Public Comment

Mayor Jesse Arreguín and his council allies are setting up city residents to take a fall. This Thursday, March 25, the Berkeley City Council will discuss the new state-mandated Regional Housing Needs Allocation (RHNA). What Arreguín has so far failed to mention is that to avoid penalties, the city must meet the RHNA affordable housing targets for low- and very low- income housing in Berkeley. Those targets will require the city to find about $1.6 to $2.2 billion dollars in subsidies, depending upon your cost assumptions. That is not a typo—yes, I mean billions. 

The RHNA process was set up by the state Department of Housing and Community Development to help cities plan for housing at all income levels. The latest targets were recently approved by the executive board of the Association of Bay Area Governments (ABAG), led by ABAG president and Berkeley's own mayor, Jesse Arreguín. By failing to notify Berkeley residents of the magnitude of the problem, Arreguín has displayed a shocking degree of disrespect for the voters who elected him. 

The RHNA targets require Berkeley to entice developers to build 8,934 housing units, including 3,854 low- and very low-income housing units. To hit those targets the developers would have to build 6,350 housing units in market-rate developments with 20% affordable inclusionary units, a total of 1,270 affordable units. 

The city would also have to find non-profit developers to build the remaining 2,584 affordable housing units in 100% affordable housing developments. The cost of those 2,584 units at $750,000 each is $1.94 billion. Today Berkeley has 51,523 housing units. Building the RNHA-required 8,934 units would be a 17.3 percent increase in the city’s housing stock. (For those of you who speak Excel, you can find a spreadsheet model here). 

Berkeley residents are being set up to take a fall because this affordable housing won't get built. Cities and non-profit developers are not going to find the necessary funding in the form of grants and federal tax credits. The main problem is that most of California’s 58 counties and 482 municipalities face the same predicament, so competition for funding will be fierce. 

The affordable housing goals were seldom met under previous RHNA cycles. But under new policies from Sacramento, built upon Senator Scott Wiener’s bills SB 35 and SB 828, cities that don't meet their housing targets by issuing building permits are penalized by having their zoning standards overruled and developers’ fantasy projects fast tracked. 

The cost of $750,000 per unit seems high, but that number is confirmed by the 62-unit affordable housing project being built next door in Albany. This article cites a similar number. In LA’s Carson City, a former luxury apartment building is being converted to “workforce” affordable housing for about $500,000 per unit. The cost of converting old motels to housing for the homeless under Gov. Newsom’s Home Key initiative is reported to be $350,000 per unit. 

What if Berkeley adopted a “build, baby build” strategy and somehow forced developers to build enough market-rate housing, with 20% inclusionary affordable units, to hit the target of 3,854 affordable units? That would require total of 19,270 housing units, a 37.4 increase in the number of housing units in Berkeley. 

This approach is hopelessly impractical in our emerging post-Covid world. On the demand side, with rents that have fallen about 25-30 % in San Francisco, developers are risk averse about going on a building spree. On the supply side, Covid-related bottlenecks have dramatically raised the costs of building materials. Even in the best of times cities cannot force developers to pull permits and build, and these are far from the best of times. 

But even if the “build, baby build” approach could hit the target, it would miss the point. One good thing about the RHNA goals is that they get the balance just about right. Due to the grotesque income inequality in our society, California needs to be producing about one affordable unit for every market-rate unit. 

As our economy grows, we’ll need more housing at that 50/50 ratio. If developers keep building at an 80/20 ratio, the housing mismatch problem will never be solved. Low-income household will continue to be cost burdened and forced to double-up in overcrowded housing units. 

The Berkeley city council needs to stop goofing around with the idea of building 2-4 unit “missing-middle” infill housing. Affordable housing requires economies of scale. Albany’s 62-unit building is on the small side. Even YIMBY big shot Senator Wiener admits this, “You don’t put subsidized affordable housing as a duplex. It doesn’t pencil out. You have to have a certain scale of density for affordable housing.” 

It’s time for Berkeley’s voters and taxpayers to stage an intervention with their city council. Council members need to stop patting themselves on the back and start doing some math. The residents deserve some answers, and the council members have some explaining to do.