Whither Measure A? (Part II: Repeal It!)

Since posting our first installment showing how multi-family housing appears to be flourishing in Alameda despite Measure A, the Merry-Go-Round has been inundated with messages from the anti-Measure A crowd conceding that repeal of the Charter provision isn’t necessary after all.

Yeah, right.

If you believe that, you’ll also believe Rob Bonta intends to remain a State Assemblyman for life or that the Alameda firefighters’ union has agreed to a pay cut to balance the City budget.

But you can’t blame the opponents of Measure A for not declaring victory just yet.

Sure, actions by Council such as adopting the Density Bonus Ordinance and amending the zoning ordinance are steps in the right direction, the opponents would say.  But those actions don’t go far enough.  If Measure A were repealed altogether, they’d argue, we’d move even closer toward realizing the “progressive vision” for Alameda:  a “transit-oriented” community offering “affordable” housing for people of every socio-economic group.

In a nutshell, the argument, as we understand it, is that repealing Measure A would result not just in more multi-family housing, but also more and denser multi-family housing.  And that in turn would produce two results essential to achieving the progressive vision:  an increase in the supply of low- and moderate-income housing and an increase in usage of public transit.

At the Merry-Go-Round, we feel unqualified to comment on anyone’s idea of the ideal City upon an Island, so we’ll leave it to you to decide whether you share the aspirations for Alameda espoused by our most enlightened citizens.  Instead, our focus today will be on evaluating whether, and how, repeal of Measure A would affect affordable housing and public transit.

Let’s start with affordable housing.

Technically, housing is deemed “affordable” if housing costs take up no more than 30 per cent of a person’s income.  By this standard, it can’t be denied that Alameda has insufficient affordable housing for its current residents.

The “Background Report” in the draft 2015-2023 Housing Element presents the statistics. The “average” price for a home in Alameda was $610,000.  “Average” monthly rents ranged from $1,009 for a studio to $3,301 for a three-bedroom apartment.  Yet the median income for a household of four was $75,832.

According to the report, this disparity between housing costs and income results in what it calls “overpayment”:  In 2010, nearly 40 per cent of Alameda households spent more than 30 per cent of their income on housing costs, and almost 20 per cent spent more than 50 per cent of their income on housing costs.  These numbers are “roughly equally true” for both renters and owner households, with “very low” income households – i.e., those earning less than 50 per cent of the area median income – the worst off.

Those are the facts.  So what should City government do about them?

Some might say:  Nothing.  If people choose to spend more than the magic ratio of 30 per cent of income for housing, so be it.  That’s their right.  And if they resolve to stick to the 30 per cent rule but they can’t find housing in Alameda within their means, let them find a less expensive place to live.  That’s their remedy.

To us, this is a defensible position.  But for present purposes, we are bound to accept the proposition that it is City government’s role, as a matter of public policy, to ensure that sufficient housing is available to enable everyone, regardless of their income, to afford to live in Alameda.  Would repealing Measure A aid in the accomplishment of that goal?

The simplistic answer is, Of course.

In Alameda, like elsewhere in the Bay Area, you can’t increase the supply of affordable housing by building single-family homes.  They just cost too much to build to bring them within the price range of low- and moderate-income households.  So the only way to get more affordable housing is to build multi-family housing.  And in Alameda, construction of additional multi-family housing necessarily will result in an increase in the number of housing units available to households of modest means.

That’s because of the City’s Inclusionary Housing Ordinance, which requires that 15% of the total units in any new residential development be set aside for “Very Low-, Low- or Moderate-Income Households.”  And if residential development occurs at Alameda Point, even more low- and moderate-income housing will result, since the Renewed Hope settlement mandates that 25% of the units built at the Point “shall be made permanently affordable,” with 10% going to households with incomes at or below 80% of median income.

So get rid of Measure A and let a thousand flowers – or, more precisely, affordable apartments – bloom!

But hang on a minute.  All of these consequences assume that repeal of Measure A would stimulate construction of additional multi-family housing.  To validate that assumption, we’ve got to bring some people’s favorite villain – the “greedy developer” – into the picture.  A developer won’t build a project unless she thinks it will turn a profit.  If a multi-family project doesn’t “pencil out,” the developer won’t build it – and no project means no additional affordable housing.

