Court punishes city of Berkeley for failing to hold public hearing

The Honda sales lot, located on Shattuck Avenue, is slated to become a five-story building with commercial space.
Shirin Ghaffary/Staff
The Honda sales lot, located on Shattuck Avenue, is slated to become a five-story building with commercial space.

In response to a court order issued this summer, Berkeley City Council is set to rescind a decision it made over a year ago next week that affirmed the city Zoning Adjustments Board’s approval of the construction of two mixed-use and one residential building on Southside.

The Alameda County Superior Court issued a peremptory writ of mandate requiring the city to overturn the resolution approving Berkeley-based real estate development firm Citycentric’s use permit — granted by the zoning board April 22, 2010 and affirmed by the council Sept. 21, 2010 — to build on Shattuck and Parker Avenues.

The court order was issued in response to a petition for a writ of mandate filed by an unincorporated association named Parker Shattuck Neighbors. According to the petition, filed in Alameda County Superior Court in November 2010, the city violated its Zoning Ordinance by failing to hold a public hearing when changes were made to the developer’s use permit.

In April 2010, the zoning board  approved the project without a specific number of affordable condominium units mentioned in the conditions for approval, according to Wendy Cosin, interim planning director for the city.

However, when the council approved the project brought forth by the zoning board in September 2010, the developers clarified that they would include at least seven affordable housing units in the case that all the developments were condominiums, in accordance with California’s density bonus law, which allows developers to build at higher densities than local ordinances permit in exchange for the inclusion of affordable residences.

The court ruled that the council was required to hold a public hearing before making such a modification.

Cosin said the council’s failure to hold a public hearing was an administrative oversight.

“The council doesn’t generally hold new public hearings unless there is a substantive concern regarding a commission’s decision,” Cosin said.

Citycentric co-founder Ali Kashani said the major consequences of this court-ordered rescinding of the approval are delays in construction, which in turn affects the pocketbooks of the developers and future tenants.

“We have been working since June 15 of this year when the judge’s order was received to reprocess this project,” Kashani said. “These delays cost us money, and increased costs for us mean increased cost for future tenants.”

When the council originally approved the project, it denied the developer’s application for a license to serve alcoholic beverages for the restaurant on the ground floors of the two Shattuck buildings, according to Kashani.

Although they were granted restaurant permits, the developers were denied the request for a license to serve beer and wine “due to the absence of restaurant operators with detailed business plans explaining how possible detriment associated with these activities would be avoided,” according to a City Council agenda item.

“We wanted to have the flexibility of having a restaurant on the ground floors,” Kashani said. “They denied our first request and told us to come back when we knew more about what exactly will be going on in the buildings.”

According to Citycentric’s website, the housing development, which is projected to cost $60 million and originally predicted to be completed by 2012, will include a total 156 dwelling units, 188 parking spaces and 23,200 square feet of retail space.

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  • Guest

    It is unclear how the City is being punished by having another building full of vacancies on the Shattuck corridor.  According to the developer……
    Citycentric co-founder Ali Kashani said the major consequences of
    this court-ordered rescinding of the approval are delays in
    construction, which in turn affects the pocketbooks of the developers
    and future tenants.

    “We have been working since June 15 of this year when the judge’s
    order was received to reprocess this project,” Kashani said. “These
    delays cost us money, and increased costs for us mean increased cost
    for future tenants.” ”
    ……he and future tenants will be affected in their pocketbooks  but then,  most developers are overly optimistic regarding market conditions. Seeing that there will likely be  limited demand  for 156 additional condominium units in  that South Berkeley location at any time in the foreseeable future, nor is there a need for additional retail space along South Shattuck, given the present vacancies, any delay will probably be to the developer’s advantage, as it will lessen his debt payments during the reduced time the building sits partially occupied  until such time the economy recovers enough to absorb the additional supply.  One must also look south to the extraordinary number of available new condominium units in Oakland to estimate demand for that location, since Shattuck and Parker is beyond the zone where demand  is going to be heavily influenced primarily by university based demand. It might be a different demand situation if the units were located on Northside within a few blocks of the campus,  but even in that far more desirable location for Berkeley condominium units, adding   an additional 156 units to the present supply  would not be a sound financial decision. The limited number of units that are up for sale spend an extended period of time on the market  and are often pulled from the market and rented. This is reminiscent of the early to mid 90’s  when several large buildings containing condominium units came on line during the market lull that lasted from around the fall of 1993 till the  Summer of 1996. There  was the building across from Berkeley Toyota at 2029  Channing on the old Hustead’s lot and the building at 2615  Telegraph just south of Parker   that was painted an  orange color for a while. Similar,  but probably more desirable locations to the location for this building  at Shattuck and Parker, and at a time when prices were within the range of a far greater proportion of the populace, about 30% of present prices in  nominal dollars.   The units simply did not sell in either of those building for years.
    In the short term,  one might   consider that the city will be punished by losing  property tax revenue the longer building is delayed; however, the actual effect of adding that many units to the present supply will be to lower the sales price of available units within the city which then set a base for property taxes for each unit sold at the reduced price. Overall the effect  of lowering the sales prices in Berkeley of units sold will be to lower the property tax revenue to the city. The winners will be those in the market for a unit at the present time who will see a reduced price and the losers will be the developer, the City, and  anyone trying to sell a unit at the present time, some of whom are already under water in mortgages,  which will then lead to more short sales, walk aways, foreclosures.
     

    • guest

      You say “One must also look south to the extraordinary number of available new
      condominium units in Oakland to estimate demand for that location”

      What about right here in Berkeley?  The Arpeggio is just sitting in the Downtown – not one condo has been sold.  The condos were on the market for about a year and the owner even rented and staffed a sales office late last year for a couple of months.  No sales.  What will become of it?

      • Guest

         Probably a bankruptcy and then rental units or greatly  reduced prices.  Maybe UC can pick it up at a bargain rate and offer  it as  housing for junior faculty members.  The Arpeggio makes no sense at all. Luxury units with all the  riff raff hanging out day and night  at the entrance to the BART station. Most of the units have bedrooms without windows. Some only have a window in the living room.
        http://arpeggioberkeley.com/arpeggio_floor2.html
        Who did they think  would want to purchase a luxury unit  that has rooms without windows,  in that location?

  • BTownEmbarrassment

    “due to the absence of restaurant operators with detailed business plans
    explaining how possible detriment associated with these activities
    would be avoided,” 

    It’s two restaurants asking for wine and beer permits… as though the city council doesn’t have an appreciation of what that entails, as though there are not restaurants in Berkeley which sell beer and wine. This is something that should be able to be addressed w/boilerplate language, what is the need for specific operators to provide detail?

    Yet again the City Council’s failure to follow their own ZO is putting a damper on the city’s tax base.
    Christ God this town is a joke.