DAVIS, Calif. —Despite Davis’ strong inclusionary housing laws on paper, a new staff report shows the city is still falling far short of its affordable housing goals—producing only a fraction of the homes required under state mandates.
The report, prepared for the October 21 City Council meeting, details how the city’s affordable housing ordinance, Article 18.05 of the Davis Municipal Code, is being implemented while acknowledging that rising costs, limited funding, and slow production continue to hinder progress toward meeting its regional housing obligations.
The report, titled “Affordable Housing Production — Implementation of Davis Municipal Code Article 18.05,” provides an overview of how the city’s inclusionary housing framework operates, how it supports the city’s Housing Element goals, and what barriers remain to achieving affordable housing production targets.
Staff wrote that Article 18.05 “establishes the City’s inclusionary housing framework, enacted pursuant to the City’s general police powers to promote the health, safety, and welfare of its residents through the creation and maintenance of affordable housing opportunities.”
The ordinance is designed to ensure that both ownership and rental housing developments contribute proportionally to meeting the regional housing needs of very low- and low-income households.
According to the report, “The purpose of this report is to provide information on affordable housing requirements and to summarize how Article 18.05 promotes developer accountability and equitable housing access while ensuring proportional responsibility for affordable housing across development types.”
Under the city’s inclusionary housing code, the goal is to maintain a “balanced income distribution.” Ownership developments must provide affordable housing for “very low-, low-, and moderate-income households.” For rental developments, at least 15 percent of the total units must be affordable, “split evenly between low-income and very low-income households.”
The report also stresses that the city’s ordinance is designed to promote integration and equity across developments.
“Affordable units must be integrated into the overall project and constructed with the same materials and amenities as market-rate units,” the staff noted. Public oversight plays a critical role, with both the Social Services Commission and Planning Commission responsible for ensuring that affordable housing commitments align with city goals.
The report highlights that the purpose of the ordinance includes providing “housing for local workers,” a key element of Davis’s effort to maintain socioeconomic diversity and address the regional jobs-housing imbalance.
Article 18.05 also sets specific inclusionary requirements based on development type and scale. Developers of ownership projects are required to provide affordable housing equal to “25 percent for single-family homes on lots over 5,000 square feet; 15 percent for smaller lots; 10 percent for attached townhomes; and 5 percent for stacked condominiums or vertical mixed-use projects.” For rental developments, “a minimum of 15 percent of total units must be affordable, split between low and very low-income levels.”
While the ordinance allows flexibility through options such as land dedication or in-lieu fees, staff emphasized that such alternatives “must be approved by Council and shown to provide equivalent or greater affordability value.” To do this, developers can submit a “Project Individualized Plan (PIP)” which “outlines in detail the method proposed as an alternative to meeting affordability per code.”
The report situates Davis’s affordable housing requirements within the broader statewide housing context.
On December 5, 2023, the City Council adopted the 2021–2029 Housing Element, which was approved by the California Department of Housing and Community Development (HCD) in February 2024. The Housing Element sets the city’s obligation for affordable housing under the Regional Housing Needs Assessment (RHNA).
According to the staff report, “The required number of units by income level for the current Davis RHNA allocation is 2,075,” which includes 290 extremely low-income, 290 very low-income, 350 low-income, 340 moderate-income, and 805 above-moderate-income units.
In 2024, the report notes that “there were 151 new residential units permitted in Davis.” The majority of these came from the Bretton Woods subdivision, which accounted for 110 of the new units, with the remaining 41 coming from other new multifamily projects.
The staff report also reviewed the city’s recent history of affordable housing construction, citing three major developments over the past decade that have produced all-affordable apartment opportunities: Bartlett Commons (2016), Creekside (2017), and Adelante (2018). Each project provided units at varying percentages of Area Median Income (AMI), with Bartlett Commons offering units ranging from 30 percent to 60 percent AMI, Creekside offering 36 units at 30 percent AMI, 22 units at 50 percent AMI, and 32 at 60 percent AMI, and Adelante including nine units at 40 percent AMI, 10 units at 50 percent AMI, and 19 units at 60 percent AMI.
Additionally, “affordable beds have been included in the by-the-bed projects Ryder at Olive (71 affordable beds) and Identity 525 (66 affordable beds). While these projects cater to the university student population, they do provide an additional affordable option for those interested in a by-the-bed product.” The newly constructed Plaza 2555 added 10 affordable units for very low-income households.
The report points out that there are “37 privately managed affordable apartment buildings in Davis with five or more units, not including those reserved for people with developmental disabilities,” and that there are approximately “125 covenant restricted affordable single-family ownership homes in the community.”
