By David M. Greenwald
Executive Editor
Davis, CA – At a recent forum, the issue of housing was discussed and many of the candidates are pushing for infill first – and for good reason when one considers the difficulty of getting approval for peripheral housing in Davis.
Dan Carson noted, “We are nearing completion of a new plan for our downtown that will add 1000 market rate and other types of units for about 2200 people over time.”
But will the Downtown Plan really add 1000 market rate units in Davis? The city is certainly counting on it, especially to fulfill their steep allotment of affordable units.
There is a cautionary tale from 2018, when the Bay Area Economic Group ran a proforma that should caution us against expectations that housing in the downtown is going to be feasible.
BAE concludes: “These results indicate that under current conditions, it will be very difficult for developers to undertake projects similar to the prototype projects, with a few exceptions. As mentioned previously, it appears that a 
medium-sized mixed-use project incorporating high density for-sale residential units could be feasible.”
They add that “development feasibility in Downtown Davis is challenging under current conditions.”
If anything, those current conditions are worse now than in 2018.
The cost of housing construction is a problem across the state and its not getting better.
The NY Times for instance argued last week that California is actually making progress on building more housing.
They focused primarily on SB9 and SB 10 which limits the ability of local government to thwart development through single-housing zoning.
Binyamin Appelbaum, on the NY Times editorial board notes, “California has a long way to go. Mr. Newsom was elected in 2018 on a platform of full-throated support for more housing, declaring that the state needed a “Marshall Plan for affordable housing.” He set a goal of 3.5 million new housing units by 2025, consistent with expert estimates of the state’s need. Meeting that goal would require 500,000 new housing units annually, but last year, in 2021, local governments issued permits for only about 120,000 units.”
As Dan Walters notes, even a more modest 180,000 unit per year goal has proven difficult to manage.
He writes, “at best we’re seeing about 120,000 housing starts and when the housing lost to fire, old age and other reasons is subtracted, the net gain is no more than half of the 180,000 figure.”
Walters argues, “The major constraints are financial — ever-rising costs of construction and the insufficient private sector investment due, in part, to those costs.”
We are having trouble building market rate housing, but the state’s most pressing need is housing for low and moderate-income families.
Walters argues that those type of projects “not only draw the most local opposition but are becoming prohibitively expensive to build.”
Last month the SF Chronicle reported that it now costs “almost $1.2 million to build a single affordable home in San Francisco.”
The Chronicle noted, “Though exorbitant building costs have long been a Bay Area norm, housing researchers say the trend has been compounded by increasingly acute worker shortages, pandemic-era inflation and familiar political issues like long and unpredictable approval processes.”
Experts warn, “a series of events… will help determine whether seven-figure costs become the new normal, or a relic of the height of the housing crisis.”
“Building affordable housing in San Francisco is usually very expensive,” said Muhammad Alameldin, a policy associate at UC Berkeley’s Terner Center for Housing Innovation. “They haven’t built housing for decades. They’ve pushed out all the workers. Now if they want to build housing, it’s going to come at a premium.”
It’s easy to point the finger at San Francisco, but it’s not as though the rest of the state is that much better.
In June, the LA Times reported “More than half a dozen affordable housing projects in California are costing more than $1 million per apartment to build, a record-breaking sum that makes it harder to house the growing numbers of low-income Californians who need help paying rent, a Times review of state data found.”
“We haven’t seen any relief on any of those [cost] drivers,” said Elizabeth Kneebone, research director for UC Berkeley’s Terner Center for Housing Innovation, which published one of the reports. “We’ve only seen more challenges piling on top of each other. There’s been nothing to bend the curve. It just rises further upward.”
The good news is that Governor Newsom signed legislation that will make more commercial property available for low income housing.
But as Dan Walters warns, “The land that Newsom and the Legislature have opened for housing needy families will go largely unused if development costs continue to soar.”
This is a huge problem that the city of Davis also faces. The city believes that it will be able to meet the 930 low and very low income unit requirement from RHNA this cycle.
