By Alysa Meyer
Editor’s note: The Vanguard received communication from a resident on Monday regarding a proposed Cannery subdivision in which staff recommended approval of its inclusionary housing requirements as the Cannery plan is currently configured.
The individual writes, “This would be a dangerous precedent and is a step in dismantling the existing effective City Affordable Housing Program. The City staff is saying that the Cannery plan meets the City’s Affordable (Inclusionary) Housing Program, not as currently written, but as the City staff is proposing to change that Program, and they say, as City Council gave them directive to change. This change to the City’s affordable housing program is being fast-tracked through, at the request of developers.”
On behalf of lower income families and individuals who reside and/or work in Davis, who need housing located in Davis that is decent and affordable, I submit the following comments concerning the proposed revisions to the inclusionary affordable housing requirements. I had the opportunity to meet with Katherine Hess at her invitation to discuss the concerns mentioned below and reiterate them here for your consideration.
Graduated Scale for For-Sale Inclusionary Obligations
City staff recommends amending the inclusionary housing ordinance to decrease the percentage of affordable for sale homes to 25% for lots exceeding 5,000 square feet down to 0% for stackedflat condominiums or smaller rental developments.
“Smaller rental developments’ is not defined. The existing ordinance already provides an exemption for smaller rental projects of one to four units and in-lieu fees for downtown projects of fifteen or fewer units. The justification for the recommendation appears to be the City’s limited administrative resources and loss of Redevelopment Agency funding. (Staff Report on Proposed Revisions to Inclusionary Affordable Housing Requirements dated 3/26/13, page 10-4)
Eroding this important tool that ensures ownership opportunities and rental housing for all economic segments of the community due to staff resources is short-sighted and will result in segregated housing and the exclusion of low income households in ownership housing in Davis.
The City’s Housing Element Adopted in May of 2010 noted that the median home price was $539,500 and thus Davis for-sale housing is affordable only to households with above-moderate income levels. (Housing Element, City of Davis, May 2010, Pg. 3-34) “Very few for-sale housing options exist for households earning less than $100,000 annually, outside of city inclusionary programs.” (Housing Element, City of Davis, May 2010, Pg. 3-34)
The City’s enumerated housing goals include encouraging a variety of housing types that meet the housing needs of an economically and socially diverse Davis and affirmatively furthering fair housing opportunities for all persons. (Housing Element, City of Davis, May 2010, Pgs. 6-1, 6-12)
The City also committed to creating and maintaining an adequate supply of rental and ownership housing that is affordable to extremely-low, very-low, low and moderate income households. (Housing Element, City of Davis, May 2010, Pg. 6-12)
The City currently has 100 permanently affordable homeownership units. (Staff Report on Proposed Revisions to Inclusionary Affordable Housing Requirements dated 3/26/13, page 10-2) Reducing the for-sale inclusionary obligations is inconsistent with the City’s Housing Element, adopted just three years prior, and the City’s commitment to ensuring participation in homeownership for all economic segments.
Instead of focusing its efforts on dismantling the current inclusionary housing ordinance that is meeting the needs of the population as discussed in the 2010-approved Housing Element, the City should take steps to evaluate other sources of funding to support staff resources to oversee the inclusionary program.
Credit For Accessory Dwelling Units (ADUs)
Staff continues to recommend that second units be credited on a 50% basis toward inclusionary requirements, although the Social Services Commission voted two to five against the recommendation. Legal Services of Northern California opposes providing a 50% credit for accessory dwelling units absent a program to monitor and ensure that at least 50% of the ADUs are affordable to and occupied by lower income households.
The staff report indicates that the City approved six second units in 2012 that were to be used for a range of purposes. There is nothing in the report to indicate that the property owners intended to build the ADUs to provide affordable rental housing.
Given the vast number of homeowners who turn out to public meetings to oppose any affordable multi-family rental project, it seems rather unlikely that homeowners would construct an ADU for the purpose of providing affordable housing to low income tenants.
