Top contenders for Berkeley mayor have sharp differences towards development

Laurie Capitelli and Jesse Arreguín are the two top contenders to replace Mayor Tom Bates. Photo: Emilie Raguso
Laurie Capitelli and Jesse Arreguín are the two top contenders to replace Mayor Tom Bates. Photos: Emilie Raguso

For the first time in 10 years, Berkeley does not have an incumbent mayor running for reelection. Mayor Tom Bates, who took office by defeating incumbent Shirley Dean in 2002, is stepping down and relinquishing his leadership of a City Council where he has long commanded the majority.

The open seat has attracted eight people to run for office, with two sitting councilmen, Jesse Arreguín and Laurie Capitelli, as the top contenders. City Councilman Kriss Worthington is also running for mayor, but his muted campaign and low level of fundraising suggest he entered the race more to influence the outcome of ranked-choice voting than to win (although Worthington does not say that). Worthington is upfront about telling people to vote for him and Arreguín as first and second choices on the ballot (or the other way around) as a way to knock out Capitelli.

The other candidates are Ben Gould, a UC Berkeley graduate student, Guy “Mike” Lee, a homeless activist, Bernt Wahl, a scientist and entreprenuer, Zachary RunningWolf, an indigenous elder, and Naomi D. Pete.

See all local 2016 coverage on Berkeleyside.


In any other U.S. city, both Arreguín and Capitelli would be regarded as ultra-liberal candidates. But this being Berkeley, where residents have long parsed slight variations in the Democratic party line, Capitelli is being cast by some as the “moderate” in the race and Arreguín as the “progressive.” Arreguín has even called Capitelli “conservative.”

A close examination of the men’s records shows they have both fought in their own way for affordable housing, a considered approach to addressing the issue of homelessness, and a strategy to repair Berkeley’s infrastructure and pare down its unfunded liabilities. But their philosophies toward development are radically different and their emphases as mayor would diverge.

Here is an examination of where they stand on several major issues and what they have done about them.

Development

Development has emerged as one of the major issues in the mayoral campaign. If you drive down Shattuck Avenue, San Pablo Avenue or University Avenue you will see many apartment complexes newly finished or under construction. In January 2015, Berkeley city staff estimated there were 1,850 housing units in the pipeline and the number has increased since then. The Association of Bay Area Government (ABAG) estimates that Berkeley needs to build 2,431 units of housing to meet its share of the regional housing demand. (While Berkeley has produced more than 89% of the units needed for people with above moderate incomes, it has produced very few units for people of more modest means).

The building boom, some say, is a reflection of the strong economy and the fact that Berkeley put uncertainty about its building climate to rest when voters overwhelmingly approved Measure R, a blueprint for downtown development, in 2010. The City Council turned those concepts into law in 2012 with the Downtown Area Plan (or DAP), which allows the construction of seven tall buildings varying from 120 to 180 feet high. (Five, including one from UC Berkeley, are already in the pipeline.) The Downtown Area Plan also increased height limits and the overall density of the downtown core. Its precepts were based on the Climate Action Plan adopted by Berkeley in 2009 which determined that concentrating high-density, “green” housing along transit corridors reduces greenhouse gas emissions.

In exchange for increased density, council adopted a series of requirements that developers had to meet. They were expected to pay into funds to create more open space in the downtown, provide transit passes for residents, set aside bicycle parking and car share spaces, and improve sidewalks, among other benefits. They had to set aside 10% of the units as below-market-rate housing or pay a commensurate fee into the city’s Housing Trust Fund so the city could build affordable housing elsewhere. Developers constructing the tall buildings were expected to contribute “extraordinary” benefits to Berkeley, although the details of those benefits were not specified until mid-2015.

Jesse Arreguín campaigned at Sunday Streets on Oct. 23. Photo: Frances Dinkelspiel
Jesse Arreguín campaigned at Sunday Streets on Oct. 23. His campaign manager, Jacquelyn McCormick, is on the right. Photo: Frances Dinkelspiel

Capitelli’s voting record reflects the belief that building more structures in the downtown core and along transit corridors will revitalize the downtown and be good for Berkeley in the long run. He was an advocate for Measure R in 2010 and routinely votes in favor of apartment projects that are appealed from the Zoning Adjustments Board to City Council. Capitelli voted in December in favor of the 302-unit, 18-story complex at 2211 Harold Way, a project that a small but vocal group of Berkeley residents opposed because it threatened the movie theaters and was, in their opinion, out of scale for the neighborhood (the developer has said he’ll include a 10-theater cinema). In his campaign literature, Capitelli says he was instrumental in securing $10.5 million from the developer, HSR Berkeley Investments, for the Housing Trust Fund, money that will build anywhere from 90 to 100 affordable units. (The developer was required by law to contribute $6 million to the fund; the City Council assessed an additional $4.5 million for the fund on top of that.)


