Berkeley planning commissioners Tuesday voted to urge the City Council to adopt a new in-lieu fee for condo developers designed to create more affordable housing for the city’s poorer residents.
While the fee was approved on a 5-0-3 vote—with members James Samuels, Harry Pollack and Susan Wengraf abstaining—commissioners voted unanimously to allow the 186 apartments and four retail spaces in the nearly completed Library Gardens apartment complex to be sold as condos.
Patrick Kennedy, Berkeley’s major developer of rental housing and the only developer to speak on the in-lieu fee, said his fellow developers would reject what he called yet one more impediment to building housing in Berkeley.
But the proposal had strong backing from the city Housing Advisory Commission (HAC) and the density bonus subcommittee, a multi-agency city panel which has been looking at state and city laws that grant developers bigger buildings in return for reserving units for lower-income residents.
The inclusionary law mandates developers to set aside 20 percent of residences in apartments or condos with more than five units for residents who would otherwise be unable to afford them.
The proposed fee would allow developers to sell the dedicated units at market rates in exchange for paying a fee that amounts to 62.5 percent of the difference between the mandated inclusionary price—now a maximum of three times 120 percent of the area’s median income—and the market rate price.
Kennedy asked for a lower fee, in the range of one-third to half of the price differential.
Fee revenues would fund the city’s housing trust fund, which has been depleted by the allocation of most of its monies to the Oxford Plaza apartments being built as part of the David Brower Center complex.
“This would create quite a lot more affordable housing, either through new construction or through rehabilitation of existing buildings,” said city Housing Director Steve Barton.
The fee would not apply to so-called density bonus units, lower-income condos added to a project in order to allow the developer to create a larger building than would otherwise be allowed by city code, Barton said.
Density bonus units are typically affordable to lower median incomes, in the range of 50 to 80 percent, rather than the 120 percent for inclusionary units.
“The Housing Advisory Commission urges your support,” said acting HAC Chair Jesse Arreguin, who said the commission is also looking at the notion of creating an equivalent fee for rental units.
“It’s time for Berkeley to provide more options for developers,” he said.
“There’s no developer in opposition except Patrick Kennedy,” said Planning Commissioner Gene Poschman, who researched the fee for the density bonus subcommittee.
One developer is ready to pay the fee the moment it’s enacted, Poschman said. “Darrell de Tienne is waiting to sign,” he said.
Not so, said de Tienne Thursday.
De Tienne represents SNK Captec, developers of the Arpeggio—formerly Seagate Building—on Center Street, which is scheduled to commence construction later this summer.
That building includes 11 inclusionary units. The project’s 12 density bonus units—which helped the structure reach the nine-stories approved by the city—would not be affected.
De Tienne said he had no position on the issue and that any decision would be made by officials of SNK.
Mayor Tom Bates said Thursday that while he favors an in-lieu fee, he prefers that it would be based on the difference between the developer’s actual costs of building a unit and the sale price.
“I don’t think anyone should have to lose money,” he said.
Planning Commissioner James Samuels said the proposed fee “seems outlandish,” and the city should set a more reasonable number.
Citing Barton’s own statement that one developer paid an even high fee in Santa Cruz—80 percent of the difference—Commissioner Susan Wengraf called for time to study programs in other cities to come up with a more reasonable number.
But the majority view, expressed by David Stoloff, was that developers would make more money under the Barton plan than they do now in providing the mandated inclusionary units.
The massive five-story project now nearing completion behind the Berkeley Public Library on Kittredge Street will offer 35 affordable apartments for rent, even though the commissioners approved the condo map Wednesday night, said city staff.
The project doesn’t include any density bonus units.
Planning Director Dan Marks said developer John de Clerq had agreed to rent the inclusionary apartments at an even lower rate than is specified in the city code, making them affordable to individuals and families earning 30 to 60 percent of the area median income.
When Planning Commissioner Mike Sheen asked why the lowest rate, attorney John Gutierrez, who represents the developer, said that “the project was stalled in the approval process, so the developer agreed to accept a deeper discount to avoid further delays.”
De Clerq said all the units will be rented initially, and a decision to sell as condos would come later. Because the project has already been approved for condos, there would be no need to pay the city’s condominium conversion fee.
The commission was also scheduled to give their comments on the latest draft of the mayor’s revision of the Landmarks Preservation Ordinance.
The sticking point, however, was that the Landmarks Preservation Commission—increasingly at odds with the Planning Commission—hadn’t finished with their own corrections.
Unwilling to comment before they’d seen the final result, the commission followed the suggestion floated by Dan Marks and passed a resolution urging the council to stick to the spirit of the Planning Commission’s own version of the ordinance.
That mayor’s draft included many of the commissioner’s suggestions, though the latest draft restores the controversial structure of merit category which developers and the planning commission had sought to eliminate.