It also seems unlikely that the City has the staffing resources to track and monitor second units to ensure they are affordable, as the staff report indicates that the City has “limited administrative resources….” (Staff Report on Proposed Revisions to Inclusionary Affordable Housing Requirements dated 3/26/13, page 10-4)
Further, there has not been an analysis of the need for second units in Davis. The City’s Housing Element adopted in May of 2010 considered the historical trends and financial feasibility of second units but did not analyze the need for such units. The Housing Needs Assessment analyzed the special housing needs of Davis households, including elderly, large family, single female-headed and male-headed, disabled, and farmworker households, among others; not one of the aforementioned special populations indicated a housing preference for second units. (Housing Element, City of Davis, May 2010, Pgs. 3-40-3-49)
In fact, permitting accessory units as inclusionary housing excludes families with children or people with live-in caregiver needs who need more space than an accessory unit provides. In order to include sites for second units in the next housing element toward meeting the City’s Regional Housing Needs Assessment, the City must consider the need for second units based on tenure, family type, household sizes, and other factors in relation to types of units, the resources or incentives available for their development, and other relevant factors such as the anticipated affordability of second units. (Cal. Government Code §65583.1(a))
Without an updated analysis of the housing need by income group that could be satisfied through second units, it is premature for staff to recommend that ADUs receive a 50% credit for affordable housing.
In-Lieu Fees By Right
Staff recommends also that the Council consider offering developers the right to pay fees in-lieu of providing affordable housing. Currently, the inclusionary housing ordinance permits in-lieu fees for ownership projects with fifteen or fewer units, and a total of no more than thirty-eight bedrooms, located within the core area.
The Social Services Commission recommended that the in-lieu fees be subject to discretionary review rather than by right. The staff report incorporates this recommendation, noting that establishing a discretionary review for payment of in-lieu fees will not have a significant effect on development certainty so long as the amount of the fee is known. (Staff Report on Proposed Revisions to Inclusionary Affordable Housing Requirements dated 3/26/13, page 10-7)
Requiring inclusionary units to be developed onsite and mandating dispersal throughout the development is the only means of ensuring income integration and avoiding segregating low income housing from market-rate housing.
The existing ordinance contemplates that there are circumstances where it is infeasible for a proposed project to meets its inclusionary onsite obligations, specifically providing for in-lieu fees for small developments of fifteen ownership units or fewer located within the core area. Legal Services recognizes that there may be other small projects for which onsite building may be financially infeasible.
Should in-lieu fees be an option that the Council considers, Legal Services recommends that they be limited to small developments. If consideration is given to permitting in lieu fees for any for-sale development, Legal Services recommends that the developer be required to justify not building the affordable units onsite through a public process with approval required by Planning Commission and the City Council. In addition, the fees should be deposited into a fund that must be used to develop housing of equivalent affordability.
Conclusion
The proposed revisions to the City’s affordable housing ordinance seem to be driven by staffing constraints and for-profit developer desires rather than the needs of the people who live in the community. Legal Services recommends maintaining the existing ordinance intact to ensure housing is available for a number of different households, including first time homeowners, single parent families, people with disabilities and older adults. The proposed revisions discussed above will diminish the progress that the City has made in meeting the housing needs of all economic segments. Thank you for the opportunity to comment on the proposed revisions and for your thoughtful consideration of the impact on low income households in Davis.
Alysa Meyer is the Managing Attorney Legal Services of Northern California-Yolo County Office
“The City currently has 100 permanently affordable homeownership units….”
Is this accurate? If so, how are they kept in a “permanently affordable” state? (The ones in our development lost their affordability upon their first sale by the original owners, all at market value at the time they sold.)
What happens to the in-lieu fee revenues?
A link to the staff report? Thanks.
The article says:
> The City’s Housing Element Adopted in May of 2010
> noted that the median home price was $539,500 and
> thus Davis for-sale housing is affordable only to
> households with above-moderate income levels.
> “Very few for-sale housing options exist for
> households earning less than $100,000 annually,
> outside of city inclusionary programs.”
At current interest rates you can get a $500K loan with a payment of $2,176 a month and “buy” almost half the (everything below the median) homes in the city.
A quick Google search of homes for sale found a 5 bedroom 2 bath in East Davis for $359,000 (1818 Haussler) with 3% down you can get a FHA loan for about $1,500 a month so a couple making $30K each (about $15/hour) could buy the home.
