by David M. Greenwald
The faith leaders write: that they are disappointment at the council 3-2 vote on the University Commons project, noting, “While we are encouraged by Brixmor’s increase from 0% to 5% affordable housing at the 80% median income for Yolo County, we also contend that this is not enough.”
In their brief letter they make several points.
First, “While the specific decision regarding the University Commons is the spark to this conversation, the housing crisis in Davis and across our state does not begin and end with this decision.”
Second, “The ongoing problem of housing insecurity affects many Davis residents—students and families alike—from accessibility to affordability. This lack of affordable housing is not an isolated issue but has cascading consequences, leading to greater food insecurity, negative physical and mental health outcomes, decreased academic performance, and increased risk of other harms.”
And third, in response to our premium newsletter (have you signed up yet) earlier this week, they noted I wrote “that demanding more from our city leaders with regard to affordable housing is 
equivalent to ‘squeezing blood out of a turnip’ – after all, 5% has already been committed.”
To that they respond: “However, we offer an alternative narrative. Can we imagine a city guided by moral imagination, where we privilege the voices and experience of all Davis residents over the profit margins of developers and corporations? Let us live into the hope of a future where affordable housing is more than a compromise, but a testament to a city committed to inclusivity and equality.”
First of all, I think it’s important to understand what is going on here policy-wise. Vertical mixed-use has been exempt from affordable requirements for a reason. The financing is difficult to achieve. However, the council did not want such projects to go without an affordable component, so they put in a five percent requirement.
University Commons preceded that update for the Affordable Housing Ordinance, nevertheless they not only added a low income component—five percent—but also a middle income requirement, another five percent. In essence, the affordable housing component is now 10 percent—26 units.
Second, looking at this project in isolation is probably a mistake. We have now seen projects like Sterling’s affordable housing site, Creekside, West Davis Active Adult Community, Lincoln40, and Nishi add immensely to the city’s affordable housing stock. Add to that the potential of another 150 units at DISC and the city has moved forward a huge commitment to affordable housing.
That fact is lost in the brief letter.
Further, they have done this with two tremendous challenges for building affordable housing. First, the high cost of construction. Second, the loss of redevelopment funding.
It is in that light where my comment about “squeezing blood out of a turnip” needs to be understood.
The faith leaders offer us no solution in terms of financing. They offer us no recognition about the challenges of high costs of construction. They offer no appreciation that this goes doubly for vertical mixed use.
My comment was fully: “While I completely agree with the faith leaders we need more affordable housing in this community – but you can’t squeeze blood out of turnip and in particular ten percent of zero is zero. Meaning that if you end up trying to push too far, you end up with no housing built and thus no affordable.”
This is the dilemma here.
Will Arnold in November 2018 put it well.
“Fifteen percent is not feasible,” he said. But, then again, “zero percent is unacceptable.”
On the other hand, “35 percent of nothing, is nothing. So if the thing doesn’t get built because we’ve put an onerous requirement on there, then no one gets to live there… So that’s the balancing act that we have in front of us.”
That is what I was getting at here. We can push for more affordable housing on a project by project basis—that’s fine. But putting too high a requirement on it means that housing does not get built. And if housing does not get built, we end up with no affordable housing.
So the faith leaders conclude, “Here’s what we’re asking: that the City Council pause and allow time to reconsider their vote before moving any further with this project due to the unaffordability of the rental of beds or units, including the ‘affordable units.’”
The problem here is that the council has been discussing these issues for years now, while the faith leaders have just now entered the discussion.
My own view about a way forward is three-fold.
First, while a lot of people are complaining about the unaffordability of this housing, the reality is that, to a large extent, the market will ultimately dictate cost. New and higher end housing will be more expensive. But there are of course tradeoffs—the ability to not drive, for instance, saves gas, maintenance, parking and other costs associated with vehicles.
Further the biggest driver of costs for the Davis market is scarcity, and by creating extra capacity, we are reducing the upward thrust of the market on costs.
