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Sunday, October 25, 2015

City Council Moves to Increase Housing Affordability to 12%

Council Makes Bid For Greater Affordability for Renters

Residential Developers to Face 
New 'Bonus Point' Program

But Will It Work?

News Analysis
Last Tuesday, the City Council finally took up the problem of a flawed and overly lenient set of planning and zoning regulations that have heretofore allowed and even encouraged a plethora of overpriced for rent studio and one bedroom apartments to be built in Emeryville over the last several years.  It's been a problem the residents and even the developers themselves have been in agreement about: rents keep skyrocketing and something needs to be done about it.  Tuesday, the Council finally did something about it.  They have imposed a set of incentives to encourage developers to built new residential development with 12% affordable units included in the mix.  But with an opt-out the Council provided allowing developers to simply write a check to the City instead of building affordable units in a project, will Emeryville actually achieve greater affordability moving forward?
The numbers as they say, don't 'pencil out' for a good outcome for affordability.

The Background
Emeryville has been on a major housing spree over the last 20+ years, filling our town with luxury apartment blocks, doubling our population.  Before last November's election when there was a pro-developer Council majority at the helm, developers were given a green light to do whatever they wanted regarding building housing.  Now however they're facing a more circumspect City Council majority.  Developers are insisting we keep up the building boom, citing the economic law of supply and demand, insisting rental rates will finally go down if the Council will only let them build out the last few parcels of land left in Emeryville with market rate housing.  So their solution to the problem of overpriced rentals is to build more of them.  But Emeryville has already built more than its share of market rate housing, especially rental housing.  In fact, we have more than doubled what the Association of Bay Area Governments (ABAG) recommended for our town as documented in their Regional Housing Needs Assessment (RHNA).
Ironically, before the decades long building spree, affordability wasn't on the mind of anyone in Emeryville.  The doubling of our housing stock has only served to decrease affordability, despite the contrary proclamations of economic laws from profit seeking developers.
Seeking to disrupt the spiral of unaffordability, the City Council majority last February moved to impose a temporary moratorium on large new residential projects for the last parcels of fallow land left but they were rebuffed by the old guard of the Council in a 3-2 vote requiring a super majority 4-1 vote.  The failure of the moratorium is what is driving this Council majority's new policy proscription.

The Solution
Emeryville isn't completely without affordable units.  The Planning Department at City Hall puts the number at 11.17% city-wide as of now.  The new Bonus Point system proposal seeks to increase that number to 12%, still low by Bay Area standards but an improvement over the current condition.
The developers can still build 'by right' whatever they want regarding including affordable units.  A 'by right' project bumps up against our zoning and planning regulations as spelled out by our General Plan, the document Emeryville residents crafted to make the town they want to live in.  However developers, always seeking ways to maximize their profits, routinely request permission to build bigger projects than the General Plan normally allows, bigger than what they can build by right.  The permission is granted in the form of 'bonus points'.  This is essentially a baked in set of negotiating parameters between the developers and City Hall.  If a developer wants say a taller building, he must provide something to temper the project, like traffic amelioration.  To be included in the new list of bonus points is the 12% affordability plan. Developers will get the points they want to increase their project's density if they build in at least 12% affordable units as prescribed by City Hall.  
'Affordability will move 
from 11.17% up to 12% 
if everything works 
according to plan'

However, the Council is proposing developers can still get their bonus points without building the affordable units on-site by cutting an in lieu check to City Hall who will later build the required number of affordable units off-site in Emeryville.  The idea of off-site affordable units it should be noted, tends to turn its head away from contemporary ideas about mixed income residences peppered throughout the city and embraces the old Robert Moses model of geographically cordoning off housing projects for poor people.

Council Second Guesses Its Own Study
Much of the talk at the Council chambers Tuesday centered around the in lieu off-site idea.  The question before the Council was the amount of money the developers should pay in lieu of building the required affordable rental units on-site.  Implicit in that argument is the idea that the money paid should equal what it would take to build the required off-site units.  An Emeryville funded nexus study on this (the Keyser Marston Study) that showed the market in our region will bear some $35,000 in lieu fee per required affordable unit but the City Council regardless settled on a $28,000 per unit fee, the same as what the City of Berkeley currently charges.  However the City of Berkeley conducted a nexus study of their own recently and strangely, that study showed an $85,000 market rate for replacement off-site affordable housing.  Presumably the newly revealed higher replacement costs revealed by the new study will drive Berkeley to increase their developer fees accordingly.

All of this drives the question of what does it really cost to build affordable housing?  Is the City Council hamstringing us by not charging developers what it actually costs to build off-site?  Will taxpayers be left holding the bag?  Or will we simply fall behind and drive down our affordability?  For years Emeryville built affordable housing using the Redevelopment Agency.  Presumably, the cost per unit the Redevelopment Agency paid is known.  These are the numbers the City Council should be guided by.  Barring that, Emeryville's affordability will go up or down over time, showing everyone if this Council's stated desire to increase affordability for our town is genuine.  The actual numbers will reveal all.

The City Council will engage in a second and final reading of the ordinance containing the new bonus point system at the November 3rd Council meeting.


  1. That's a .83% increase. They're not aiming very high. Pretty uninspired. That's what I voted for?

  2. I think you missed the point. After the redevelopment agency went away there's no way to get affordable housing anymore. If the city council can get this then they have done a good job. Anything more than zero is good.

  3. I think the answer will be that we're not going to be able to afford to build these units after we get our checks from these developers. It'll be like the health care or school vouchers Republicans always want. It's not going to be enough to replace what we lost. We shouldn't take this deal.