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.

Emeryville's Bogus Small Business Bonus Point System

Forget the Bonus Points: 

Small Business 'Bonuses' Should be in the Form of Free or Reduced Rent Paid by the Developers

News Analysis/Opinion
Arguably one of the most important pieces in the livability puzzle for a town is the idea that small locally serving businesses should be attracted and retained as an amenity for residents.  It's a subject near and dear to almost everyone in Emeryville as revealed in many public resident surveys.  That virtually everyone seems to want small locally serving business, especially retail, is equally remarkable as the fact that Emeryville always seems to be lacking in this department.  City Hall (or the free market) can't seem to deliver what everyone wants; it's a conundrum and a would be untenable condition in a democratic polity such as ours.  And yet still we wait for our non-formula independent bookstores or corner green grocers and the like.  Meanwhile the stuff we don't want, the formula chain stores and fast food restaurants proliferate in Emeryville.
What's needed is a legal contract that developers can't wriggle out of.  They're the ones who should be responsible for bringing us our locally serving retail.

This is Emeryville:
East Bay Bridge Mall
Low slung suburban style, baking asphalt.
Before the Planning Department came up
with the 'bonus point system', left to their 
own devices, this is what developers 
felt comfortable building
in Emeryville.

So it is probable there are hidden reasons why residents must go on waiting to get the kind of retail they want to see.  More on that later.
For now, let's take it as a given that people should get the town they want (as long as the law is obeyed).  It should be simply a matter of creating municipal policy for us getting what we want.  We'll chalk up this strange Emeryville disconnect to some kind of miscommunication for now.

As the City Council argues for how to attract and retain these small businesses we want by use of the Planning Department's 'bonus point system' as they have been of late,  now would be a good time to consider new more effective ways to go about this.

Historically in Emeryville, City Hall offered essentially nothing by way of intervention in the development of the town in attempt to steer developers to deliver any specific kind of retail.   What we got as a result is what the developers wanted to produce.  That hands off model brought to Emeryville the 1990's suburban style malls, notable at East Bay Bridge Center and the Powell Street Plaza; decidedly not what residents say they want.

This is Emeryville:
Powell Street Plaza 
The heart of Emeryville, regional shopping center.
Lots of parking and lots of formula chain retail.
1990's, this is what developers wanted to build but 
not what Emeryville residents wanted.

Later, as Emeryville land became more valuable, the Council directed the Planning Department to be more interventionist and the current 'bonus system' was invented.  This new system, still hands off in its demeanor, gives developers more rights to build denser and taller (and more profitable) projects that would normally be allowed so long as they include certain things the Council says they want.  In the case of their small business desires, especially in the retail field, the Council designed a fee idea where developers could pay into a small business fund at City Hall if they choose to get their bonus points.  City Hall then dispersed these fund monies to small businesses in the form of the Facade Improvement Program, the Paint Program and such.  The bonus system may have made Emeryville's small businesses look better but it has had little effect in achieving the desired results for attracting locally serving non formula retail as we have seen and as the Tattler has chronicled.

Now, the Council is looking to upgrade the bonus system by giving developers 10 bonus points to developers for every 1% of project construction valuation up to a maximum of 50%.  The idea is to funnel more money into City Hall's small business fund.
We think this idea is fundamentally flawed and it will not deliver the kinds of small business residents say they want.

This is Emeryville:
Bay Street Mall, Anytown USA
Emeryville's 'bonus point system' brings this
kind of development; the Gap and Old Navy.
Denser and more urban but still nothing but
major formula chain stores.
Emeryville residents don't go here.
We're still waiting for our locally serving retail.

The Tattler has long urged the City Council to take up this cause and in their defense, they did try an experimental approach with the Promenade Project on San Pablo Avenue back some years ago.  That shopping center was slated to become just another strip mall with formula fast food except Councilman John Fricke proposed the City directly intervene in the rental process in the newly built mall and offer reduced rent to desirable businesses by subsidy from the taxpayers.  That is how Arizmendi Bakery was able to afford the rent there.  Now, incidentally, Arizmendi is a success and making it on their own, the City subsidies having long since ended.
But the problem with the City subsidies is that City Hall is ill suited to getting into the commercial landlord business.  It's better to let the private sector do that.

Clearly, the way to get the type of retail and other small business we want is to get the developers, the ones with the expertise and the money, to do it.  Up until now, it's all been by verbal agreement.  And that's where the breakdown occurs.  The developers invariably tell the City they also want these locally serving non formula business renting the street front stores associated with their (usually residential) development proposals.  The developers tell us they also want what Emeryville residents want before their project is approved.  They assure the Council they'll work in good faith to secure leases for locally serving retail for their projects.
We all know how that's been working out.
The business that end up signing leases in the new store fronts are formula retail chains and fast food (because of the high rents associated with new construction).  Perhaps even worse, the store fronts sit empty for years because the (residential) developer isn't interested in playing commercial landlord, the store fronts having been provided by them as a condition for approval from the City.

This Could Be Emeryville:
Locally Serving Non Formula Retail
The only way Emeryville can get this is if the City
gets it in writing from the developers
before it approves the project.

The only realistic way to deliver locally serving non formula retail and other small business that Emeryville residents want is simply to require developers to guarantee in writing this will happen.  The resultant low rent receipts can be written off by the developer as a cost of doing business in Emeryville.  Like everything else, it needs to be in the form of a written contract, not a verbal agreement that has no force of law.  Rather than relying on some arcane or byzantine point system that isn't delivering the goods, Emeryville simply has to start demanding developers deliver what they say they will when it comes to small locally serving retail.