Hancock Bill Would Stop Berkeley Projects, Local Developers Say

By Richard Brenneman
Tuesday May 23, 2006

A bill now pending in the state Legislature would end the bonuses that enable larger apartment buildings and condominium complexes to get even larger—but developers say it would end infill development in cities like Berkeley. 

The measure, by Assemblymember Loni Hancock, would bar granting the so-called inclusionary bonus to projects with a density greater than 40 units per acre. 

Patrick Kennedy, who has built most of the new housing in downtown Berkeley in recent years, said none of his projects could have been built had Hancock’s proposed law been in place. 

“I’m bumfuzzled by it all,” said Kennedy. “She’s been a consistent supporter of transit-oriented infill development, and now this.” 

Evan McDonald, a partner in Hudson McDonald LLC, which has developed many Kennedy projects and is now developing a major housing project at 1885 University Ave., agreed with Kennedy. 

“It would basically stop development here in Berkeley,” he said, adding, “but I’m not too worried about it. I don’t think it’s going anywhere.” 

Currently, state law allows developers to increase project size by up to 35 percent for reserving some units—20 percent in the case of Berkeley—at reduced rents or sales prices. 

The bonus is designed to allow building owners to recover funds lost from their legally imposed obligation to provide the required lower-income units. 

The bonus has been the subject of ongoing debate within the city’s Zoning Adjustments Board and Planning Commission. 

A joint task force involving both agencies is now hashing out details of what may become a new set of local codes for the units. 

While rentals must be rented to individuals or families earning less than the area’s median income (AMI), the city has allowed condo developers to set inclusionary unit prices at levels affordable to those earning 120 percent of the median—though that rate is being lowered to 80 percent of AMI. 

Under the current calculations used by the city, planning department staff calculated that developers of the nine-story condo building now planned for Center Street west of Shattuck Avenue were entitled to build a 14-story project. 

That figure was arrived at by combining the inclusionary bonus with the city’s downtown cultural bonus and using calculations to arrive at a figure that would restore funds lost by provision of the inclusionary units. 

It was that finding that triggered the current discussions among the city commission and board members. 

Hancock’s measure, Assembly Bill 2484, would end the bonus on projects in urban areas with more than 40 units per acre, with a 25-unit maximum set in suburban areas and 20 in rural settings. 

The bill would also set limits on parking spaces for units in the larger exempt projects, with one space for studio and one-bedroom apartment, two spaces for two- and three-bedroom units and two-and-a-half spaces for units with four or more bedrooms. 

The bill is currently lodged with the Assembly Housing and Community Development Committee. 

Hancock’s measure ran into strong opposition from the start, including three of the state’s most powerful constituencies: the California Chamber of Commerce, the California Association of Realtors and the California Building Industry Association. 

Other opponents include the California Rural Legal Assistance Foundation, Housing California, the Western Center of Law and Poverty, the Southern California Association of Non-Profit Housing, Housing California, the California Association of Retired Americans and the California Association of Homes and Services for the Aging. 

By comparison, the measure attracted only three supporters, the League of California Cities and the cities of Daly City and Lakewood. 

Even the staff of the Assembly Committee on Housing and Urban Development registered caution, in the analysis of the measure drafted by Hubert Bower. 

Noting that the latest version of the state density bonus law has been in effect less than two years and a cleanup law took effect only at the start of 2006, Bower wrote, “The Committee may wish to consider calling for a ‘cooling off’ period ... to give the most recent changes time to take effect so that all parties can evaluate their impacts and can take time to carefully negotiate any further changes to the law.” 

“Even organized labor is opposed to the bill,” Kennedy said. 

“The question is, what’s she trying to stop? Downtown Berkeley is already on life support, and they’re administering last rites to Telegraph Avenue,” Kennedy said. 

The bonus is essential to developers, he said, as long as state law requires building owners to rent or sell units at a loss. 

“What the inclusionary requirement taketh away, the density bonus giveth,” he said. “When you just have the taketh away component, you can’t make a project work ... This law is more like something you’d expect from an Orange County Republican trying to preserve one-acre lot minimums,” he said. 

Calls to Hancock’s office for comments were not returned by deadline.