By David M. Greenwald
Executive Editor
At the start here, I will say the housing crisis is complex and likely won’t be solved with a single approach.
I largely agree with this comment from yesterday’s article: “SB 9 won’t solve the problem or even make a huge dent. But it will take down one more barrier to solving the problem. This is going to require a multistep process.”
The bigger point though is that we have to change the entire structure of this system or we simply perpetuate the problem.
The problem here is actually highlighted inadvertently in this comment: “I grew up in a neighborhood that was becoming more dense through the development of high-rise apartments along the major traffic arteries and the replacement of classic bungalows with apartment buildings. As a kid it was alienating and one of the reasons I left Los Angeles. It is why, to this day, I prefer peripheral development to infill.”
This comment explains to a “T” the phenomenon known as urban flight and urban sprawl.
It also explains findings from the last decade or so that have found that concentrated poverty—poverty in the cities has gotten worse since 2000.
The findings are found in a dated study from the American Community Survey data from 2009-2013, but I doubt much has changed and, if anything, things have gotten worse.
As the Washington Post reported in a 2015 article: “The poverty that poor African Americans experience is often different from the poverty of poor whites. It’s more isolating and concentrated. It extends out the door of a family’s home and occupies the entire neighborhood around it, touching the streets, the schools, the grocery stores.”
Most poor Blacks “live in concentrated poverty” and “Poor whites, in most major metropolitan areas, are spread out. Poor African Americans are not.”
Why is this happening? In part because of urban sprawl. They densify city areas to make it more affordable for poor people, and that pushes wealthier whites into the periphery or into the suburbs.
Who can afford to “leave LA” as the commenter at the beginning of this article did? Certainly not the Blacks who live in urban areas like Chicago census tracts where the poverty rate is above 40 percent.
That is why in general I have not looked to peripheral development as the solution to the housing crisis. In my view, peripheral development has caused or at least exacerbated the housing crisis. It has also contributed to segregation.
The question really is how we change this picture.
One answer may be affordability by design.
As Eric Gelber points out: “The logic behind SB 9 is that duplexes are less expensive to buy or rent than single-family homes. So, two (or four) duplex units on one (or two) lots that would otherwise have one (or two) single-family home(s) provides 2-4 relatively affordable homes, which would facilitate increased diversity.”
He adds, “SB 9 may not have a major impact on the overall affordable housing crisis or diversity. But it’s one additional means of addressing the issues.”
The studies that we have been citing show the limits of that approach. It’s expensive to demolish and rebuild. Further, they are going to put safeguards in the law to prevent speculative buying which will further reduce the potential.
But I agree, it is one tool in the tool chest.
Still I’m a believer that the key to solving the housing crisis and reducing housing segregation is to have a more diversified pool of supply in neighborhoods. If you build a new neighborhood that is all 2000-plus square foot homes, what you have done is add supply for wealthy people to move to, which will open up older homes in the center of town for newer residents.
But that exact phenomenon will, in fact, exacerbate segregation and discriminatory residential patterns.
Instead, what we need to do is eliminate single-family zoning and build a bunch of homes that are different sizes and types so that a more diverse group of people will move into the neighborhoods from the beginning.
I also believe that we need subsidized housing. For example, I use the small housing development I live in. Ten years ago, it was housing for medium-income families. The result was that of the nine units, every one of them is still occupied by a family with children, and many of them are occupied by people of color.
The problem of course is the expense of building affordable housing is often greater than a target affordable sale price, if the housing is going to be truly affordable. As a result, the cost of building affordable housing generally is subsidized by building and selling market rate housing in the same development project. That is all the more the case because RDA (Redevelopment Agency), which used to help communities build affordable housing, is gone.
So in my mind, if we want to start cutting into this problem, we need to bring back RDA. Hopefully eliminate some of the excesses that led to it being scrapped. However, without a mechanism like RDA to help developers cover the costs of building affordable housing, I don’t see how we break out of this cycle.
Bringing back RDA is as fantastical as building on PG&E’s corp yard. Easy to be for things that aren’t going to happen. Then you can claim you’re not part of the problem.
I would say there’s a far better chance of some version of RDA coming back, than Measure J being defeated in the next decade.
The two of you need to bury the hatchet. This recurring needling of one another has lost its Groundhog Day appeal a long time ago … and even when it still had some novel appeal lo these many months ago, it never really had anything positive to share.