Last year, too many students were housing insecure. Many lived in their vehicles and on couches. Many more overcrowded existing housing. If we can somehow get to five percent vacancy, it is a game changer.
Second, on affordable housing there are two longer term solutions. One thing that the faith leaders may want to look at is the creation of a faith-based non-profit that can leverage funding to help purchase land and build affordable housing. We’ve seen that affordable housing developers like Neighborhood Partners and Mutual Housing can raise money through grants and other means to fund even large scale affordable housing projects.
Finally, the recession will make this more difficult in the short-term, but the reformulation of RDA and incremental tax funding of affordable housing projects is another way forward. The faith leaders would need to help mobilize our community to lobby the state to do this.
In the end, they can push and push and push and try to get the developers to go from 26 subsidized units to 39, or they can help work to make it possible to have funding streams that in the big picture are much more impactful.
—David M. Greenwald reporting
Translation: Stick with saving souls, you goody-two-shoes. The Vanguard is the only “expert” regarding “penciling out”. 😉
(But, we’ll “need your help” on just about every other social justice concern – as long as it doesn’t interfere with our market-based development advocacy.)
OK, I’ll try to say this in a way that doesn’t get nuked . . . the ‘faith leaders’ seem to universally believe in a system that force-ably redistributes wealth from those who have more of it to those who have less of it – in this case for housing. A system that begins with an “S” and ends with an “-ism”. And when people collectively believe in that they are known as “-ists”.
I believe in systems such as cooperatives-by-design (not subsidized) or even grants, however questionable the criteria may be. The subsidy system will break us.
Why, though, no article this morning on the biggest news for Davis students of all — lease breaks due to Covid-19 and lack of in-person schooling will not be honored, thus tons of students stuck with year-long leases on apartments they will not be using?
The “other” side of a free market, apparently one which David doesn’t want to discuss.
It is big (but not unexpected) news.
We’ve covered it previously. I spent most of my time on the wrongful case, probably will have an update after the council meeting tomorrow.
I imagine a lot of ‘stuendts’ will be calling in. Read: organized campaign by the Campus Soci—–pardon, I mean Campus Democrats.
As this article demonstrates, the system that begins with “C” and ends with “-ism”, based on a profit motive, has proven to be incapable of providing adequate affordable housing. Perhaps, it’s time to look to other “isms“ for solutions.
Like the other ‘system that begins with “C” and ends with “-ism”’? In Russia, China, Cuba, Cambodia, other locales, that hasn’t worked out too well…
The H-ism?
The issue the article highlights is the inability of the for-profit model to adequately address the affordable housing issue. I’m not suggesting, as Bill Marshall implies, that we dump capitalism for socialism. But publicly subsidized models do work in selected areas (schools, healthcare, public works, etc.). That can apply at the state and, to a degree, the local level.
But then you end up in the rabbit hole where people start talking about Cuba and China rather than affordable housing.
The fact that some people invoke ridiculous arguments is no reason to avoid the discussion of alternative models that could be explored locally. Medicare and public schools don’t make us China or Cuba.
What is the expected profit margin behind this statement? And what is the amount in dollars? What was the motivation of redevelopment?
Housing is one of the issues that local residents can solve directly if they have the will to do so (with minimal help from a city council). As said, residents could buy land and build affordable housing themselves, or rent out/sell their existing property below market rate to the target population.
But ethically it makes no sense that individual homeowners are doing so (to supply affordable housing at no profit or at market loss) while professional developers continues to develop at profit.
The ethics that the consumers shall share the cost of helping fellow consumers should be the suppliers restrictions its own profit in order to provide for everyone.
The ethical principle does not change the fair market competition if every supplier is subjected to the same rule. This could mean individual homeowners are subjected to the same profit cap if they own excess dwelling (taking up space) or rental property.
Without such ground rule, a society would be pressuring the middle class families to compete against big developers and corporations before the middle class could help the lower class.
