Public Comment

Commentary: Affordable Housing for Berkeley: Yes on Measure I

By Fern Leaf
Friday November 03, 2006

Home ownership remains a cornerstone of the American Dream. In 1993, unable to afford a San Francisco broom closet, I crossed the bay to purchase a sweet bungalow under $200,000. Today, Berkeley starter homes list at $600,000-$700,000. 

To protect ethnic and cultural diversity, Berkeley housing policy has focused on rent and eviction controls as well as prohibitions on condominium conversions for many decades. Such policies have become counterproductive to their original intent. Berkeley voters can bring current housing policy in line with reality under November’s Measure I initiative that seeks to increase the number of condominium conversions allowed per year from 100 to 500. 

Unfortunately, the ballot description suggests Measure I will reduce affordable housing stock. That could send it to defeat—instead of allowing the measure’s revenues to advance Berkeley’s diversity goals. 

It’s time to consider incentives that accommodate affordable housing for the young middle class who want to invest in Berkeley; get involved in local issues, send their kids to our schools, and use their creativity and enthusiasm to raise the social capital of all our neighborhoods, while preserving Berkeley’s historic character. 

Current Berkeley homeowner occupants are becoming quite an elderly group. Our architectural heritage is also at risk. About 50 percent of housing predates World War II. Not only do many of these properties need serious infrastructure upgrades to plumbing and wiring; years of neglect as rentals and deferred maintenance of built-in woodwork, stained glass, rock terraces and retaining walls is all too common. 

Condominiums can offer a more affordable opportunity for university employees, police, firefighters, teachers, city government employees, and other middle-income individuals and families to buy into the equity that serves as a foundation for the American Dream. Allowing unused rental stock to be transformed in this way could also serve to moderate the trend toward home hyper-valuation. 

Measure I protects tenant rights in several ways. Should citywide vacancy rates drop below 3 percent, conversions drop for that year, too. At all times, converting owners must give first right of refusal to the sitting tenant. 

Are you worrying about down payments? Don’t. Owners must give opt-in tenants 5 percent of the unit’s purchase price in cash. This will assist them to secure financing. 

Still worried about the tenant? Don’t. Their no-buy decision still gains them 2 percent of the purchase price for relocation. If the condo lists for $400,000, that translates to $8,000 the tenant receives to smooth his move. 

While we’re on the subject, Berkeley gains fiscal resources in three ways: 

1. An estimated $215 million from the 1.5 percent transfer tax on each sale. 

2. Ongoing increased property taxes from the boost in the units’ assessed values. 

3. An $8 per square foot condo conversion fee earmarked for the city’s affordable housing fund that can be used to develop additional housing for low-income residents. 

The inability of the youthful middle class to afford to raise their families in a Berkeley home of their own is a roadblock to our diversity goals. In creative desperation, many use TIC purchases of multi-unit properties to buy a home. 

TIC law is often poorly understood and puts young, financially vulnerable first time buyers at great risk. Consider this: tenants-in-common co-own their properties. If one defaults on a loan, all partners’ loans are jeopardized. If one partner wants to refinance, everyone else has to refinance, too. If one person just lost their job, that loan for all is unlikely to go through. 

Homeowners consider their equity as a partially liquid asset and often use 2nd mortgages to cover emergency health and safety expenses, pay for property improvements, and send kids to college. This flexible use of individual assets is typically not accessible to TIC owners. 

Today Berkeley has thousands of market rate rental vacancies. For years, developers have been given preferential treatment to build hundreds and hundreds of small unit rentals all over town. It’s time to shift our strategy by encouraging more middle class home ownership in Berkeley. Vote yes on Measure I. 


Fern Leaf is a Berkeley resident.