“In accordance with Berkeley’s award-winning Climate Action Plan (that I wholeheartedly endorsed), I support making new green, energy-efficient housing in the Downtown and along major corridors – housing that is strategically linked to good transit and that is designed carefully to transition to existing neighborhoods,” Capitelli wrote on his mayoral web page.

Arreguin’s voting record on density is more mixed as he has taken a series of votes against specific apartment projects – not, he said, because he is opposed to growth, but because those particular apartment complexes had issues. Arreguín was involved with downtown issues before he became a councilman in 2008. He served on the citizen’s group that helped craft the first downtown plan, which council adopted in 2009, although Arreguín voted against it. (The city council later withdrew the plan after it qualified for a referendum).

While Arreguín voted to pass the revised Downtown Plan in 2012, two years later he and District 5 candidate Sophie Hahn gathered signatures to place a new Measure R on the ballot in 2014. It would have overturned major portions of the DAP. Detractors labeled aspects of the measure as “poison pills” for development. Arreguín said he put forward the new measure because not enough buildings were being constructed to the highest energy standards. He wanted buildings to be LEED Platinum, not LEED Gold, as the DAP required. He also wanted more specific language regarding the community benefits developers would pay. Berkeley residents defeated 2014’s Measure R with a 73% no vote, but not before developers seeking to build a downtown hotel threatened to cancel the project because of uncertainty around building in Berkeley.

Arreguín has often voted against housing projects that have come before the City Council or abstained from voting. When the council was asked to certify the EIR for the 2211 Harold Way project, Arreguín voted to reject it and send it back to the zoning board for further consideration of the project’s impacts (Capitelli voted in favor of certifying the EIR). When that motion failed, Arreguín abstained from approving the project with the community benefits package that would have placed $10.5 million into the Housing Trust Fund. Both Arreguín and Worthington had pushed for a substitute measure that would have assessed an additional $2.4 million for the Housing Trust Fund. (Capitelli voted against this plan). Arreguín told Berkeleyside recently he voted against Harold Way because he thought the council should have extracted more from the developer.

Arreguín also voted against a number of other housing projects, including Telegraph Gardens, The Durant, 1500 San Pablo Ave., and The Varsity. He abstained from voting on Parker Place, 651 Addison (The Avalon) and 1500 Ashby Ave. Taken together, those projects, which were all eventually approved by the City Council, created 935 units, (if you include 2211 Harold Way, which Arreguín  supported with a higher level than community benefits than was adopted), 82 of those classified as affordable.

Since he came on the council at the end of 2008, Arreguín has voted in favor of 10 projects that brought housing to Berkeley, according to an analysis he gave to Berkeleyside. While many of those approvals were for small single-family homes or two-story dwelling units, Arreguín voted in favor of four larger projects that added 252 units. That tally includes both his “yes” and “no” votes for 1200 Ashby Ave, with 98 units. Arreguín voted against the project when it was designed for market-rate housing but affirmed the project when it became a 100% affordable senior housing complex; it was eventually constructed as The Higby, a market-rate development.  Arreguín also voted in favor of the construction of 2029-2033 Blake St., 2631 Durant Ave., and 3250 Sacramento St.


Arreguín and Capitelli both voted in favor of the Southside Plan, which increased the density of buildings to the south of the UC Berkeley campus. There is a critical shortage of housing for students, and Berkeley is hoping to encourage more construction near the campus. In June, Arreguín voted against a ruling made by the Landmarks Preservation Commission that The Village, a collection of small shops on Telegraph and Dwight Avenues, was not a landmark. Capitelli voted to uphold the LPC ruling. The vote paves the way for a developer to tear down The Village and to build a seven-story, 76-unit building.

Arreguín told Berkeleyside recently that his “no” votes on these projects do not mean he is opposed to development, but that he found something wrong in each of these projects. They may have had too big an impact on the neighborhood, had a flawed EIR, blocked too much sunlight, or did not contain enough affordable housing, he said.

Arreguín has repeatedly expressed concern that not enough affordable housing is going up. He said in a questionnaire for the Berkeley Progressive Alliance that he wanted to explore creating a Housing Balance policy ordinance that would ensure that at least half of all new housing is affordable before allowing market-rate housing. Arreguín has since decided that the idea is not feasible and has scrapped it, he told Berkeleyside.

