Berkeley's Place in "the urban crisis of affluence"

Becky O'Malley
Sunday July 01, 2018 - 03:22:00 PM

San Francisco just elected a new mayor after a hotly contested race. I asked a friend who lives there what difference she thought London Breed would make.

“The candidates were all alike, just a few tiny differences,” she said. “But meanwhile, they’re locking up babies in Texas!”

She has a point. All the news, all day every day, is so appalling that it’s hard to get worked up about local controversies. Yesterday, locking up babies and the prospect of Alt-Right Supremes forever. . Today, a newsroom massacre. Tomorrow, what fresh hell will our nation’s rulers produce?

Saturday afternoon, I joined some thousands of Berkeley friends at an emphatic rally denouncing the baby-snatchers. Sometimes I feel that much of my adult social life has been seeing old friends at demonstrations, always a pleasure, but ultimately not preventing things from going from bad to much worse over time.

Against the backdrop of national catastrophe, thinking about local land use problems can seem almost recreational, kind of like watching the World Cup when you don’t really know the rules for futbol.

Meanwhile, however, the urban future is being dramatically changed, and not for the better. Our livable cities are being destroyed by moneyed interests while we’re occupied with the Big Picture.

This will be a long piece incorporating big quotes, but please be patient and read it all. At least the end is inspiring. 

First, the July issue of Harper’s Magazine has a terrific cover story by Kevin Baker, The Death of a Once Great City: the fall of New York and the urban crisis of affluence. Everyone who cares about the place they live, e.g. about Berkeley, should read it. 

The first few paragraphs sum up the thesis: 

“New York has been my home for more than forty years, from the year after the city’s supposed nadir in 1975, when it nearly went bankrupt. I have seen all the periods of boom and bust since, almost all of them related to the “paper economy” of finance and real estate speculation that took over the city long before it did the rest of the nation. But I have never seen what is going on now: the systematic, wholesale transformation of New York into a reserve of the obscenely wealthy and the barely here—a place increasingly devoid of the idiosyncrasy, the complexity, the opportunity, and the roiling excitement that make a city great. 

“As New York enters the third decade of the twenty-first century, it is in imminent danger of becoming something it has never been before: unremarkable. It is approaching a state where it is no longer a significant cultural entity but the world’s largest gated community, with a few cupcake shops here and there. For the first time in its history, New York is, well, boring. 

“This is not some new phenomenon but a cancer that’s been metastasizing on the city for decades now. And what’s happening to New York now—what’s already happened to most of Manhattan, its core—is happening in every affluent American city. San Francisco is overrun by tech conjurers who are rapidly annihilating its remarkable diversity; they swarm in and out of the metropolis in specially chartered buses to work in Silicon Valley, using the city itself as a gigantic bed-and-breakfast. Boston, which used to be a city of a thousand nooks and crannies, back-alley restaurants and shops, dive bars and ice cream parlors hidden under its elevated, is now one long, monotonous wall of modern skyscraper. In Washington, an army of cranes has transformed the city in recent years, smoothing out all that was real and organic into a town of mausoleums for the Trump crowd to revel in. 

“By trying to improve our cities, we have only succeeded in making them empty simulacra of what was. To bring this about we have signed on to political scams and mindless development schemes that are so exclusive they are more destructive than all they were supposed to improve. The urban crisis of affluence exemplifies our wider crisis: we now live in an America where we believe that we no longer have any ability to control the systems we live under.” 

Baker’s essay is mostly about Manhattan, with nods to similar situations in similar world class cities, but what many of us who live in the Berkeley cocoon don’t realize is that we’re undergoing a bush league version of the same conversion. Interesting streetscapes are being taken over by the same boring uniformity.  

Why is this happening? As often has been the case, it’s the money, honey. And it’s everywhere. 

