The ratio of rental versus home-owner occupied housing in Arcata is currently about 64% rental and 36% owner-occupied.

Simple logic tells us: 

 

For all the new residential units that are built, if fewer than 36% of the new units are owner-occupied …

 

then that 64  / 36 ratio will only get worse. 

What would things be like here in Arcata if this ratio were, say, 70% rental and 30% owner-occupied… or 75% rental and 25% owner-occupied. Because that’s where we’re headed.

The Gateway Area Plan promises home-ownership –but it’s not will likely to be part of our reality. Unless there is a radical push to actually ensure home-ownership opportunities — not just provide minimal “encouragement” to developers — the anticipated home-ownership will be either zero or close to zero.

At 64%, Arcata has a higher percentage of rentals than such college-prominent cities as Santa Cruz (53%), Berkeley (54%), or San Luis Obispo (59%).

The article from May 2022 asked:  What percentage of new construction has to be for owner-occupied housing in order to “bump up” our percentages? The answer is that more than 70% of it would have to be owner-occupied for there to be a good change on Arcata’s overall ratio. And we know that’s not going to happen.

This article looks at the other side. Over this past year and a half we have learned much about the difficulties of creating owner-occupied housing. We’ve also been informed  that much of the policies and propositions of the draft Gateway Area Plan are what is termed “aspirational” — meaning they will never come to fruition, or is, in more ordinary language, they are worthless. The question then becomes: If 500 or 1,000 or even 3,500 residences are built, what will happen to the proportion of rental units in Arcata?  The answer is: The ratio will go from the current 64/36 figure to about 68/32, or 70/30, or higher. That is to say: It will get worse.

To skip to the easy-to-read original article, press or click here.

To skip directly to the math results, press or click here.

Introduction

This article was first published on May 19, 2022 — within the first month of the introduction of Arcata1.com. In the discussion on the Gateway Area Plan, much has evolved since that time. But one of the issues in the Gateway Plan that has repeatedly been shuffled to the back burner is that of opportunities for Home Ownership. 

What does the draft Gateway Area Plan say about Home Ownership?

A word that is used by the Community Development Director, David Loya, is “aspirational” — meaning that these are policies that are aspired to. Are these policies and pronouncements practical to achieve?  You decide. 

The current draft (July 11 2023) contains the following statements and policies.

• Plan for up to 3,500 new residential units with the Gateway Area that are available to a wide range of income levels and that include a balance of renters and owners.
• New housing will feature a range of unit sizes, a mix of renter and owner‐occupied units, and housing choices available for students and lower‐income households.
• Encourage a mix of both owner‐occupied and rental housing.
• Encourage new home ownership opportunities affordable to households of all income levels. Include deed‐restricted affordable opportunities for low‐ and moderate‐income households.
• Encourage a range of ownership opportunities including condominiums, townhouses, and other alternative ownership mode.
• Provide strong incentives through community benefits program for owner occupancy.

Difficulties in creating condominiums

If 500 new housing units were built, with 5% of them as owner-occupied:

If 1,000 new housing units were built, with 5% of them as owner-occupied:

If 2,000 new housing units were built, with 5% of them as owner-occupied:

If 3,500 new housing units were built, with 5% of them as owner-occupied:

If 500 new housing units were built, with 2% of them as owner-occupied:

If 1,000 new housing units were built, with 2% of them as owner-occupied:

If 2,000 new housing units were built, with 2% of them as owner-occupied:

If 3,500 new housing units were built, with 2% of them as owner-occupied:

.

The original article “Rentals Percentage in Arcata: “Do the math” from May, 2022, is below.

Here in Arcata, the ratio of non-owner-occupied (i.e. rentals) to owner-occupied housing is around a 63% / 37% split. That is, in Arcata 63% of the housing units are rentals, and 37% are owner-occupied.

Will the Gateway plan help with this ratio?
Will it allow more Arcatans to purchase their homes?

Arcata has a higher percentage of rentals than such college-prominent cities as Santa Cruz (53%), Berkeley (54%), or San Luis Obispo (59%).

For any new housing built in Arcata, if fewer than 37% of the units are not individually-owned and owner-occupied, then that 63% rental figure will get WORSE.

Do we understand this?

A ratio that would help the situation might be 50-50. Lets do the math:

Arcata has 8,031 units (2021 data). Suppose 2,000 new units were built. And that’s a lot of units.  You can think of this in terms of the quantity of “Sorrel Place”-sized apartment buildings.  (Sorrel Place is the recently-constructed building on 7th Street between I & J Streets — it occupies the length of the block.)  Sorrel Place is 4 stories, but let’s visualize that building as a 5-story building, with the ground floor being commercial spaces. There are 44 units in the building.

Creating 2,000 housing units would be the equivalent of putting up 46 block-long buildings that are 5-stories tall and the size of Sorrel Place.

That would give Arcata 10,031 units total.

• If all new apartment buildings were 50% rentals and 50% owner-occupied, then for all of Arcata we’d have 40% owner-occupied – better than he current 37%, but not by much.

Is that enough of an improvement?

• San Luis Obispo is at 41% owner-occupied and we’re at 37%.  It would take 57% of all new housing units to be non-rental to get to an average like San Luis Obispo.
• To get to Berkeley’s 46% owner-occupied ratio? It would take 82% of all new housing units to be non-rental units to wind up with an average like Berkeley.

How about if 1,000 housing units are built? That’s a more reasonable figure than 2,000, and it will happen sooner. 

If 1,000 housing units are built it would then take 73% of all new housing units to be owner-occupied to get to San Luis Obispo’s 41%.

Does Arcata have the will and the clout to make a Form-Based Code with suitable amenities and encouragements and strength? So that developers will construct more than half of all new apartment units as owner-occupied — that is, as Condominiums?

And then with proper Home-Owner Agreements, those individually-owned condos would stay as owner occupied and would not be rented out?

Certain developers will build condos, because they like to and that’s their business model. But as Arcata Planning Commissioner Dan Tangney said at the February 8, 2022 Planning Commission [Read the full transcription here]:

In the last decade or more that I’ve been on the Commission nearly every project that’s gone through — particularly large projects — is rental-based, including our most recent four-story downtown project. I sure hope that this ambitious development in Arcata would include a lot – a lot — of options for home-ownership. I’m just wondering how we can influence that. I get that market forces are very real.  However if there is something that we can codify on this, I would sure love to see that included.

Reader: Please go to that transcription and read the response from Community Development Director David Loya, along with commentary, as well as his comments on “Supply and Demand” farther down in the article.  [link here]
And then you decide what you think of this.

Any real change in the percentage of rental units in Arcata does not seem likely to occur. Among the concerns are: If the requirements are too difficult, then developers just won’t build here.

On the other hand, if requirements for building new apartment units in Arcata are too easy, then we’ll basically have “more of the same.”

And the ratio of 63% rental housing in Arcata will continue… or will get worse.