On Monday, the Social Services Commission was unable to support a motion that would have recommended to the city council an amendment to the Affordable Housing Ordinance to allow the alternative proposal by the Chiles Road Apartments to go forward.
Due to limited projected revenue, the developers were proposing creating a revenue stream of 1.65 percent of gross rental income be generated for the city’s Housing Trust Fund in perpetuity. The estimate is that the first year it could contribute around $125,000 and go upwards of $300,000 as rents increase over time.
One of the concerns is that the fund does not establish a baseline – in case rents were to go down rather than continue in their upward trajectory.
A motion put forward by Commissioner Matthew Wise would have adopted the staff report and added a recommendation to put in a revenue floor, as well as specify that the revenue stream would continue in perpetuity.
However, that motion failed on a vote of 3 to 3 with one abstention. The majority of those opposing stated their “discomfort with the information that we had.”
Commissioner Don Kalman indicated that he was flat out opposed to it. “I just don’t believe it,” he said, referring to claims from the developer that they and others would not be able to build housing without a change in the affordable housing policy.
He said that developers want to build in this town “and they’ll find a way.”
Matthew Wise, who made the motion, noted that “we’re talking about what we’re going to do for the next couple of months.” He noted a more permanent ordinance would come forward in June and they will have additional time to vet what is going to happen beyond June.
There were a number of public comments – most of which were positive. However, Martha Teeter expressed concerns that this type of proposal would not be “advantageous to the affordable housing stock.” 
She pointed out that Paul’s Place would be contributing $5 million for affordable housing while this is proposing about $100,000 per year which in her mind was not nearly enough.
Matt Williams ran through the numbers, however, and noted that, given the rental increase of 5.26 percent per year, the affordable housing fund is likely to increase at a rate much faster than a simple in lieu fee. He believes that given a $2.5 million baseline contribution, the fund established by the in-lieu fee would be exhausted by about year 15 while the fund proposed by the developer’s alternative would be still contributing its full amount that year and every year thereafter.
Greg Rowe pointed out that “one of the real strengths (is) to have a fourth mechanism for funding affordable housing in the city.” He argued that the loss of RDA (Redevelopment Agency funding) was “a real significant loss to being able to provide affordable housing.”
He said this type of flexible approach would produce $5 million over 30 years and the city could sell a bond to create several million up front. He likened it to “sort of like RDA 2.0” and called it a “really innovative approach.”
Eileen Samitz also called it a really innovative idea but warned that she did not want to this to become the default affordable housing type. Ultimately, she believes that land dedication is the best way to go in terms of generating land for affordable housing.
Finally, Darryl Rutherford said that the need for a housing trust fund “is huge” and said he regretted that this proposal came around so late. He said that allowing the project to go through could go a long way toward allowing them to set up a housing trust fund, but he was less sure about an amendment to the affordable housing ordinance.
During commissioner comments, Don Kalman again called the income stream nice, but worried that “it doesn’t seem like it’s that much money.” He said, “I’m torn because, while it is a nice idea, I’m always in favor of building units.
“I just don’t know that it’s enough money that it’s worth negating units that we could be building,” he said. “Certainly not enough money that you can build units with.”
Claire Goldstene called herself in the ambivalent category. She told the commission, “I’m not entirely comfortable supporting this change” and said that she wanted to do more research about the amount of money coming in and what it would look like.
She noted in her time on the commission, “we have really prioritized the building of units and the need for housing.” She said, “I do share the concern that if this is approved, this serves as an attractive example of other developments coming forward.
“But if we create a precedent where workforce rental housing choose the revenue stream,” she said, “we’re not going to see affordable workforce housing.”
Georgina Valencia who supported the motion, said, “I would hate for us to kind of throw the baby out with the bathwater and ignore this whole idea of a housing trust fund because we’re concerned that we don’t understand it well enough,” noting that the housing trust fund gives them money to do a number of things that the city is doing at this time.
Ultimately though, not enough of the commissioners understood the proposal or were comfortable with their level of understanding to support the motion.
The exception was Don Kalman, who was adamant that he wanted to see affordable units build in Davis.
“My message,” he said. “I want affordable units built in this town. There’s a crisis.”
The Planning Commission had passed their recommendations “subject to the concurrence of the Social Services Commission.” The Social Services Commission did not put forward any sort of recommendation, given the failure of that vote, and now it will be up to the council to decide how they want to proceed.
The concerns of the Social Services Commission will be forwarded to council.
—David M. Greenwald reporting
20/20 hindsight tells me that the Commission, as a whole, was not ready to consider a change from the historical precedent of land dedication for the purposes of building new Affordable units. Staff standing to the sidelines playing Pontius Pilate did not help. That effectively left the Commission members flailing in a sea of inadequate information.
