Since 2011, rents for vacant rent controlled apartments have soared by an average of 47% and are unaffordable to many of the people who live and work here. Housing costs impact our city’s vitality and diversity by contributing to the decline of the African American population and fewer lower-income residents and creative people. Berkeley has fallen short of building the new housing called for under regional housing goals and falls woefully short of housing affordable by moderate and low income households. This problem is not unique to Berkeley: Oakland, San Francisco and most of the Bay Area face a housing affordability crisis. We need a comprehensive approach in Berkeley.
Build More Affordable Housing
More housing is needed for people at all income levels with the greatest need for housing affordable to low and moderate income households:
- Prioritize affordable housing by streamlining permitting process for projects with at least 50% affordable units.
- Use some Housing Trust Fund money to purchase existing rental housing to keep it affordable and develop ownership opportunities through limited equity coops.
- Evaluate publicly owned sites for suitability for housing. Develop the Berkeley Way parking lot and North Berkeley BART air rights for affordable housing.
- Build more housing for students at locations close to the UC campus as called for in the Southside Plan. Work with the Berkeley Student Cooperative to expand relatively affordable co-op housing.
Every dollar in the Trust Fund can leverage about $3 in federal or other public funds to build affordable housing. There are four actions the City Council should take to generate more funds for the City’s Housing Trust Fund to pay for additional affordable housing:
- Ask voters to increase the business license tax on large landlords in Berkeley; each 1% increase in the tax would bring in $2 to $3 million annually, a small proportion of the estimated $66 million that rents have increased in Berkeley since 2011.
- Increase Housing Impact fees to at least $34,000 as recommended by a City-commissioned study and make funds available earlier by requiring developers to pay the fee when the first construction document is issued. If a developer chooses to build housing on site instead of paying the fee, require it to provide 20% affordable units (5 affordable units for every 20 market rate units).
- Tax short term rentals like AirBnB and place the money in the Housing Trust Fund.
- Allocate 25% of excess Property Transfer Tax Funds to the Housing Trust Fund.
Together, these actions could generate $10 million or more and fund creation of around 100 or more affordable units each year through both new construction and acquisition of existing housing. Some of these funds could also be used to create affordable home ownership via limited equity coops and other resident-controlled cooperative housing.
Maintain the Supply of Existing Rental Housing
We also need to insure that currently affordable housing is not taken off market. Ask the Council to:
- Strengthen our Demolition Ordinance. Require that each rent controlled unit be replaced one for one with housing permanently affordable to low wage people.
- Prohibit conversion of rent controlled units to short term rentals.
- Create a City-maintained waiting list for affordable housing units and work to give priority for these units to those who currently live or work in Berkeley.
- Continue to limit conversion of rental units to condominiums and increase the conversion fee.
- Continue Support for Rent and Eviction Controls.
- Lobby for changes to state law to allow rent control for new housing beginning ten years after it’s built.
- Monitor Ellis Act evictions after they happen to insure evictions were legal and increase relocation fees for owner move-in evictions.
- Regularly monitor habitability of affordable and rent controlled units to insure they are retained in the housing stock, with inspections paid for by the owners.
Build Green, Sustainable Buildings
Reduce the generation of greenhouse gases and water use by residential buildings in Berkeley:
- Require new multi-family housing in Berkeley to meet a Zero Net Energy standard by 2020. Solar electric and solar thermal systems should become commonplace.
- Require best-practice water conservation measures in new buildings.
- Require all developers including in the downtown to pay open space impact fees to create and maintain parks, plazas, community gardens, etc.
- Require developers to pay transportation service fees to support pedestrian, bicycle and transit improvements and incentives.
- Encourage developers to seek GreenTRIP certification from Transform through car-sharing, transit passes for residents, and ample bicycle parking and storage.
- Give incentives to homeowners and owners of existing multi-family housing to make energy efficiency and water conservation improvements.
In 2010, Berkeley had about 27,183 rental housing units, an increase from 24,512 units in 1990. Of these, about 19,000 are rent-controlled housing units. State law in 1995 replaced Berkeley’s system of strong rent control with vacancy decontrol, which means that landlords can raise their rent to market rate whenever a unit becomes vacant.
Rents are soaring
In the last few years, rents for new tenancies in rent controlled units have risen sharply:
New tenancies 2011 2015 Jan-Sept change
Studio $ 970 $1,450 + 49.5%
One bedroom $1,250 $1,800 + 44.0%
Two-bedroom $1,700 $2,600 + 52.9%
Source: Data in Berkeley Rent Stabilization Board, December 14, 2015 Memorandum, Market Medians: January 1999 through September 2015 http:// www.ci.berkeley.ca.us/uploadedFiles/ Rent_Stabilization_Board/Level_3_-_General/3q2015_Market_Medians.pdf
Average rents in new apartment are now much higher than rents in older rent controlled housing. Average rents in new apartment buildings in Berkeley as of 2014 were:
Source: bae urban economics, City of Berkeley Affordable Housing Nexus Study, March 25, 2015, p. 4.
What is affordable?
Federal guidelines set 30% of household income spent on housing as the limit for determining whether housing is affordable. If more than 30% goes for housing and utilities, then it’s not affordable.
Many tenant households in Berkeley have modest incomes. 82% of renter households have income below $100,000 a year, making area rents for even a studio unaffordable:
Median household income, renters: $ 38,539 Affordable monthly rent: $963
Median income of renters is even lower in South and West Berkeley. In South Berkeley, median tenant household incomes are under $38,000 a year.