Still, Davis continues to face steep challenges in meeting affordability goals. The staff identified a series of structural barriers common to many California jurisdictions but particularly acute in Davis, including rising land and construction costs, inflation, limited funding, and community opposition. “According to the Tax Credit Allocation Committee (TCAC), the California average cost to build per new unit in 2020 was $269,799, and today that cost is $561,301.”
The report emphasizes that, as construction costs and interest rates rise, overall development feasibility becomes more difficult. “There are many factors involved in creating affordable housing and Davis, like many jurisdictions, finds it difficult to attract, build and sustain affordable developments,” the report notes.
To illustrate the challenges, staff provided a sample development scenario comparing market-rate and affordable housing costs. In a hypothetical 700-unit project on R-1-8 zoning with 8,000-square-foot lots, the affordable portion—130 units—would represent about 18 percent of the total acreage and 23 percent of total project value, with a development cost exceeding $40 million for those affordable units.
The financing of affordable housing development, staff explained, generally requires “multiple financing sources, which include Federal and State Tax Credit (LIHTC), Public Subsidies (including HCD Programs), with local agencies providing the first layer of public funding, and Conventional Loans through various sources of commercial funding.”
The report outlines an array of funding sources—from federal programs such as HOME and Community Development Block Grants to state programs like the Affordable Housing and Sustainable Communities Program (AHSC) and Infill Infrastructure Grant (IIG)—as well as commercial and community lending institutions such as the Federal Home Loan Bank and Community Development Financial Institutions (CDFIs).
Beyond outlining existing policies, the report asks the City Council for feedback on two clarifying questions intended to guide future enforcement and review practices. The first concerns financial review when developers claim affordability requirements are infeasible. Current code language says that “projects not requesting financial assistance from the city are not subject to a budget review.”
However, staff observed that this conflicts with Council’s previous direction requiring developers to “show their work” when making infeasibility claims.
Staff asked, “When a developer claims a project is infeasible, is Council open to staff engaging in an exploratory review process to include an evaluation of supporting financial information in order to prepare an informed assessment of the claim?”
The second question deals with how staff should approach Project Individualized Plan (PIP) negotiations—objectively or subjectively. According to the report, “If the approach is subjective, each PIP will be reviewed on a case-by-case basis, with maximum flexibility to interpret the PIP in the totality of the project.”
In contrast, an objective approach would require that each PIP proposal be reviewed to determine whether “the units proposed will align with the income targets specified in code” or whether “the alternative proposed will include some component of community benefit that serve the residents of Davis consistent with Council goals.”
Staff wrote that they hope the presentation “will offer the Council information that allows for clarity in the way the City addresses affordable housing concerns.”
The report highlights the goal of “offer[ing] developers clear guidance as applications and financing are structured early in project development,” a move that staff believe “will in turn provide Council flexibility in its decision making related to affordable housing.”
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Sadly, because of Measure J and with David’s continued support, the City of Davis missed a more than decade long period of historically low interest rate wherein it could have addressed its housing affordability imbalances. Now because of high interest rates it’s going to be much more difficult and expensive for Davis to build Affordable housing going forward.
The Nimby’s win again.
Yay for the Nimby’s.
In a time when the Federal Government is being sued by jurisdictions for unilateral authoritarian dictates, why are California cities not suing the State of California for its unilateral, unfunded, authoritarian RHNA dictates?
Yes Matt, I’ve brought this up before. If the state can say it’s not going to abide by federal laws then why can’t cities do the same in regards to state laws?
How’d that work out for Huntington Beach?
https://voiceofoc.org/2025/10/huntington-beach-housing-penalties/
It doesn’t appear that the issue with Huntington Beach has anything to do with Matt’s comment.
But how are the housing mandates working out statewide? (Not so well, it appears.)
The state and the YIMBY groups apparently have a lot of de-certifying and suing to do. (They’d probably be better-off taking some carpentry lessons.)
https://cities.fairhousingelements.org/
That’s a simplistic construction. As I pointed out a few weeks ago. we have seen under Governor Newsom HCD has evolved from a relatively passive, administrative agency — one that primarily reviewed housing elements (city housing plans) — into a robust enforcement arm with statewide authority.
This stems from the Housing Accountability Unit which was created by Newsom AND the legislature (in contrast to Matt’s point).
Before Newsom, HCD’s oversight was procedural and limited to approving plans.
Under Newsom, it now operates like a regulatory agency — interpreting, enforcing, and policing state housing law through the HAU and related initiatives like the Prohousing Designation Program and coordination with the Attorney General’s Housing Strike Force.
