Council sets fee for affordable housing mitigation

A new mitigation fee gives developers flexibility on how to handle affordable housing requirements in Berkeley. Photo: Tracey Taylor

Developers of new residential rental properties in Berkeley can now choose to pay into a special city fund instead of including on-site affordable housing after an 8-1 vote Tuesday by the City Council. It’s the latest step by City Hall to create policies that will increase Berkeley’s affordable housing stock.

But whether developers will choose to pay the fee remains to be seen, and some members of the City Council caution that setting the fee too high could have unintended, unavoidable, consequences for future projects.

The city requires developers of new market-rate rental properties to make one of their units affordable — to households earning 50% or less of the region’s median family income — for every 10 market rate units. This means that the units would have to be affordable, for example, to a family of three in Berkeley making $42,100 or less.

In June 2011, the council adopted a new ordinance requiring developers either to include affordable housing or pay the city a fee in lieu of providing lower cost units, according to a staff report prepared for Tuesday’s meeting. Council did not set the fee at that time pending further public discussion. The 2011 ordinance was prompted by a 2009 court decision that invalidated the city’s existing inclusionary housing rules.

The aim of the fee is simply to offer an alternative to developers who prefer not to build their own inclusionary housing, said city spokeswoman Mary Kay Clunies-Ross.

Payment of the fee would build up Berkeley’s Housing Trust Fund, which the city could use to develop its own affordable housing projects around town. The fund was established in 1990 to pool available federal, state and local money for these projects.

Tuesday night’s discussion largely revolved around the amount of the fee and which types of housing developments would be subject to it.

Berkeley City Council, Oct. 16, 2012. Photo: Emilie Raguso

Over the summer, City Council members agreed to discuss a fee ranging from $15,000 to $34,000 per unit. City staff previously had recommended a fee of $20,000 per unit, according to Tuesday’s staff report. In September, the city’s Housing Advisory Commission voted to recommend a $28,000 fee per unit.

Vincent Casalaina, chairman of the commission, told the council that the group’s goal was to set the fee high enough “so that the developer actually has a choice to make. Does he want to pay the fee or put the units in?” Setting the fee too low, he said, while perhaps more palatable to developers, could lead to a long wait before the city could raise enough money to build affordable housing.

Four councilmembers — Linda MaioDarryl MooreMax Anderson and Jesse Arreguín — either spoke in support of the $28,000-per-unit recommendation or did not suggest an alternative.

“We’re on the cusp of a housing comeback. There’s no question about it,” said Anderson. He said it would be important to build up the Housing Trust Fund so the city could help provide housing for those in need.

Moore added that it is a critical time to take steps to increase the amount of affordable housing in Berkeley: “People born and raised here can’t afford to live in our community.”

But Mayor Tom Bates, along with council members Laurie Capitelli and Gordon Wozniak, predicted that setting the fee that high would likely result in little or no money for the city’s Housing Trust, as developers would simply elect to construct the affordable units rather than pay the fee. Susan Wengraf said Thursday, via email, that she too saw the high fee as a near-sighted way to incentivize the construction of affordable housing.

“What we’re about to adopt is not going to produce one stick of the money for the affordable housing fund,” said Bates. He said setting a lower fee could lead to community criticism that the city was pandering to developers. But a lower fee, argued Bates, actually would lead to more money in the Housing Trust Fund.

Wozniak said it would be in the city’s best interest to craft a policy to encourage developers to pay into the trust rather than build inclusionary units. That’s because Trust Fund dollars used by the city, he said, would result in the construction of a higher number of affordable units than the same amount spent by developers. Based on his calculations, he said, the city could build more than twice as many units as could developers, given the same budget.

Forcing developers to build inclusionary housing, via a steep mitigation fee, “is not a good deal for the city,” he said. Wozniak voted against the resolution.

Capitelli noted that pushing developers to include affordable housing in their projects could have an unintended consequence. State law requires cities to give incentives or concessions, such as additional floors, he said, to projects that commit to make a certain percentage of their units affordable to lower income residents. Capitelli said he did not want anyone to be surprised when developers came back to the city demanding taller buildings, or other incentives, in return for providing the requisite on-site affordable units.

Councilmember Kriss Worthington said the city might benefit from offering a lower initial fee, for the next two years for example, to push developers to get moving quickly and elect to pay into the Housing Trust.

“What we’re saying is: we need affordable housing and we need it now,” he said. “Why not have an incentive to turn in their applications?”

Berkeley Student Cooperative supporters in line to speak to the City Council about the need for an exemption from affordable housing mitigation fees, Oct. 16, 2012. Photo: Emilie Raguso

About 20 members of the public addressed the council regarding the resolution. Many of the speakers were students affiliated with the Berkeley Student Cooperative who said the co-op should not have to pay the fee because of the organization’s commitment to providing low-cost student housing. They said they came to share their stories because of a staff recommendation to end the co-op’s historic exemption from paying inclusionary housing fees.

