Build more houses? Let’s talk

At the March 10 Planning Board meeting, Board member John Knox White suggested that the rapid progress being made on the 2014-21 Housing Element created breathing room to “have a conversation” about the goals the City’s housing policy ought to seek to achieve.

The Merry-Go-Round doesn’t do conversations, but we do like Mr. Knox White’s goal-oriented approach.  Indeed, it reminds us of our own suggestion that City Council list and rank its goals for development at Alameda Point before it began signing off on detailed planning documents.

That suggestion, of course, went nowhere.  Having more juice at City Hall than we do, Mr. Knox White may have better luck getting the current City Council to overcome its disinclination to engage in a policy discussion of any sort.  But if not, we’re happy to start the ball rolling in the hope that Mr. Knox White and his colleagues on the Planning Board will pick it up and run with it.

So here’s the proposition we’re prepared to defend: The goal of housing policy for the City of Alameda should be to match housing availability with employment opportunities.  Since the City now has more housing than jobs, planning should focus on creating more jobs, not building more houses.

(We should make clear that this policy is intended to apply to private residential development.  Government-subsidized low-income housing is a separate issue).

City Planner Andrew Thomas set the stage for this discussion in a little-noticed presentation to the Planning Board on February 10.  At issue was whether a parcel located at 1835 Oak Street should be re-zoned to allow a “mixed use” project consisting of 43 townhomes, a 2,000-square-foot “commercial” or “community” building, and 10 “commercial units” occupying 5,600 square feet.

Mr. Thomas took the occasion to present some statistics:

  • From 1990 through 2010, employment in Alameda has declined from 38,730 to 24,070 jobs (a 38% decrease);
  • From 1990 through 2013, total housing units in Alameda have increased from 30,491 to 32,429 (a 6% increase);
  • The “jobs to housing ratio” in Alameda is 0.71 (i.e., 24,070 jobs for 37,799 employed residents).

According to Mr. Thomas, housing growth is expected to continue.  Extrapolating from the 2014-21 Regional Housing Needs Assessment and the Alameda Point zoning ordinance, he projected more than 3,000 additional housing units will be built by 2021.

Mr. Thomas didn’t name names of the residential projects already approved by the appropriate bodies – the Planning Board presumably knew them – but we will:

  • Alameda Landing: 91 single family homes, 84 two-story condominiums, 56 townhomes, 22 single level flats, and a 23-unit apartment building;
  • Boatworks: 46 single-family homes, 40 duplexes, 67 townhomes, and a 29-unit apartment building;
  • Marina Cove II (nee Chipman): 52 single-family homes and 37 duplexes; and
  • Mapes Ranch (triangular parcel at Fernside and Tilden): 11 single-family homes.

These are just the projects already approved.  The list of proposed residential development projects includes not only the Oak Street proposal that prompted Mr. Thomas’s presentation but also Tim Lewis Communities’ recently announced plan to build up to 414 lofts, townhomes and flats in and around the old DelMonte warehouse (of which 309 housing units will go inside the old warehouse itself).

We’ll leave off the list, for now, two other residential development projects that – if the citizens have their way – will never see a shovel hit the ground: Tim Lewis Communities’ proposal to build 48 single-family homes at Neptune Pointe and whatever Ron Cowan’s latest scheme for the Harbor Bay Club ends up to be (it started as 80 single-family homes).

(Incidentally, the graphically inclined can see these sites, with a description of each, on a map prepared by Michele Ellson at The Alamedan).

Even without Neptune Pointe and the Harbor Bay Club, it sure seems like there are a lot of housing projects already in the works.  Which causes us to ask: Do we really need more housing in Alameda?

If the goal is to match housing availability with employment opportunities, the data presented by Mr. Thomas suggest that the answer is, No.  In fact, Alameda already has 50 per cent more housing units than employed residents.

But should that be the goal?  The affirmative argument is really quite simple: If everyone who lives in Alameda is able to work on the Island, our residents won’t need to find jobs elsewhere.  Which means they won’t need to commute.  Which means that they won’t be clogging the bridges and tubes getting to and from their jobs.  To use the fancy term, a jobs-housing “balance” – defined as one housing unit for each employed resident – will result in less traffic congestion.

