The “nexus” between market-rate and affordable housing

Today we submit for your consideration the following heresy:

The market-rate residential developments approved or proposed for Alameda aren’t going to solve the problem of the shortage of affordable housing in the City.  In fact, if anything, they’re going to make the problem worse.

This is heresy, of course, because it runs directly counter to the credo espoused by the most dogmatic of Alameda’s Inner Ringers and the most rabid of our local housing advocates.  Building more market-rate housing, they claim, is the best, if not the only, way to increase the supply of affordable housing and thereby eliminate the shortage.

But if you’re willing to risk expulsion from the society of the enlightened – the Merry-Go-Round was never invited to join – you might be interested in what the economists (rather than the ideologues) have to say about this issue.  As it turns out, it’s quite a lot.

The bottom line is that, since market-rate residential development creates the need for more housing for very-low-, low- and moderate-income households, a new project will add to, rather reduce, the existing shortage of affordable housing unless the project itself supplies the necessary additional affordable units.  And even if it does, the aggregate deficit is not likely to shrink significantly.

In fact, what’s true as a theoretical matter may be coming true as a practical matter in Alameda.

Here’s how we get to that conclusion:

More than a dozen cities in the Bay Area have adopted ordinances requiring market-rate residential developers to pay an “impact fee” intended to “mitigate” the effects of their projects on affordable housing.  (The City of Alameda is not one of them.)  This fee is used, among other things, to fund construction of new housing for very-low- and low-income households.  Before a city can impose such a fee, state law requires it to prepare a so-called “Nexus study” analyzing the impact of new market-rate residential developments.

The premise of the Nexus studies is simple:  The new residents in a market-rate development will need goods and services, like groceries and home repair.  The demand for those goods and services will create new jobs.  But many of those jobs won’t pay much, and the workers who perform them won’t earn enough to be able to afford market-rate housing.  As a result, if these workers are going to live in the community where they work, they’ll need affordable housing.  Otherwise, they’ll have to commute to their jobs – with all of the detrimental traffic and environmental consequences that entails.

The following diagram, taken from the Nexus study for the City of Albany, illustrates the concept:

Nexus Analysis Concept

Next comes the hard part:  quantifying the impact.  The methodology used by the different economic consulting firms preparing Nexus studies is pretty much the same:

  • Estimate the household income distribution of the households purchasing or renting the new market-rate units.
  • Estimate the consumer expenditures of those households.
  • Estimate the number of new full-time employees required to provide the goods and services purchased by these households.
  • Estimate the number of new households associated with this employment growth.
  • Estimate the income distribution of these new employee households.
  • Estimate the number of new households requiring affordable housing.

We’ll skip any extensive discussion of the tools used to derive these estimates – if you truly want to know more about the IMPLAN software model, we’ve attached the Nexus studies for the cities in Alameda County so you can read all about it – and get right to the results.

Typically, the studies calculate the need for additional affordable housing for a variety of development scenarios (e.g., town homes, condos and apartments), each of which is assumed to contain 100 units.  For each scenario, the study shows the number of new housing units needed for the very-low- (0-50% of area median income), low- (51-80% of AMI), and moderate- (80-120% of AMI) income households whose members will perform the low-paying jobs needed to service the residents in the new market-rate developments.

Take Berkeley as an example.

In 2015, the Berkeley city council received a Nexus study assessing the need for additional affordable housing created by both a 100-unit condo project and a 100-unit apartment complex.  Here are the tables showing the results (if they’re hard to read,  click the Condo link for a larger version of the first table and the Apartment  link for a larger version of the second):

Condo

Rental

The bottom line can be summarized this way:

  • Every new market-rate condo development will generate a need for 13.1 new housing units for very-low-income households, 6.71 new units for low-income households, and 14.68 new units for moderate-income households per 100 units of new housing.
  • Every new market-rate apartment complex will generate a need for 11.48 new housing units for very-low-income households, 5.88 new units for low-income households, and 12.86 new units for moderate-income households per 100 units of new housing.