You’ve touched on a problem with language, as currently used, and elsewhere the difference between informed free-will, and ‘compulsion’ by any institution… secular or religious…
Social = good… socialist = anathema, to many…
I could quote many writings, religious and secular, that could go either way as to free-will, compassion for others, vs. compulsion, either by fiat (usually government), or by “guilt-laying” (both some institutions and/or political individuals)… in the latter group, there are many individual hypocrites… old saying, “what’s yours is mine, and what is mine is my own”… a lot of folk operate that way… put next to nothing in the social ‘collection plate’, and decry that others aren’t putting in more (it seems to assauge their ‘guilt feelings’)… they do little themselves, but demand it, expect it of others… government, society, other institutions, including faith based ones… and even go so far as to blame those for being hypocrites, when they are doing near nada, themselves… except in rhetoric.
One of my favorite passages from Christian scripture, Matt 6:3-4…
Informed free-will… not compulsion (not law, not threat of going to HEdouble toothpicks)… true charity… caring, compassion, given freely… a ‘social’ thing to do. For which the reward is in the doing, not extraneous affirmations… personal… not mandated…
Affordable housing will require public funding. It can be jump-started by non-profits that leverage their assets and get the public funding via grants. Here is one example: https://www.washingtonhousingconservancy.org/the-model
It is very strange to me that the faith leaders would take the time and effort to write this letter about a project with such a trivial amount of affordable housing units in question. This is a tiny detail in a relatively small project, and would barely make a dent in the affordability issue. In fact, it would have the unintended consequence of likely increasing the rental costs for the other tenants.
There are many organizations ready and willing to partner and direct funding to projects on the scale of New Harmony. This particular group that I linked looks, at least at quick read, like it’s well-organized and seeking market-based solutions to an otherwise intractable problem. So instead of nitpicking at 5% vs 10% across the street from campus, focusing on much more effective approaches like this would be a better use of their time, in my opinion.
It seems that some people just don’t like collaborative or market-based approaches, preferring rather symbolic strategies and, of course, assuming that developers have enough extra profit to pay for everything. It is also likely that, if we want to get any significant amounts of affordable housing in the area, it will be necessary to annex some land for that purpose.
It’s a community issue. Seems like it calls for a community-based solution. Singling out one group to pay for it, especially when framing it as a moral issue, doesn’t seem like a community approach.
David,
I am disappointed, again, to see you defending unaffordable housing, this time in the University Commons mega-dorm particularly where the majority of the project is, again, group-housing, designed exclusively for students. More of this type of expensive mega-dorm group housing makes no sense in the middle of a COVID-19 pandemic, particularly when far fewer students will be returning to UCD. We already have 3,888 of these luxury student beds approved and the trying to say that 15% of those beds are “affordable” beds is another fallacy. $1,000+ per month to rent a bed in these-mega-dorms is not affordable for students!
First, of all NONE of mega-dorm beds rented “by-the-bed “currently qualify legally as affordable housing You neglect to mention that inconvenient fact, while the City is desperately trying to back-pedal to fix that problem with HCD and SACOG, the fact is none of the mega-dorm beds are actually affordable housing since they are group housing that are do not quality.
Second, this 15% “affordable” beds which still are not affordable in reality have a “caveat” that if the developers “can’t find” a student who qualify for affordable housing, those “affordable” beds simply change to the much higher market rate rents. While the net rent difference would go to the City’s affordable housing fund, it is not permanent, nor effectively, affordable housing. These Brixmor developers were not even wiling to agree to this same condition!
The University Commons Supplemental City Staff report reveals just how unaffordable the University Commons mega-dorm apartments would be. The Staff report quotes that their market rate studio apartments would be an estimated $2,229 monthly and their 2-bedroom apartments would be $2,898 per month.
This is anything but affordable student housing. The studio apartments are 19% higher than the most expensive studio apartments in the UC Davis annual Apartment Survey, and almost twice as expensive as the average studio apartment in the most recent BAE rental vacancy and rent costs survey data.
Further, it will be difficult to locate students who legally qualify for affordable housing since they either need to be independent financially of their parents, or they must have a family with a very low, income and yet they need to be able to get loans still to support and expensive UCD education. I think paying $1,000 or more per month to rent a bed is not do-able in their budget.