The city is required to build 580 very low and 350 low income units for a total of 930 low income units. In the pipeline, the city lists 284 very low and 37 low income units. They are also planning on 83 additional units at vacant or underutilized sites and 54 ADUs to create a total capacity of 458 or 472 short of the requirement.
As noted in the housing element, “the City of Davis has a shortfall of 472 units to accommodate its lower- income RHNA (930 units). Per State law, the City must rezone land within three years of the Housing Element adoption deadline that allows at least 30 units per acre with a minimum density of 20 units per acre.”
But perhaps we should be skeptical of even that 472 shortfall number. Of the 83 units at vacant and undertilized sites, the city is relying on downtown redevelopment for all of them. 53 of those low income units are in a redevelopment of the E St Plaza, 17 would be along 2nd and G, and 13 along Fourth St – all of those are redevelopment sites.
Given the cost of housing, are we really going to be able to build what we need? That seems unlikely. I would think some sort of analysis of our housing situation should be what this city council campaign focuses on.
I’ve been telling you guys for the past few years that financial risk which by extension includes construction costs are the primary prohibiting factor in getting more homes built and more affordable homes built. Builders can’t just mass produce homes on spec, flood the market which would help at least stabilize…if not reduce…home prices. It’s just too financially risky. The margins for most home builders isn’t that great. If they’re a major (mass) builder, they likely aren’t the land developer (which is where the higher profit/ROI/risk is). That’s why builders keep the supply relatively constrained. It’s not really to keep prices up; it’s too reduce financial risk of having homes built with softening demand.
If you add on top of that the constraints of forcing all development into infill locations you’re going to further push up prices and/or make the cost of affordable housing even more.
(Please note: I am not advocating for peripheral market rate housing development. In general, on it’s own I am against it. But I am trying to present the financial realities),
Indeed.
(The article also quotes UCD’s Professor Emendorf, a frequent and primary opponent of local autonomy. Not sure if he gets “paid” by UCD to essentially advocate on behalf of the state.)
In any case, it sounds like “Russia” (the state) has its hands full, with (“Ukrainian”) cities across the state. Who knows, maybe the cities will “blow up” a figurative bridge or two.
My guess is that they’ll wait for “Russia” to invade, before they REALLY react. In the meantime, there are organized efforts to overturn much of this in 2024.
Of course, much of the state’s efforts are going to fail on their own, due to population and housing market trends, etc. (And construction costs, as mentioned in the Vanguard article itself.)
https://www.msn.com/en-us/travel/article/bay-area-cities-running-out-of-time-to-convince-the-state-they-can-build-441-000-new-homes/ar-AA12M2RH?cvid=317958c844eb481fb4f79364aa0d2c46
Another factor in all of this is the amount of money that the state has available to subsidize Affordable housing. Without that subsidy, much of this won’t happen regardless.
So, every time that voters approve more funding for Affordable housing, they’re essentially funding a “weapon” that the state can then use against cities to force them to grow – including the type of development that might be in your own “backyard”, so to speak.
Maybe voters should think about that, the next time a state initiative for Affordable/subsidized housing arises.
Cut off the state’s funding for its war against its own cities, and the war will come to a stop.
Ultimately, a state cannot successfully be at war with its own cities.
“In any case, it sounds like “Russia” (the state) has its hands full, with (“Ukrainian”) cities across the state. Who knows, maybe the cities will “blow up” a figurative bridge or two.
My guess is that they’ll wait for “Russia” to invade, before they REALLY react. In the meantime, there are organized efforts to overturn much of this in 2024.”
What I wonder is if you enjoy being so offensive or if you are oblivious to how offensive you are? You might want to check out Ken Burns recent documentary about the the U.S. and the Holocaust.
Sure, put forth “fake moral outrage” as an argument, as you’re also doing with another issue. David used to do this, as well.
Always “useful” to bring up the Holocaust and Nazis without any connection as part of that, as well.
In any case, please tell your friend Mr. Putin that I’m sorry about his bridge.
