While the city of Davis will continue to toy with the exact requirements for affordable housing – what is becoming more and more clear is that we need a funding mechanism in order to provide the revenue needed to pay for that housing.
The loss of RDA (Redevelopment Agency funding) is one big problem for the city – because that represented an annual $2 million of money that is no longer available. While we saw the voters approve WDAAC (West Davis Active Adult Community) with its 150 units, the number of peripheral housing projects with land dedication sites that can be turned into subsidized housing from grant and other sources figures to be quite limited in the next two decades.
Finally, as the reports have indicated, even though we figure to add some infill sites, the type of development we figure to have – namely redevelopment and vertical mixed-use – figures to curtail even more of that potential affordable housing.
Along those lines the Chiles Road apartment project might give us a way forward – not only to workforce housing and affordability by design, but also in terms of the potential for a new way to do affordable housing within the revenue and funding limitations that we have.
As developer Chuck Cunningham explained in his comments to the Planning Commission on Wednesday, when they looked at their project, they figured out that there was no way to get to the previous 35 percent 
affordability mark. But more than that, even the 5-5-5 proposal was a problem.
As Mr. Cunningham explained, “We had to do something. We began looking at alternatives.”
He said, “It turns out we could do 3.5% total without even extremely low units.”
He also explained why most of the student housing projects could get to 15 percent affordability – they are renting by the room and thus get more rent per room than other complexes. That allows them the leeway to get to 15 percent affordability in most cases.
This is yet another reminder that without redevelopment and without site dedication, it’s going to be hard to consistently build affordable housing in town.
But there are two solutions her, both to be found within the confines of the Chiles project. The first is that they are going to attempt to create an annual revenue stream. This isn’t just an in-lieu fee, which is one time. This is actually an ongoing stream that could generate upwards of $300,000 per year at some point.
There is a difference. The in-lieu payment simply places an amount of money, in the place of actually building housing, into a fund that can be tapped at a later point in time. But by creating a funding stream it produces not only on-going money, but as some of the commissioners like Greg Rowe and Darryl Rutherford pointed out, the city has the ability to bond against an ongoing stream.
If the city were to implement this plan for the next several projects, perhaps they can create enough of a stream to start replacing RDA. That is something at least worth exploring.
In addition to finding new ways to provide big “A” affordability, there is an acute need for workforce housing.
If MRIC (Mace Ranch Innovation Center) is coming back – and signs suggest that some sort of proposal is forthcoming – and if the city is serious about economic development, one of the biggest shortfalls in the city is finding housing that meets the needs of that group.
In this case, they are looking at a project that creates affordability “by design” for the so-called “missing middle.” These are people making $60,000 to $80,000 that we might not think of as low income but who cannot afford to buy homes in Davis.
These are the same concerns that were targeted over at University Research Park and their vertical mixed-use proposal for housing for employees of URP.
At the same time, we need to acknowledge Darryl Rutherford’s point from Wednesday’s meeting. This project does not address a number of groups that are in need of housing in Davis.
There is a whole host of lower income people that are not being served by this project. That’s naturally by design and Mr. Rutherford also recognizes, “We can’t have every project solve every problem but I’m a little disappointed that we haven’t seen something worked out in this project that could actually meet the needs of these individuals.”
But for lower income workers, this project probably won’t work.
“This project doesn’t meet that need,” he said. “That is one of the biggest challenges we have getting to this affordable housing conundrum that we’re in.”
Still, a big barrier to actually attracting companies and high tech to Davis will be housing. Obviously, if we lack commercial space, that’s a structural problem that we must address as well. But when it comes to recruiting companies, a selling point is that they have to be able to hire quality employees. And many will want to live in this community.
This is a point made loud and clear by a public commenter on Wednesday.
Eric Johnson is a partner in an IT firm that has several major Davis companies as clients.
He explained that these businesses employ a total of 500 people and “share a common trait. That trait is that they employ professionals who make solid incomes – $60 to $80 thousand per year – yet their employees have a difficult time finding housing locally.
“Many choose to commute to Davis,” he said. “Their Davis housing choices are quite limited if they prefer not to live in student rentals and they don’t have high enough incomes to afford the typical Davis single dwelling.”
He said, “A project that’s geared toward Davis working professionals is sorely needed in this city.”
We agree. This project will help with that. The advantage of this project is that it checks several important boxes and does so in a location that makes sense and that should not adversely impact either the near-neighbors or the others in this community.
And they have found creative ways to help address issues of affordability, both in terms of the missing middle and in terms of lower income people who need subsidized housing.
—David M. Greenwald reporting
re: photo and caption,
It appears there are three people in the photo. Perhaps the Vanguard is inspired by Borat for their captioning policy:
“She have no name because she girl”.
How about creating a bureaucracy that takes money from people who appear to have a lot of money and giving it to other people who appear to have less money?
How is taking a small portion of rent and putting it towards a funding stream doing as you suggest? And even if so, why would that be a bad thing?
Because it attracts people who start blogs.
Acknowleding receipt, tracking, and disbursing the funds costs employee time… so, incrementally, it is an increase in what many would call “the bureaucracy”… not ‘crating, per se, but an incremental growth.
And would be roughly the same is we’re talking about is $100 k or $2,000 k in funds.
I agree with Bill Marshall. The bureaucracies of these types of local programs end up costing almost as much as the revenues and benefits generated from the fund. It’s simply too difficult to do at a small scale.
In response to Alan Miller, the woman in the photo is Mr. Shepard’s daughter, Kristen.
Taking a portion of the gross rent and allocating it to the City’s Housing Trust Fund would provide a reliable funding source, and one that would increase as rents rise over time. It would add a 4th means for addressing the need for affordable housing, in addition to inclusionary housing (which the consultant’s report issued last November found to be largely financially infeasible), one- time developer “in-lieu” fees and land dedication (hard to do with little suitable vacant land in Davis).
The City need not create a bureaucracy to administer such a program; the mechanism for dealing with the program was spelled out in the documents reviewed by the Planning Commission and recommended to the City Council for approval. The program proposed by the development team would be better than a developer paying an “in-lieu” fee, which is a one-time payment that may be insufficient to provide any near-term benefit.
Greg: you make some really good points. From my experience in years of housing policy consulting, it is rare that a jurisdiction established in-lieu fees at a level actually sufficient to actually fund the affordable housing that it is intended to. There are lots of reasons for this ranging from the political to the technical, but anything that moves towards the likelihood of actual units on the ground is preferable.
It is interesting that this article talks about the need for workforce housing, but ignores the history of development interests killing policies and programs that the City had in place to address these needs. As I wrote back in October:
“In perhaps the most egregious example of special interests weakening affordable housing provisions in Davis, there is a specific set of requirements that were killed by the Chamber of Commerce and a coalition of developers in 2009: the City of Davis Middle Income Ordinance. This was directed specifically at the primary internal housing need identified by Measure R and the City of Davis General Plan: workforce housing.
There is a large irony in the fact that the same project developers for WDAAC who are trying to use a broad and nebulous definition of “internal housing need” applied to Measure R that apparently means whatever they want it to mean for a particular project, —in this case a project that consists primarily of senior-only, market-rate, upper-income, suburban-sprawl style housing—and have also instituted a specific discriminatory program, were also involved in efforts to kill one of the main policies in Davis that actually addressed the primary internal housing need in Davis.”
Let’s add another irony on top of that: the Davis Vanguard has received tens of thousands of $ from these same developers and remains completely silent about this history.
Really? I hadn’t heard.
Rik, have you revealed what your sources of income are, and the sources of your biases? It seems that you should hold yourself to the same standard, especially since you have claimed to be a journalist.