John Lanchester has a long piece in the latest London Review about what’s been going on in the money world since the 2008 crash. He notes that “one of the things that happens in economic good times – a very clear lesson from history which is repeatedly ignored – is that money gets too cheap. Too much credit enters the system and there is too much money looking for investment opportunities. In the modern world that money is hotter – more rapidly mobile and more globalised – than ever before.” 

That’s what we’re seeing in Berkeley and San Francisco and all the other places that are simultaneous being colonized by “luxury” apartments and suffering from a lack of affordable housing. Too much money is feeding the bubble with predictable results. 

In addition to the world-class cities the Baker piece lists, smaller cities all over the world are being taken over by capital looking for a home. I’ve just been visited by a young environmental attorney, who reports that the downtown of her home town of Boca Raton, Florida, which used to be charming, is now wall-to-wall faceless new buildings, both tall and not so tall, but all boring. And it’s not just charm that’s being lost: The people that contribute to sense of place are being squeezed out by the new rich. 

Here, there and everywhere flight capital, often ill-gotten gains stolen in other countries, is looking for property to use for pieds a terre (places for owners to visit occasionally) or AirB’n’B type rentals for tourists.  

When we were in the pre-historic technology business, way back in the early ‘90s, our main customers were in Hong Kong, while it was still British. We asked them what they’d do when China took over. No worries, they said. At that point in history, if they needed a place to go, with a $500k investment they could become Canadians. A million dollars would buy them a place in the U.S. and a path to citizenship or at least a green card. 

I don’t know what the comparable figures are these days, but the principle still survives: money can buy love, and also buy property on which to park your flight capital. 

The outtakes from the Mueller investigations of the Russian interference with the 2016 elections, plus the stories spun off about Michael Cohen and Paul Manafort’s escapades, have given us a window on the shadowy world of Russian oligarchs, who seems to have a finger in every pie, large and small. They’re only one of the various sets of money movers, but they’re typical types. 

Often in these target cities there are what’s now called “flippers”, people who gain some legal hold on a tempting building site, perhaps an option, and then persuade local governments to grant them entitlements (permits) which then can be resold to actual developers to build. After that the “luxury residences” are resold to the rich with an additional layer of profit. Often the flippers are successful because of connections abroad who’d like a place in the U.S. 

A local example of a flipper transaction is the proposed development at 2902 Adeline, now the subject of a lawsuit by outraged neighbors. The developer is a company called Realtex, of which the president is Boris Fadeev. He’s identified on Zoominfo.com as “Director at Moscow Redevelopment Agency”—perhaps that’s his former job, or perhaps he still works there. But he’s also listed as “co-founder of Realtex … primarily responsible for overall development and acquisition activities in the Western United States.” The company’s website lists 3 current projects in the works in Berkeley and more in San Francisco, but has no information on where they are in the entitlement process. They don’t claim to have ever actually built anything. 

Often the finished product in these flipped projects ends up markedly different from what the Zoning Adjustment Board thought it was approving. The City of Berkeley’s Planning Department has the latitude to grant many concessions to builders who plead poverty, and often overlooks conditions on development and use which were supposed to control permits.  

An example of how this works is the Harold Way project next to the Hotel Shattuck, which threatens to demolish the building which houses the Shattuck Cinemas. The company which got entitlements for this project in the final act of the Bates administration has been trying to flip it ever since, with no luck. Word on the street is that they were expecting concessions from the previous administration which now look more dicey with the new council. The entitlements were supposed to expire at the end of 2017, but a former city planning director authorized an extension to this deadline on her way out the door. It might still be built. 

The sad thing is that most Berkeleyans don’t even know what’s hitting them most of the time, as evidenced by postings on the NextDoor site. 

There a distinguished academic lamented the loss of her favorite neighborhood business to an insupportable rent hike, and even went so far as to find out and post the name of the landlord. What she didn’t realize is that the greedy owner of that building has similar holdings all over Berkeley, and is involved with the conglomerate which is now trying to build a huge box on the Ohlone Shellmound site on 4th Street. A small number of commercial property speculators like this one now own a very large percentage of Berkeley’s rental properties, and they do as they please.  