So has it failed?
Again depends on how you measure things. We are only about halfway through the current RHNA cycle and we have not yet seen the full force of the law. The law has given the state new weapons to enforce housing mandates. They have shown the willingness to use the courts and lawsuits to enforce it.
But we are only four years into the new world order, there is still a lot of local and bureaucratic resistance, and there are crosswinds with things like inflation and interest rates that are making housing formation more difficult than they might be.
Bottom line: I would argue too soon to tell. We need to see what happens with governor succession and also the conclusion of the current housing cycle.
Take a look at the YIMBY housing dashboard, again.
You’re claiming that these cities are going to be in “compliance” at the end of the current housing cycle? And when they’re not, THAT’s when the state is going to “punish” them?
https://cities.fairhousingelements.org/
The state’s housing mandates are FAILING MISERABLY – statewide. You yourself have previously acknowledged that these mandates are not achievable. It’s widely acknowledged that they’re not achievable – even in major, pro-YIMBY media sources as I recall. (They do their best to avoid admitting that, however.)
I’m only halfway-kidding regarding learning some carpentry, plumbing, and electrical skills. These mofos might actually help people, if they volunteered with Habitat for Humanity instead of suing and de-certifying. Get out of the courtroom, and into the field, so to speak.
You can’t get blood out of a turnip, as they say. (Suing and decertifying has about as much chance of success as trying to collect damages from prisoners in regard to the costs they create.)
Did I say that? It seems you missed the main point of what I was saying.
Yes – that appears to be what you were stating. (That these cities are suddenly going to be “in compliance” and “on target” before the end of the current cycle.)
Unenforceable laws, in terms of actually getting housing built.
Certainly, they can try to “punish” cities in regard to unachievable goals. But I don’t think that’s going to end well for the state and the politicians which try to push that. They are ultimately responsible “to” the people – not the other-way around. (See Proposition 13.) Though it does take quite a bit to awaken the tiger, especially when fighting politically-entrenched interests.
Most of the time, the builder’s remedy doesn’t even pencil out.
Another way to look at it is that the laws are enforceable they’re just going to take more than just a few years to change course of the ship. For example, few weeks ago we reported on the cities launching its commission review of measure J. Today, we’re reporting on the City Looking back at affordable housing. Both of those are in direct response to the state. So if we take Davis as a case study, how long is it gonna take for Davis to change its policies in response to state pressure? obviously more than just a few years. So maybe just maybe you’re jumping the gun with your conclusions given that it’s only been three or four years.
The current cycle does not allow for “flexibility”, unless the state acknowledges that they’ve set unachievable goals.
It is particularly unachievable in regard to Affordable housing (and always has been). (Getting back to Matt’s point.)
Affordable housing requires public funds which simply aren’t there, and aren’t going to be – ever. If anything, we’re moving in the “opposite” direction regarding that.
No amount of time is going to make up for, or address that. Again, this isn’t something “new” regarding funds for Affordable housing. Even the RHNA targets themselves aren’t “new”. (It’s just that in the past, just about every city except Davis ignored them. Some still do, according to the YIMBY dashboard.)
So again I say, the city and the state have a lot of suing and decertifying to do. (And if they don’t do so, they’ll lose even more credibility than they already have lost.)
We’ll just have to agree to disagree for now. We can revisit it in a few years.
Sorry – I meant the “YIMBYs and the state” have a lot of suing and decertifying to do. Probably need a lot more lawyers and government employees to accomplish that, to boot. Maybe they can squeeze the money to do so from cities, as well – thereby providing even more incentive to decertify and sue.
You can be sure that they’ll do everything they can EXCEPT pick up a hammer and join Habitat for Humanity. (Probably wouldn’t even know which end of a hammer to use.)
“We can revisit it in a few years.”
I suspect that we’ll “revisit” it tomorrow, and the next day, and the next day . . .
“I suspect that we’ll “revisit” it tomorrow, and the next day, and the next day . . .”
LOL, yes, who are “we” kidding…
Suing and decertifying is leading to Builder’s Remedy projects. That’s how this will play out. The question is whether cities can respond appropriately and grab back local control. Otherwise, as happened in the aftermath of Prop 13, the state will take over.
“… why are California cities not suing the State of California for its unilateral, unfunded, authoritarian RHNA dictates?”
Because they are not unilateral or authoritarian dictates. They are democratic responses to a societal problem with numerous bills passed repeatedly by the legislature and signed into law by the Governor.
So are you saying that every time Obama and Biden signed an executive order it was an authoritarian dictate?
