David M. Greenwald
Executive Editor
Davis, CA – The Davis City Council is being asked by staff to extend the interim Affordable Housing ordinance once again. The current ordinance would expire on November 30, 2022, unless extended by City Council. They are being asked to extend the sunset date through June 30, 2023.
Staff notes, “The current ordinance is intended to serve as a bridge that would allow City Council to act on multifamily development proposals with a project specific affordable housing plan of less than 35% of the units being designated as affordable housing, while staff prepares a comprehensive update to the inclusionary requirements for multifamily projects for further City Council consideration.”
If the council does not extend the deadline, council would be “precluded from approving housing proposals that do not fully comply with the existing 35% affordability requirement.”
When the Planning Commission initially made their recommendations to City Council back in November 2018, they “recognized that it might be worth considering extending the current ordinance to be in conjunction with the Downtown Specific Plan, the Housing Element 
update, or another appropriate effort.”
A year ago, staff noted that the extension was pushed to November of 2021 with the idea that the city would be able to make progress on the Downtown Plan as well as complete the Housing Element which had initially been expected by May 2021. None of that has come to pass.
The council has already extended the sunset date three times.
Last year, staff noted, “delays due to the COVID-19 pandemic, as well as shifting certification requirements from the California Department of Housing and Community Development (HCD) throughout the development of the document resulted in the 2021-2029 Housing Element not being adopted until August 2021.”
And now HCD has declined to certify the Housing Element and so that is still being sorted out.
Staff notes this time, “As part of a legislative package that aims to address the state’s housing shortage, Senate Bill (SB) 2 established a permanent source of revenue intended to increase the affordable housing stock in California.”
HCD is directed to use 50 percent of the first year’s revenue “to establish a planning grant program to fund local government activities that streamline housing approvals and accelerate housing production.”
A component of the City’s request for the first year of available funding under SB 2 “includes $20,000 for additional funding that the City proposes to use to commission additional economic analysis that builds upon the previous study completed in 2018.”
The city has received the funding, has selected a consultant and has started work on the new ordinance.
Staff writes, “Extending the sunset date of the current ordinance provides an opportunity to complete and further refine the pro-forma analysis and inform a permanent ordinance.”
The city also “continues the process of preparing a Downtown Davis Specific Plan for the downtown that is envisioned to serve as significant future housing opportunity area.”
The current ordinance, adopted back in 2018, after AB 1505 reestablished local authority following the Palmer Decision, “temporarily establishes an alternative affordable housing target of 15% by the bed, bedroom, or unit with a 5% extremely-low, 5% very-low, and 5% low-income mix.”
Further, “The current ordinance also temporarily allows the City Council to consider a myriad of factors in determining whether to approve an alternative affordable housing proposal, such as whether the developer makes a large infrastructure or transportation contribution.”
In December of 2018, the council modified the ordinance to include inclusionary requirements for stacked flat condominiums and vertical mixed-use development.
At the time, the council voted to replace the previous exemptions to the affordable housing ordinance for such developments and replace them with a more flexible requirement that allows the council to adjust the inclusionary percentage up or down, based on the size of the project and the targeted income levels.
Councilmember Will Arnold said that, at the bottom line, “we want to see these things built.” He was concerned that if they made the requirements too high, “nothing would be built.”
Councilmember Arnold said that “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.”
If the council were to take no action, “the alternative option will expire and the City will need to enforce the standard option of 35 percent affordability.”
Back in 2018, the city asked Plescia and BAE to review the ordinance—the report evaluated development economic feasibility, based upon project economics at that time.
The report concluded that—under current economic conditions—the Downtown Core Mixed-Use and Large Urban Mixed-Use “are unlikely to be feasible, even without inclusion of any affordable housing requirements.”
The study specifically assesses the 35 percent requirement in the city’s base regulation. The study asks, if 35 percent is not feasible, what is?
The report found: “Using the same rent and income limit assumptions from the economic analysis, the interim affordable housing requirement of 5% at the extremely low, very low, and low income categories equates to an approximately 10% operating income reduction to an otherwise market rate project. A lower on-site requirement at higher income levels, such as 10% of units affordable to low income levels, would result in an approximately 5% operating income reduction (instead of 10%).”
“Permanent”? Poor choice of words… even the existence of the sun is not ‘permanent’. Given the shifting of State legislation, economic conditions, etc., even “long term” would be pushing it…
It has been said, “the ONLY constant is ‘change‘… ”
As it comes to housing policies, it is not just the goalposts that keep moving… the yard-marks and the field itself is moving. Best anyone can do is dealing with a ‘snapshot in time’… coordinating the DT plan, AHO, makes sense, to a point. Sometimes the choice is between “fishing, or cutting bait”… it will always be a ‘work in progress’…
Good question at the end… far beyond my pay-grade to answer… pretty much, you ‘roll the dice, take your chances’. Good luck finding the correct, perfect, answer… either you’ll p-off some, be deemed too ‘progressive’, too ‘conservative’, or “do nothing”, which will pretty much P-O everyone.
A “no-win” game… all I can recommend is “roll the dice”…
Permanent ordinance comes from the staff report and it is the legal designation to distinguish it from a temporary or interim ordinance.
My suggestions would be, for what it’s worth:
The city should stop trying to establish any fixed percentage of affordable housing as being mandated for specific projects. Instead the city should set a goal of a percentage of affordable housing citywide with affordable housing projects to be sited in all parts of the city.
The focus should be on stand-alone projects on sites that have been purchased or donated for that purpose. Primary funding to come from state and federal grants. City costs, up front and ongoing as best they can be determined, to be funded by fees.
