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Housing Boom Ending, Says Berkeley Planner

Friday November 12, 2004

Berkeley’s seven-year housing boom may be going bust, and Planning Director Dan Marks wants the regional agency which has pushed for ever more units to ease off their demands for more. 

In an Oct. 27 letter to the Association of Bay Area Governments (ABAG), the multijurisdictional agency which sets the official housing construction goals for regional cities, Marks said a glutted market and falling rents are evidence that the boom can’t be sustained in Berkeley. 

“The city has clearly been engaged in what is a cyclical residential construction boom,” wrote Marks. “However, there is growing evidence that it is not sustainable, as the student market becomes saturated, and rents have begun to decline in the past two years.” 

ABAG has backed the Berkeley apartment boom with demands for more housing and by authorizing tax free bonds for some of the city’s most controversial projects, including those built by developer Patrick Kennedy with UC Berkeley Professor David Teece. 

Marks said some developers with projects already approved the city “have either not proceeded to apply for building permits or are trying to reposition their projects in light of changed market circumstances, increased construction costs, and the specter of higher interest rates.” 

According to Marks’s figures, the city has added an average of 185 housing units per year for the last five years. ABAG calls for 222.5 units every year from 2000 to 2025. 

“To assume that the City of Berkeley can increase residential development by 40 percent over that which occurred during this five-year boom and then sustain it for 15 years is clearly inappropriate,” Marks wrote. 

The planning director’s letter was sparked by the release last month of ABAG’s draft of their housing projections for 2005. 

“While the city is committed to doing its share to meet housing needs, it believes the projections promulgated by ABAG...are unworkable. To make such assumptions simply sets unreasonably high expectations on the city’s and the market’s ability to generate housing and leaves regional deficits due to these unreasonable expectations.” 

Marks said Berkeley’s seven-year boom has dwarfed anything seen in the city in the past 20 years. 

“Between 1980 and 2000, the City of Berkeley gained 251 units,” Marks wrote. “By the city’s count, between July 1, 1999 and September, 2004, building permits were taken out for 571 new units and an additional 232 units (not counting group quarters) were built by the University of California,” for a total of 832. 

“Another 418 units are in the pipeline with approved Use Permits, and an additional 300-plus units are somewhere in the entitlement process.” 

UC Berkeley has expanded its housing significantly in the same period. The just-opened Channing Bowditch Apartments offer 228 student spaces in 57 units, and the Unit 2 residence halls, coming online in the Spring semester, will offer another 420 spaces. More units will be available in the Fall. 

According to published accounts, the UC Berkeley student housing office was able to find spaces for all students on the spring wait list for campus housing, the first that has happened in years.