Undeniably, that’s a good thing.  It’s good for the peace of mind of the people who chose to live here because they like what the Island has to offer.  And it’s good for the health of the planet, since shorter commutes produce lower carbon emissions.  (The cognoscenti also contend that a jobs-housing balance enhances “economic and social vitality,” but arguments like these are beyond our ability to evaluate).

Moreover, a jobs-housing imbalance may say something about a city’s relative priorities.  The only city in the Bay Area with a jobs-housing ratio lower than Alameda’s is Piedmont.  Have we, too, chosen to become a bedroom community for well-off commuters?

Redressing a jobs-housing imbalance can’t be accomplished by fiat.  A city can’t dictate to developers what types of projects they must build.  Nor can it force people to take jobs closer to where they live.

Moreover, an imbalance tilted in favor of housing over jobs may prove more difficult to fix than an imbalance going the other way.  As long as residential development is considered more lucrative than commercial development, you always can find property owners and developers willing to put up more houses.  Convincing them to build offices and stores instead is a tougher sell.

The Oak Street property discussed by the Planning Board presents the problem in microcosm.  According to the staff report, after the parcel became available, interest in the building was expressed by winemakers, research and development companies, software developers, and mobile and social media technology firms.  These companies were seeking so-called “creative office” space, which is “in short supply and high demand in the region.”  The Oak Street warehouse fit the bill perfectly.  Nevertheless, the property owner chose to sell the parcel to a residential developer.

Redressing Alameda’s jobs-housing imbalance by increasing employment opportunities on the Island thus might prove to be difficult.  But it is not impossible.

If our City Council were so inclined, it could use its zoning power to put more parcels into the commercial or mixed-use categories.  (Just the opposite, of course, of what Council actually did in July 2012).  The Planning Board could use its design review power to ensure that mixed use or planned development projects contain a strong commercial element.  (For example, even Planning Board chair David Burton, normally counted as a housing advocate, discerned a need for more commercial space in the proposed Oak Street project).  And City staff could re-double its efforts to pitch Alameda to businesses.  (Listening to Mr. Thomas’s presentation to the Planning Board, one comes away convinced that Alameda has something to offer every potential employer).

In any event, even if creating more jobs presents a challenge, tacking to the opposite course and building more houses will just make the jobs-housing imbalance worse. Now, the politically correct response is that the City can continue to encourage residential development as long as it adopts a “robust traffic demand management” program designed to force people out of their cars and onto buses and ferries. Call us skeptical.  But TDM is a way to ameliorate the traffic congestion that additional housing may produce.  If you don’t trigger the problem in the first place, you won’t need TDM.

And don’t tell us that “state law requires” the City to build more housing.  That argument fooled the public once, but we won’t get fooled again.

As City Planner Thomas has pointed out, the state housing element law doesn’t require the City actually to build anything.  It merely obligates the City to prepare an inventory of “available” sites containing the number of units, in total and in four income categories, sufficient to meet Alameda’s share of the Regional Housing Needs Assessment (“RHNA”).  As we have previously noted, the housing element law gives a lot of discretion to a city’s planners to decide which parcels are “available” for residential use and which income category to put them in.

Mr. Thomas is a proven master at this task.  As a result, the draft Housing Element he presented to the Planning Board satisfies the RHNA quotas with room to spare: the inventory of “available” parcels contains 2,245 housing units; the RHNA requires only 1,723.

Nor is building more housing the way to put the City on a sound financial footing.  As City Manager John Russo, among others, has argued, new housing often imposes an economic burden, rather than confers an economic benefit, on a city because the incremental cost of providing public services exceeds the additional property tax revenues generated by the project.  Indeed, even the developer who pitched the 1835 Oak Street. project to the Planning Board seemed to accept this point, since it included in its proposal a $15,000 per unit “fiscal improvement fee” to defray the added financial load on the General Fund.

In short: We don’t need more housing.  We’re not legally obligated to build more housing.  And building more housing may do more harm than good.  So why not make job-creation our priority and plan to build only enough housing to support existing and future employment opportunities?