Source: 2010-2014 American Community Survey 5-Year Estimates, S2503, Financial Characteristics, data by Census tracts and for the city as a whole. South Berkeley defined as Census tracts 4233, 4234, and 4240.
What kind of housing is currently being built in Berkeley?
Berkeley’s General Plan calls for the City to create 6,400 permanently affordable units for low- and very-low-income households. Between 2007 and 2014, only 22 units were produced for people with moderate incomes, achieving only 4% of Regional Fair Share Goal. Only 87 low income units and 76 very low income units were built in Berkeley, achieving only 21% and 23% respectively of Berkeley’s regional fair share goal.
More than 1,000, or 84%, of housing units produced in Berkeley were affordable only to people with above moderate incomes (income greater than 120% of the area median income, or income in excess of $112,200 in 2015 in Alameda County).
Source: City of Berkeley 2015-2023 Housing Element. For area median income: California Department of Housing and Community Development Division of Housing Policy Development, “State Income Limits for 2015”, April 15, 2015.
Many families pay more rent than they can afford
Only a fraction of low income families in Berkeley receive Section 8 housing vouchers or live in permanently affordable housing. Of Berkeley’s nearly 50,000 housing units, only about 2,000 are subsidized or inclusionary units. Up to 2,000 people in Berkeley have Section 8 or Shelter Plus Care vouchers.
Now, 53.5% of Berkeley’s renters are currently paying 30% or more or their income in rent. A City’s Rent Board survey of tenants in rent-controlled housing in 2009 found that 26% of non-student tenants were paying more than 50% of their income in rent, up from 20% in 1998. About 3,400 Berkeley households are considered “extremely rent burdened”. Rents have soared since 2009; those paying over 50% of income in rent have also increased.
Students, who make up about one-third of the City’s tenant population also face a difficult situation. Even with a big jump in UC fees, many students’ housing costs are still higher than their fees. This contributes to their debt when they leave school. Even though many students double up, they still pay high rent even when they share rooms.
Sources: U.S. Census Bureau, 2010-2014 American Community Survey 5-Year Estimates; Berkeley Rent Stabilization Board, Rent Stabilization and the Berkeley Rental Housing Market 15 Years after Vacancy Decontrol, January 28,2013; Stephen Barton, Ph.D., and former City of Berkeley Housing director, “Berkeley’s Affordable Housing Crisis and What We Can Do About It”, PowerPoint presentation for November 22 teach-in].
What is the City Council doing to address the housing affordability crisis?
At the moment, not much.
The Council Rejected a Modest Budget Request
In April, 2015, the City Council rejected a proposal from Councilmembers Anderson, Arreguin and Worthington to add $1 million to the Housing Trust Fund as part of the current budget. Funds are available: the City collected close to $164 million in discretionary revenue in 2015, up from $140 million five years earlier.
… and Discounted the Housing Fee to Benefit a Big Developer
In April 2015, the City Council continued discounting the housing impact fee to $20,000, down from the $28,000 approved in 2012. They took this action just as the largest housing project ever proposed in Berkeley was being considered and despite clear evidence that rents, and developer revenues, are soaring. Councilmembers Anderson, Arreguin and Worthington dissented. The City Council still has not acted to update the fee based on a March 2015 study recommending a $34,000 per unit fee and noting that construction of 100 market rate units creates demand for 25 additional low and moderate income units.
Source (revenue) City of Berkeley Adopted Biennial Budget, Fiscal Years 2016 & 2017, p. 40; for HTF budget referral: April 7 City Council Agenda, item 33, “Budget Referral: Housing Trust Fund”; for Council vote on impact fees: http://www.contracostatimes.com/breaking-news/ci_27918486/berkeley-council-extends-discount-affordable-housing-impact-fee http:// www.ci.berkeley.ca.us/ Clerk/City_Council/2015/04_Apr/City_Council__04-07-2015_-_Regular_Meeting_Annotated_Agenda.aspx; sources: http://www.fundaffordablehousing.org [site under construction]; bae urban economics, City of Berkeley Affordable Housing Nexus Study, March 25, 2015
Housing Trust Fund: Running Near Empty
The amount needed to complete projects already identified by affordable housing developers by 2018 is as much as $ 36.8 million. As a result of the Council’s failure to act, the City has relatively little money available in the Housing Trust Fund. As of November 5, 2015, the Trust Fund had a balance of only $3,067,578.
Source: “Below Market Rate Housing and Housing Trust Fund Program Status” prepared by city staff for City Council Work Session, December 1, 2015 (item 03). Funding Strategies: http://www.fundaffordablehousing.org
Building it Green
The California Public Utilities Commission (CPUC) adopted the California Long Term Energy Efficiency Strategic Plan, calling for all new residential construction in California to be Zero Net Energy (ZNE) by 2020. A ZNE building produces as much energy as it consumes during a year through energy efficiency and clean, on-site renewable power generation, typically solar photovoltaics.
The CPUC and at the California Energy Commission staff’s New Residential Zero Net Energy Action Plan 2015-2020 makes the state’s 2020 ZNE goal possible. Berkeley requires new buildings downtown to be LEED gold, but this can be achieved without any on-site energy generation and does not necessarily lead to much reduction in the building’s carbon footprint. Very few new Berkeley buildings have any significant solar energy component (Oxford Plaza downtown and Helios Corner on University are notable exceptions).
New development can also help achieve the City’s Climate Action Plan goals if buildings are located near transit and residents received encouragement and incentives to take transit, walk and bike; Transform’s Green Trip certification can help with that.
Drafted for the BPA by Rob Wrenn and Kate Harrison