With the passage of Measure R last year, Berkeley voters set the stage for a taller, denser, greener downtown.
While developers will be allowed to build one hotel and two residential buildings of 180 feet, a couple of office buildings at 120 feet and other buildings that are taller than in today’s downtown, what the city’s core will actually look like – who will live there, how much open space will be retained and how people will get around – is likely to be the focus of many late-night council and commission meetings over the next months and years to come.
The question the council debated at its Tuesday evening work session was whether paying a $20,000 per rental unit fee to an affordable housing fund would negatively impact the developer’s bottom line, affecting a proposed project to the degree that it would not to be built.
Developer fees are not taxes. They are intended to pay cities back for partial costs they bear for new development. Currently in Berkeley developers pay into a childcare fund, commercial developers pay into a fund for affordable housing, and condominium developers pay into a fund for affordable housing if they don’t choose to build lower-cost housing on site.
Berkeley formerly mandated that 20% of new rental units a developer built would be affordable, with an option for the developer to pay into a fund to house lower-income people in lieu of creating new affordable units. The 2009 Palmer decision by the state supreme court made that illegal.
The council is also likely to impose developer fees dedicated to open space and transportation, but that wasn’t part of Tuesday’s discussion.
It’s important to strike a balance “so that some projects actually get built”, said Councilmember Gordon Wozniak, asking staff for further analysis. “If projects don’t get built, or if they’re delayed because fees are too high, we don’t get the property tax revenue – and that’s significant,” he said, pointing to revenue generated by property and other taxes. “When the project is actually built, you get property tax revenue, which is on an ongoing basis.”
Wozniak said he doesn’t care where funds “for worthy projects the council is trying to find funds for” come from, whether it’s developer fees or taxes.
Similarly, Councilmember Laurie Capitelli noted that there is a “whole host of desires” from which the council must choose — affordable housing, open space, reducing travel to work or school, discouraging automobiles, improving streets and green space downtown. He said the goal was to “extract as much of community benefits from affordable housing to open space as we can – but to make sure we don’t go over the tipping point where nothing happens”.
Mayor Tom Bates argued that any fees established are not set in stone. He further suggested that once the council set fees, if they were too high, developers could make their cases to staff. “You’d enter into a development agreement at that point and then it would be up to the developer to meet with staff and to justify that it wasn’t possible under those conditions to go forward.”
Councilmember Kriss Worthington shot back, saying the mayor’s proposal “invites political deal-making behind the scenes”.
Worthington further argued that the discussion was off the mark. “Our goals must be not how to get more money. The goal is to get more affordable housing units,” he said, adding that if the affordable housing fees are low, there will be an incentive for the developer to pay fees rather than include affordable units in their projects.
He added that increasing development further increases the need for infrastructure upgrades. “It creates more unfunded liabilities,” he said.
Worthington characterized Wozniak’s concern that fees would kill development as “totally bogus”. When the city was able to mandate affordable housing, developers did build – and profit, he said, arguing, “We can’t give in to that kind of manipulation.”
Capitelli countered by noting that, in the past, developers got bonuses, such as the ability to add a floor above the allowable height, to reward them for building affordable units. And he said Worthington’s concerns about infrastructure were unfounded. “We’re not in Brentwood where we have to plough up an orchard, pave new roads, build new sewers,” he said.
Another element in the debate was the question of who the housing would serve. Councilmember Max Anderson said he thought the discussion of affordable housing was too focused on students. “We need to make sure affordable housing is available to families struggling to find permanent housing and get a roof over their heads,” he said, pointing to the need for three-bedroom rentals. “We have to find a way to incentivize that.”
More concrete discussions on developer fees are yet to be scheduled. In November and December the Planning Commission will take up other aspects of the Downtown Area Plan.
“This is just the beginning of the discussion,” said outgoing City Manager Phil Kamlarz.