By David M. Greenwald
Executive Editor
Davis, CA – Housing affordability is perhaps THE most important issue facing the city of Davis. But ironically the more I look at the numbers and consider the unintended consequences of the city’s inclusionary housing policy, the more I have come to the perhaps radical conclusion that the best approach is to actually end the city’s inclusionary housing policy rather than trying to scrape out 15 percent units of affordable housing from rental housing units.
As I noted earlier in the week, inclusionary ordinances can be a double-edged sword.
City Attorney Inder Khalsa explained this week, “A few years ago I would’ve said that HCD was warmly supportive of inclusionary ordinance, but that has changed over the last few years, and they’re now looking at them more critically in the context that some of these inclusionary requirements are so onerous that they’re preventing the development of any housing, market rate or otherwise, and therefore contributing to the overall housing crisis.”
This is similar to a point made by former Mayor Robb Davis in a column a month ago where 
he noted ways to densify Davis.
In a one-paragraph suggestion that didn’t get a lot of notice, he suggested “while controversial, the City could eliminate inclusionary housing requirements in these rezoned areas, requiring instead minimum and annual financial contributions from these projects to the City’s Housing Trust Fund.”
He said, “This elimination recognizes that the optimal way to produce affordable housing is to use land dedication sites that can be 100% affordable in perpetuity.”
He added, “It acknowledges that including affordable housing in market-rate infill projects is a barrier to creating housing and has only VERY rarely been how permanently affordable housing has been developed in Davis’ history.”
Robb Davis here makes several critical points that echo the points I made this week.
First, putting requirements for inclusionary housing can deter the building of housing altogether.
Second, unlike other forms of affordable housing, lower rents for affordable housing are subsidized not by government and grants, but by market rate units, which means having a higher percentage of inclusionary housing not only discourages housing, but it also increases the cost of market rate rentals.
He also acknowledges that the best way to produce permanent affordable housing is through land dedication.
This is a point that I made earlier in the week, arguing that we can go higher in terms of affordable housing on annexed land through land dedication.
“The Council should require 25 percent for annexed land,” David Thompson recently posted. “As a city, we are knowingly planning to lessen the doors for the poor. A few more acres set aside for VLI and LI units would go a long way to being welcoming and inclusionary but not on the cards.”
Thompson noted, “When David Taormino asked me to do the affordable housing for Bretton Woods I said I would if he doubled the land required for affordable housing. David provided land for 150 VLI and LI apartments instead of the required 68.”
On a land dedication site, there are advantages in that the developer only has to provide the land to an affordable housing developer, usually some sort of non-profit. They can then tap into state and federal funding for affordable housing as well as grants and put together the funding needed to provide the housing.
This is what eventually happened at Creekside which became housing for those in danger of becoming homeless—though that came together over 20 years after Mace Ranch was completed.
Clearly, even on a few acres, an affordable housing developer can get the funding to put dense, low-income housing in place.
One thing that Robb Davis suggested to me was the possibility of requiring Section 8 voucher set asides for infill projects.
What is Section 8 Housing? Funded through HUD (US Department of Housing and Urban Development) Section 8, it is a Housing Choice Voucher program for very low income families, the elderly and the disabled.
The way it works is it subsidizes rent through housing vouchers paid directly to the renter’s landlord with the renter paying the difference between the full rent and the amount paid by the voucher.
This allows very low income people to pay what they can afford on their rent—about 30 percent of the family’s monthly adjusted income.
According to a 2022 CalMatters article, “These vouchers have helped pay rent for more than 300,000 households in California this year, totaling $1.9 billion in assistance. “
The advantage is that this caps rent at what families can afford; it doesn’t discourage them from getting better jobs, and the subsidy is by apartment and on the government’s end, which means it should not impact the cost of housing for market rate renters.
The disadvantage is there aren’t enough units that allow for Section 8 housing.
So CalMatters found that “only one in four needy households get help, and the vouchers end up passing through multiple families’ hands before turning into a rent check because many landlords reject them.”
