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 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 only 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 homeowner 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 homeownership 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 a 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 the 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.
From article: “But it’s pretty clear that we need more than just one project. And probably more than just two projects.”
This claim, which you have repeated many times on here, is factually incorrect. The state cannot force housing outside of the city, nor do any of its laws address doing so.
It is interesting that fire-prone places like Malibu and Santa Monica have RNHA targets, as well. Which means that the state is attempting to force housing in high risk zones. Although Pacific Palisades and Altadena are part of the city of Los Angeles itself, rebuilding in those high risk zones is likely going to be essentially forced by the state, as well.
So, the state is apparently in the business of forcing death and destruction, via its RHNA targets. (And not just in Southern California.)
“The state cannot force housing outside of the city, nor do any of its laws address doing so.”
Probably not directly under current laws. But the way this can work now is that the city risks crippling fines, lawsuits and funding opportunities if it doesn’t comply with RHNA, and peripheral landowners know that. So they can annex their land to the city — the city can’t prevent that except under rare circumstances — knowing that they’ll get development approval because the city needs the housing. So the net effect is that the state *can* force peripheral housing development on cities even if the citizens don’t want it.
Jim: I understand that the state can only apply RHNA targets within city limits, and that there is technically “no way” that a city is prevented from meeting those targets.
In other words, if a city doesn’t present an acceptable plan to the state, the state would then engage in ensuring that sites WITHIN the city do meet their targets.
Of course, if those sites don’t “pencil out”, then the housing will simply never be built. This is the most likely outcome.
There’s also some question as to how the state is going to view sites from previous rounds, which were never built. But from what I recall, they will “count” toward future rounds, as well.
There is no other way for this to work, in the vast number of cities- especially near the coast – which aren’t expanding their boundaries.
As far as the scenario you present, this seems like a separate manipulation. But even if that’s a possibility (e.g., during a period in which the city has not yet submitted an approved plan, but prior to the time that the state steps in and forces a rezoning of sites within a city), I would think that a developer would presumably have to show how “their” plan would meet a city’s RHNA targets.
Also, I don’t see a mechanism that a developer can use (in regard to an appeal to the state) to annex land to a city, in regard to the laws surrounding RHNA. There is no law I’m aware of which states that “if a city refuses to address RHNA targets, then the state will step in and force annexation of land outside of a city”. It ultimately seems about that simple.
And if it’s not that simple, then urban limit lines, agricultural zoning, agricultural easements, and the state’s own Williamson Act, for example, would be in the crosshairs of the state. (Which would fly directly in the face of what they claim to want – infill.)
One has to look at the original justification for the state’s recently-enacted laws (infill, in places like the Bay Area where jobs are supposedly plentiful and well-paying). Their entire premise is based on that.
So if they start encouraging sprawl on farmland (more than they already do by failing to reign it in throughout the state), this would certainly lay bare a different motivation than what they claim to be doing.
The state itself hasn’t been growing, and some business interests (who happen to support these politicians) aren’t too happy about that. In fact, the birth rate for the entire nation is well-below replacement levels, and it seems likely that Trump is going to curb (or even reverse) illegal immigration.