This article is to set the stage for a community discussion on the subject of Affordable Housing (AFH).
AFH has different meanings depending on the context. In some situations, affordable housing means sufficient, reasonably priced homes for sale at market prices. In others, it means reasonably priced rental housing. Affordable housing can also mean housing that is offered at below market rates in programs that are regulated by Housing and Urban Development (HUD).
The City of Davis Housing Ordinance has an entire chapter dedicated to AFH, reflecting our community values. The AFH chapter is closely connected to the land use and development policies in Davis’s General Plan and helps further our policy to create an inclusive community. The chapter defines AFH to mean both owned and rental housing offered at below market prices thanks to a variety of City programs. These programs require that when new for sale or rental housing development is created in Davis, the developer may need to dedicate a certain number of the units at below market prices based on a complex formula. In certain situations, instead of dedicating units, the developer may dedicate land for future affordable housing or pay in-lieu fees.
Those community values are reflected in this statement taken from the city’s website: “The City of Davis has had a long standing commitment to affordable housing. Since the late 1980s Davis has had inclusionary requirements in its General Plan policies, and in 1990 adopted an ordinance requiring affordable housing (both rental and ownership) for households from extremely low (30% AMI) to moderate (120% AMI) income levels.” The AFH Ordinance is something that the community can take pride in. However, written in 1990 it is some 28 years old and in need of an update.
There are at least two specific parts of the ordinance that deserve a fresh look:
One, is the definition of a “First Time Home Buyer”. Is a First Time Home Buyer someone who has never purchased a home? Or, should it include someone that because of bankruptcy, divorce or other circumstances has lost their home? Currently the Davis Housing Ordinance defines a First Time Home Buyer as anyone that fits in the *AMI income (Area Median Income) and asset levels, nothing more. Under this definition an individual that currently owns a home, sells that home and fits into the AMI and asset requirements, is qualified to be a First Time Home Buyer. We should reconsider if this definition reflects the spirit of what an Affordable Housing Program is designed to do?
Second, there are no “financial requirements” outlined in the Ordinance stating that an individual applying for an Affordable Home have financial capacity to obtain a loan. On the face of it, this sounds very inclusive. However, applicants to a lottery for AFH have a misconception right from the start. The fact that they have the ability to fit into the program (AMI and Asset Cap’s) but are not vetted for financial qualifications creates a false start for some applicants and distrust of the program.
The fact is that everyone can apply for a loan but not everyone is eligible to get the loan. The difference is that the while lenders have specific requirements (i.e. credit, down payment, income, etc), the applicant for the housing lottery process is only required to meet AMI and asset caps.
The competition for housing in Davis is so keen with hundreds of people applying for very few affordable homes. The lack of clarity regarding what it takes to financially qualify may create a very unhappy group of applicants. Once selected many of the applicants realize that it is impossible to financially qualify for the home they want. They have been subjected to a long process only to be disappointed.
We should consider revising the ordinance to state the financial requirements clearly. We can, like other communities, incorporate as part of the affordable housing program a financial qualification component.
As we move forward to update our General Plan and create a new Downtown Area Plan we have many opportunities to help create better Housing Policies that better serves the need for more housing and more Affordable Housing. This Housing Forum is a great opportunity to further the conversation.
Georgina Valencia is a member of the Social Services Commission and a Real Estate Professional with experience working on Affordable Housing Programs.
*Area Median Income (AMI) is the household income for the median (middle) household in a region. Each year, the Department of Housing and Urban Development (HUD) calculated the median income for every metro region in the country