It’s just like New York, and San Francisco, and all the rest. Bad money drives out good. 

Also posted on NextDoor recently has been a lengthy controversy about whether or not residents are entitled to complain about long-term parkers in the space in front of their own doors. What the disputants don’t realize is that many of the apartment buildings recently built in downtown Berkeley have been allowed to omit tenant parking. This is based on the fiction that downtown tenants won’t own cars since they live near BART. Common sense should tell you that they take BART to their well-paid San Francisco jobs during the week, storing their cars on residential streets to use for weekends at the beach or on ski slopes.  

More of these expensive developments are in the works. At least two are being proposed for the north side of Durant, west of Dana, one to demolish and replace Trinity Methodist Church and the other on the Berkeley City Club parking lot. Tenants there, many probably well-off students sharing bedrooms, might promise not to have cars, but they’ll be tempted to store them on Southside neighborhood streets. 

A new day may be dawning, slowly, in Berkeley. The word on the street, though the minutes and video have yet to be posted, is that the Zoning Adjustment Board on Thursday threatened (in a 7-2 vote) to revoke Honda’s permits for its recently occupied South Shattuck garage because neighbors showed up with well-documented video proof of violations of city conditions on its use permit. 

Amazing. Permits once granted are never revoked by the city of Berkeley despite flagrant breaches of conditions. Well, perhaps almost never? 

Small victories like this one, however, don’t disguise the evidence that the fight for a human-scale city with peaceful neighborhoods is far from won. But change could be in the air. We might still have the “ability to control the systems we live under” after all, at least here in Berkeley. 

Two City Council seats now held by people who favor pricey market-rate developers are up for election in November. The District One incumbent is retiring, and Zoning Adjustment Board Commissioner Igor Tregub, appointed by Mayor Jesse Arreguin, is running for her seat. In District 8, Planning Commissioner Mary Kay Lacey, appointed by Councilmember Kate Harrison, hopes to defeat incumbent Lori Droste, a reliable ally of luxury developers. Both challengers have already been endorsed by the Berkeley Progressive Alliance and Berkeley Citizens’ Action. Both endorse more affordable housing, but discourage excess luxury construction, 

And here’s the inspiring bookend on that topic, one last lengthy quote from another New Yorker about what’s happening to our cities: 

“Housing in the United States has become a playground for wealthy developers instead of a leg up towards the American Dream. In New York City specifically, money from luxury real estate developers have taken over our political establishment - leading to luxury rezonings that push out small businesses and working families, and leave a wake of empty units in their place. 

“Working New Yorkers can’t afford to stay in the communities their families have called home for generations. Families are rent burdened, and the city is experiencing the highest levels of homelessness since the Great Depression. While shelters go up, housing actually remains empty - there are three times the amount of empty luxury units as there are people experiencing homelessness in New York City. 

“So, what do we do? 

“Alexandria believes that housing is a right, and that Congress must tip the balance away from housing as a gambling chip for Wall Street banks and fight for accessible housing that’s actually within working families’ reach.  

“Congress has allowed most of our existing housing investments to go towards benefitting the wealthy. Alexandria supports extending tax benefits to working and middle-class homeowners, expanding the Low Income Housing Tax Credit, housing (not sheltering) the homeless, and permanently funding the National Affordable Housing Trust Fund. 

“By refusing money from luxury real estate developers, Alexandria can be trusted to fight for fair, inclusive housing policies that upend the overdevelopment that real estate speculators have imposed on New Yorkers.” 

That’s right, that was a quote from the published platform of this week’s big winner, Alexandria Ocasio-Cortez, Democrat, Socialist and next Congresswoman from the Bronx and Queens.  

Which Berkeley candidates will match her pledge to refuse money from luxury real estate developers? Let’s ask them!