Public Comment

Commentary: Is a Transit Village Economically Feasible? By Robert Lauriston

Friday January 27, 2006

Since I first saw the city’s Caltrans grant application last month, I had the gut feeling that the 50 units per acre it envisioned was nowhere near dense enough to make a for-profit project on the site economically feasible. This week, I finally found the data to back up that guess: a 2004 study performed by the Berkeley consulting firm Strategic Economics for the East Bay Community Foundation. 

The study considers two alternatives for the six-acre site, one with 482 dwelling units and a density of 67 units per acre, the other with 553 units and 76 units per acre. Both would have two buildings with interior courtyards to provide open space for residents, retail space in the north building along Ashby and Adeline, and 370 parking spaces for BART, 490 for residents, and 90 for retailers in a basement garage and part of the first floor. (The study notes on page one that eliminating BART parking would provide little benefit, so it was not considered.) In both scenarios, half the units would be 800-square-foot one-bedrooms, half 900-square-foot two-bedrooms. 

The study assumes 80 percent market-rate units and 20 percent affordable, as required by Berkeley law. Half the affordable units would be reserved for households earning less than 80 percent of the “Area Median Income” (AMI), the other half for households earning less than 50 percent of AMI. The study assumes they would rent for the following amounts: 


One-bedroom units 

80 percent $1,200-1,500 “market rate” 

10 percent $1,242 (50 percent AMI) 

10 percent $1,116 (80 percent AMI) 


(That’s not a typo: the 50 percent AMI “affordable” one-bedroom rent is higher than the bottom “market-rate” range. The study’s assumption is that Section 8 funds would be available to allow that.) 


Two-bedroom units: 

80 percent $1,500-1,800 “market rate” 

10 percent $1,400 (50 percent AMI) 

10 percent $1,412 (80 percent AMI) 


When I checked today, I found 54 listings for Berkeley one-bedroom units under $1,116 and 30 for Berkeley two-bedroom units under $1,400. So much for the notion that developing Ashby BART would create below-market-rate housing. 

The study concludes that the project might be feasible if market rents were to rise and additional funding could be found to pay for BART’s portion of the parking lot. This conclusion is wishful thinking: No funding for building an underground garage or parking structure has been found in the past 40 years, and inflation in rents typically means inflation in construction costs as well. 

Given that this study envisions 67-76 units per acre, the grant application’s 50 units per acre would be even less feasible. It seems to me that the only way the numbers could work for a rental project would be to go even higher than six stories and/or provide significantly less parking for the retail and residential tenants. 

The study does not draw an explicit conclusion about the feasibility of condominiums, but apparently the project would break even if the market-rate units could sell for $300,000 for the one-bedroom units and $350,000 for the two-bedroom units. So if the real-estate bubble doesn’t pop too badly, condos might work: but the “affordable” units would cost $235,000 to $265,000, not exactly low-income housing. 

By the way—can anyone tell me why the East Bay Community Foundation, a charitable organization, commissioned a feasibility study for a for-profit development? 


Robert Lauriston maintains the Neighbors of Ashby BART website ( and invites submissions from all points of view.