You can “buy” something for even less if you get a condo. As a city (and as taxpayers) wouldn’t it be a better idea to “invest in people” and pay for job training so people learn skills that pay over $15 hour than to subsidized housing so a couple that both makes $10/hour can buy a new home in a luxury subdivision?
The article says:
> “The City currently has 100 permanently
> affordable homeownership units….”
Then Just Saying wrote:
> Is this accurate? If so, how are they kept in a “permanently
> affordable” state?
As far as I know all the “permanently affordable” units in Davis are rentals. The DACHA “co-op” experiment has cost the city millions (more than it would have cost to build the homes and just give them away) so I don’t expect another “co-op” experiment any time soon (I could be wrong, but most of the smaller than average units that the city has forced the developers to build and sell at affordable prices don’t have “permanant” price restrictions).
For those that don’t know how property taxes work a new $600K home pays twice as much in property taxes as a new $300K “affordable” home. I’m all for helping the poor and feel that it is a much better idea to let the developer build $600K homes and take the extra development fees and property taxes and help poor people pay rent while they learn how to make more money and/or save up to buy their first home (no one helped me when I lived in a crappy apartment with a rommate saving for my first home)…
There are a small number of limited equity owner homes, where equity is limited to the rate of inflation.
Where are they? Are there really 100?
Gotta’ link? (Maybe you won’t need to an investigation of our affordable housing management–if the staff report is complete and accurate.)
Here are some answers ([url]http://city-managers-office.cityofdavis.org/housing-and-human-services/affordable-housing-program/affordable-ownership-housing-program[/url])
David wrote (and posted a link to the program letting me know that I was wrong and that Davis does have “affordable” ownership homes other than the failed DACHA project):
> There are a small number of limited equity owner homes,
> where equity is limited to the rate of inflation.
The link does not say that equity growth is limited to the “rate of inflation”, but “The sales price of the property is restricted to a 3.75% appreciation per year from its original date of sale, compounded annually. Southfield Park is the only exception with appreciation restricted to 5.5% per year.”
I paid close to $500K for a crappy little fixer up home (with no equity growth restrictions) in Davis six years ago then invested more than $50K fixing it up and could sell it for maybe $400-$450K today (It was worth under $400K at the bottom of the market when I moved “South of Davis”).
If I bought a property in Southfield the same year for $230K I would be “limited” to “only” selling it for a 37% gain (vs. a 25% loss for the typical Davis homeowner).
To summarize regular people that worked hard and saved to buy a home in Davis over the last 6 years have to (almost all) sell at a loss while “subsidized” “lower income” people get to sell at a gain as much as 37% (close to a 1,000% ONE THOUSAND PERCENT gain on a 3% down payment).
The link David posted shows that a guy with two kids making $91,250 (more than 90% of all Americans and more than DOUBLE what the average person with a bachelor’s degree in America makes) can buy a subsidized home in Davis. It is sad when just about everyone but a brain surgeon (or firefighter) can qualify to buy a “subsidized” home while most people in Davis that make a lot less are working extra hours and weekends to make ends meet and subsidize people that make more than them…
P.S. One of my sisters UCD sorority sisters married an attorney who was doing legal work for a developer that had to build some “affordable” homes in a development. He had his firm hold back his bonus so he (without breaking any laws or lying) qualified to buy one of the “affordable” new homes. He told me that the developer said they were happy to have a nice couple that went to Cal, Hastings & UCD buy the home (located near other homes that were selling for close to a million) rather than a “poor family”…
P.P.S. Here is another example of “affordable” housing helping the “poor” (get free money at taxpayer expense):
http://www.almanacnews.com/news/show_story.php?id=13215
“The individual writes, “This would be a dangerous precedent and is a step in dismantling the existing effective City Affordable Housing Program.”
This assumption, that the existing affordable housing program is effective, is in my mind questionable. It would be good to have a transparent discussion of whether there is a better way to achieve the goal of having more affordable housing. The first question I have is how much does the current program add to the cost of a home?
“[i]…the City should take steps to evaluate other sources of funding to support staff resources to oversee the inclusionary program.[/i]”
Um, how? What did they have in mind?
“The link does not say that equity growth is limited to the “rate of inflation”, but “The sales price of the property is restricted to a 3.75% appreciation per year from its original date of sale, compounded annually. Southfield Park is the only exception with appreciation restricted to 5.5% per year.””
