The Davis Vanguard Wants to Sacramentorment Davis Housing

(c) by Mark Dempsey

Editor David Greenwald's recent Davis Vanguard commentary "Housing Production Continues to Fall Well Short" is critical of Davis, but--bizarrely--touts Sacramento as the housing producer to emulate. Greenwald also wants less multi-family housing, and more single-family homes in Davis. Sacramento is still well short of the housing production goals it proposes by half or less, but it builds far more single-family housing. Wisely, I say, Davis builds almost none.

Davis is almost out of infill to develop, says Greenwald. He doesn't mention the Sacramento region has 20 years worth of unbuilt infill and yet continues to approve outlying development, which, in turn, means longer CO2-emitting commutes and infrastructure with roughly twice the maintenance costs of infill development.

Greenwald also does not mention the density needed to have working transit rather than long single-occupant car commutes. According to Berkeley planner Robert Cervero that density is roughly eleven units per acre at the lower bound--approximately that of the least dense attached dwellings, duplexes. Typical suburban neighborhoods don't have enough residents to support neighborhood commerce, or enough potential riders to support a bus stop. But we must have more single-family homes!

Incidentally, the most valuable real estate in the Sacramento region is pedestrian-friendly, mixed-use (residences, offices, commerce, etc.) McKinley Park. Buyers pay premiums to live in a neighborhood roughly twice as dense as most single-family developments, yet the Sacramento region builds precious few such neighborhoods.

Worse still, if locals build at lower densities than eleven units per acre, development consumes more land and favors the Central Valley's big business: land speculation. Davis doesn't favor land speculators, but Sacramento does. In fact, the City of Sacramento approved the poster child for bad development: North Natomas. 

Before it was built out, North Natomas was a twenty-foot-under-water agricultural floodplain surrounded by weak levees. It was so notoriously unsuitable for development that a federal grant to increase regional sewer capacity contained a $6 million penalty if that additional capacity served North Natomas.

The speculators didn't fret. They went all the way to then-vice-president G.H.W. Bush and got that prohibitive, up-front $6 million penalty transformed into a more palatable pay-as-you-develop fee--and they also got $43 million in grants to bring those substandard levees surrounding North Natomas up to pre-Katrina standards.

Pay $6 in installments, and get $43! Where do I sign? But wait, there's more!

The speculators bought, or more likely optioned, that ag land for roughly $2,000 an acre. Once they received permission to break up those 40 and 80-acre agricultural minimums for residential/commercial/industrial uses, they sold some to builders for roughly 100 times more. So...a 10,000% profit! Wow! But wait, there's more!

If the speculators exchange their land, once it has that value-added entitlement to develop, for some income-producing property like apartments or shopping centers, they defer income tax on that egregious profit indefinitely. So...10,000% profit, tax-free!

These policies still impact North Natomas residents even today. The levees had to be upgraded after Hurricane Katrina proved they might be inadequate, but the speculators were long gone, so the North Natomas homeowners have to pay more money in their property taxes to shore up those levees.

There are alternatives to these speculator-happy policies. Curitiba Brazil embraced one. The city bought the floodplain and turned it into parks. Curitiba is not rich, so they also got the municipal sheep to keep the lawns trimmed. Still, a poor city got large parks, and doesn't have maintain levees.

Another alternative is what Germany does. Those proposing outlying development must sell the land at the agricultural land price to the local government, then purchase it back at the upzoned price. The entire "unearned increment" (that 10,000% gross profit) benefits the public. 

And public amenities in Germany are very nice indeed. Unlike the US, where engineers grade our infrastructure a stunning "D+," and every so often a bridge collapses, German infrastructure is in good shape. Germans have single-payer healthcare, but they also offer higher education without tuition, even for non-native Germans. The arts budget for just the City of Berlin exceeds the US of A's National Endowment for the Arts.

Meanwhile, from another story about the future of Sacramento City's housing: "Building this [higher] density in proximity to high-frequency transit hubs … prioritizing infill development, that’s really where we’re gonna see us achieving housing affordability." You mean...like Davis?

So...I'd suggest Mr. Greenwald find some other jurisdictions to admire when it comes to housing policies. Sacramento has a long way to go before it can do as well, or as sustainably as Davis.

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The author of this piece spent nearly a decade on a Sacramento County Planning Advisory Council (CPAC) and observed the above and many other dismal Sacramento planning practices.