On the other hand, the rather substantial Budget Surplus that our Governor needs to deal with does have potential to be a funding source for something like RDA. So lets focus on that positive possibility.
With that said, another possible use of the Budget Surplus could be a permanent effort to make higher education, including the cost of student housing, more affordable.
If you had to choose between 1) making housing more affordable or 2) making the cost of higher education more affordable, which one would you rather see happen?
Tradeoffs… as it relates to property tax going to the City, it all gets to whose ox is being gored. Same is actually true about all existing taxes.
I didn’t say anything about Measure J.
You’re not going to get affordable housing without peripheral annexation, RDA or no RDA.
That’s not completely true. There was New Harmony in Davis, and when I went on the Affordable Housing Tour in Sacramento three years ago, they were able to finance several projects (even without RDA). On the other hand, where would you put affordable housing in Davis unless you go peripheral. So there is that.
Bringing back RDAs is easier said than done. RDAs were eliminated because of significant shortcomings and misuse of the system. E.g., https://www.forbes.com/sites/scottbeyer/2019/02/13/californias-redevelopment-agencies-the-bad-idea-that-wont-die/amp/
When I say bring it back, I would was referring to the ability to siphon off the tax increment by local communities for redevelopment and affordable housing. Doing that in a way that avoid some of the pitfalls of the previous system – I agree is tricky but necessary.
Eric is exactly right. So David, for optics, you need to stop using “bring back the RDA” because that is a dead letter concept for a multitude of reasons.
Instead, the simpler statement that doesn’t require a degree in government geekdom (of which I am a full fledged alum!) is to say “increase the share of property taxes given to communities for new development.” That’s a pretty simple statement, which I can see from comments (which should be articles) from Matt Williams and a few others that have delved into the fiscal situation. The state is generating enough property tax revenue to easily cover the fiscal shortfall for cities. Cities get 12% of property tax revenues, which implies an assessment rate of about 0.15% on an average of 1.2% statewide. Based on the fiscal analyses for Davis, these developments are close to parity as it is. The state could easily double the assessment share for cities on all new properties and solve this fiscal dilemma.
The state has already done these types of fixes several times with AB 8, the Triple Flip, ERAF, VLF back fill and even RDAs. This is probably not a big political lift. The state has other pots of money to make the other agencies whole, which it has done in the past.
The important aspect is 1) to eliminate the ability of cities to condemn property to force redevelopment (that was SO abused!) 2) eliminate “districts” and 3) clearly define “new” development (this last one is the most difficult).
RDA is a cynical joke… here’s why:
RDA funds come from development, specifically properties within the boundaries of the RDA boundaries. South Davis, at the time, largely ‘bare ground’ was included in the boundaries.
RDA captures the incremental property tax increase due to development/redevelopment. But,
The incremental increase, by negotiation, does not go to the City… there are “pass-through” agreement(s), where the County and DJUSD were “made whole”, passing thru any increased revenues, as if there was no RDA… their “fair share”, as it were… , so,
What happens to the rest of the increased tax increment? What would normally go to the City GF, doesn’t, and goes into the RDA, earmarked for such things as affordable housing, renovations to downtown infrastructure, pertinent other capital projects, etc. Not the GF.
So, new development in a RD area generates no property tax revenue to the City, except to the RDA. And there are City costs in maintaining/supervising, the RDA.
Simpler than an RDA would be the CC to commit, by ordinance if necessary, some or all of new property tax revenues, coming from development or redevelopment, to the previous purposes… or even focus it on affordable housing… year to year, as far as the eye can see.
Property tax is a zero sum game. Increases in property tax go to City/County/DJUSD-State. The last two pieces are “spoken for”, and have been for a very long time. So, RDAs generate no new money… merely apportion it for specific purposes. So, RDA’s only do what the CC could do, without the bother of legal/procedural issues and cost. City property tax shares, due to redevelopment/development within the “area” would be ‘frozen’. Which has a lot of implications for the general GF funds available, for other purposes.
Inconvenient truths… be careful what you ask for… your wish might be granted.
TNSTAAFL. Much of life, particularly finances, are a ‘trade-off’ deal. That is the issue.
Not the existence of RDA’s.
If the CC wanted to, they could divert as much money as they choose to, to certain areas… but it is a balloon… to make a balloon bulge in one direction, you have to compress it on other directions.
An inconvenient truth.