Councilmembers acknowledged the co-op’s efforts and said the city would ensure that the organization, along with others with similar goals, would not have to pay the mitigation fee.

Toward the end of the two-hour hearing, the council voted to approve the $28,000-per-unit mitigation fee for developments with five or more units, but asked staff to come back with language regarding Worthington’s suggestion for a discounted initial fee, as well as criteria for co-op exemptions from the fee.

City staff and officials noted the need to craft these criteria carefully so as not to leave loopholes open for private developers looking to get around the mitigation fee requirements.

Council also asked staff to explore the possibility of a local density bonus that might entice developers to pay into the housing trust rather than build affordable housing into their projects.

The council agreed to assess the effect of the resolution in one year’s time to determine whether it was having the desired effect on new rental development projects.

Other business

Daycare center go-ahead: Council voted 8 in favor, with an abstention by Arreguín, to uphold a Zoning Adjustments Board decision to approve plans for home renovations and the creation of a small in-home daycare center at 2329 Grant St. The applicants asked to raise their home by two feet, add onto their first and second floors and create a new 1,054-square-foot third floor.

The child care center would serve up to 15 children a day between 7:30 a.m. and 3 p.m.

Some neighbors asked the council to overturn the earlier approval due to concerns about traffic and noise. The majority of the councilmembers spoke in favor of the designs and in favor of adding more child care services in the city.

Arreguín said he thought the matter warranted further discussion, and asked for a second hearing. Other members of the council noted that the application has been in the works since 2010 and that it was time to make a decision.

“I know the neighborhood is split,” said Councilmember Linda Maio, who described the child care center plans as “enlightened.” “It will heal over time. We’re talking about 15 children. We’re not talking about 40 or 50. We’re talking about 15 little kids.”

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  • PragmaticProgressive

    As long as we agree that that’s your belief and not a fact, sure.  But just so we’re clear — it IS possible to enjoy community in towns other than Berkeley.  Most of the world does.  

    And it’s possible for extended families to get together, even if they don’t share a zip code.  Having to drive or take (subsidized!) transit for such gatherings is not even close to being an obstacle.    If that’s the best argument the affordable housing boosters can manage, I think we’re done.

  • Brantbellamon04

    I think we fundamentally disagree on what humans need.
    I’m not really sure, from reading your statements, that it is possible for us to come to an agreement on this issue, coming from very different paradigms, so we’d probably better just respectfully disagree.

  • Brantbellamon04

    I think, as I stated below, that our beliefs (you, also are holding beliefs) as to what humans need for a meaningful, and thus sustainable, existence may be too different to reconcile…
    For instance, I do not see cars, computers, or even telephones or refrigerators as absolute necessities.
    On the other hand, I do see  close proximity to family members and a supportive community as necessities. I also see clean water and healthful non=polluted food as necessities…
    I think we are coming from extremely different paradigms.
    Importantly, we both live in Berkeley, and should have our voices heard.

  • PragmaticProgressive

    No, we were talking about basic human needs:  food, shelter, water.  That’s the category in which you tried to place the desire to live in the same city as one’s parents.  

    You’re entitled to your opinions, of course, but not to your own facts.  And the fact is that billions and billions of humans have found existence to be both sustainable and meaningful without living in Berkeley or within walking distance of their childhood homes.  

    Social policy needs to be grounded in facts and so far you haven’t provided any factual basis for a policy that would mandate construction of additional affordable housing in Berkeley.   I don’t doubt that your beliefs are important to you, but please don’t expect others to assign them the same status without something more than your say-so, however impassioned.

  • anon

    Importance of caring for older family members: study
    http://eche2012.abstractsubmit.org/presentations/3072/
    A study about childcare and proximity to family
    http://www.nber.org/digest/apr12/w17678.html

    A study about children’s proximity to their parents and the effect on their psychological heath:
    http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3229683/

    A study on the effect of extended family proximity’s effect on parenting:
    http://jfi.sagepub.com/content/18/3/251.abstract
    Here are some facts, easily found by google, for you to check out.
    I tend to base my opinions and beliefs on facts and my own observations and experiences , as most of us do.A healthy 
    A healthy community, which many of us see as the goal of social policy, needs to include the psychological and emotional well-being of its members. This is a big reason we have parks and playgrounds, for instance. And non-communal toilets. And libraries, and a host of other things. We can technically sustain life without psychological and emotional well-being, but many of us would like to set up our  cities (where we live) in a more wholesome fashion.

  • anon

    disqus formatting >_<

  • Charles_Siegel

     This implies that public housing should be allocated based on psychological need.  If someone grew up in Berkeley, has family in Berkeley, and works in Berkeley, they should be given higher priority for public housing than someone who grew up and has family in New Jersey and works in Emeryville, because affordable housing in Berkley is a need for the first person but not for the second.