These days, this concern may be mainly theoretical.  As readers of the financial press know, the multi-family housing market is hot.  According to a recent article in the Wall Street Journal, “the share of new homes being built as rental apartments is at its highest level in at least four decades.”  So, of course, developers, freed of the prohibition imposed by Measure A, will leap at the chance to put up new multi-family projects, won’t they?  After all, that’s where the money is.

Some housing advocates make a more sophisticated argument why repeal of Measure A would lead to more multi-family projects and a corresponding increase in the supply of affordable housing.  It centers on the relationship between density and development costs.

The Density Bonus Ordinance already allows a developer to increase density to 29 units per acre – 35% over the Measure A limit – in exchange for including affordable housing in a project.  But people like Bill Smith, the vice president of Renewed Hope who speaks frequently – and articulately – at Council meetings, think developers would find a higher number more enticing.  As Mr. Smith explained:

Both for- and non-profit housing developers find that land, infrastructure and construction costs are minimized if three to five story multi-family units with densities exceeding 60 units per acre are allowed. The exceptions to Measure A allow at least 30 units per acre, but none allow the more competitive housing densities of 60 units per acre or higher.

If Mr. Smith is right, eliminating Measure A’s density limitations would enable developers to build “more competitive” multi-family projects.  That would mean they’d build more of them, and more multi-family housing brings more affordable housing along with it.

(As is our wont, the Merry-Go-Round wasn’t willing to take Mr. Smith at his word.  When we challenged him to substantiate his assertion, he prepared and sent us the analysis we’ve attached at the end of this post).

In the end, whether repeal of Measure A would result in additional affordable housing may depend on market factors that even the government can’t control and even someone as smart as Bill Smith can’t predict.  If developers find it in their economic interest to respond to the repeal by building more – and denser – multi-family housing, the strategy succeeds. If they don’t, it doesn’t.

Now on to public transit.

To set the stage:  Today, Alamedans can commute to their jobs by car, by bus, by ferry, or by BART (once they get to the station by other means).  According to estimates in the 2008-2012 American Community Survey, 71.4% of Alamedans drive to work – 62% use their own cars – and 15.8% take public transportation.  The Bay Area Census reported similar figures:  75% by car and 15.7% by public transportation (broken down into 8.6% by bus, 4.4% by subway – which presumably means BART – and 2.3% by ferry).

We would like to have seen whether there are any trends in public transit usage by Alamedans, but the only information we could obtain – and thanks to Scott Houston of the Water Emergency Transportation Authority for providing it – was for the ferry:  Boardings at the Main St. terminal in Alameda have increased from 15,759 in July 2012 to 19,842 in April 2014.

Even if public transit usage already is on the rise, let’s assume that one of City government’s missions, as a matter of public policy, is to increase it even further.  Would repealing Measure A boost the number – or percentage – of Alamedans who take the bus or ferry to get to work?

To some housing advocates, the answer is obvious because multi-family housing and public transit go hand in glove.  It’s simply a matter of demographics.

So say some of the experts.  For example, according to the consultants who wrote the Station Area Plan for Alameda Point in 2009, “A typical household in a multifamily building generates fewer auto trips and more transit trips than a typical household in a single-family unit.”  Why?  Because “a typical moderate-income or low-income household generates fewer automobile trips and more transit trips than a typical household that can afford to buy a market rate single-family home.”

Lacking a sociology degree, we can’t evaluate the accuracy of this assertion.  It does seem, well, a little elitist and a bit illogical:  If someone can’t afford an expensive house, it doesn’t necessarily follow that she can’t afford an inexpensive car and therefore she must resort to the bus.  Nevertheless, according to the Victoria Transport Policy Institute, even “studies that account for demographic factors find that virtually all groups that live in higher density areas reduce their average annual vehicle mileage.”

Putting demographics to one side, the argument that additional multi-family housing would result in increased public transit usage can be supported just as a matter of logic.