If you want more affordable housing in town you have to build more housing. If you want extremely expensive “A”ffordable housing that may be used to help a paltry number of financially challenged individuals (and perhaps a few well connected not-so-financially-challenged individuals) restart the RDA and have the City act as the housing developer.
If instead you want to make housing more affordable to the greatest number of those in the community who need the assistance, approve more development in town and designate a portion of the increased tax revenues to fund rent vouchers (with the program preferentially managed by a local non-profit). No need for a new RDA, no need for more extraordinarily expensive “A”ffordable developments, and no need for the City Staff to manage a program that they have previously demonstrated they are incapable of managing properly.
“If you had to choose between 1) making housing more affordable or 2) making the cost of higher education more affordable, which one would you rather see happen?”
Why not do both? With a $75 Billion surplus the state could make a huge investment in affordable housing. In fact with the way new construction at West Village has been funded with municipal bonds its might be possible to keep building while lowering total expenses for students by budgeting more of that $75 billion surplus to higher ed.
Here’s the latest legislative effort (note Aguiar-Curry is one of the authors) to establish successors to the RDA’s.
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB11
Died in committee.
https://leginfo.legislature.ca.gov/faces/billHistoryClient.xhtml?bill_id=201920200AB11
So if a legislature controlled by one party with a governor of the same party hasn’t, in ten years since RDA’s were dissolved, managed to replace them, I see little likelihood of it happening.
Summary of recent discussions.
RDA’s won’t happen.
There is no funding for affordable housing other than having it privately subsidized, unless some federal funds happen to be available right now that can be sequestered.
Property tax proposals simply transfer the funding to other property owners, or deprive some other government agency of funding. They’re not just not a panacea, they are fraught with complications.
Splitting lots in single-family neighborhoods will not make a significant difference statewide, nor in Davis. So that proposal is basically just symbolic. It’s also quite divisive, so one wonders if it is worth pursuing if it will create strong pushback and achieve very little.
Affordable housing will not be likely in densification developments in most places, and very unlikely in Davis.
The usual sites mentioned in Davis (PG&E, city corp yard, DJUSD yard) are not likely to move forward in the next decade or even the next generation. They aren’t relevant to this discussion.
That leaves peripheral annexation as the only method by which Davis is likely to add any significant amount of affordable housing, or really any housing at all, with a few exceptions of small sites within the city limits.
Also: rent vouchers are a really good idea.
By that token though, how does that bode for dealing with the housing crisis overall?
I suspect it bodes for more of the same pattern we have seen over the past five years.
— Very few jobs within the City Limits that pay sufficiently high enough wages to support the monthly costs associated with buying/owning a single family residence (SFR) in Davis.
— Continued high levels of commuting by SFR residents to jobs outside the City Limits (government, legal, medical, educational, and other professional jobs across the Causeway, in the Bay Area, and on the UCD campus, etc.)
— Continued displacement of non-student renters by student renters in existing apartments
— Continued apartment vacancy rates below 1.0%
— Continued extended tenure of existing residents = low turnover
— Continued growth of the number and proportion of residents over the age of 55 (and more often than not retired)
— Continued growth of the number and proportion of residents between the ages of 19 and 25 (more often than not UCD students).
— Continued decline in the number and proportion of residents between the ages of 25 and 55 … and their children between the ages of 0 and19.
— Continued increase in the average number of residents per residential unit (density)
— Continued pressure on UCD to provide on-campus housing for 100% of its annual enrollment increases. as committed in the City-County-UCD MOU (See https://www.ucdavis.edu/news/uc-davis-admits-record-number-new-undergraduates-fall-2021).
— Continued pressure on UCD to provide on-campus housing for between 40% and 50% of its enrollment, as committed by UCD in the past to the UC Regents and UCOP.
—
That’s a Davis-based answer. I was thinking more broadly.
Pretty much the same as if there was an RDA, today [See Matt W’s comments], for the next 10-15 years… with the added downsides of the RDA as to administrative costs in formation, ‘maintenance’, and each of those dollars do not go to housing.
Don S’s previous comments as to problems with RDA’s get to the same sort of conclusion.
It’s still a zero-sum game as to where RDA revenues would go. A robbing Peter to pay Paul sort of thing.
For the money you’re talking about, major shifts in budgeting, or drastic new general/parcel taxes.
And changes in land-use, development footprint issues…
My question was more along the lines of Dan Walters column this weekend – will the legislature confront the housing crisis, because so far, I have not seen anything that indicates they will.