    Do you believe this? 

    Of course, this is not the way that slots in public housing are actually allocated.

  • anon

    Well. I am not sure if I believe this should be policy: perhaps it ought to be considered… I do think, as you have seen above that there are some strong arguments to be made for it as policy…
    I originally brought it up as a hypothetical situation to show how affordable housing in a specific area  could be seen as a “need”. We could also consider the case of someone who has been raising a family here for a certain amount of time, or who has lived here for a certain amount of time, or who has a majority of family here…
    I am pretty sure that you (Charles) agree that there is A need for affordable housing in any given community, whatever the reasons for that need may be: no?

  • guest

    I didn’t make the comment to which you reply, but I will say that any homeowner anywhere in town whose utilities gets under-grounded pays for it according to the (varying) dictates of the city.

  • Charles_Siegel

    Central Paris does not have much affordable housing.  Is it culturally stagnant? 

    Your argument makes some sense, but I think cultural stagnation is the wrong word.

  • Charles_Siegel

     I generally agree that it is better to have a mix of incomes in a community, and that we have a better society if we promote that mix.  I think you are going too when you call it a “need.”

    Using the same example I just gave, your argument also imply that the person who comes from New Jersey and works in Emeryville has a need for both a job and affordable housing in New Jersey.   He might be happier if he could stay in New Jersey.  It might be a better society if he could stay in New Jersey.  But I wouldn’t call it a need. 

    It obviously would be impossible to give everyone in the country a job and housing that lets them all stay with their family and community.  If that is a need, it is a need that is impossible to fill in a modern economy, which is dynamic and often moves people around. 

    Maybe people were happier in some ways in traditional economies, where they stayed all their lives in the places where they grew up, but they suffered from extreme poverty.  Hundreds of millions of people in China (for example) are moving from the places where they grew up to the cities, in an attempt to escape poverty.

    PS: I definitely sympathize with your statement that many of the things we say we need, such as cars, are not really needs. 

  • guest

    I know that it is not seen as realistic at this point in time to live in a more traditional fashion.
    However, many people seem to feel that we ought to make the world, or at least our local area, a better place in our lifetime, and in that spirit, I would suggest that moving forward with planning, perhaps we should look at the issues that arise with a society that assumes a “moving around” kind of lifestyle. Perhaps we should consider that that may not be ideal for everyone, and look at alternatives.

  • guest

    For what it’s worth, our cousins who live in rural Nebraska regularly congratulate us for moving to more urban areas.

  • The Sharkey

    None of that disproves anything PragmaticProgressive said.
    All  of that falls into the category of want, not need.

  • The Sharkey

    No, not really. The problem is that you think what you want is the same as what you need.

  • PragmaticProgressive

    While interesting, these don’t actually support the conclusions you are trying to reach.  

    One study says that parents without a college education rely on grandmothers who live within 25 miles of them.  That is a huge swath of geography that extends well beyond Berkeley’s city limits and out into other cities that have more affordable housing, have supportive communities, and are well connected by transit lines.  So, to get the benefits you seek, there’s no evidence there that we need more affordable housing in Berkeley itself.

    Another of your studies is about children separated from their migrant worker parents.  I’m not sure how that’s relevant at all — if Mom and Dad can’t afford to live in Berkeley, the kids should certainly be living with them wherever they can afford to live. That’s certainly in everyone’s best interests.

    I won’t go through all of your links because I don’t think you yourself put in much time to evaluate whether these actually support your claims.  There’s little, if anything here to suggest that we have to subsidize intergenerational affordable housing in Berkeley.  And, as The Sharkey points out, someone who wants such an arrangement can certainly move to a more affordable location.

    When I originally posed my question asking about the “need” some express for affordable housing “in Berkeley,” I sincerely hoped that someone would advance a coherent argument, based on relevant facts that would support the case for a policy.  Unfortunately that has not happened.  

  • PragmaticProgressive

    There are so many other inputs to pricing that it’s hard to assess  your claims in a vacuum.  A restaurant, for example, has to pay rent and pass that on to consumers as well.  How much of the localized price inflation is explained by higher rents in a better location?  Also, from a profit perspective, that same restaurant might charge higher prices simply because it knows the surrounding demographic can afford it.  By the same token, I have friends who are contractors who charge higher rates in Piedmont simply because they know they can do it and get paid — it’s not any more expensive for them to drive a job there than in Oakland.

  • guest

     I do not agree with your beliefs.  If they are made policy, then your beliefs will be force upon me – either to conform with them or to fund them – a situation that I would dislike.

  • http://www.shoqah.com/ gregortarquin

    Having an own house is a dream for all but it is not an affordable for all to buy a home.There are many financial companies in the market which provides many services like home loan and all.