.Time Is Running Out for Oakland

With a red-hot housing market pricing residents out of the city, Oakland needs to act quickly to enact funding mechanisms for affordable housing.

Oakland’s downtown housing market is hotter right now than perhaps it’s ever been. In the past several months, developers have come forward with at least six major projects that would add 1,450 new housing units to downtown and Uptown. If built, the new housing should provide some relief to Oakland’s extremely tight rental market. But the plethora of new market-rate development proposals also shows that if the City of Oakland is going to stem the tide of displacement, it must quickly adopt measures to help fund more affordable housing. If Oakland drags its feet, as it has done in the past, it may miss its chance to capitalize on the current development boom.

It’s no secret that the affordability crisis in Oakland is staggering. The recent experiences of affordable housing developer Bridge Housing show just how bad things have become. For its 68-unit AveVista housing project at 460 Grand Avenue in Oakland, Bridge was flooded with applications from residents desperate for affordable housing — it received 5,200 requests, according to Bridge’s communications director Lyn Hikida. Similarly, for Bridge’s 90-unit Mural housing project at the MacArthur BART station, the nonprofit received more than 5,000 applications. “It gives you a sense of the high demand,” Hikida said.

It certainly does. But the problem for Bridge and other affordable housing developers — and for cities like Oakland — is securing funds to build more affordable units. Ever since Governor Jerry Brown eliminated redevelopment financing in 2011, cities like Oakland have been without a dedicated funding stream for affordable housing construction. As a result, many cities, including Berkeley, Emeryville, and San Francisco, have established a range of fees on market-rate housing and adopted other funding mechanisms to help build more affordable units. Oakland, however, has not yet approved any of these measures. And it’s not clear when it will.

Some local activists have recently called for a moratorium on new market-rate housing development approvals in Oakland until the city gets its act together. Although it’s a tempting proposal, it would be a mistake. Oakland needs a lot of housing as soon as it can get it, especially apartments — otherwise rents will continue to skyrocket and create even more displacement.

According to the real estate site Zumper, Oakland is now the fifth most expensive rental market in the nation. The median price for a one-bedroom in October was $2,160 a month, and for a two-bedroom, $2,520. Both represented increases in excess of 13 percent in the past year.

These record-high rents are pricing many people out of the city, and the only means available right now for stabilizing prices in Oakland is to build more new housing — both market-rate and affordable.

But Oakland must act immediately to fund affordable housing before it misses its window of opportunity. Here’s an unofficial list of six major housing projects recently proposed for downtown that could raise millions of dollars in funds for more affordable housing in the city:

• 1100 Clay Street. Strada Investment Group plans to build a 262-unit, 13-story building.

• 1900 Broadway. Developer Seth Hamalian is proposing to construct a 19-story tower with 345 housing units.

• 1800 San Pablo Avenue. Sunfield Development wants to build a 209-unit housing project (including 10–15 percent affordable).

• 2100 Telegraph Avenue. Dones 2B2 Retail Complex LLC plans to build 250 residential units (including 15 percent affordable).

• 14th and Alice streets. Bay Development Group is proposing to build a 126-unit, 17-story tower.

• 14th and Jackson streets. Wood Partners is proposing 258 units of housing.

Except for the 2100 Telegraph and 1800 San Pablo projects, which already include affordable housing, the proposed projects above are for market-rate units and thus offer an opportunity for Oakland to raise much-needed funds. Here’s how other cities have done it:

• Impact fees. Berkeley and Emeryville both have established impact fees of $28,000 per unit on market-rate housing for developers that do not include affordable housing in their projects. Oakland is still studying impact fees and how much to charge. Mayor Libby Schaaf has said she favors phasing in an impact fee in order to not stifle development, but an extended phase-in could result in the city losing out on millions of dollars for affordable housing.

• Inclusionary zoning. Many cities, including Berkeley and Emeryville, require market-rate condo developers to include affordable housing in their projects or pay an in-lieu fee. Oakland has no such law.

• Density bonus fee. Under state law, developers can build higher than local zoning rules normally allow if they include affordable housing in their projects. But Berkeley has moved one step further by adding a $10,000 fee per unit of market-rate housing in developments that take advantage of the state’s density bonus.

These are all sensible proposals that Oakland can and should adopt quickly. The city can also follow San Francisco’s example and propose a large bond to pay for affordable housing. Last month, San Francisco voters overwhelmingly approved a $310 million bond measure for affordable housing — and probably would have okayed an even larger one if it had been proposed.

In addition, Oakland could easily revise its policies to ensure that it prioritizes affordable housing on excess public property. And it should be heavily lobbying Sacramento to roll back the state’s anti-rent control law, known as Costa Hawkins, in order to keep existing housing affordable for more residents.


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