Features

Daily Planet Response

Friday February 20, 2004

Mr. Haggerty writes that “[c]ontrary to Mr. Allen-Taylor’s statements, ABAG’s Finance Authority regularly monitors borrowers, and enforces strict compliance with Federal and State regulations for tax-exempt bond financed multifamily housing project. Ther e are no exemptions to these requirements as stated in the article.” 

The reference was to the statement in the article that “ABAG’s signed agreement with Panoramic Interests to sponsor bond financing for the Gaia Building specifically exempts ABAG from h aving to monitor whether Panoramic actually rents the affordable apartments to low-income tenants.” 

A re-reading of the contract between ABAG and Panoramic Interests concerning the affordable housing shows that the Daily Planet was, indeed, in error in o ur statement. The contract provision only exempts ABAG from monitoring the project once the bonds are repaid. 

Having said that, we are glad to read that ABAG regularly monitors Panoramic on compliance. Questions have been raised both at Berkeley City Cou ncil and at the Berkeley Housing Commission as to whether or not Panoramic’s projects are actually in compliance with the 20 percent low-income unit inclusionary agreements. We look forward, therefore, to seeing ABAG’s reports on such compliance concernin g the Panoramic projects. 

We are in complete agreement with Mr. Kennedy and his many planners, politicians, and agencies, including HUD, that affordable housing units should be included in larger housing developments, and not ghetto-ized in the discredit ed, traditional housing “projects.” We do not agree, however, that the way to do this is to use tax-exempt affordable housing loans to subsidize both the low-income and the market rate units in a single development.  

In return for $72 million in low-cost, tax-exempt, ABAG-issued loans, Panoramic agreed to build 90 units of low-income housing. Mr. Kennedy asserts that an added benefit is that the city of Berkeley also got a total of 425 units of new housing (80 percent of which are market rate).  

But suppose HUD changed its regulations, and allowed the low-interest loans only for low-income housing. Under that type of program, Panoramic would qualify for approximately $15 million in ABAG loans for the 90 low income units in its seven Berkeley mixed-unit housing developments. With this public benefit in hand, Panoramic would still be free to seek market rate loans for the remaining market rate units in its seven housing developments. The remaining $57 million in ABAG loans could then go directly to low-in come inclusionary housing in mixed-unit developments. Thus Berkeley might end up with more than 400 affordable units and an additional 400 market rate units, far more than we are currently receiving under the present HUD way of doing things. This appears to us to be a wiser use of scarce public funds. The only ones who might argue against such a use are those developers intent on getting more than their fair share.3