Berkeley is facing an unprecedented housing crisis, which threatens the very soul of our city. With sky-rocketing housing costs forcing out artists, intellectuals, students, seniors and working families, the core values of our city — diversity, inclusion and innovation — are threatened. This housing crisis is also having a profound effect on our schools and our neighborhoods, which are seeing advanced stages of gentrification.
This crisis is a result of many factors — booming regional job growth and an inadequate supply of housing, and the state Costa Hawkins Act, which allows owners to increase rents whenever a tenant moves out. While there is a limited supply, there is also pure speculation on the part of some builders and owners. We are seeing huge rent increases displacing tenants, unfair evictions and demolitions of older housing, in order to make more profits.
The deep concern over the housing crisis is shared by many Berkeley residents. A recent survey conducted in March 2016 revealed that Berkeley residents believe the housing affordability is the biggest issue this city is facing, with 79 percent of respondents saying it is a very or extremely important issue the city needs to address.
But what is the solution to this crisis? Just building lots more market-rate housing or also creating more low-income units?
There are many who say that just building housing, even though it’s luxury housing, is the solution because at some unknown point, it will have a downward effect on rents. But how much housing is needed to lower rents, and how long will it take? We need to significantly increase supply, but we can’t wait 10 years to solve the problem. The people who are hanging on to stay in this city will be gone by then.
A recent report by UC Berkeley’s Urban Displacement Project points out what we have known for decades: Trickle-down economics does not work. More specifically, the concept that constructing market-rate and luxury housing will make rents more affordable for low-income people has proven not to be very effective. Rather, the report says, the construction of subsidized housing is twice as effective as market-rate housing in reducing displacement.
Berkeley can take bold steps to stem the tide of gentrification and maintain our economic and cultural diversity. But it will take resources such as strong tenant protections to protect existing renters from displacement and more funding to build low-income housing.
A major obstacle to the construction of affordable housing is the lack of funding. We have seen shrinking resources due to cuts in state and federal funding. Our Housing Trust Fund, which is the best vehicle of creating new low-income housing, has roughly 3 million dollars, yet there are $36 million in affordable housing projects that need funding over the next three years. We need more sustainable local funding for affordable housing. That is why in February 2016, I proposed an item to earmark a portion of the increase in the Real Estate Transfer Tax to fund affordable housing. Unfortunately, a majority of City Council decided to vote against this policy, further suppressing our ability to fund affordable housing.
At the May 17 council meeting, some inroads were made in developing a comprehensive policy to address the housing affordability crisis. I introduced a series of proposals that asks city staff to develop an Affordable Housing Funding Plan that will help develop 500 low-income units in the next five years. The proposal also calls for more student housing around campus, with expansion of the Berkeley Student Cooperative to provide affordable student housing. But we need to make sure that the actions we took become a reality.
This November, we have an important opportunity to increase funding to affordable housing. First is the countywide Affordable Housing Bond, which will provide $500 million for affordable housing projects. This can help us construct hundreds of new affordable units just in the city of Berkeley. Just as important will be a measure to increase the business license tax for large landlords. With huge rent increases, property owners are making significant windfalls. Some of these excess profits should be taxed to support community needs, including building more affordable housing. The measure will raise up to $6 million annually, which could be used for affordable housing.
With the future of Berkeley at stake, we cannot turn a blind eye to the displacement that is happening today. If we want Berkeley to be a diverse and vibrant place to live in, we must take a multifaceted approach that protects existing tenants, funds new affordable housing and promotes equitable housing policies. That’s the Berkeley way.
Jesse Arreguin is a Berkeley city councilmember.