Not every executive order is authoritarian but it is possible that some are. What I think is undeniable is that bills passed by the legislature and signed by the governor do have more legitimacy than Matt was recognizing.
By “legitimacy”, I’ll assume that you’re referring to what you believe is “needed”.
But I don’t think these orders have much practical legitimacy, when they’re unachievable. (Which I believe was Matt’s main point in the absence of funding for Affordable housing.)
https://cities.fairhousingelements.org/
“ By “legitimacy”, I’ll assume that you’re referring to what you believe is “needed”.”
Not how I understood it
Ron O’s inference is incorrect.
Ah – then it has less “legitimacy” than what you claim. That’s what happens when the state tries to create laws that have zero chance of succeeding in regard to the goal.
https://cities.fairhousingelements.org/
The side effect is that the state will also lose credibility.
For that matter, I believe the speed limit on I-80 is probably 65 mph (or perhaps 55 mph in construction zones).
In other words, the state does have a sense of humor, at least. (And every once-in-awhile, they’ll catch someone doing 90 mph to demonstrate just how serious they are.)
So yeah, you probably should at least submit a fake housing element, instead of no housing element at all (while simultaneously “daring” the state to do something about it.)
“They are democratic responses to a societal problem with numerous bills passed repeatedly by the legislature and signed into law by the Governor.”
If you look at who is funding the YIMBY’s and their political friends, you might arrive at a different conclusion.
The purpose of all of the housing legislation is, to quote Newsom, “to make it easier and faster to build more homes.”
Obviously, it doesn’t ensure that housing will get built, because housing is built by private developers who need an industry-standard ROI and who wish to build for the actual market demand they perceive. But the purpose is to remove the obstacles that have been put in place by local zoning and other restrictive practices that delay or prevent construction of certain types of housing.
The goal is more housing. If these bills don’t remove enough obstacles to private development, more targeted legislation is sure to be introduced, passed, and signed by the governor. They aren’t going to stop passing laws, nor is “it isn’t working” going to be a compelling argument.
Nearly everyone who looks at the housing market in California agrees there is a shortage of housing.
The cause of the shortage and the high cost in California?
“Since 1990, the state has added 3.6 million housing units and 9.4 million residents (increases of 33% and 31% respectively from April 1990 to January 2024). Adjusted for inflation, California’s median values for owner-occupied housing have increased 56% since 1990 (from $456,000 to $753,000) and rents have increased 39% (from $1,300 to $1,800). California’s housing values remain more than twice as high as the national median, and the state’s rents remain about 50% higher.”
Homeownership rates are especially low for young adults in California, reflecting the difficulty of affording a first home.
There are stark disparities in homeownership across racial/ethnic lines. Homeownership is far more common among whites and Asian Americans and Pacific Islanders (AAPI) in California than among African Americans or Latinos.
High housing costs have left many Californians financially burdened. The share of renters who are “stressed”—paying over half their income in rental costs—is considerably higher here than in other states. Not surprisingly, housing stress most affects lower-income Californians, who are generally already in the cheapest rental units and cannot move to escape the burden.
But the gap in housing stress between California and the rest of the country has been growing most among the middle class. It is a sign of the severity of the housing crisis that one in six middle-class renters in California are now spending over half their income on housing. The gap in stress between California and the rest of country is actually larger among homeowners, but it has not increased over time to the same extent.”
https://www.ppic.org/blog/three-decades-of-housing-challenges-in-the-golden-state/
So the overwhelming consensus is that more housing is needed. There is a three-decade-plus backlog in housing demand that needs to be addressed. Even slight ups and downs in the state population, or short-term fluctuations in the housing market, aren’t relevant to this issue.
Some communities are trying to say they won’t allow growth, despite this clear need. State senators and the governor are making it very clear they will no longer tolerate that. They will implement legislative and regulatory remedies targeted at specific obstacles. Continued obstructionism will simply result, ultimately, in loss of local control.
If Davis residents want to continue to exert control over how and where development occurs, they will need to approve projects. Failure to do so is very likely to lead to legal action against Measure J, and possibly even loss of local authority over zoning and development.
Vanguard: “The report emphasizes that, as construction costs and interest rates rise, overall development feasibility becomes more difficult. “There are many factors involved in creating affordable housing and Davis, like many jurisdictions, finds it difficult to attract, build and sustain affordable developments,” the report notes.”
Davis has a multi-decadal reputation as being a very difficult place to do business in residential (and commercial) development. It will not be easy to overcome that.
There is no housing shortage, largely because they “overbuilt” in previous decades. Housing prices are not indicative of a shortage of buildings. But even if that was true, chasing “low housing prices” is a good way to screw up the entire country.