Third, this raises the point that while this project this 10% “affordable” units, the other mega-dorms include 15%, although those are beds. So, despite being a vertical mixed use, the enormous size of this project can easily help to subsidize more affordable units with it having 894 beds.
Fourth, why isn’t the City first doing a new fiscal analysis to evaluate the loss of an entire floor of commercial? This will reduce the project revenue at the very least with property tax.
Finally, I just find it really also disappointing that you continue to try to diminish their message and the validity of this very important letter and outreach by the religious community who has helped first hand with housing needs of the students and the rest of the community.
Your article essentially tries to quiet their voices and try to neutralize this critical action they are asking the Council to take. These religious leaders do so much for social justice and it really is so unfair and rather hypocritical that you are undermining them.
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David, last Monday you made a similar comment about the challenges of high costs of construction. Unlike this article, where you provide no supportive reference for your opinion, in last Monday’s article you cited two reports by Plescia and Gruen+Gruen as reference. I commented then (see LINK) and I repeat that comment now,
As I commented on yesterday’s article, this request for more affordable housing must be considered in the context of the open economic borders that we have with the U.S. It is not possible to impose a requirement that drops the investment return substantially below other investment opportunities and expect that type of housing to be built in Davis. X% of 0 is 0. Instead, we need to negotiate for those requirements in the context of the regional real estate market. Whether the City is capable of gaining a good deal given its record on the BrightNight solar deal and Cannery requirements is a different question.
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I agree wholeheartedly with the point Richard has made above, and the point bears repeating. It is not possible to impose a requirement that drops the investment return substantially below other investment opportunities and expect that type of housing to be built in Davis. Richard’s point sets the stage for asking/addressing several logical follow-up questions,
— What are the other housing investment opportunities?
— What are the affordable housing requirements in other cities in the region?
— Do the other communities support the rent-by-the-bed model for revenue capture?
— If they do, what revenue premium does rent-by-the-bed leasing realize for the landlord over rent-by-the unit?”
So, as has been said so many times before, the devil is in the details when answering those questions. And because we do not know the answers to those questions, translating Richard’s very solid holistic point of principle into an actionable position in this case at this time is an impossibility.
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I also agree with this second point of Richard’s, and on that subject I sent out the following e-mail this afternoon.
I suspect that some of our well-intentioned but uninformed liberal citizenry have laid a heavy hand on their respective church leaders to write their letter, so I cannot criticize the letter per se. If the “faith” community wants to lead in the area of morality regarding housing, they should do as David suggests and come up with a model of how private parties can finance a social good. Even if it is small, it would carry moral weight. But they cannot insist that the “city” do it out of thin air, especially since they pay no taxes. The “faith” community does contribute in many ways to our community, most notably through their rotating winter shelter program and in other ways as well and for that they have some moral standing.
But there is a limit to what they can righteously demand unless it is an end to capitalism based on their religious teachings. That would open the door to an honest conversation about how to put peoples’ needs ahead of profit. I’d start going to church to hear that.
pretty much exactly what I said that you nuked. You being the censors.
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Dave, more often than not you and I agree on issues. However, this is one of the times where we disagree. I find a significant contrast in your words above and the church leaders own words below (bolded emphasis in each case added by me to highlight the comparison … “demand” versus “guided” and “righteously” versus “moral imagination”. For me those are two very different tones.
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I would add that while the genesis of the church leaders’ guidance is “moral imagination,” the target of their guidance is very clearly capitalistic … the relative amount of bottom-line profit that the developer is going to extract from the proposed project. If providing more affordable housing than the 5% currently proposed reduces the hypothetical bottom-line profit for the developer/landlord from 20% to 18%, is that a bad outcome for the developer?
Said another way, is the value of “moral imagination” worth more or less than a hypothetical 2%?
In respond to what Don said earlier, the hypothetical restriction on profit margin could be applied to all landlords, not just “a particular developer.” The will to make such change is a community effort.