Alameda, of course, is not Berkeley (at least not yet; we’ll wait to see who gets elected to Council in November), and it would be wrong to assert that the new residential developments here will result in exactly the same affordable-housing needs as those in Berkeley.  In fact, it’s almost certain that the numbers would differ, since a Nexus study makes assumptions about sales prices and rents specific to the community being studied.  Unfortunately, the City of Alameda hasn’t done any recent Nexus study of its own, so the data isn’t available that would allow more precise evaluation.

But we’re not going to give up so easily.

To get an idea of how much additional affordable housing the new market-rate residential developments in Alameda will make necessary, we took the data from the Nexus studies prepared for other Alameda County cites (except Oakland, whose analysis is not readily comparable to those done by the other cities) and computed an average of the new affordable units needed to support market-rate condo and apartment developments.  We then compared these computed needs with the affordable housing actually provided – or promised – by the two large residential projects that Council already has approved.

The conclusion won’t make supporters of affordable housing smile.

First, the average number of additional units of affordable housing needed per 100 units of new housing:

Very low   income Low income Moderate       income
Condos    11.56         6.76      5.09
Apartments     9.22         5.52      4.33

Then the local projects:

In November 2014, the lame-duck Council approved the Del Monte warehouse development (for which, as of today, construction hasn’t even commenced, much less been completed).  The developer, Tim Lewis Communities, always has been coy about the mix of condos and apartments to be included in the 380-unit project, so we did the analysis both ways.  A 100% condo project would create the need for 44 very-low-income units, 26 low-income units, and 19 moderate-income units.  For a 100% apartment project, the corresponding numbers are 35, 21, and 16.

Tim Lewis will tell you that the Del Monte project provides 55 units of affordable housing, and that is true – but 31 of those units, comprising all of the very-low- and low-income units, are contained a separate building devoted to senior housing.  Perhaps some of the folks aged 62 and older who will live in this building will take jobs selling yogurt or teaching yoga to the new residents of the renovated warehouse.  But maybe not.  And if they don’t, far from reducing the city-wide shortage of affordable housing, the Del Monte warehouse development actually will increase the need for very-low-income housing by 35-to-44 units and for low-income housing by 21-to-26 units.

The picture is only marginally better for the residential development approved by the current Council just a few weeks ago:  the Alameda Marina.

The master plan prepared by the developer, Bay West Development, calls for 760 new housing units, of which at least half must be offered for sale.  Applying the Alameda County averages to a 50/50 split between for-sale and rental units, the project would create the need for 79 very-low-income units, 47 low-income units, and 36 moderate-income units.  But the master plan calls for only 33 and 26 units, respectively, in the two lowest-income categories.  (It also includes 45 moderate-income units.)  Thus, like the Del Monte warehouse, the Alameda Marina project won’t reduce the shortage of affordable housing in Alameda.  To the contrary, it will increase the need for such housing by 46 very-low-income units and 21 low-income units.

(As a preview of coming events, we also crunched the numbers for the redesigned 589-unit Encinal Terminals project Tim Lewis is going to present to the Planning Board Monday.  Based on the Alameda County averages, this project, depending on the condo/apartment mix, will worsen the city-wide affordable-housing shortage by 29-to-43 very-low-income units and 13-to-20 low-income units.)

The Nexus studies undermine the argument for market-rate residential development derived from what we’ve called the “movin’ on up” theory (and the housing economists call the “filtering” effect).  The premise of this theory is that everyone wants a bigger and better place to live.  New market-rate projects appeal to this longing, and, as renters and homeowners flock to the more expensive residences, apartments become available for lower-income renters.  Or so it is claimed.

Even if this theory reflected an accurate reading of human nature – i.e., that we’re all little George Jeffersons – it will take a long time for the “filtering” effect to occur, and the benefits may not trickle down to those at the bottom of the income scale.  Don’t take our word for it.  As the definitive research brief published by the Institute for Governmental Studies at Berkeley states, “The filtering process can take generations, meaning that units may not filter at a rate that meets needs at the market’s peak, and the property may deteriorate too much to be habitable.”  Moreover, “while filtering may eventually help lower rents decades later, these units may still not be affordable to low-income households.”

When Smashburger opens a new outlet to cater to the residents of the new waterfront developments in Alameda, we doubt that the employee behind the counter will take much comfort in the assurance that the movin’-on-up phenomenon ultimately will bring down housing costs:  she needs an affordable apartment now – not decades from now.

