At its Thursday meeting, Berkeley’s Housing Advisory Commission considered amendments to the city’s policies on affordable housing requirements for developers, including a potential increase of the city’s affordable housing mitigation fee.
The conversation revolved around the potential consequences of raising the fee — a $20,000 payment that developers pay per unit as an alternative to setting aside 10 percent of their units for affordable housing. Commissioners discussed whether they should craft recommendations that would generate money for the city Housing Trust Fund — to which the mitigation fee contributes — or raise the required percentage of affordable housing units in future developments.
At the meeting, Commissioner Kate Gordon said no developers have opted to pay the fee since it was implemented in 2012. Instead, developers have consistently preferred an alternative to the fee in California’s state density bonus law, which allows developers to build more units than city zoning laws typically allow as long as they offer at least 10 percent of the units below market rate.
Commissioners also responded to a proposal made by Mayor Tom Bates and City Councilmember Laurie Capitelli earlier this year. According to a letter from Bates and Capitelli to City Council, a city density bonus would allow developers to qualify for the additional units but with the option of paying an in-lieu fee to the Housing Trust Fund instead of setting aside a certain percentage of units for affordable housing.
“I don’t think this is necessary to keep builders interested,” said Commissioner Marian Wolfe, regarding the appeal of the state density bonus law to potential developers. “I think they’re already interested.”
The city density bonus would require developers to pay the housing mitigation fee and an additional in-lieu fee of $10,000 per market-rate unit offered for a total of $30,000 per unit. The $10,000 fee would not be imposed on the extra units granted by the city density plan.
At the meeting, Commissioner Alejandro Soto-Vigil said the group should recommend ways to increase affordable housing options for the community instead of adding to the Housing Trust Fund, because building affordable housing takes longer than including affordable units in developments already underway.
“A one-time fee isn’t enough when we’re dealing with affordable units,” Soto-Vigil said. “If we want to come up with a preference between paying into the trust fund or (requiring) inclusionary units, then we should do inclusionary units.”
At the meeting, the city manager’s office presented a nexus study that revealed Berkeley could legally impose the fee at $84,400 per rental unit — although many cities propose a lower fee than the legal maximum because of financial feasibility concerns. In the last five years, the allowed maximum, according to the nationally accepted nexus standard, increased by $50,000, Soto-Vigil said.
Berkeley city government created a housing mitigation fee in 2012 after a state court decision struck down Berkeley’s inclusionary housing ordinance, which required developers to set aside 20 percent of their property for low-income housing.
After four months in effect, the fee was reduced from $28,000 per unit to $20,000 in order to incentivize paying the fee.
“I do think what we have right now is woefully inadequate, and that’s what we have been hammering at for the last several years,” said Commission Vice Chair Igor Tregub at the meeting, regarding the current mitigation fee.
He added that he agreed with the mitigation fee amount before it was reduced to $20,000 but that the percentage of below-market-rate rental units should be increased, thereby allowing developers to have two comparable options.
The commission will meet again Oct. 1 to finalize recommendations to City Council, which will discuss them in November.
Jamie Nguyen is the lead city government reporter. Contact her at [email protected].