The argument begins with a truism:  for any given parcel, building multi-family housing will result in more new residents than building single-family homes, simply because more people can live in a multi-unit apartment building than in a handful of single-family homes.  Now follow along:  Where there are more new residents, there are more potential new customers for public transit.  Where there are more potential new customers, there is more revenue available for public transportation providers.  And where there is more revenue available, there is more reason for providers to expand their service.

If this logic doesn’t persuade you, maybe you’ll trust the Victoria Transport Policy Institute and the National Research Council.  According to a recent VTPI article summarizing the literature, “As density increases per capita vehicle travel tends to decline, and use of alternative modes increases.”  By how much?  It depends on which expert you ask.  An NRC survey reported that “doubling residential density across a metropolitan area might lower household VMT [Vehicle Miles Traveled] by about 5 to 12 percent, and perhaps by as much as 25 percent, if coupled with higher employment concentrations, significant public transit improvements, mixed uses, and other supportive demand management measures.”

So there you have it, logic and expert opinion:   If Measure A was repealed, and developers responded by building additional multi-family housing, public transit usage would increase as a result of the higher population density created by the new multi-family projects.  Mission accomplished!

Unfortunately, there is no consensus about just how high density must be to “support” public transportation.  “As a general rule of thumb,” VTPI says, “4-7 dwelling units per acre are required to create demand for ‘basic’ bus transit service (20-40 buses per day), 6-15 units per acre are required to create demand for ‘frequent’ bus transit service, 9 units per acre are needed to create demand for light rail transit, and 12 units per acre are needed to create demand for rapid transit.”  For a “typical transit-oriented neighborhood,” the density for the apartment buildings located at the “core” is 50 units per acre.  For a “transit village,” the density for the centrally located apartment buildings goes to 80 units per acre.

When the issue has arisen in connection with the Alameda Point Town Center, even our own local experts don’t agree.  The Bay Area Station Area Planning Manual states that a “transit center” should contain 20 to 75 units per acre.  By comparison, the “precise plan” for the Town Center recommends a minimum density of 35 units per acre overall “and higher densities in the Core area.”

At the Council meeting at which staff sought approval to issue requests for qualifications to developers, City staff averred that 25 units per acre was high enough to induce transit operators like AC Transit to expand their services.  But the Planning Board’s John Knox White, in a special appearance, insisted that such a density “barely supported” even infrequent bus service to and from the Town Center.  (He didn’t disclose, at least at that meeting, what he thought the magic number was).

We suspect that, if pressed, housing advocates whose goal is to increase public transit usage would say, The higher the density, the better.  Repeal Measure A’s density limitation and let developers cram as many units into a building as they can.  And then watch all the people clamber on board the buses and the ferries.

By now any defender of Measure A who has read this far probably is starting to feel her blood boil.  Higher density, whether in terms of housing or population, is a good thing?  You’ve got to be kidding!  But be patient, ye hardy band of diehards:  We’ll turn to the case for the defense in our next installment.

Sources:

Draft 2015-2023 Housing Element: 2014-03-10 staff report to PB — Ex. 1 – Draft Housing Element

Inclusionary Housing Ordinance: 30_16_INCLUSIONARY_HOUSING_REQUIREMENTS_FOR_RESIDENTIAL_PROJECTS

Density Bonus Ordinance: 30_17_DENSITY_BONUS_ORDINANCE

Renewed Hope settlement agreement: Settlement Agreement – Renewed Hope and Arc Ecology

American Community Survey: ACS_12_5YR_S0801

Bay Area Census: Bay Area Census — City of Alameda

Station Area Plan: Station Area Planning Study – 2008

Station Area Planning Manual: Station_Area_Planning_Manual_Nov07

Victoria Transit Policy Institute articles: Online TDM Encyclopedia – Land Use Impacts on Transport; Online TDM Encyclopedia – Transit Oriented Development; Online TDM Encyclopedia – Clustered Land Use

National Research Council paper: NRC article, Driving & the Built Environment

W. Smith analysis of residential development costs: WSmith memo re housing costs

About Robert Sullwold

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

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