The Market Speaks: Can Berkeley Hear? By BECKY O'MALLEY

Friday December 17, 2004

It’s official. The apartment shortage is over, the apartment glut begins. The end of Homefinders, a worthwhile enterprise which served a lot of needy customers in its heyday, is the final nail in the coffin of Berkeley’s haphazard building boom. While it lasted, it lined the pockets of a few already well-fixed investors, notably UC’s B-School Prof. Teece. Its legacy is demolished landmarks (the Doyle House, the Fine Arts Theater), crumbling buildings (the Gaia Building) and vanished institutions (the Gaia Bookstore, Anna’s Café on University). In its wake are promises: Anna’s really will re-open sometime in the Gaia Building; the fake marquee on the Fine Arts apartment building touts shows which will never play there. (Red Diaper Baby Josh Kornbluth shouldn’t let his good name be used for this particular scam.) 

Unfortunately, the people who run Berkeley don’t seem to have gotten the word. And who runs Berkeley? Who really knows? All we know for sure is that the behemoth downtown Seagate project, which will dump numerous luxury condos with ample parking for the owners’ luxury vehicles in the middle of Berkeley’s transit hub, sailed through the soon-to-be-lame-duck Zoning Adjustment Board without an environmental impact report, despite the fact that it violates the city’s Downtown Plan and has many other problems. Granted, that was the pre-election ZAB, including at least one appointee who exemplified the power of developer campaign contributions and another who makes his living in the real estate industry, but there’s little reason to expect better from the new ZAB. In any event, the Seagate project is now on appeal, and the new City Council still has the power to demand an EIR, but do they have the guts? One new councilmember is the self-same realtor whose substitute voted on ZAB to skip the EIR, so it’s doubtful he’ll vote for one.  

We should not conclude that just because the apartment shortage is over, the housing shortage is over. We are still short of housing for the lower-income families whose housing needs are pushing them to Antioch and Tracy and even farther afield. The demand for subsidized housing is much greater than the amount of money available, but we have no real proposals to solve that problem except the promise of a very few trickle-down units in market rate buildings. 

It’s possible that UC students will relinquish their grip on Berkeley’s stock of converted houses with yards in favor of the new apartments, and that this will free up more housing for the less privileged. UC students are more affluent these days because they have to be. Rising tuition and other costs are squeezing out low income students, and the rest might opt for sharing luxury condos downtown, particularly those which offer ample parking for SUVs which can be used for trips to Tahoe on weekends. Financial planning magazines carry articles suggesting that well-off parents purchase condos in their students’ names, to take advantage of the generous federal tax deductions for owner-occupied dwellings, which can be passed around within the family budget for the parents’ ultimate benefit.  

But the small landlords who tend to own the older low-rise apartments and converted houses will face a financial squeeze if students choose to move into new buildings already wired for the Internet. The remnants of rent control create a perception of risk for an owner who reduces rent to adjust to reduced demand, since raising rent back again if costs go up or the market shifts is significantly more difficult. There are no easy answers to these questions, but in the face of a complexly changing housing picture it seems unwise for city planners in Berkeley and surrounding cities to continue to press for more market-rate apartment construction with no consideration of the cumulative impact of what’s already been built.  

There’s an inherent conflict of interest for city planning staffs, since their budget increasingly is derived from fees imposed on builders. If construction decreases, eventually jobs for planners will also decrease. Continued growth equals job security for many of them. 

Livable Berkeley, the growth advocacy group for development and planning professionals, is currently lobbying councilmembers new and old for seats on commissions with planning authority: the Planning Commission, ZAB, the Landmarks Preservation Commission and the Housing Advisory Commission. The organization claims fewer than 125 actual members, but its experienced and well-wired board members know how to leverage their strength where it counts. Among them, for example, are Ali Kashani, a housing developer who has recently shifted from non-profit to for-profit, Todd Harvey, a key player in Jubilee Housing (now being investigated by HUD) and David C. Early, whose consulting firm, DCE, authored UC’s EIR for its latest expansion scheme.  

Naïve new councilmembers (or even naïve old councilmembers) might be tempted to listen to LB’s siren song and fill up commission slots with development professionals at the expense of citizens. That would be a major error. When the dust settles, the Planet will be doing a full report on who the new appointees are, and their affiliations. It should be interesting. 

—Becky O’Malley