No to Co-op at Village Farms

[The following letter was shared with the Davisite for posting]

November 1, 2025

To the members of the:
Davis City Council
Davis Planning Commission
Davis Social Services Commission

From David Thompson, Davis Citizen and Affordable Housing, Advocate, Co-Founder National Cooperative Bank and Inducted into the US Cooperative Hall of Fame

No to this flimsy, sketchy, ill-prepared and financially dangerous to co-op members Limited Equity Housing Cooperative (LEHC) proposed by Village Farms

My first major point is that the path of an LEHC(laid out below) takes many steps and requires much over $2 million dollars of an entity’s money prior to even starting construction, The path to a LEHC if travelled, will take about five years from inception to occupancy. The member’s own investment of $50,000 each ($3.5 million overall) is likely at risk during the latter two years of construction. Dos Pinos took close to 3 years of active one on one marketing to get to 85% occupancy. At Dos Pinos, no one lives on top of anyone else. At 15 townhome units per acre it is an attractive community. Each owner member has a separate front door on the ground floor with a front and back patio. A four floor apartment building with no patios at 30 units per acre is not an attractive home ownership model.

Much as I love LEHC’s, the Village Farms LEHC proposal is impossible to develop under present circumstances. To be fair to the City and to the citizens this proposal should be removed immediately or else it will be a huge waste of the City’s time and the citizen’s resources or it will be a major housing proposal seen as an ill-prepared developer’s red herring that should have been eliminated. Village Farms does a disservice to the City by presenting a thin dream without details to back up the Co-op.

The City should immediately reject the Village Farm LEHC as being infeasible.

My point of view is that the proposed LEHC as submitted is not feasible to meet a family at 100% -120% of Yolo County median income. Please remember that the city requirements are that the average of all of the units is that they are affordable to a household of four (in a three bedroom unit) earning at or below $117,000 per year i.e. $9,750 per month and $3,412 max for housing costs at 35% (2024 State Stats). The weighted average for an equivalent three bedroom market rate rental unit in Davis (2024 UCD Housing Study) is $3,273.

Number of Persons in Household:

1

2

3

4

Yolo County Area Median Income: $117,000 2024	Acutely Low	12300	14050	15800	17550
	Extremely Low	24250	27700	31150	34600
	Very Low Income	40400	46150	51900	57650
	Low Income	64600	73800	83050	92250
	Median Income	81900	93600	105300	117000
	Moderate Income	98300	112300	126350	140400

I am a Co-Founder of the National Cooperative Bank (1978) and then the original Director of the Western Region (14 states) of the NCB, I was inducted into the Cooperative Hall of Fame (2010) and am the author or co-author of 6 books and over 400 articles about co-operatives. From the National Association of Housing Cooperatives I have received the President’s Award, the Jerry Voorhis Award (thee highest honor of NAHC) and Author of the Year (twice). I Co-wrote the California law (1978) that established the first LEHC’s in the USA. TO me this LEHC doesn’t work.

Under the existing conditions presented by Village Farms, the thinly thought through 82 unit LEHC proposal would be almost impossible to develop. It would also expose 82 Davis families to the potential of extensive unrecoverable financial losses of $4.1 million dollars.

If the Co-op can overcome the following list of extensively high economic barriers then it might be possible? However, I cannot see this be anything but a cooperative that will become a horrendous local failure with millions of local member‘s capital at risk. The details I show are close to the normal mortgage bank or National Cooperative Bank (NCB) requirements.

With the LEHC quite likely not feasible and no single family affordable homes in the PIP there are no affordable ownership units in the PIP.

The general steps on the pathway to an LEHC,

• The planning phase (architecture, civil engineering, property taxes, legal, etc.) would generally require an expenditure of at least $700,000 to be paid up front. Who will pay that $700,000, Village Farms or the City of Davis?
• The parcel set aside for the LEHC will need to be shovel ready (ground cleared, streets built, amenities plugged to the site (electric, gas, telephone, water) etc. Could be up to $400,000, who will pay? Village Farms should.
• Marketing to arrive at 82 signed memberships  will require staff, legal work and advertising of about $50,000 per year for three years = $150,000. Who will pay that, Village Farms or City of Davis?
• At $500,00 per unit the construction costs will be $41 million
• At risk equity invested in the co-op will require 20% so $8,2 million
• At 10% equity max by state law, each share will average $50,000casg investment per average member = $4.1 million at risk
• Where does the other 10% of equity ($4.1) come from, Village Farms or City of Davis?
• There are no federal or state subsidies for LEHC co-ops today as there were in the 1980’s.
• Banks use comparable values to weigh credit risk. However, in this case there is no similar 82 unit new built unsubsidized LEHC co-op in California to measure against. Only one similar LEHC (Dos Pinos, Davis 60 units) but that was 40 years ago. The developer carried all the costs until turning Dos Pinos over to its’s members with carrying costs that met the city’s standards.
• There are no comps since the mid 1980’s, 40 years ago.
• Only two unsubsidized newly built LEHC’s have been built in California since LEHC law passed in 1980. Both in the 80’s.
• As soon as the property is assigned and owned by the co-op it will be assessed property taxes and other city and county fees. Initial property taxes/fees will be about $70,000 to be paid per year for five years until occupied = $350,000. Who will pay this Village Farms or City of Davis?
• The ongoing property taxes and fees will be 1.5% of between $40 to $50 million dollars.
• Once occupancy permit received on finished project, the property taxes will be about $480,000 per year. LEHC’s as a nonprofit co-op is not tax-exempt as if it were a nonprofit tax exempt entity. I have urged the director of CCDC to pursue a lower tax for LEHC’s but she

Refused

• Banks that lend to new build housing cooperatives are almost impossible to find in California. NCB requires 50% of the $50,000 shares be sold to 41 members before a construction loan can begin.

The $2,050,000 in member assets must be turned over to NCB. All these member shares are now at risk.

• NCB requires that 85% of full shares be sold and handed over before the permanent loan can be accessed and borrowed. Now 70 units at $50,000 each sold and turned over to the NCB, = $3.5 million, All these member shares are now at risk.
• At a required density of 30 units per acre this will mean a four storey apartment building,  (see attached 32 per acre density Celeste in Davis)
• From a marketing point of view, I cannot see 82 households putting up $50,000 at risk to buy an apartment in a four floor building at 30 units per acre when they can rent at about the same price.

As Regional Director of the NCB I Funded//Developed 10 LEHC’s amounting to 1,500 units 1981-85.

No new build multi-family LEHC of the VF size has been funded since 102 unit (Redwood Shores) done by me in 1983 (forty years ago).

With the LEHC not feasible and no single family affordable homes in the PIP then there are no affordable ownership units in the PIP.

In my opinion this PIP does not pass the test.