One solution locally would be to, instead of having housing projects mandated to have 15 percent affordable, have them pay money into the housing trust fund while at the same time setting aside a certain percentage of units to allow for Section 8 vouchers.
I agree with those who argue that we need more affordable units. But what I question is whether nickel and diming 5 to 15 percent through inclusionary housing is the way to get there. I think we can accommodate low income residents better through broader Section 8 Housing availability in town, coupled with land dedication sites that can chunk off huge portions of our needed allotment.
And we can do it in a way that doesn’t discourage additional housing and doesn’t raise the costs for market rate renters.
.
The aspect of this whole housing affordability challenge that the Vanguard never discusses is how affordable housing is funded. The RHNA requirements that the State of California has unilaterally imposed on the City of Davis are
14% Extremely Low (less than 30% of annual median income) 290 units
14% Very Low (less than 50% of annual median income) 290 units
16.9% Low (less than 80% of annual median income) 350 units
16.4% Moderate (between 80% & 120% of annual median income) 340 units
To address this unfounded mandate what funding has the City of Davis actually pursued?
What State of California housing funding is available?
What Federal housing funding is available?
What are the processes for pursuing that funding?
I believe funding housing affordability is tha most important topic in this whole issue, but it never gets discussed.
It’s not an issue for the “city” at all – not even one bit.
It’s also not an issue for (I would guess) 3/4 of the existing non-student population – not even one bit. Doesn’t even cross their mind.
In fact, I suspect that most residents “like” the fact that Davis isn’t at the bottom of the barrel in regard to the local housing market. And for that matter, so does the city (in regard to property tax, income levels of its residents, etc.).
And for that matter, Davis housing values are nowhere even close to the most-expensive locales in California. As I recall, Davis housing values are right-around the state median.
Also, ask anyone who recently-purchased their house if they want to see it significantly drop in value. The entire Cannery comes to mind.
There’s nothing “ironic” or “surprising”, here. David has long-ago bought into the developer’s mantra. That is, eliminate Measure J, and eliminate Affordable housing requirements – among other “suggestions”.
Uh, huh. Never mind the fact that the state’s own “builder’s remedy” requires 20% Affordable. Does anyone else find it odd that the state (supposedly) might complain about a local inclusionary requirement which is less than that?
Has anyone in the city or at the state even thought about this? Does anyone (other than say, 48 Hills) even bother to perform the most-basic analysis, anymore? Or, do they simply parrot press releases from the state, while staffing their own publications with YIMBYs? (I’m referring to major media publications, in regard to that comment.)
Can this possibly become any more amusing than it already is?
What kind of a state is this, anyway? Does the right hand know what the left hand is doing? And is Rob Bonta going to sue HCD in regard to an “onerous” builder’s remedy?
I’ve got one more suggestion for those who claim to be concerned about housing prices, while also owning property themselves. In other words, the vast majority of non-student households.
If/when selling or renting out your own property, lower your price.
“Problem solved”.
(Let’s see how “concerned” they actually are.)
From what I’ve seen, that’s where the “concern” exposes itself – and not just in Davis.
Of course, one can point out that they’re not necessarily “pocketing” that money, since they may need it to purchase or rent something in an even “pricier” market if they’re moving. (Not referring to major apartment owners, with this comment.)
I have long stated here that I believe our current affordable housing policies are ineffective and should be completely abandoned, that we should start over completely in assessing how to provide affordable housing.
The history of the program in Davis is murky, corrupt, and simply not cost-effective. But I have also long-since resigned myself to the reality that there are strong interest groups that favor the current approach and that changing it would probably not be worth the fight.
To the extent that current policies become obstacles to the development of rental housing, I urge that they be set aside. The in-lieu fees are pointless. Contrary to popular opinion, developers are not endless sources of revenue for this. People want affordable housing for families, but not for students. And everyone wants someone else to pay for it.
