City Council extends discount on city affordable housing fee to July 1

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At an April 7 meeting, Berkeley City Council extended a discount on a city affordable housing fee — originally set to expire this week — to July 1.

By lowering the Affordable Housing Impact Fee, a $20,000 charge that housing developers must pay for each housing unit they build, the council hopes to provide an incentive for increased housing development. Developers, however, can avoid paying the fee if they make 10 percent of their units affordable to low-income individuals. If they do not, they must pay the fee to the city’s Housing Trust Fund.

The fee, which was originally $28,000, was approved by City Council in October 2012. In February 2013, however, the council approved a discount of $8,000 on the fee, which was set to expire in October 2014. The expiration date was later extended to April 16 at a council meeting.

The Housing Trust Fund, created in 1990, was established to subsidize affordable housing development in Berkeley. While the majority of the fund stems from federal sources, it is also composed of fees paid for by developers as well as revenue collected from city-owned properties.

The discount extension was presented by Mayor Tom Bates to City Council at the April 7 meeting. Amending the impact fee, according to a report from Bates, would add a predicted $2 million to the Housing Trust Fund.

The Berkeley Plaza project, a multi-use complex which will be located at 2211 Harold Way in Downtown Berkeley, is set to include 302 housing units. According to Councilmember Jesse Arreguin, the developers of the project are choosing to pay the fee rather than include affordable housing units in the building.

Councilmember Kriss Worthington called the discount extension a “corporative giveaway” for a particular developer, adding that the resolution’s wording is “defective and deceptive.”
The original $8,000 discount was implemented, in part, to incentivize housing developers to build during the recession, according to Arreguin. But Worthington said the discount is not necessary in the current economy.

“During a recession with no construction happening, a reduced fee would have a logic to incentivize (developers),” Worthington said. “But during a boom time, it does not.”

Councilmember Lori Droste, who also expressed concern, said at the meeting that “zero dollars” have been added to the housing trust fund as a result of the discount and that the discount may not bring its intended benefit.

Arreguin added that the fee discount would reduce the amount of affordable housing available in the Downtown area and would similarly have a negative impact on Berkeley’s diversity.
“We need a Downtown where there are housing opportunities for everyone, not just for the wealthy,” Arreguin said.

According to Worthington, several council members will present a proposal to the council at its May 12 meeting in hopes of rescinding the extended discount. A special meeting regarding the fee will also be held May 5.

Adrienne Shih is the lead city reporter. Contact her at [email protected] and follow her on Twitter @adrienneshih.