Will Oakland Protect and Expand Affordable Housing?

The city is eyeing a new Housing Equity Road Map designed to help Oakland avoid San Francisco's mistakes. But there are questions about whether the council will adopt it quickly — and if it goes far enough.

In June, city housing staffers presented to the city council’s Community and Economic Development (CED) committee a “Housing Equity Road Map” — a 106-page document detailing 17 policies that could stem displacement, produce up to 7,000 new affordable housing units, and rehabilitate rundown housing stock. Housing policy experts and activists said the plan is a good starting point, and they have been pressuring the mayor and the council to approve it so that Oakland can avoid becoming another city like San Francisco, where skyrocketing housing prices have caused widespread displacement of low-income and working-class residents. The full council, however, likely will not even discuss the road map until sometime this fall.

“The market forces that are upon us have contributed to extreme demographic changes in Oakland,” said Margaretta Lin, director of strategic initiatives in the city’s housing and community development department, to the CED committee at the June 9 hearing. “We have seen a 24-percent decline in our African-American population, a 16.7-percent decline in our children population, and the loss of 25 percent of our East Oakland homeownership.” Lin called the current affordable housing crisis the city’s worst-ever, and implored the CED committee to approve the road map’s action plan. After some discussion, the committee okayed the plan. Council President Lynette Gibson McElhaney, who is also a member of the CED committee, wrote in an email to the Express that she intends to organize a fall summit to discuss the road map, and that the full city council will consider the road map on September 30.

Erica Derryck, spokesperson for Mayor Libby Schaaf, said that the mayor’s office supports the road map and is already working to implement some of the strategies outlined in it.

Housing policy experts differ on the road map’s potential, but all are hoping for quick passage and implementation of its policies. “I think the document is really comprehensive, there’s so much in it,” said Gloria Bruce, executive director of the affordable housing nonprofit East Bay Housing Organizations. Bruce said the city needs to enact the ideas contained in the road map before Oakland’s housing market gets hotter or before another recession sparks a second wave of foreclosures.

“This is the tip of the iceberg,” said Robbie Clark, a housing organizer with the tenants rights group Causa Justa/Just Cause of Oakland. Clark said the road map is important, but that it is also “the very least the city can do to address the housing crisis.” According to Clark, there are many crucial changes that need to be made to Oakland’s housing laws and regulations.

Among other things, the road map proposes amending Oakland’s condo conversion rules and finding ways to generate new public affordable housing funds.

Oakland’s condo conversion ordinance was adopted in the early 1980s when many affordable apartments in downtown, east of Lake Merritt, Adams Point, and Rockridge were taken off the rental market and sold to higher income households. But the city council has never updated the ordinance to cover other sections of Oakland. Some of those areas are now facing San Francisco-like pressures in which landlords are starting to profit by kicking out renters and selling off apartments as condos. Under the current rules, owners of apartment buildings with two to four units in areas of the city not covered by the condo conversion ordinance, which, according to the Urban Strategies Council, include as many as 29,000 units, may freely convert these apartments to condominiums. In areas that are covered by the ordinance, any condo conversion requires replacement of units by either building new apartments or by purchasing a credit from someone else who built a new apartment in those areas.

The road map proposes to include all sections of the city in the condo conversion ordinance and to enact an annual cap on condo conversions to avoid the further loss of apartments.

Another loophole in the condo conversion ordinance concerns the way in which conversion credits are generated and transferred. Under the current rules, landlords who convert apartments to condos can obtain credits from developers who aren’t building long-term apartment housing stock. The rules allow developers to sell credits on condos they’ve built, but only have to maintain the condo as a rental apartment for seven years. After seven years, they can convert the apartment into a condo if they want to. The road map proposes ending this rule.

Bruce said updating Oakland’s condo conversion ordinance is an example of “low hanging fruit” that the city can act on immediately to prevent further displacement. “Condo conversion is about keeping people in their affordable rental homes,” she said.