Sorry I was going off memory.
“This assumption, that the existing affordable housing program is effective, is in my mind questionable.”
We would have to start by determining what effective means? I suspect your objection is that we don’t have enough of it, but I’m curious as to your definition of effective.
Thanks for the city link. More than I knew about the current city home ownership program–Cassel Lane (5 units), Parque Santiago (5 units), Southfield Park (60 condo units). Wonder how it’s working for the home buyers and the city, particularly during the recent economic upheaval. Who sets the initial sales price? Who carries the loans? What happens during foreclosures?
Looks like the city turned over much of the program management to NeighborWorks. Do we pay the non-profit, or are their services donated? How is the sales price contingency policed?
This appears to take out the windfall profit and favortism problems of past Davis programs. It also eliminates one of the best benefits of home ownership (unlimited potential profit), but keeps one of the related disadvantages (unlimited losses). If people can afford to pay their mortgage in the face of job losses or whatever befalls them and time their purchase to be homeowners in an up market, fine.
If this program is successful, it could be an effective solution. (Of course, buying in Woodland, West Sac, Dixon, etc. would have almost the same effect without city government involvement. But, wouldn’t help the Davis class diversity problem.)
Still looking for a link to the city staff report cited in this article.
Mr. Toad wrote:
> This assumption, that the existing
> affordable housing program is effective,
> is in my mind questionable.”
Then David wrote:
> We would have to start by determining what
> effective means? I suspect your objection
> is that we don’t have enough of it, but I’m
> curious as to your definition of effective.
My definition of “effective” is helping a lot of poor people so they have a place to live in the community (not just a small number of people with political connections).
Most politicians that set up the plans define “effective” as:
Creating high paying jobs with great benefits for friends to “manage” “affordable housing” in the city.
Setting up a plans so friends make millions managing the sale and transfer of the properties (NeighborWorks will makes over a million dollars to manage just one transfer of every Southfield Park condo).
Buying land from developer friends at inflated prices to “thank” them for past contributions.
Providing high paying above market construction jobs to unions as a thank you for campaign cash when they build more “affordable” housing.
Providing a massive number of high paying management and maintenance jobs to manage and maintain the “affordable” housing…
my definition of effect is similar to yours – enabling people to have a place that they can afford.
“everyone but a brain surgeon (or firefighter)”
That was pretty darned funny. Thank you for the chuckle. I might add the category “tenured professor” to this group.
“most people in Davis that make a lot less are working extra hours and weekends to make ends meet and subsidize people that make more than them…”
Re: hard working, productive people: I am a very hard working person, sort of middle income anywhere but Davis & Marin Co. & San Francisco. In 2005 I qualified for an affordable housing home. I worked a minimum of 44 hours per week, cared part-time for two parents in their 90’s with failing health, and cared for two teenagers, also.
DACHA “co-op” experiment has cost the city millions (more than it would have cost to build the homes and just give them away)
This statement is entirely misleading. The city has the potential to make millions of dollars on the DACHA homes. They have not lost money. As DACHA dissolves, the city collects rent at fair market value from previous DACHA members and from people who moved into the DACHA homes when the DACHA residents moved on. The city is sitting on millions of dollars in equity in the DACHA homes, it has not lost money on the deal.
*should have placed quotes in my first sentence above.*
When the city offers a lottery, who oversees that? For example, we used tapply for summer daycare. Every year I’d mail the application (to arrive by the correct deadline, with the correct postmark) for Kids in the Kitchen, Rainbow summer, Art, etc. Every year we’d be denied, with a reason all the slots were full. One year I walked my application to city hall on the first day, at the first minute applications were accepted. I was informed again all slots were full, except for two weeks of Rainbow Summer. Other classes were full, although I arrived at City Hall the moment they opened. An employee stated city employees (and, I assume, all their friends) had first dibs. Who monitors the housing lotteries? And, is the daycare “lottery” any better now? Our summer daycare problems occurred approximately 1997-2001.
*…we used to apply*
Growth Izzue will probably complain I’m writing like a “victim” again. That’s his/her option, freedom of speech…..
It would be really nice if people get houses that too at affordable price.Owning a property is a great thing in today’s market.
buy my house fast