During the meeting at which Council approved the Alameda Marina project, none of those on the dais, or at the podium, addressed these (presumably unintended) adverse consequences of market-rate residential development – except for Bill Smith, a long-time local housing activist and member of the Renewed Hope housing advocacy group.  Before the meeting, Mr. Smith submitted a comment letter on the draft environmental impact report in which he urged the City to study the potential effects of new market-rate developments on affordable housing:

The Alameda Marina project together with proposed developments at the Del Monte Building and Encinal Terminals sites, would add about 1,500 market rate homes to the Buena Vista / Clement Avenue corridor.

These expensive market rate homes would induce hundreds of low wage jobs in Alameda, including for K-12 teachers, retail clerks, landscapers, home electricians, plumbers, handymen and many others. . . .  [T]o find the adverse impact on housing to be less than significant, the Draft EIR must demonstrate that the ~100 affordable units proposed in the plan would be able to accommodate at least the number of low-wage workers required to provide the residents of the market rate and affordable homes in the development with a variety of services.

There is a reasonable expectation that despite the provision of ~100 affordable units, this market rate housing will have a significant adverse impact on the cost of housing in Alameda for low-wage workers and will force them to seek housing in surrounding cities. The Draft EIR ignores these workers and provides no basis for asserting that the impact on them would be less than significant.

The official response to Mr. Smith’s  comment letter was not to deny the validity of his argument – but to state that the impact he identified was not an environmental impact meriting analysis in the EIR.  Likewise, when Mr. Smith spoke at the Council meeting, no one on the dais took up his challenge to the conventional wisdom; instead, the Councilmembers hewed to the party line.  Typical was Councilwoman Marilyn Ezzy Ashcraft: “I just want to see more housing, whatever we provide, whatever percentage of rental and for-sale, we’re going to help address the problem we have, make no mistake about it.”

Now for the application part of today’s sermon.

We suppose that those who reflexively oppose new residential development – and, frankly, we don’t believe there are as many zealots in this camp as in the opposing one – can take post facto gratification from the conclusion that market-rate residential projects  may actually make the city-wide affordable-housing shortage worse. “See, we told you it was a bad idea!” they can gloat.  But what’s done is done.  And the risk of further harm from subsequent projects doesn’t give these folks any ammunition to use to shoot them down.  As Assistant Community Development Director Andrew Thomas will be the first to tell you, the state Housing Accountability Act limits the grounds upon which a city can deny a residential development proposal – and exacerbation of the local affordable-housing problem isn’t one of them.

As we see it, a city that truly wants to remedy the affordable-housing shortage first must decide the extent to which it is willing to continue to rely on private developers.  The analysis we’ve presented today suggests that the current system isn’t doing the job in Alameda, but perhaps it could be tweaked rather than trashed.  Maybe the percentages of affordable units required by the inclusionary housing ordinance should be increased.  Or maybe developers should be required to pay an affordable-housing impact fee in addition to including affordable units in their project.  Sure, we recognize that either of these measures would increase a market-rate residential developer’s costs, but that doesn’t bother us, since it is the developers themselves who have made the problem worse.

The alternative is for the city to relegate private developers to the back seat and start driving the construction of affordable housing itself.  Our regular readers know that this approach appeals to us, and from his public comments, it would seem Mr. Smith favors it as well.

“[O]ur existing housing policies are leading us to become ever more reliant on Oakland and other surrounding communities to house the new workers required to staff businesses that new market rate housing attracts to Alameda,” he told Council on April 3.  “If we move Alameda to the head of the class for funding construction of affordable housing, we will be better positioned to attract and retain both residents and businesses.”  More recently, he suggested that Council authorize a study of “social financing methods for affordable housing, including philanthropic, business or government (e.g. housing bonds).”

Pursuing either impact fees or government financing would require political will by current and future elected officials, since both might hit them where it hurts the most:  their campaign accounts.  The developers who fund PACs like “Alamedans United” won’t like the idea of seeing their costs go up.  And the groups who promote candidates willing to hand over an ever-increasing share of City revenue will balk at diverting cash away from wages, benefits, and multi-million-dollar emergency operations centers.  Forgive us for being cynical, but we don’t see our politicians relying for donations on the lower-income people whom affordable housing benefits.