Darin Raneletti, deputy director of Oakland’s planning and building department, said another low hanging fruit involves revamping laws regarding secondary units — small studios or apartments attached to or built behind existing single family homes. “We feel it’s a good way to provide relatively affordable housing in ways that have little effect on existing neighborhoods because the units are small, within the building, or behind the building,” said Raneletti. Berkeley recently changed its secondary unit laws to make it easier for homeowners to add housing in residential neighborhoods. Oakland is expected to vote on secondary unit legislation as early as the end of this year.

Impact fees are a much harder fruit to reach, but their ability to fund affordable housing and offset other costs due to the real estate boom has been proven in dozens of other California cities. Impact fees are one-time payments required of developers of market-rate housing. These funds are then dedicated to affordable housing programs, or other needs. Impact fees are justified through so-called nexus studies in which cities demonstrate how the addition of market-rate housing creates a localized demand for goods and services, many of which are provided by low-wage workers who can’t afford to live in the area, and for whom affordable housing will not be built by the private market. The fees therefore pay for the impact of the market-rate housing on the area.

The road map points to Berkeley and Fremont’s affordable housing impact fees as successful models. In Berkeley, each new market-rate apartment requires a $20,000 impact fee. Oakland has already hired an outside economic consultant to study proposed impact fee types and at what levels the fees should be set. Raneletti said the goal is to bring a proposal to the city council by November.

The road map also recommends inclusionary zoning as a means of preserving Oakland’s diversity. Inclusionary zoning requires that a percentage of new housing in condominium projects be priced so that lower-income households can buy in. While the road map doesn’t offer specifics, its authors note that inclusionary zoning is already the law in more than 170 California cities, and that “[g]iven the escalating costs of Oakland’s market-rate housing units that are unaffordable even to Oakland’s moderate-income residents, requiring financially viable moderate-income housing set asides in market-rate projects may be the only viable way to promote the city’s mixed-income and desegregated housing goals.” Oakland previously considered inclusionary zoning in 2007, but under pressure from the home building industry, and with the onset of the recession, the council ditched the idea. In recent interviews, City Hall sources said the current council, which is heavily influenced by developers and landlord groups, likely will not vote to adopt inclusionary zoning anytime soon.

The biggest pot of money for affordable housing, meanwhile, would be a regional bond. Bay Area leaders have been kicking the idea around for some time now, but no solid proposal has been drafted yet. According to the road map, regional cooperation might be key for Oakland to participate. “The City of Oakland or its tax base may not be in a financial position to absorb the debt service on a new housing bond,” the road map states. The plan therefore recommends that Oakland partner with other governments to issue as much as $250 million in tax-exempt bonds to build approximately 2,500 new units of low-income housing.

“We are partnering with organizations like EBHO, SPUR Oakland and the Bay Area Council to determine the feasibility of a regional housing bond,” Schaaf’s spokesperson Derryck wrote in an email. “The root causes of the current affordability crisis extend beyond Oakland’s borders. Therefore lasting solutions will only come from working in concert with other jurisdictions.”

Causa Justa’s Clark said, however, that a big problem for Oakland is that many of the tenant protection policies it already has aren’t enforced, meaning that even if all the new policies in the road map are adopted, thousands of renters could still be displaced or forced to continue living in dilapidated housing: “We have some good stuff on the books, but consistency of how they’re enforced, and accountability is lacking.” Clark pointed to building codes and enforcement as areas needing better implementation. “There isn’t a consistent way that Oakland is tracking and monitoring actual code violations,” said Clark. “And the ability of Oakland to fine and collect from violating landlords has been an inconsistent practice.”

But some of the road map’s recommendations are also facing stiff opposition from landlords and developers. Gregory McConnell of the Jobs and Housing Coalition, a business lobbying group whose board of directors includes major real estate investors, told last month’s CED committee that his organization will oppose certain policies, including new limits to condo conversions. “There are some things in it that would be counterproductive,” McConnell said about the road map.


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