I guess that really depends on whether you see the housing crisis as
1) housing has become unaffordable for large portions of the California population, or
2) the current housing supply is insufficient to meet the current housing demand, or
3) people can’t live where they want to live.
Can the Legislature actually do anything about 1)? Does the Legislature actually want to do anything about 3)?
Matt
3) is a problem in San Francisco due to physical limits. It is not a problem in Davis where we are not particularly dense and we can expand.
Note that the state will likely have to retire upwards of 750,000 acres of farmland in the next 20 years to achieve a sustainable balance of water supply. (Search for the PPIC/UCD study on SGMA pumping restrictions if you want to learn more.) Ag land preservation is much less of an issue in this situation. In addition, the development that doesn’t happen in Davis under tighter control than just about any other community will happen elsewhere and be more environmentally damaging in multiple ways.
Very familiar with the SGMA. There are no Critically Overdrafted Groundwater Basins in the Sacramento Valley that I’m aware of, so this is not relevant to our area.
https://water.ca.gov/-/media/DWR-Website/Web-Pages/Programs/Groundwater-Management/Basin-Prioritization/Files/CODBasins_websitemapPAO_a_20y.pdf
The overwhelming majority of the land to be repurposed is in the San Joaquin Valley. The price tag for buying out farmers is going to be much higher than anybody was proposing. Battles between water districts down there are going to be intense and I’m sure it will be interesting to watch any attempt to implement this land retirement proposal. But it has nothing to do, in my opinion, with planning issues in Davis or elsewhere in Yolo or Solano Counties.
AB2 in 2015, signed by Gov. Brown, established new agencies to replace RDA’s.
https://www.westerncity.com/sites/main/files/file-attachments/ab_2_summary_october_2015.pdf
“COMMUNITY REVITALIZATION AND INVESTMENT AUTHORITY (CRIA)
In 2015, Assembly Bill 2 established CRIAs, another type of tax increment financing district, that increases funding for and production of affordable housing in disadvantaged communities as well as other types of infrastructure projects. To qualify, a city/county must meet the criteria for disadvantaged communities, including having areas with high unemployment or high crime rates, neighborhoods with deteriorated infrastructure, and/or areas with a significantly lower median household income. CRIAs have an affordable housing set aside of 25% and entail the powers of eminent domain for the first 12 years. CRIAs do not require public vote for creation or issuance of bonds, however they are subject to majority protest at adoption. CRIAs are governed by a 5-member board made up of at least 3 members of a legislative body and 2 community members who live or work in the district area.”
https://scag.ca.gov/post/community-revitalization-and-investment-authority-cria
There are also EIFD’s.
City of West Sacramento created the first one approved in the state.
https://www.cityofwestsacramento.org/business/economic-development/enhanced-infrastructure-financing-districts
Good cites, Don…
But the fact remains, that if a portion of tax increment monies are ear-marked for one purpose, they are necessarily not available for other purposes. It’s not “free money”, it is ‘trade-off’ money. Same goals can be achieved by simply budgeting more money to affordable housing, and less for other purposes.
The problem is the restrictions on CRIA and EIFD (https://scag.ca.gov/post/enhanced-infrastructure-financing-district-eifd), either in terms of eligibility (Davis doesn’t have anywhere that qualifies for a CRIA) or limits on use of funds to pay for infrastructure like Mello Roos bonds (EIFD). The spending of the tax increment needs to be less restrictive. I think a lot of communities would pursue development if they had a better fiscal incentive without stupid limitations that legislators keep cooking up.
Two questionable assumptions.
1) it is climate change… it can change either way, as far as precipitation… some areas have been in drought… others face increased precipitation (to the point of flooding)… is the whole world going dry? Where’s the science for that? With the questions about exactly how weather patterns will be morphing, is it wise to take good farmland out of potential production? Never to return?
That some lands may need to lie fallow for years, is that any reason to “pave them over”?
2) given 1) the State can restrict water availability in a given season year. Should the State “retire” farmland, buying the property, and then sometime in the next 5-10-15 years find out that they ‘sold their inheritance for a mess of potage’?
Bottom line… we do not have any real knowledge about how climate change will change weather long term, particularly in such tiny an area as California. In is an unknown. Except it appears it will make weather, in any area, more variable. One way or the other. Not sure it is wise to make long term land use decisions based on weather…