We are fortunate to have a few local developers who are willing to make less money building affordable housing now and then, so if we can find land for them to do so — great. Otherwise, the current system is a mess and isn’t likely to get any better. [originally posted Dec 16 2017].
I want those families to pay for it. Why should they be subsidized?
Those with kids already receive massive tax breaks, free education, etc.
And that particular group is probably the most environmentally and fiscally-damaging of all, in regard to the demands they create. (Fortunately, millennials seem to understand this – compared to prior generations at least.)
Five comment rule is in effect and is retroactive for this article.
I find it hard to believe that you of all people David, advocating against affordable housing and providing a loophole for developers to avoid providing affordable housing in vertical mixed-use projects. Regardless of how much it produces, each residential project, including vertical mixed-use needs to provide its fair share of affordable housing since the “developer’s remedy” offers the incentive to get fast-tracked with 20% affordable housing, then vertical mixed-use proposals need to require at least 15% as it is clear, it can be done.
The Regal Theater project is vertical-mixed use proposals providing 20% affordable housing so any vertical-mixed use project needs to pull its weight and provide at least 15% affordable housing. This is particularly important since its marker rate units downtown charge higher rents in general, so they can afford to provide the affordable units. So, letting these vertical-mixed use off the hook for providing its share of affordable housing is completely counter-productive and repeats the mistake for years that the City had for this loophole that developers were using whenever they could.
Eileen – did you actually read the article or just the title? Because as I make clear in the article, I’m not arguing against affordable housing, just arguing that the way we are funding it is ineffective and propose a better alternative.
And that “better alternative” (according to Robb Davis and you) is “continuing sprawl”.
Which will likely lead to “no Affordable housing at all” – especially if the city weakens its inclusionary requirements for infill.
Unless you and Robb Davis are naïve-enough to think this won’t be used as a campaign issue (e.g., “the city didn’t even support inclusionary infill in the first place”).
Talk about “lack of trust”!
(There’s a part of me which says, “try it”, and see what happens as a result. For sure, I’m already energized, and am looking for this type of thing.)
My fifth comment for the day.
You just personally came out against all affordable housing… so I’m not sure what your point is.
(See “fifth comment” above.)
Another day, another 5 comments allowed.
I don’t believe I said that, but I’m not “against all affordable housing”. Regardless, this isn’t about “me” in the first place.
My point was that any peripheral proposal is going to lose, if the city chooses to eliminate its inclusionary requirements for infill.
The reason being that this will be used as a campaign issue.
And since I’m likely to join any campaign against sprawl, I’d almost look forward to the city eliminating its inclusionary requirements for infill.
But in regard to my own views, rent control works far more-effectively, for a far-greater number of units than Affordable housing does – and without being dependent upon government funding.
And since the city hasn’t even discussed rent control, the only conclusion one can draw is that they’re not actually serious about controlling costs for long-term renters. It’s the only initiative that actually has the word “control” in its title – in regard to costs. And does so across-the-board, for ALL units – not just a handful.
No other initiative does this. Granted, it does not work well for short-term renters (e.g., students), due to Costa Hawkins.
David,
I did read the article and my comments stand. You still seem to be claiming that inclusionary housing in multifamily proposals, like vertical mixed-use should just be eliminated because it does not yield large number of affordable units. I understand your concern is that it increased the cost of the other market rate units. Well, my point is, if it does, then it does, and since the downtown housing units are expected to be more expensive rents charged, then that is a consequence.
But allowing vertical-mixed use developers off the hook is not helping but making the situation even worse by giving developers an incentive to proposed vertical mixed-use to get out of providing any affordable housing which we saw happen for years, including with the early Nishi and DISC proposals. You just wind up exasperating the situation. So, even if it is a small number of affordable units, so be it, every unit helps.
I also understand the Section 8 suggestion, but unfortunately, as David Thompson points out, most developers tend to not want to opt for that. But it certainly can be used as a option for developers since they get guaranteed payment of at least part of the rent monthly from the Feds.