From your response I can see that the answer to my question is that you are oblivious. So let me explain this to you.
As the descendent of a Ukrainian refugee from an earlier time I find your sarcasm to be offensive. Your response is even more so. These current refugees have fled a hot war. The last thing they need is to be disrespected by people like yourself whose flippant attempt at humor likely isn’t funny to anyone but yourself.
As for Ken Burns recent film about the U.S. and the Holocaust its relevance is that he shows how the unwillingness of the USA to help stop the slaughter because of the indifference of so many Americans facilitated the deaths of untold numbers of innocent people.
It is an indifference I am reminded of when I read many of your anti-immigrant posts.
Given the cost of housing, are we really going to be able to build what we need? That seems unlikely. I would think some sort of analysis of our housing situation should be what this city council campaign focuses on.
Analysis of our housing situation is not going to result in the building of any additional housing. We already know what our housing situation is. No amount of additional analysis of that 40,000 foot reality is going to change anything. What is needed is a collaboration at the nuts and bolts level (the dollars and cents level) of the financial situation with respect to housing. Bottom-line, (1) the community does not have the financial resources to fund the creation of any meaningful amount of housing that is affordable, (2) the developers do not have the financial resources (or the desire) to fund the creation of any meaningful amount of housing that is affordable, and (3) the State of California is sitting on an annual $100 billion budget surplus … it does have the financial resources.
Any effort put into analysis should be focused on how to forge a collaborative partnership with the State (and where possible the Federal Government) to fund projects that are focused on truly delivering housing that is affordable … like Creekside, Dos Pinos, Eleanor Roosevelt, New Harmony.
Market rate housing in California and in Davis is not affordable … almost by definition.
Here’s how this is going to work if local governments won’t come into compliance with the new state housing laws. Santa Monica has been out of compliance, so the alternative is the ‘builder’s remedy’ process by which projects are approved by the state, bypassing local government permitting procedures.
“Developer-submitted” plans would still have to “pencil out” (while simultaneously meeting the state’s own requirements for Affordable units). Unless the state allows developers to simply meet the “market-rate” component, which is always the “easiest” for them to meet. (Actually, this is probably a broader question.)
It appears that your chart is NOT the actual state requirement for Santa Monica, and is (instead) what developers are proposing. It would be interesting to compare it with what the state is ACTUALLY requiring for Santa Monica, in regard to Affordable housing. (Assuming that it’s been finalized, which I doubt.)
But sure, that’s how the “real” war would get started. I’m actually looking forward to the state firing a salvo or two, at some of the more powerful, wealthy and resistant cities.
The other thing that really bothers me (personally) about all of this is how Affordable housing market developers “latch onto” sprawling market-rate proposals on farmland. That’s been the “game plan” regarding peripheral proposals outside of Davis’ boundaries.
Again, every time voters choose to fund Affordable housing developers, they’re creating an incentive for sprawl.
Don, there is a huge difference between Santa Monica and Davis. To the best of my knowledge the Santa Monica projects do not need an annexation of land under the rules of LAFCO. Davis projects typically do need an annexation. Is the State going to do away with LAFCO as well?
Correct. Davis has protected itself reasonably well, so far, by having annexations (and zoning changes from ag) require a public vote. But as one example, if the city were out of compliance and the owners of University Mall sought to move forward with a revised project that met state standards, the city would have no recourse to prevent it and those buildings could be as tall as the builders wished to build them. Same would go, I’d assume, for redevelopment proposals for either of the moribund neighborhood shopping centers if their owners wished to convert them to housing. And even for sites like those owned by the Anderson and Hibbert families.
The city would be well advised to be in compliance with the state housing element. And I still don’t see how Davis is going to get there presently.
The city (and every other city) has “protected itself” because the new requirements essentially weren’t there – not due to changes in zoning or approval of sprawl. Though Davis is one of the few cities which always met the requirements – even before the draconian changes emanating from the state.
