Davis, CA – Addressing affordable housing is pretty tricky. In recent years, the city of Davis has moved away from for-sale affordable housing and towards affordable rental housing.
One problem of course was trying to balance issues of equity and preventing abuses of the program while at the same time, providing first time homebuyers homes they can afford.
Stepping a step back, there are several problems with affordability.
The first is the cost of market rates homes has continued to soar beyond the means of middle income, first time home buyers.
The second problem is the cost of housing construction makes it difficult to construct affordable by design housing in places like Davis. Moreover, when you do, the housing is far smaller in places like Davis than nearby communities like Woodland.
A recent staff report noted that to build an affordable housing unit – just one – costs on average between 600 and 700 hundred thousand dollars. To build 1000 such units then would cost about $600 million.
That cost makes its prohibitive for the city to generate the funding to make a meaningful dent in affordable housing.
For instance, even an affordable housing trust fund with $2 million, would generate three or four new affordable units.
But a program that subsidizes low and middle income families to be able to put down the money needed to buy their homes has several key advantages.
First, the cost to the city (likely funded by grants) will be far less than the cost of building a new home from scratch. It might take just $20,000 to $40,000 per unit for a down payment rather than $600,000 to build one from scratch. That immediately spreads the impact while limiting the costs.
Second, if the city sets it up correctly, it’s more of a loan than an actual subsidy, where the home owner repays the city over time.
Third, it allows people to buy into the housing market without limiting their equity to then purchase a larger home down the road and sell their first time home.
Fourth, it allows the housing market to provide the supply of housing rather than go through layers upon lays of grants and other funding to build affordable housing projects.
As noted originally – all the city right now would be doing is creating an “overarching structure for a program” – the details and funding will need to be worked out down the road.
A critical point however is that this program by itself is not going to solve Davis’ housing problems. It’s not designed to do that. But it could become a potent tool to allow the city a more economical means to subsidize housing – especially home ownership for middle income first time buyers.
We still need to address supply. That’s the most important issue facing the city and there is not going to be one answer.
One thing we know is we are probably going to need several large Measure J projects in the next few years to address state mandated housing in the sixth and seventh RHNA cycles.
As former Councilmember Will Arnold noted in November, “over the course of the next few years, we need one or potentially several projects of this size, housing projects of this size in Davis, not something that you’re going to find with an ADU here and a duplex there, and a few apartments over a shopping center.”
He added, “We have a housing crisis that we are addressing, and we need a project of this size. I believe that’s undeniable.” He was speaking of Village Farms.
Previously he had noted that the city was not going to meet its future housing needs with infill.
Village Farms gives us a bit of glimpse for how a down payment assistance program could be integrated.
At the 1800 unit project, the proposal now calls for 360 affordable housing units with 90 down payment assistance homes. That improves the affordability component of that project from 20 percent with those 360 affordable housing units, up to 25% with the 90 extra units. That starts to make a dent in what we need.
But it’s pretty clear, that we need more than just one project. And probably more than just two projects.
The city in the coming years is going to have to figure out where it will get the housing to meet the current RHNA cycle and next cycle, how to address the General Plan Update, whether to adjust Measure J and how to finance affordable housing.
Clearly, the down payment assistance program is not going to address supply of housing, but it can become a tool to make that supply of housing more affordable to first time home buyers and that is something that is sorely needed.
“That cost makes its prohibitive for the city to generate the funding to make a meaningful debt in affordable housing.”
LOL, I’m sure the city is capable of creating a “meaningful debt”. Was that a Freudian slip?
“b” and “n” are next to each other on the keyboard – but yeah, nice little typo
This could be a useful part of an affordable housing strategy, but I urge the council to make every effort to make it fiscally self-sustaining, and also to take David Thompson up on his offer to provide an overview of the history of affordable housing programs in Davis. I am not an expert, but in following stories and conversations about this over many years I believe that his comment:
” this issue relating to city assisted single family affordable home ownership has been plagued with horrendous abuse, excessive municipal legal and administrative costs, lack of oversight and unfettered favoritism.”
… is, if anything, an understatement. The council subcommittee would do well to meet with David. He knows more about this than anybody else and could give some guidance on how to avoid those pitfalls.
Also, the program should probably sunset in a few years so that it can be re-evaluated formally.
”this issue relating to city assisted single family affordable home ownership has been plagued with horrendous abuse, excessive municipal legal and administrative costs, lack of oversight and unfettered favoritism.”
… is, if anything, an understatement. ”
Good points, I have to wonder if this program creates new employee positions, such as a director? If so, at what cost?
Right now there is no program. So we all have to wonder about how it will work.