But the bottom line is that vertical mixed-use, like all housing proposals, need to provide its fair share of affordable housing and it needs to be at least 15%, not just 5%, in particular for the downtown where the rents are much higher and therefore those developers can afford to do it. The 20% affordable housing being proposed by The Regal Theaters proposal makes it evident that since 20% is do-able, than 15% should be do-able, particularly for all these high-end downtown vertical mixed-use project proposals.
What I’m suggesting is that the developer would have a choice – they can provide the 15 percent units or they can provide for the Section 8 Vouchers.
Also, I will point out again, that the 20 percent affordable is only for “low income” which means people making 80% of AMI. The city’s requirement was for 15 percent with 5 percent very low and 5 percent extremely low. Now it’s 7.5 for very low and 7.5 percent for low. That distinction matters because to accommodate very low and extremely low requires more in the way of subsidies. So it’s not a fully apples to apples comparison.
Well not quite sure where to start first when everything we have is blown up.
I admit we have had many errors, omissions and corruption in our affordable housing efforts.
However, before blowing up everything perhaps we first ought to choose a solution that we know works.
I am reminded of the London I lived in the 1950’s. Thousands of terraced houses in the East End that were homes to the poorest workers were bulldozed to make room for new homes. However, it was decades before anything was built. The governments had money to knock things down but not enough money to build.
To build affordable housing for the VLI and LI we need deep subsidies (to bring the rents fow) which come only through the Tax Credit financing. To get that funding, the project has to go through competitive rounds. The projects need to bring free land to the table because adding land costs to development costs create a blended total that makes the project non-competitive cost wise.
A three acre site is the minimum I suggest to accomodate a project between 60-100 affordable units.
The Tax Credit subsidies cannot go to one unit here, three units there, it must be a project of 50 and above (the lowest unit count in the 2021 competition was 53 units projects of about 100 are more likely to win the competitions.)
So now we have to find an open three acres site within Davis and buy it. Not so easy, land in Downtown Davis might now likely be at $1.5 million per acre. And the cost of demolishing existing structures adds to the costs. So the cost of a 3 acre cleared site could be about $5 million.
That bill needs to be paid before the project can go forward without land costs.
Subsidising VLI and LI units costs cost about $300,000 per unit.
I am not sure that in lieu fees of $330,000 will be obtainable from the applicants. Every developer recently has cried and the Council has always dropped the cost so we never get full value. The City Council having the chance to do individual deals will always bring about lowered revenue.
It will be a decade before the Housing Trust Fund will have that kind of money to pay $5 million for the land. And there will be lots of other demands on HTF funds.
Almost all landlords dislike and will not take Section 8 vouchers. Few landlords in Davis do and they won’t. There is no Section 8 path to affordable housing.
Show me a way to get as many affordable VLI and LI units as we presently do then I will be glad to listen to the plan.
But blowing up what we have without a valid replacement is not effectively addressing the problem.
David (Greenwald),
Just to clarify, I am suggesting that elimination of inclusionary affordable units for any project, including multifamily and vertical mixed-use is a terrible idea. But, I agree that a developer shuld have the choice of providing 15% inclusionary affordable housing, or Section 8 for multifamily or vertical mixed use. But either no affordable housing, or only 5% affordable housing for these higher density is simply unacceptable, particularly when we need affordable units.
Also, while very low income housing may not be as well served by this, I don’t think that is necessarily the case. There should be more incentives, such as reduced development fees , or simply that the project does not get immediate approved, but gets far more scrutiny and discussion and requires negotiation before being approved. The State imposes its “streamlining” policies to a certain extent, but if the issue is that not enough affordable housing is being included in a project, I’ll bet that, the City could legally defend its refusal to approve that project until that is rectified for approval. I can’t help but think that even HCD would back up the City since it is HCD who imposed 44% affordable housing RHNA requirement on Davis, which was heavy handed to say the least. This extremely high affordable housing demand was put on Davis, once of the smallest cities geographically and a City that has been generous for decades providing 35% affordable housing. the amongst highest demand in the Sacramento and Yolo County region.
https://davisvanguard.org/wp-content/uploads/2023/06/IMG_0489.jpeg
In short, I don’t think that a practice of “build anything” is a solution to our housing issues, but in fact is more detrimental than beneficial if we are not getting the type of housing we need and is being demanded of us by RHNA.