Developers can get incentives or a fee structure can be established in support of these stand-alone projects. They can get credit for donating land on project sites, or for purchasing and donating separate parcels anywhere in the city limits. Leave the actual construction of these projects to the non-profit developers that have a track record.
Since they are exempt from Measure J votes, sites can be peripheral if necessary.
Downtown is not a suitable location for significant development of affordable housing. The requirements should be waived for downtown redevelopment projects that meet other city goals including economic development.
Damn good advice… with a caveat… a ‘variable’ rate opens the door to politics/patronage by the electeds… yet, I’d chance that (there are ‘remedies’) over an arbitrary “mandate”…
Perhaps to get to an overall goal, developers who exceed whatever is set as a goal, they could “sell” the excess credits to another developer… not a new concept… energy and pollution credits come to mind.
By whom? New residents? Boosting non-affordability limits for others? Spread among all taxpayers? Non-res development (works counter to ‘economic development)? TNSTAAFL.
This, I strongly affirm and support… at the end of the day, we should be striving for “community”… not enclaves for the ‘well-off’, nor perceptional ‘ghettos’ where folk are perhaps ‘tolerated’, but not really perceived as part of the whole community… that offends me on many levels… it was a failure of “the projects” mode of thinking… (and/or ‘shanty towns’, N-‘quarters’, etc.)
One of the issues that came up during the Measure H community discussions is that the Interim Ordinance was specifically intended to address the very high cost of land suitable for housing development or redevelopment within the City Limits, which are several hundred thousands of dollars per building lot. The argument put forward during the Measure H discussion went on to say that the Interim Ordinance was not intended to apply to land outside the City Limits, because the purchase costs of that land is typically less than $10,000 an acre.
On Tuesday City Council should address this land cost discrepancy and modify the Interim Ordinance language to address this issue. Arguably, the 35% threshold should be explicitly spelled out as being the standard for land outside the City Limits.
Matt – is anyone using 35 percent in the state?
From your article:
So, the answer to your question, as posed,
is yes… the City of Davis, if you are to be believed… duh!
Is that 35% reasonable, feasible, justified (perhaps on a “reparations” basis)? Beyond my ken, paygrade, to pick a number… but that is what is “out there”, as you reported. It is what it is.
How should we ‘pick a number’? Who should make that ‘policy’? Obviously someone who has studied the ‘sciences’ of ‘politics’, economics, environmental, ethical, moral, etc. (and some are inherently somewhat/partially exclusive of each other)… not an engineering or surveying thing… so I will ‘pass’ as to a number…
So, I propose that a decision be made… permanent/interim, temporary/permanent, however you wish to frame your PS arguments, David… your blog, your call…
I still believe that any decision will need ‘re-deciding’ in 5-10 years, at most… for some, that may be ‘permanent’… I know you like to avoid ‘temporary’, or ‘interim’ as terms… but isn’t any decision, however worded, one of the two latter? Or did you get some stone tablets from a mountain in the Sinia desert? Even those commandments were re-structured…
Rest assured, ‘tho… a decision to have an abortion, take one’s own life, take another’s life, etc., are ‘permanent’ for someone. Oft, many someones.
The 35% requirement effectively killed multi-family housing construction in Davis for the better part of two decades. It was an arbitrary number that was set with no basis in reality, so I doubt any other City in the State has been ignorant enough to try it.
It is my understanding that a local developer figured out that by maximizing the number of 4 and 5 bedroom units and renting by the bed, they could project sufficient revenues to support new development with the 35% requirement. Up to that point, all the 35% value accomplished was to block development, which I suspect was one of the goals. As I recall, many of the anti-development folks in town (and not in town) decried the 4 – 5 bedroom units and bed leases as well.
Apparently, it doesn’t really matter what the “anti-development folks” think, since SACOG doesn’t think that megadorms are a “city need”. And as such – can never count as Affordable housing.
The city gets no credit whatsoever for them, regarding that category – which includes the entire Nishi development as well. And yet, the council not only approved them in the city, they failed to warn voters about that in regard to Nishi – despite being warned about that problem from some of those you refer to as the “anti-development” folks.
And of course, the same “pro-development” folks are now crying about the city’s challenges in meeting those requirements (that they also knew about, in advance).
In other words, the developer supporters don’t seem to care one bit about the city’s challenges, unless it suits what they want. They talk out of both sides of their mouth (and are complicit in hiding critical information).
Also, multi-bedroom units apparently “count” the same as one-bedroom units – in regard to non-Affordable housing.
The Plescia Report was completed in December, 2015.
It did state the study was based only on land within the City of Davis.
The ordinance should have separate requirements for land within the City and Land outside of the City.
I believe that any parcels brought into the city through Measure J should have to meet the previous affordable housing requirements.
How otherwise is our City going to meet the housing goals (930 VLI and LI Units) set by the Sacramento Area of Governments (SACOG) Regional Housing Needs Allocation (RHNA).
I am not aware of what other cities are doing about affordable housing requirements on annexed land.
Why? If the lands outside the City are not annexed, City ordinances don’t apply. If they are annexed, they are part of the City… why should they be treated separately? Not following your line of reasoning… please clarify, if you choose to…
Dear Bill,
The reasoning is as Matt Williams explained above.
The Plescia report added up all the costs of doing housing in Davis which of course requires a higher land cost for land within the city versus outside.
The city should have another study done that takes into account all the new resoruces for housing since basing the first on resources looked at in 2014.
What s the city’s plan to develop 930 VLI and LI units by 2029? Seems like there is no plan visible at the moment.
David