As a result, there was no context for the fiscal efficiency and effectiveness message in my public comment. Some of the Commission comments indicated that they didn’t care about the actual availability of affordable units unless those units were newly-built units. Bricks and mortar took precedence over efficiency and effectiveness.
Interesting referent… comes from a truism… damned if you do, damned if you don’t… no “safe place to land”… the CC and vocal citizens have trained staff to ‘keep their heads down’… CC and the vocal ones do not want professional views/judgements/opinions unless it comports with what they want to hear.
Pilate had the same dilemma… with folk crying out “crucify him” (goaded by MJGA), and his wife telling him he had an innocent life in his hands, he did the bureaucratic thing, and went the “whatever” route.
That one commissioner ‘abstained’ without the need to recuse, is true cowardice. Fish, or cut bait. That commissioner more resembled Pilate, than staff.
Matt – slightly different reaction. I just don’t think a lot of commissioners were prepared for the meeting. In fact, it was notable listening to public comment from people like you, Greg Rowe, Darryl Rutherford and even Eileen Samitz – they knew more about this issue than the commissioners.
I don’t disagree with your assessment David … don’t leave out Martha Teeter, whose comments were solid as well. The question for me comes, with acknowledgement of Bill Marshall’s observation, when does it fall on staff to provide the Commissioners with the information necessary to make an informed decision. Last night the staff presentation could have illuminated a whole lot more than it did . . . and the Commissioners would have had a lot more information to make their decision from.
JMO
> that motion failed on a vote of 3 to 3 with one abstention
> called herself in the ambivalent category.
> did not put forward any sort of recommendation, given the failure of that vote
Go Davis!
Yeah – Doesn’t seem like a good moment for citizen governance
Could this revenue stream idea be used toward remodel existing housing? I’m thinking of the cheaper apartments along East 8th Street across from Dollar Tree. Maybe remodeling Pacifico and other troubled locations? Could this revenue stream be used to remodel this type of housing to create more units, more appropriately designed and more conveniently located near schools and stores, rather than just rely on new land dedications for affordable housing on the periphery of town?
Yes. I was just talking to Brett Lee about this very thing. Right now this is one project and it could generate $125,000, but imagine in a few year and five to ten of these projects, you could be easily at looking at $1 million per year. That’s half of what RDA was generating AND without the restrictions. You could remodel Pacifico and allow two buildings, like 100 units to be renovated and workable. You could create vouchers to bridge the gap between affordable and market rate units. You could provide these vouchers for low income or you could do it for middle income. Or as Greg Rowe suggested, it could be bonded.
Point of clarification . . . that is $125,000 each year every year in perpetuity. If rents in Davis continue to rise at the same 5.26% rate per year as they have since 1975 (according to the UCD Apartment Surveys), then the $125,000 becomes
$ 131,573
In Year 1
$ 138,491
In Year 2
$ 145,772
In Year 3
$ 153,437
In Year 4
$ 161,505
In Year 5
$ 169,997
In Year 6
$ 178,935
In Year 7
$ 188,344
In Year 8
$ 198,247
In Year 9
$ 208,671
In Year 10
$ 219,642
In Year 11
$ 231,191
In Year 12
$ 243,347
In Year 13
$ 256,142
In Year 14
$ 269,610
In Year 15
And as the 3820 Chiles Road project developers pointed out to me, it is quite possible that over a 30-year period the cumulative contributions to the Housing Trust Fund from this project could amount to $5.5 to $6 million. It would be a reliable, continual revenue stream for the life cycle of the project.
It appeared to me that perhaps not all of the Social Services Commission (SSC) members have fully digested the Plescia report issued last fall, which essentially concluded that most rental housing development scenarios in Davis are fiscally constrained from producing affordable housing. This is quite likely among the new SSC appointees, who were not on the SSC when the report was issued. Land acquisition and construction costs are now extremely high, and there’s a shortage of qualified construction workers nationwide.
In the case of the 3820 Chiles project, there is the added cost of demolishing the existing antiquated structure on the property, which includes asbestos and lead-based paint abatement. And, as pointed out in the Planning Commission staff report, this project will pay almost $2 million in impact fees, which impacts the ability to pay affordable housing in-lieu fees or provide inclusionary housing.
I think one of the policy considerations Davis will need to confront going forward is our seemingly ever-growing list of “wants.” We want new construction projects to be zero-net energy (which I believe the Plescia report says can add 15% to project costs). We also want affordable housing, electric vehicle chargers, impact fees, bicycle parking, bioswales for storm drainage, local hiring programs, prevailing wage, higher density, and the list goes on and on. At some point, a project will simply collapse under the multitude of our “wants.”
As I said at an SSC meeting last year, at some point, Davis will need to prioritize its “wants.” For example, we might be able to get affordable housing, but maybe not zero net energy in every case, so a decision will need to be made as to what’s most important.
The usual caveat is that this is just me talking as a citizen, and not representing the Planning Commission.