But if what we have is not functioning, then do we actually have an effective way to address the problem? David’s proposal would force the community to start over with people like you in the position of putting something in place that might actually work. As it is now we, as a community, seem to be content to pretend we’re doing something effective.
What “problem”, and for whom”?
And how many are we supposedly talking about, here?
What amount of income do they have, and from what source? And what can they pay?
And, why not rent control?
Or do folks just like to blindly call “housing crisis”, while also gutting inclusionary requirements for the only proposals that they city actually controls?
None of this seems like a recipe for “success”, especially since success hasn’t even been defined or quantified in any way, shape, or form. Nor has the “problem”.
Oh, wait, I guess crying “housing crisis” is an argument. DO SOMETHING!
And preferably, without any thought whatsoever.
I dunno, but I doubt that this is a “winning argument” for continuing sprawl.
But for sure, I’ll do my best to “spread the word” if the city guts inclusionary housing requirements, while pointing to sprawl as the “answer”. Try it.
Dave,
Currently, the problem we have is that Davis is one of the smallest cities geographically in the Sacramento and Yolo county regions, yet it was assigned the one of highest percentages of affordable housing. This was despite the fact that Davis has required 35% affordable housing for years, which is a much higher affordable housing requirement than other cities.’
In terms of solutions, for one thing, I have made clear that vertical mixed-use needs to be required to provide at least 15% affordable housing, like all other residential housing.
Another solution needed is that SACOG needs to assign a RHNA fair share requirements as well to provided the needed on-campus housing for their students, as well as for employees. UCD has plenty of land with over 5,300 acres and a 900-acre cored campus, and it needs to be building much higher density housing on campus, instead of the mere 4-story student housing projects, with a rare 5-story building,.
Gov. Newsom has approved millions of dollars for university student housing and it is inexcusable that UCD has not applied for any of it. Further, UCD’s Solano Park, currently being planned for redevelopment, needs to be 7-stories. UCD needs to not squander yet another opportunity for higher-density housing, like when they built the low-density project like the sprawling 4-story Orchard Park complex. Meanwhile, a 7-story student housing privately developed project was built right across the street in the City (currently named “Identity”).
You raise an interesting point. Davis was assigned only 2000 units of housing, but almost half of it (44%), affordable. OTOH, West Sac was assigned 9000 units and Woodland over 3000.
The numbers aren’t quite as skewed as you might think – 44% affordable in Davis, 38 percent in West Sac, and 34 percent in Woodland. It’s probably more helpful to think of our housing requirement at 3600 to 4500 units rather than 2075 – not that that’s what people want to hear.
Also, I just noted that a sentence I posted earlier (9:43 AM) is missing some words, so I want to clarify what I was trying to say. I was in a hurry and running late, but it should have read:
“This extremely high affordable housing demand was put on Davis, one of the smallest cities geographically and a City that has been generous for decades providing 35% affordable housing. Yet, Davis has been assigned one of the highest percentages for affordable housing in the Sacramento and Yolo County region.”
David regarding your following comment:
You are not considering the important factor of the geographical size of these cities in Yolo County relative to the RHNA housing requirements assigned to them.
If you do you will see the numbers are skewed with Davis getting assigned far more affordable housing than the other cities except Winters, when you consider the geographical size of the other incorporated cities in Yolo County.
Davis is only around 9.9 sq. miles in size and got 44.4% affordable housing assigned.
Compared to West Sac which got 37.7% affordable housing assigned is but is more than double the size of Davis at 22.8 sq. miles in size.
Compared to Woodland which got 33.8% affordable housing assigned and a half time bigger than Davis at 15.2 sq. miles.