Pretty sure that there was an article on here previously, which noted that the state is leaning toward approving Davis’ plan. And that this was confirmed by staff (and Dan Carson, for that matter). Unlike all of the other cities I cited above.
By the time the “next” plan rolls-around (in future years), the state is going to have its “rear-end handed to them on a platter”, by the wealthier cities along the coast.
Though my guess is that the state will “unofficially fold” by that time, as those cities are where a lot of their financial support and politicians come from in the first place.
Either that, or the state is going to try forcing this upon those same cities, likely resulting in propositions to take-away the state’s authority and return it to cities. (Again, there are already organized efforts to do so. Which is the reason that I’m actually hoping they try it with some “Atherton’s”, “Santa Monica’s”, etc.)
There’s a “showdown” brewing, and the odds are going to favor the cities. Again, the state is dependent upon funding and cooperation from its own cities in the first place. Even Putin needs some kind of support in his own country, at least.
AGAIN, it was a mistake to load the high parts of the design for U-Mall redevelopment on the north side of the property: The height of Identity Davis should be the general template for this corridor, and up against the southern border – the Russell artery – would be fine in this location, as long as it doesn’t have an unreasonable shadow impact to the north as it reduces height the further it gets from Russell.
I think given that all of the state laws recently passed that bypasses local jurisdictions and rubber stamp affordable housing by the state specify that infill is a requirement for those laws….I’d say it’s a good chance that HCD enforcement is heavily (if not exclusively) going to push infill affordable housing projects.
It will be interesting to see how this plays out. Infill is often times more expensive to develop and simply more restricting because of it’s limited space. So there some communities may run into a “likely to be developed” economics barrier. Affordable infill projects may become difficult to pencil out for the developers. So the next step is to allow for increases in density. So those 25 u/acre projects that are 3 stories high could be come 100 u/acre to make it financially feasible (including the local infrastructure impacts.) So then of course there would be eventual push back by voters at the state level and then maybe peripheral development and annexation by the state would be considered….or the voters simply do away with state direct control over local projects; regardless of the need.
Other than the points already noted, I believe that cities (now) have no recourse for proposed conversions of commercial property for residential or mixed uses (regardless of whether or not the state has approved a given city’s housing element – as long as the proposal meets the state’s requirements).
In other words, the choice has been removed from city control – regardless of any other state-approved city plan or choice that a given city submits. As such, an “approved” housing element makes no difference regarding that new law.
Of course, a proposal would still need to adhere to state requirements (e.g., regarding Affordable units or “fair wage” requirements).
Would have to review the law again, but I believe that the state totally eliminated onsite parking requirements, as well.
My fifth comment for the day.
For infill projects, especially on “greyfields” such as commercial parking lots, I would think that the following features or designs would save money at some locations:
* No need to construct huge new sewers, only to connect to existing ones;
* Simple reduction in cost of length of input water and juice (electrical) connections;
* No underground vehicle parking;
* Minimal wasted footprint for any vehicle parking (there would be ADA parking and some for people in certain trades);
* Centralized pool facilities….
I also think that we should pursue the design of or tender for a construction rig of sorts combined with off-site construction that with considerable use would save money in adding a few extra stories to e.g. light industrial sites like off Research Park Drive and other areas and types of buildings….
And as always we should consider the value of the land under I-80, the likely increased value of homes near a quieter corridor (also on 113), the advantages for TOD in relation to the future high speed railway…
My friend says he lives in a million dollar Davis home. He actually lives in a half million dollar home on a half million dollar Davis lot. The difference in land value between a lot in the city and one outside the city can be as much as 100:1. You can thank Measure J for that.
“… so the alternative is the ‘builder’s remedy’ process by which projects are approved by the state, bypassing local government permitting procedures.”
Wow I was unaware you could do this. I can see Covell Village getting approved this way. The City won’t annex because of Measure J and the County won’t approve because it has a policy of deferring to the cities. I could see the owners going directly to the state and bypassing both the City and the County to get approval to build 2000 homes on that site alone.