’m wondering if Tia got any answer from the city about prices at the Cannery before it was built and if the prices she got years ago are anywhere near the actual current prices. Asking a city staffer (or developer) what a new home will sell for or what a new apartment will rent for in four years after it is built is like asking a city staffer (or developer) what the new iPhone XII will cost in four years.
If it was so easy to know that the cost of development and rents at a development years in the future we would not have so many developers filing for bankruptcy. It is so hard to guess what rents will be in the future that even successful billionaire developers will top estimators on staff (I’m not going to mention the developer with orange hair that I’m thinking about) have to file for bankruptcy protection time and time again when the rents at a development are not enough to pay the bills.
As J. Paul Getty once said “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” Most development loans in Davis are closer to $100 than $100 million so if a developer is off on their numbers they typically lose a life savings (and/or multiple local investors life savings) of couple million (unlike a politically connected guy that knows he can wait for things to change while the BK courts hold off (and often cram down) creditors since no banker wants to be the one to write down a $100 million loan.
It’s hard to imagine being able to quote a price ahead of project completion, especially in this town. I’m uncertain as to what financial information Tia is seeking, what format she would find useful or acceptable for the numbers, and why she thinks any business owner would consider providing that kind of data.
One of the pieces seems to be developer profit…
The City Staff and City Council have access to information and expertise that is not readily available to residents, and in some cases such as sales tax receipts, it is information that residents are legally precluded from having access to. That is one of the reasons why we have a system that uses elected representatives to make land-use and development decisions on behalf of the community as they have access to the appropriate information to make an informed decision.
Tia: They didn’t provide specific information, I wanted to understand process and what the city knew.
Kind of ironic that the teachers unions which bristle at the claim that they care more about their pay and benefits than they do the welfare of the students, paid for Jerry Brown to be elected so he would raid the RDA cookie jar for them… and this has led to even more financial pain for students of higher learning.
Even more irony that many of these students vote for the political party paid for by the teachers union… the same party that keeps making their education crappier and more expensive.