Edgar, I would argue that to get affordable housing built as a community effort, it requires the city government to be involved to lower costs (land, permitting, etc.) for something like a non-profit entity or a cooperative that could be composed of citizens who buy “shares” in the venture with the goal that they will at least get their money back with minimal or no guaranteed profit. I would truly be interested in how many people would “buy in”. Don’s link above seems to be an example.
The holistic idea I have in mind is a social credit system where people in need of necessities can register what they need, and anyone can fulfill such needs voluntarily to earn a credit. The credit is used for setting the priority on resource distribution when there is a shortage.
The system is limited to necessities for survival, to prevent people from boosting their credits through fulfilling non-essential demands.
Such system is the voluntary equivalence of social security/public healthcare/welfare systems. But even such system does not address the issue when “the cake itself is too small.”
It does not change the ethical question at the end of the day:
Regardless how a person obtained wealth, is it ethical to not share their surplus when someone else is dying to no fault of their own?
a) What is yours is yours. No one has a responsibility to help others. That is survival of the fittest at work, the oldest law of nature. <– Full Capitalism
b) People should help others when it doing so does not cause much inconvenient. But no one should be forced to help others. It should be voluntary. <– Social Credit System
c) People should put saving human lives above their own personal possessions. Not helping in such case is morally wrong and can be a reason of sanctions and boycotts.
d) People have no rights to possess excess resources while others need them to survive. Possessions of such nature can be rightfully repossessed and redistributed. <– Taxing the wealthy (US Status Quo)
e) People who willing possess excess resources and refuse to share with fellow human beings are morally evil. Not only can their excess possessions be repossessed, they deserve to have their wealth stripped to the level of the poor that they refuse to help. <– Communism (?)
Matt, how does that vision translate in any meaningful way when the fate of affordable housing is placed virtually exclusively in the hands of private profit-maximizing businesses? Capitalism has no moral imagination. Do our faith leaders believe that our city council can banish capitalist profit maximizing from Davis city boundaries? I ask this question in all seriousness and with personal respect for everyone who signed the letter.
It absolutely is a bad outcome for the developer because it is a direct attack on their reason for being in business. BTW, is the profit margin really that fat?
Dave, here is a quote from the December 11, 2015 PRELIMINARY PROJECT ECONOMIC ANALYSIS FOR CITY OF DAVIS AFFORDABLE HOUSING ORDINANCE prepared for the City by Plescia & Co. I have added bolded emphasis of the relevant wording.
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Here is another quote from the October 2018 DEVELOPMENT ECONOMIC ANALYSIS OF MULTI-FAMILY RENTAL HOUSING PROTOTYPES report prepared for the City by Gruen+Gruen and Plescia & Co.
Now with respect to your statement “Capitalism has no moral imagination.” that gets to the point Richard McCann made at the end of his comment above.
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It is up to the City to make sure that whether the capitalistic developer actually has “moral imagination” or not, their ultimately approved development includes a “moral imagination” component. That is the end result we (ideally) expect our City Council negotiators to achieve.
“More of this type of expensive mega-dorm group housing makes no sense in the middle of a COVID-19 pandemic, particularly when far fewer students will be returning to UCD.”
Brixmor won’t break ground until there is more economic certainty so this is a non-issue.
“Fifteen percent is not feasible,” he said. But, then again, “zero percent is unacceptable.”
This is the Laffer curve applied to Affordable Housing. The Laffer curve is idea that at both the zero percent marginal and 100% marginal tax rates you raise no revenue. The question in debate here is at what percentage Affordable housing do you maximize actual production of that housing. I don’t know how you get to that number within the current model but maybe others do.
The numbers I find interesting are the $440,000/unit construction cost and the $75,000/ unit Affordable contribution. I don’t know how you make these numbers work and then complain about affordability.
Whether you think capitalism is amoral or immoral is irrelevant. It is the system we have and our economy operates under. One aspect of capitalism is that capital is allocated first to the highest available rate of return. At some point Davis becomes like Hue during the Tet offensive. You have to destroy the village to save it.
