How to Build Affordable Housing in Rockridge?
Nuts and Bolts discussed at RCPC Town Hall in March, 2023
by Casey Farmer, Chair, RCPC
Nearly 70 residents gathered for a Town Hall on the topic of affordable housing in Rockridge on Tuesday, March 14. This topic was chosen due to the many questions about how to build affordable housing in a high-resource area like Rockridge, especially on the few large and vacant available parcels.
Commencing the event, City of Oakland Housing Community Development Interim Director and Senior Advisor Chris Noman gave an overview of the City’s efforts to build and invest in affordable housing.
This slide reflects the City of Oakland’s investment approach. It models best practices and the Association of Bay Area Government’s three-pronged approach to address the housing crisis: Production, Preservation, and Protection. Presented by Emily Weinstein, Interim Director, City of Oakland’s Housing and Community Development agency.
Rick Jacobus, principal at Street Level Advisors (a consulting firm that provides economic analysis to municipalities and local agencies, including BART) provided a high-level overview of the costs, financing mechanisms, and risks of building a housing project. He co-developed a free online calculator tool which enables anyone from the public to assess housing development costs, in which they can include affordable units, add or subtract units, adjust parking amounts, and much more: https://calc.inclusionaryhousing.org/ihc/ “Some communities appear to have set affordable housing requirements “too high” as a way to prevent development of market rate housing — this only makes the housing challenge facing low-income people worse,” said Jacobus.
According to the City of Oakland’s most recent analysis, the average cost to construct a unit of housing is $811,000 within our city. To make this unit affordable, a developer must make up the difference between what a low income family can afford to pay and the unit cost with a myriad of government subsidies and tax credits. This was a slide included in the presentation by Rick Jacobus, Principal at Street Level Advisors.
Who invests in market rate housing projects? It may be your very own pension. CalPRS, CalSTRS, and many other retirement funds regularly invest in housing development projects.
Who invests in affordable housing projects? We do. The generous voters and taxpayers of Alameda County and Oakland currently fund Measure A1 and Measure U (formerly Measure KK) which fund affordable housing units. Additionally, some portion of state and federal taxes are used for affordable housing. Oakland also levies “Impact Fees” which are a subsidy from market rate developers into our Affordable Housing Trust Fund.
Jeff Levin, Policy Director for East Bay Housing Organizations, explained the two ways to make housing affordable: through rent subsidies (such as Section 8 voucher) or through capital subsidies (a grant to pay the costs of building affordable housing, such as the Low Income Tax Credit Program).
“There is a tremendous gap between housing being built at market rate versus what we are producing in affordable housing,” said Levin. He noted that in 2012, the State cut Redevelopment which previously invested $1 billion per year in affordable housing. One way the City of Oakland responded to that resource loss was by imposing “Impact Fees” on market-rate housing construction that help fund affordable housing projects and has generated $80 million since its inception in 2016.
Ben Metcalf, Managing Director of U.C. Berkeley’s Terner Center for Housing Innovation, spoke to legislative changes that have impacted housing in California. Metcalf noted that since 2016, nearly 100 state laws pertaining to housing have been passed and signed. He detailed the three categories of changes to state housing law:
Planning and Enforcement
Cities are required to zone for many more housing units.
Requiring affordable housing to be distributed throughout cities, not concentrated in low income neighborhoods but mixed into “high-resource neighborhoods” like Rockridge.
New enforcement authority to penalize municipalities who are not in compliance, such as proposing infeasible housing sites.
Zoning:
Accessory Dwelling Units (also referred to as granny units or backyard cottages). These units must now be easily approved by each City’s Building Department, ADU permitting has grown significantly throughout the state, from 2,100 units in 2016 to 21,000 units in 2021.
Entitlement Streamlining
A successful effort to make housing permitting processes move faster if projects adhere to the existing zoning, such as limiting the number of public hearings.
Metcalf highlighted the State’s success in growing the number of affordable units constructed each year which doubled since 2016 to ~20,000 units per year despite increased land, material, and labor costs. This growth is due to increased State and Federal investment in affordable housing and changes in state law to permit higher density affordable housing projects. However, there are still many more families who qualify for affordable housing than units available.
Questions from Rockridge neighbors:
What is the data on the impact of market rate housing increasing the number of affordable units? Is there a “Trickle Down” effect?
“This is the big question. All of the researchers agree that generally market-rate housing is helpful for affordability because not building is a core cause of the housing crisis we now face. If you don’t build enough housing, there is a supply shortage, which pushes rents and home prices up and that is what is driving the affordability problem,” said Jacobus.
Are there alternative ways to make construction cheaper?
“The simplest answer is “no,” but a workaround we’ve seen is building smaller units. There is potential in modular housing but so far we’ve only seen modest cost savings,” said Metcalf.
Land costs in Rockridge and Temescal are over $11 million per acre in Rockridge and Temescal, which are a lot higher than in the downtown area. How does that affect the ability to build affordable units?
“It makes it very hard,” said Jacobus. “It does make it hard. It drives up the costs. But land is not the only factor, the costs to entitle and permit also play a role,” noted Levin.
In a neighborhood like Rockridge, where large sites for new development are rare, what would be the most feasible way to build as much affordable housing as possible?
One thing that we are seeing is splitting large sites into separate projects: one part is affordable and one part is market rate, so the affordable project can leverage funding sources earmarked for fully affordable projects. This also results in more affordable units,” answered Jacobus.
5. How do we protect the lifetime investments of Rockridge homeowners and their single homes from multi-family projects incursion along their housing line while balancing the need for more housing?
“Some amount of change has to happen. Another way to think about it: the absence of housing means profound change as well — as we see increased displacement, increased homelessness, increased “out-migration” of our children and our families. Change is going to happen, either because you don’t build and your neighborhood withers from within due to high costs and instability or because you do build and you welcome some kind of growth that hopefully is diverse by including multiple levels of affordability,” said Metcalf. “This is why it’s important for groups like RCPC to mitigate the legitimate concerns of neighbors about housing growth and the need for more neighbors…We all have to face some burden when housing is developed but the question becomes how do we manage that burden,” said Jacobus.
Nine Bay Area counties are currently considering a bond to increase housing production, preservation, and protection on a regional level through the Bay Area Housing Finance Authority. This measure may come before voters in 2024.