Laurie Capitelli talks to voters at Sunday Streets on Oct. 23. Photo: Frances Dinkelspiel
Laurie Capitelli talks to voters at Sunday Streets on Oct. 23. Photo: Frances Dinkelspiel

Affordable Housing

Despite the building boom, housing prices and apartment rents have skyrocketed. Berkeley’s median monthly rent jumped by nearly $400, or 12%, to $3,584, from 2015 to 2016, while the median sales price of homes rose 15% to $974,000, according to Zillow data. One extreme example of this jump in housing prices is the newly opened Parker Apartments at 2038 Parker St., designed by award-winning architect David Baker. The complex is renting a three-bedroom apartment with high-end finishes for $6,300 a month.

City studies have shown that for the past six years market-rate rents, particularly those in new buildings, were generally unaffordable to people with lower incomes, which is defined as making only 80% of the area median income.

Berkeley’s two competing political camps (the “moderates” and “progressives”) have different attitudes toward the housing crunch. One faction, which includes the majority of the current City Council, including Capitelli, believes that best way to ease the housing crunch is to build more market-rate units. A larger supply of units will ease demand, even if rents are high, they believe. In addition, they believe that the more units constructed, the more money developers will place into the Housing Trust Fund, money which can be leveraged to construct more affordable units than the original developer could have built.

Construction started earlier this year on Harper Crossing, an affordable housing complex for seniors in the Lorin District. Only 427 affordable units have been built in Berkeley since although 175 are in the pipeline. Photo: Satellite Housing Associates
Construction started earlier this year on Harper Crossing at 3132 Martin Luther King, Jr. Way. The building will create 42 homes for low-income seniors in the Lorin District. Only 427 affordable units have been built in Berkeley since 2002 although 175 are in the pipeline. Photo: Satellite Affordable Housing Associates

The other faction thinks there has been an overemphasis placed on building market-rate housing, which most Berkeley residents can’t afford. The high rents have prompted an exodus of working families, especially African-Americans, they believe. They want Berkeley to slow down or stop construction of multi-unit buildings and focus primarily on affordable housing. They are concerned that the new buildings, cumulatively, are changing the character of Berkeley and are pushing up rents, which leads to gentrification.

In the past 14 years, only 427 units of below-market-rate housing have been constructed in Berkeley, Eric Angstadt, the city’s former planning director, said in February. The vast majority of those were built before 2012. Only 31 affordable units have been built in the past four years, he said. There are another 175 in the pipeline, he said.

One central point of contention in the mayor’s race has been the percentage of affordable housing developers must include in projects and the fee they must pay if they don’t include affordable units on site. In 2009, the California State Supreme Court invalidated Berkeley’s inclusionary housing rules in what is known as the Palmer decision. It meant Berkeley could not require developers to include affordable housing in projects. Berkeley sought a way to legally circumvent the law and hired a firm to prepare an “impact fee nexus study” that would quantify the need for affordable housing in Berkeley. Staff delivered the report in June 2010 but it wasn’t until June 2011 that the City Council agreed to create a fee developers could pay rather than build housing on site.

Council initially set the rate at $28,000 per unit on Oct. 16, 2012, even though city staff had recommended $20,000.

“In determining a fee, Council should strike a balance between setting the fee too high that it depresses housing production and setting it too low as to not allow the City to collect enough funds to address the affordable housing need,” then City Manager Phil Kamlarz wrote to the City Council in 2011.

Four months later, on Feb. 19, 2013, the council voted to lower the fee to $20,000 per unit for 20 months. No developers were stepping up to pay the fee and the council decided that more might jump in if given an incentive. “If everybody paid the $20,000 fee, we would have $10 million in the trust fund,” said Capitelli at the time. “We can do something with that.” Capitelli and Arreguín voted to approve the lower fee, while Worthington opposed it.

In October 2014, in a measure introduced by Capitelli, the council voted to extend the $20,000 discount for another year. This time Arreguín, along with Worthington and Max Anderson, voted against the discount.

On April 7, 2015, the majority of the council, in a motion introduced by Capitelli, voted again to extend the $20,000 discount until July 2015, when it was set to rise back to $28,000. The council was also expecting to review a new nexus study with updated market information in July 2015 and the majority of the council thought they should consider this report before raising the fee.

Council members also noted that not a single developer had paid an in-lieu fee into the Housing Trust Fund. All of them had decided to include affordable housing on site.

This time, Arreguín voted against leaving the fee at $20,000. He said he thought the building climate had improved sufficiently that developers could be asked to pay more. “Continuing to discount the fee would be a travesty,” Arreguín said. “This is a give away to developers plain and simple.”