Ron, you are selectively applying the Laffer Curve in your comments. Amoral and immoral are at two extremes of the morality principle universe. Dave Hart’s comment was only that “capitalism has no moral imagination” which is definitely somewhere in the middle ground that lies between the Laffer Curve extremes.
The comment you really should be focusing on is Richard McCann’s, which in effect says the Council needs to develop some backbone … and in this representative democracy that we live in, represent the people and stand up to the developers. As Richard correctly pointed out, the Council’s track record is not particularly good in that respect.
The Council did not stand up to the Cannery developers when they asked for a CFD one year after getting approval in a 3-2 vote by the Council. The Council capitulated to the Cannery request and that capitulation cost Davis taxpayers over $21 million.
Over and over and over again, the Council has failed to set enough money aside for repaving our streets leaving them in the poorest condition of any town in Yolo County.
The Council needs to get a backbone.
A decision to tell Brixmor that 5% isn’t enough is totally capitalistic, as is telling Brixmor that something more than 5% but less than 15% is necessary.
JMO
If the city is the client paying for the development, then the negotiation is capitalistic. If the city is simply issuing permission for the developer to pay to build what they pay, the relation is not capitalistic but socialistic.
In capitalism, the city could pay the developer enough so that the developer is willing build it a certain way. The city could also boycott the developer in other ways, such as not awarding a contact to such developer on future development. Using laws to restrict what a developer may build is a socialistic concept.
I respectfully disagree Edgar. Any transaction between a land owner and the jurisdiction in which the land resides is still capitalism. There is a transaction in which value is given by the land owner for value received from the jurisdiction. The value(s) associated with the transaction ebb and flow just like they do in any capitalistic negotiation.
I know what your words mean. But I don’t see how that match what people normally refer to as capitalism. Capitalism implies sovereignty over ownership. It means that the landowner can decide what to do with their land with their own resources. They don’t need to ask for someone else’s approval.
Could you describe what value the developer is getting from the city for negotiating?
My understanding is that the developer is not trying to get any “value” from the city. The developer is either acting based on a threat that the city has the power to not approve the development, or acting out of altruism that they also want to provide some affordable housing.
A developer being subjected to a threat that if they don’t act a certain way, they would not get to do what they want with their own property is not a capitalistic concept.
Is there a name for your interpretation of capitalism? or is there a name for my version?
No, that is ‘socialism’… or more.. what the City could pay, is revenues from taxpayers… involuntary… unless there was a vote… even then…
Guess you are not aware (all of) of the Fifth Amendment… that comment is VERY disturbing… but, your 1st amendment right to say that… and my 1st amendment right to say it is very disturbing…
Oh, the word is ‘contract’, or approval, not ‘contact’… parle en anglais, s’il vous plait…
Re: Bill
My example was wrong. I meant to reimagine the “city” being any independent city-state-entity/voluntary cooperation/organization. I didn’t mean it as a government that has jurisdiction over the land that the developers own. It was my bad. The context was completely missing. You are right.
Edgar, the value the developer is trying to get from the City are the entitlements that are a requirement for changing the current land use to a different land use. When the developer purchased the land on the open market through a capitalistic negotiation and transaction, they understood that the land they are purchasing comes with some restrictions. Restrictions exist is the vast majority of capitalistic transactions. When you buy a 5 pound bag of sugar at the grocery store, you know that you will not be getting 10 pounds of sugar from that 5 pound bag.
If the developer wants to use the land in a more intense or different way than it is permitted for (have it be the equivalent of 10 pounds of sugar), rather than the current permitted use (the equivalent of 5 pounds of sugar), the developer knows that the permission to get the “extra 5 pounds of value” will come from the jurisdiction.
You possibly could argue that the whole concept of zoning and land use restrictions is socialistic, but the entitlements transaction is an open negotiation in the public marketplace with either party in the negotiation having the ability to say either “yes” or “no” based on the value they will receive in exchange for the value they will give up.
Edgar… please forgive me for my over-reaction… I fully accept your clarification… best to you and yours… sincerely…