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For twenty years, Berkeley had an inclusionary law requiring developers who build new apartment buildings of 5 units or more to set aside 20% of the units to be rented to low income households. The purpose of the inclusionary law was to address the critical shortage of affordable housing in Berkeley and to promote economic diversity in neighborhoods. Over the past 20 years our inclusionary policy has resulted in hundreds of new affordable units in new market rate projects throughout Berkeley. 

In late 2009, the California State Supreme Court denied review of the Palmer v. City of Los Angeles decision, which means that the decision is now law in the State of California. The decision ruled that local laws requiring the set aside of units rented to low income residents violates state law. This decision invalidated our inclusionary policy for apartment building projects. Since then there has been no policy in place to try to address the effects of the Palmer decision. Over the past almost two years the Berkeley City Council has been discussing the establishment of a fee to address the affordable housing impacts that new market rate development creates. The fee would generate revenue to our city’s Housing Trust Fund which funds the rehabilitation and new construction of affordable housing in Berkeley. 

After months of discussion, on June 14, 2011, the Berkeley City Council adopted on first reading an ordinance authorizing the establishment of an affordable housing mitigation fee. The vote on the Ordinance was 6-1-2 (YES: Councilmembers Maio, Moore, Anderson, Arreguin, Worthington and Mayor Bates; NO: Councilmember Wengraf; ABSTAIN: Councilmembers Capitelli and Wozniak) 

The ordinance was the first step, which puts the law on the books to allow for an affordable housing mitigation fee to be imposed on new rental housing projects. Step two is determining how much the fee should be and adopting a resolution setting the fee. 

On next Tuesday’s (July 12th) City Council agenda is an item from Councilmembers Arreguin and Worthington to move forward with adopting an affordable housing fee, by directing the City Manager to set a public hearing as soon as is practically possible and asking staff to develop a resolution to adopt a fee at a rate of $34,000 per unit. While Councilmembers Arreguin and Worthington have expressed support for a fee that will generate the most revenue for affordable housing, the $34,000 amount is a placeholder and Council will ultimately decide what level the fee should be set at. 

What is most important is that we keep the momentum going. There have been active efforts to stall adoption of an affordable housing fee, because some people do not want a fee at all. By scheduling a public hearing as soon as possible it will ensure that the City Council can act soon on creating a fee and start to generate revenue for affordable housing or stimulate the provision of affordable units in apartment projects in Berkeley. 

Please email the Mayor and City Council and urge them to keep moving forward on adopting an affordable housing fee.