Education in Oakland

Inclusionary Zoning is Back

Posted by novometro on October 17, 2006

This is a tough one. Oakland City Council takes up an inclusionary zoning ordinance Tuesday evening that would require 15 percent of new rental units in the city be affordable to a family of four earning around $50,000. Affordable units for sale would have to be within the budget of a family of four with an annual income of $83,000. Thus, a maximum rent for a four-room apartment would be $1,458. A spacious, new condo could be had for $250,000. Developers could also opt to put money in an affordable housing trust fund. The fee for a project with 100 market-rate, two-bedroom units would be $5.3 million.

That works out to a “tax” of $53,000 on each unit. The question is this: Will that mandatory extra cost stifle development in Oakland? Oakland Native thinks so. And a paper published by the Reason Foundation in 2004, a Libertarian think tank in Los Angeles, argues that inclusionary zoning fails to create affordable housing while it simultaneously prohibits the creation of market rate housing. The study ends this way: “Inclusionary zoning should only be enacted if the goal is to make housing more expensive and decrease the quantity of new housing.”

But a 2002 study prepared for the Los Angeles Housing Department concluded that inclusionary zoning policies throughout the state have not hindered housing production, but have actually resulted in more housing in places like Sacramento and San Diego. The study found that “housing starts most closely track the unemployment rate.”

Part of the problem in evaluating the pros and cons of inclusionary zoning lies in the wildly different numbers the researchers use to support their competing arguments. For example, the authors of the Reason study claim that inclusionary zoning policies in the Bay Area have produced only 7,000 units over 30 years. According to another team of analysts in Washington D.C., that figure is off by about 93,000.

Crafted by City Councilwomen Jane Brunner and Jean Quan, the proposed ordinance would make an exemption for projects within 1,000 feet of a BART station.

Erecting a speed bump to development in Oakland makes me nervous. So does the prospect of Oakland no longer being an affordable home for the kinds of immigrants that make a city a hotbed of entrepreneurialism and creativity. Jane Brunner told the San Francisco Chronicle it would have been better to introduce inclusionary zoning in the midst of the housing boom. She’s right. It seems dangerous to do this now with DataQuick reporting Monday the first downward tick in housing prices in four years.


5 Responses to “Inclusionary Zoning is Back”

  1. jerome peters said

    But it’s never ever a good time to require anything from developers, is it? It reminds me of my mom’s efforts to deprive me of popcorn at movies: if it was before dinner, it would ruin my appetite. If it was after dinner, I just ate.

    IZ actually did come up in the midst of the housing boom, but it was then voted down because it would have “stopped the investment Oakland is finally getting.” Now, investment is slowing, so it’s also a bad idea now.

    As I always say, child labor laws definitely increased the cost of doing business. Luckily, there’s more to our world than that.

    The question is not if there will be IZ, it’s when and what it will look like. Dellums and Council hopeful Allison are both supporters and Dellums has made no secret that he wants IZ> The question is whether this proposal–put forward by lefty by reliably reasonable Quan and Brunner–is going to be better or worse than one that could come from Dellums, Allison and Nadel.

    The political tea leaves are clear: there will be IZ in Oakland. The question is “what kind?”

  2. This proposal is quite radical. It has no compromises with developers, and gives housing activists even more than they asked for in their (failed) initiative put forth in the spring. The current proposal exempts some BART stations but not others (it was modified the other day), allows NIMBYs to sue developers even if the projects are approved by city staff (a very dangerous idea), and would be more expensive than San Francisco’s $110k/bd IZ policy (which, by the way, was a result of compromise with the developers and an economci impact study, which is sorely lacking in Brunners’ proposal).

    This would be the absolute end of residential development in Oakland. The timing is awful, the mandate is unfairly high, and developers will be completely spooked by the third-party lawsuit provision. Downtown, property owners will go for office rather than residential construction; outside of downtown, projects either won’t be built or will be scaled down to avoid the law.

    70% of Oakland’s condo buyers are first-time homeowners. They can’t afford SF-level fees, let alone those proposed by Brunner.

  3. More on the fees – the fee schedule that you cited is an estimate by the city staff. SF’s fees are $110k/bd, and our construction costs are identical. There is no reason to believe that Oakland’s fees will be any lower than SF’s, especially as the newly-rewritten version of the ordinance targets lower-income people than the one put on the agenda last week.

  4. Jerome Peters said

    There are no fees set yet in the proposal, so you don;t know what they will be. The level of the in lieu fee is a mechanism that can incentivize certain public policy objectives (on site inclusionary) or others (raising money for lower income affordable housing).

    Nobody mentions that the proposal is only for projects with more than 20 units. So the “end” of residential development is probably a bit of an overstatement.

  5. It is fair to estimate Oakland’s fees from SF’s, since our constructions costs are virtually identical (land costs are not a facotr). The version that was before the council targeted poorer people than SF’s, so it would cost more than their $110k/bd.

    In very few parts of Oakland are land costs low enough to justify 19-unit residential buildings. One speaker last night said we should approve inclusionary zoning because it would “reduce traffic.” The third-party lawsuit provision is frightening. Good riddance to awful policy.

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