On July 19, 2016, the council unanimously voted to increase the mitigation fee from $28,000 per unit to $34,000 per unit (the new nexus study said the fee could be as high as $84,400). Developers who pay the in-lieu mitigation fee when they apply for a building permit rather than when they get their occupancy permit have the option of only paying $30,000. The council also voted to require developers to make 20% of their market rate units, not just 10%, affordable.

Arreguín and his supporters have argued that setting — and keeping — the mitigation fee at $20,000 from October 2014 to July 2015 was a giveaway to developers.

Arreguín’s detractors point out that his 2013 vote to discount the fee to $20,000 meant it would be applied to the Harold Way project (since the discount applied to projects approved by the Zoning Adjustments Board by Oct. 2016). When the project came up for a vote in December, Arreguín tried to set a $28,000 mitigation fee per unit, arguing that it would have added $2.4 million to the Housing Trust Fund, even though the lower fee already applied. That motion failed.

Arreguín was a strong proponent of establishing a fee and consistently pushed the council to establish a set rate. He has criticized Capitelli for taking a slower approach to this process and is using the pace of the council voting as an argument that he is more strongly in favor of affordable housing than Capitelli.

On a website Arreguín paid for to attack Capitelli, called LaurieFacts, Arreguín states that “Capitelli has voted against affordable housing multiple times.” He provides four examples. For instance, Arreguín said, Capitelli voted July 12, 2011 to delay the scheduling of a public hearing that would have set the rate for a fee for the Housing Trust Fund. On that date, Capitelli, along with the majority of the council, declined to set the hearing but voted to have city staff return in the fall for a special work session on the fee. (See Laurie True Facts, a rebuttal to Arreguín’s charges)

“Every member of the city council wants to address the housing affordability issue,” Jill Martinucci, Capitelli’s mayoral campaign coordinator, wrote to Berkeleyside. “Every member of the council wants to build more affordable housing – the question is how to get there. Jesse and Laurie often disagree about process, timing and the details of financing. In these cases, Jesse is making the allegation that to disagree with his strategy or timing is to ‘vote against affordable housing.'”

(See Arreguín’s allegations against Capitelli here and see Capitelli’s detailed rebuttal here.)

Paying for affordable housing

Capitelli and Arreguín share many similar ideas on how to raise more money for the Housing Trust Fund. In addition to the in-lieu mitigation fee, they both support Measure U1, which would increase the business license tax on rental units from 1.081% to 2.88% and could raise $3.5 million annually for the fund. (Both Capitelli and Arreguín have said they have been working with Steve Barton for many years to develop this idea. Barton, Berkeley’s former housing director said he has been talking to Capitelli about this type of tax for 20 years and to Arreguín for 10 years.) They both want to explore putting a portion of the hotel occupancy tax toward the Housing Trust Fund.

Until recently, Berkeley has only required developers to include affordable units for households earning from 50% to 80% or less of the area median income. Capitelli has said that while he wants to increase the housing supply for low-income residents, he is also concerned that teachers, city workers, and other middle-income residents (he calls them the “missing middle”) are having difficulty finding housing in Berkeley, too. Capitelli said he is working with the city and the Berkeley Unified School District to find vacant land in which to build housing for these kinds of workers.

Arreguín also wants to increase funding to construct more housing for moderate-income workers. He wants to work with the state to get more student housing built. He also wants to explore the idea of a speculation tax, which would increase the real property transfer tax for multi-unit properties which turn over within a year to five years of purchase. The proposal is under consideration by staff for the Housing Action Plan currently being prepared. Voters would have to approve a speculation tax, said Arreguín.

Update: 12:20 p.m. This article has been updated to say that Arreguín cast a no vote or abstained on 935 units with 82 of them affordable. Previously it had 456 units, 51 of them affordable. The reporter forgot to include 170 units at 1500 San Pablo Ave. and the 302 units at Harold Way.

Related stories:
Election 2016: Who is Jesse Arreguín?
Election 2016: Who is Laurie Capitelli?
Election 2016 Berkeley: Spotlight on the mayor’s race (10.13.16)
Berkeley 2016 election hub: What you need to know (10.11.16)
Side by side: The mayor’s race (Compare responses to Berkeleyside’s candidate survey)
Berkeley mayoral candidates square off about budget, homelessness and more (10.05.16)
Berkeley candidates outline their positions on the arts (10.03.16)
Berkeley candidates share their vision for downtown (09.26.16)
Berkeley mayoral hopefuls weigh in on homelessness (06.29.16)

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