We’re virtually certain that Mr. Knox White wouldn’t agree with any of the arguments we just made.  As he told the Planning Board,

There are a lot of reasons to build housing regionally, and within our city, that come down to affordability and taking care of the people who live here, building housing so that seniors can afford to live here, beyond access, which is also important. . . . I would suggest a couple of reasons we would want, a couple of our goals of building housing, are going to be around greenhouse reduction, climate change concerns, and with that really supporting transit-oriented development, not just building transit-oriented housing but actually supporting transit because they’re interlinked and you can’t do one without the other.  And it would be good, I don’t know if there was a policy in here, I don’t remember seeing it, about supporting in-fill as well, and talking about how housing can provide opportunity.  Oftentimes we get into discussions about how housing costs us money and commercial, but who’s paying the sales tax, who’s going to the stores, it’s the people who live in the housing who are going to those . . . . It’s not, you have one or you have the other, they’re symbiotic.  And how we build the housing can change that balance, can change the math on that.

For now, we’ll let Mr. Knox White have the last word.  But we hope that he succeeds in sparking a discussion among his colleagues – and we think Ms. Zuppan and Ms. Alvarez-Morroni, to name two, would have something valuable to say – about housing policy issues.

As Mr. Thomas and Mr. Knox White themselves might put it, that would be a conversation worth having.

Sources:

Staff presentation & report re rezoning 1835 Oak Street: 2014-02-10 staff presentation to PB re rezoning 1835 Oak St.; 2014-02-10 staff report to PB re rezoning 1835 Oak St.

Staff reports re approved residential developments: 2013-06-10 staff report to PB re Alameda Landing; 2011-07-11 staff report to PB re Boatworks; 2013-01-02 staff report re Chipman approval; 2012-10-02 staff report re Mapes Ranch

California Planning Roundtable article on jobs-housing balance: CPR-Jobs-Housing

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
This entry was posted in City Council, Development, Housing and tagged , , , , , , , , , . Bookmark the permalink.

4 Responses to Build more houses? Let’s talk

  1. conversing says:

    After Andrew Thomas finished his rant about how many years the city spent on the previous housing element, John Knox White started off by saying it was pushed through within six months. John said, this time around, city staff should allow time to actually “have a conversation.”

  2. William says:

    Robert. I always find your blogs to be informative and well thought out. They cause me to think further about the many issues we face here in Alameda. Thank you for your consistent efforts.

  3. dave says:

    Russo’s claim about housing not paying vis-à-vis commercial sets my skeptic meter spinning. housing.

    With property the city takes in .29% of the gross 1% ad valorem tax. For a $500,000 house that’s $1450/yr, and that’s ongoing every year, plus a 2% increase in most years. And $500,000 is obviously on the low side for home value.

    Compare that to sales tax, of which the city gets .75%. Therefore that same household must purchase $193,333 in taxable goods for sales tax to equal prop tax. I sincerely doubt more than 1 or 2 households in Alameda spend that much in a year, as most large outlays (housing, insurance, tuition, etc) are not subject to sales tax. The few households that buy a Ferrari certainly don’t purchase it on Park St.

    While new neighborhoods and infill housing will add incremental law enforcement expenses, so will new commercial development, and the commercial revenue simply doesn’t add up to residential. Maybe — MAYBE — it does if it’s a large B-to-B seller, but that is a stretch.

    When redevelopment financing was in place, and that was the plan for the base’s development, then Russo’s claim held true. With redevelopment almost all of the property tax revenue was siphoned off for debt service of the district, in effect a subsidy to the developer. In that scenario, sales tax IS the most significant revenue source, but RD is gone (hopefully forever). Surely Mr Russo is aware of the differences here. He is rather loudly sensitive to gross revenue, and is obviously aware that the city’s largest revenue source is property tax, and that sales tax revenues has been static to down in recent years.

    Unless the city is significantly subsidizing these new developments, whether through TIF financing or outright cash outlays, it seems clear, at least to me, that residential is a vastly greater generator of tax revenue than sales tax. Am I missing something? Is there a significant subsidy of which I am unaware?

    • William says:

      It is also worth noting that the city of Alameda now gets a $7 a month tax from mobile phone users! What do they get this? What service do they provide? The cell sights are built by the mobile companies and they pay a fee to have them reside here.

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