Only Winters also got assigned a very high RHNA affordable at 36.2% relative to only being 2.96 sq. miles in size.
The high affordable housing share reflects the fact that Davis housing is priced at a 55% premium over the neighboring Yolo and Solano cities of similar size–housing here is less affordable. And that’s because we’ve failed to expand in a prudent way that meets the rising demand in this town. We can’t just throw up the moat and then claim that we aren’t responsible for helping to solve the state’s housing problem. Accept that we have a disproportionate responsibility because we’ve had a disproportionate responsibility for creating the problem. This is just like the developing nations needing to take on a greater responsibility for reducing greenhouse gas emissions because of our history.
The current system isn’t working, but it is considerably better than the previous one. We had a period of greater than 10 years recently where no new apartments were built in town despite the historically low vacancy rate. This was primarily due to the affordable housing ordinance requirements making new apartments construction non-viable. That changed when someone figured out that building 4-5 bedroom apartments rented by the bed made the projects more feasible, which of course simply changed the complaint being leveed by opponents.
You cannot build affordable housing until you are willing to build housing in general. Those calling for a renewal of the old ordinance are in reality working to stop all new housing, while desperately trying to showcase their virtue. I agree with David G. that the inclusionary ordinance should be scrapped entirely, and replaced with something completely different, not because I oppose affordable housing as some will claim, but because I actually want to see affordable housing built in town and not just be used as a virtue flag by the anti-development crowd.
First of all, the main reason we had little multi-family housing for 10 years is that the entire country was recovering still from the recession that cause so many construction workers to leave the field and find other work. Then as the recovery was very slowly happening, the country got hit with the pandemic, which set things back again.
This problem is not unique to Davis, it has been nationwide. Furthermore, Davis was out of land zoned for housing, because the City is essentially built out. The City is less than 10 sq. acres in total, and there was no place left to build other than re-zoning commercial land. This, unfortunately, was done for the mega-dorms in particular and we got no affordable housing in these mega-dorms plus, to make things worse, SACOG and HCD do not want to give the City credit for these exclusionary by design mega-dorm group housing formats.
However, while traditional multifamily and vertical mixed-use yields smaller of numbers of affordable housing since generally they are in the 150-200 unit range of units, every unit built helps because it is costly to build any housing unit.But what does not help, is building exclusionary by design group housing where we get no affordable housing like all of the the mega-dorms approved. This mega-dorm type of group housing does nothing to help provide housing for our workers and families, because it generally is a design of rent by the bed and often has a lock per bedroom door and a bathroom per bedroom. This is also not sustainable planning since the amount of water used is far more with a bathroom per bedroom.
Further, SACOG/HCD is objecting to giving the City any credit for our RHNA allocation due to the group housing design because they are not compatible with housing families nor workers generally due to the design being group housing. This question of “Would the City get RHNA credit for these more than 4,000 student beds in the City, and what about affordable housing for these mega-dorms?” was asked repeatedly in written communications and public testimony to the City and the City Council, but there was no effort to determine the answer to these critical questions.
So, as it turned out, the City wound up approving over 4,000 beds which will include no affordable housing, and SACOG/HCD does not want to give the City any RHNA credit for these mega-dorms.
However, had these mega-dorms been built instead as traditional apartments, then anyone, including families, workers or students could have lived in them, plus we would have gotten at least 15% affordable housing units.
What a phenomenal lack of planning by the City. This disaster could have, and should have been avoided, had the City bothered to find out the outcome ahead of time regarding SACOG/HCD’s position on if the City would get RHNA credit for the mega-dorm group housing format, and what about the mega-dorm lack of affordable housing?
Finally, it is not an “anti-growth crowd” but an “anti-crappy-planning crowd” that have been objecting to badly planned proposals put before the community.
Ron O
I see a litany of claims of the needs for exclusion that mimic those made by segregationists two generations ago. Specific groups are targeted for exclusion because they are undesirable and their presence could undermine housing prices. We know what the implications are of your statements and rationale. Those are unacceptable in today’s society.