Zoning Adjustments Board votes to deny developer’s application to pay mitigation fee

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Jessica Gleason/Staff

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Berkeley’s Zoning Adjustments Board unanimously voted Thursday to deny a developer’s application to pay a mitigation fee rather than set apartment units aside for affordable housing.

The applicant, Jim Novosel, asked commissioners to allow the property owner, Prasad Lakireddy, to modify his existing proposal — which requires that three out of his 16 new apartment units are priced affordably — and instead pay a $30,000 mitigation fee for each to the city’s Housing Trust Fund. Each of the three units, located at 2319-2323 Shattuck Ave., would be rented at market price instead.

Commissioners questioned the developer’s rationale for asking to change the proposal eight years after its approval, as in 2007, the developer had agreed with zoning board members to include the three affordable housing units. At the time of the original approval, the city had yet to implement its Affordable Housing Mitigation Fee as an option for developers.

According to Lakireddy, he encountered monetary obstacles during the project’s construction and claimed that paying the mitigation fee instead of setting aside a portion of the units for affordable housing would be “more economical.”

The proposed mitigation fee of $30,000 per unit was described by some commissioners as “arbitrary,” though Lakireddy said at the meeting that he had arrived at the number using data from a 2010 Berkeley Nexus Study, which establishes the current fee and equivalent percentage of affordable housing units needed to be included in a new project.

At the meeting, several residents also voiced their concerns about the importance of affordable housing units for low-income Berkeley residents.

“(The inclusion of affordable housing) would really be a nice advantage to a few families,” said Berkeley resident Kelly Hammargren at the meeting. “It really reflects what the Downtown (is doing) to provide diversity of residents of all income levels and sizes.”

Novosel claimed that paying the mitigation fee to the city’s Housing Trust Fund could be beneficial to other low-income residents. He added that money from the fund could be used to repair older affordable housing units, such as the recently renovated Strawberry Creek Lodge, a senior affordable housing unit in West Berkeley.

“We believe that the (mitigation) inland fees provide greater benefits (in) fulfilling the city’s affordable housing goals,” Novosel said.

Regarding Lakireddy’s economic incentives, zoning board Commissioner Sophie Hahn said that his economic windfalls were not the primary concern of the commission.

“I think being in the real estate business is risky, and I don’t feel that it’s our board’s job to mitigate the downside when an investment doesn’t turn out to be as good as (one) might have hoped,” Hahn said.

Commissioners also agreed that keeping the three units as affordable housing kept in line with the city’s goal of providing low-income residents with a greater breadth of living options.

“I think we all want affordable housing in Berkeley,” said zoning board Commissioner Igor Tregub. “While we have differences in opinion about the best strategy to get there, I don’t want that to be the issue for consensus.”

Commissioners unanimously agreed to deny the proposal. The housing project is one year away from getting a certificate of occupancy, according to Novosel.

Contact Cassandra Vogel at [email protected].