There are other factors which keep housing prices in check, including “alternative locations” for both residents AND businesses. Davis itself is an “alternative (cheaper) location” for people from the Bay Area.
From article below: “There is a commonly held belief that the United States has a shortage of housing. This can be found in the popular and academic literature and from the housing industry,” McClure said. “But the data shows that the majority of American markets have adequate supplies of housing available. Unfortunately, not enough of it is affordable, especially for low-income and very low-income families and individuals.”
“The numbers showed that from 2010 to 2020, household formation did exceed the number of homes available. However, there was a large surplus of housing produced in the previous decade. In fact, from 2000 to 2020, housing production exceeded the growth of households by 3.3 million units. The surplus from 2000 to 2010 more than offset the shortages from 2010 to 2020.”
https://news.ku.edu/news/article/study-finds-us-does-not-have-housing-shortage-but-shortage-of-affordable-housing
It should be noted that at this point, this study is “dated”. In other words, a lot more housing has been built since 2020, even though the population itself is not increasing as it once did.
1.6 kids per woman – that ain’t gonna make it in regard to replacement levels. (And that’s a “good” thing.)
So when the state itself starts out with a demonstrable false premise, they’ve already lost credibility (not to mention creating an impossible task – REGARDLESS of how many laws they pass).
They are essentially “owned” by the interests which have a stake in claiming there’s a housing shortage, which is the REAL problem that no one is talking about (other than publications like 48 Hills).
These same interests are trying to build a new city (bypassing the system) in the Suisun Bay area.
Since this is a Davis article, all of that is irrelevant…
The staff report provides several indicators of the DAVIS shortfall:
• RHNA Requirements vs. Actual Production: Davis’s 2021–2029 Regional Housing Needs Allocation (RHNA) requires 2,075 new housing units, including 930 affordable units for extremely low-, very low-, low-, and moderate-income households. Yet, in 2024, the city only permitted 151 new residential units, most of which were market-rate homes in the Bretton Woods subdivision. That pace falls well short of what’s needed to stay on track for the eight-year cycle.
• Recent Affordable Projects Are Limited: The report notes that over the past decade, only three major all-affordable projects—Bartlett Commons (2016), Creekside (2017), and Adelante (2018)—have been completed. While these projects added meaningful units, there have been few large-scale affordable developments since.
• Student-Oriented Affordability Doesn’t Fully Address Need: The report mentions affordable beds in “by-the-bed” student housing projects like Ryder at Olive and Identity 525, but acknowledges these primarily serve UC Davis students and “do provide an additional affordable option for those interested in a by-the-bed product.” These don’t substantially increase affordable housing stock for working families or seniors.
• Structural Barriers Remain Significant: The report identifies major obstacles to affordable housing production — “cost increases (including land cost, rising interest rates and inflation), community opposition, income inequality, and insufficient public funding.” It highlights that construction costs in California have doubled since 2020, from $269,799 per unit to $561,301 per unit, making it increasingly difficult to finance projects even with inclusionary requirement
The state’s “mandates” apply to the entire state. They are not (in general) “Davis-specific” requirements. Only the numbers differ between different locales.
And they’re failing across the entire state.
The state and the YIMBYs have a lot of suing and de-certifying to do. So far, the state has only gone after the locales who essentially tell the state to shove it. (Frankly, those cities would have more success if they stuck together more than they do.)
The state will win some battles, but they can’t win the war (even if all cities were cooperative – which they obviously aren’t). The math (finances) simply don’t support it, as Matt implied.
Ultimately, the state is responsible to the populace – not the other way around. (Again, see Proposition 13 as an example of a time when the state pushed the populace too far.)
I already told you I’m not getting back into that debate.
O.K.
But let’s see how Davis’ northerly neighbor (North, North Davis) is doing.
Yeap – off target. No good / no growthnick NIMBYs spreading up there, apparently.
Looks like quite a few places don’t even have an approved housing element to “decertify” in the first place.
https://cities.fairhousingelements.org/
Ron O
“Housing prices are not indicative of a shortage of buildings. ”
Yes they are. Watch the Father Guido Sarducci Five Minute University if you need a simple enough explanation. Market prices are reflective of supply-demand balances that are created by specific conditions. These do not need to based on “free markets”–just market activity of any kind. Local restrictions can change that balance and the prices.
And as I’ve pointed out businesses set up where they are most productive and profitable, not where people live. So people move to jobs, not the other way around. This fact is well documented. If you believe otherwise, provide empirical evidence to support your assertion. So people will continue to move to California. In state birth rates have only a small part in that trend.