But we may be wrong.  We urge our readers to listen carefully to what the candidates say about housing issues this fall.  If any of them starts touting market-rate residential development as the solution to the affordable-housing shortage – he’ll be the one leading the chants of “Build more housing now!” – well, you might consider voting for someone else.

Sources:

Albany Nexus study: Albany Affordable Housing Nexus Study (December 2016)

Berkeley Nexus study: Berkeley Affordable Housing Nexus Study (March 2015)

Emeryville Nexus study: Emeryville Residential Nexus Study (March 2014)

Fremont Nexus study: Fremont Affordable Housing Nexus Study (October 2016)

Hayward Nexus study: Hayward Affordable Housing Nexus Study (October 2017)

Oakland Nexus study: Oakland Affordable Housing Impact Fee Nexus Study (March 2016)

Pleasanton Nexus study: Pleasanton Affordable Housing Nexus Study (rental) (February 2018); Pleasanton Affordable Housing Nexus Study (for sale) (February 2018)

Richmond Nexus study: Richmond Residential Nexus Study (July 2016)

San Ramon Nexus study: San Ramon Residential Nexus Study (March 2016)

Union City Nexus study: Union City Affordable Housing Nexus Study (September 2016)

Del Monte warehouse: 2014-12-16 Ordinance – Del Monte Master Plan-redline

Alameda Marina: 2018-07-10 staff report

Encinal Terminals: 2018-07-23 staff report to PB

Bill Smith comment letter: Bill Smith comment letter to DEIR

IGS research brief: Berkeley IGS research brief re subsidized & market-rate housing

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
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20 Responses to The “nexus” between market-rate and affordable housing

  1. Karen says:

    Alameda is to blame for the high cost of housing. Due to the ban on multi-family housing, Alameda has not built any multi family housing in forty years. If you’re not sure what 40 years looks like — find someone who is 40 years old and take a long look at them. During their lifetime, there was no
    multi family units built in Alameda.

    Couple that with the Bay Area economic boom, we are facing a supply and demand problem. Let’s make sure we are getting to the core issue of the housing shortage: there is not enough supply to meet the demand, which causes prices to rise.

    After a forty year ban on multi-family housing, we need both market rate and affordable housing to meet the housing shortage. I agree we need to come up with more creative ways to build more affordable housing, so let’s focus on that — but we need both.

    Finally, market rate housing helps to pay for new transportation improvements. The new Seaplane Lagoon Ferry at Alameda Point, and the expanded AC Transit Line 19 (which stops one block away from Alameda Marina) are two of the transportation improvements being funded by market rate development, and there are other transportation projects in the pipeline.

  2. Steve Gerstle says:

    What I see happening is that lower wage workers are doubling and tripling up in apartments. Living rooms become bedrooms. Some live in illegal units carved out of garages, attics, sheds or other substandard spaces. This impacts neighborhoods in many ways.

    My immigrant ancestors lived in the most densely populated place on earth. Some hot-bedded — one slept in the bed while the others worked or shopped.

    When I was young, we lived in a small two-bedroom in Washington Heights. I was in the living room, my mom and dad in one bedroom and my grandfather, grandmother and great grandmother in the other. Times changed and we were able to rent a small apartment in Rockaway with a shared bath. If you look at new immigrant communities in the Bay Area, there are similar stories. The situation is unpleasant and puts stress on families and communities.

  3. Steve Sorensen says:

    Merchant builders are slaves to partners/shareholders who require a minimum return on investment for their projects. Lobbyists and spinners are paid by them as part of their budgets to get the projects approved. I agree that more market rate units will not solve the housing affordability problem. Low income housing has to be provided by the government via taxes and not supported by builder mitigation, just not enough in the margins for builders to accept. That’s just the way it is in this world. Those in positions to make decisions on this issue are politicians who won’t take the time to read an opinion on this issue as they are more focused on pleasing the masses in order to get re-elected or elected to a higher office. Cynical? Maybe. Truth? Yes.

  4. 2wheelsmith says:

    The nexus studies cited by the Merry Go Round show that by building more than five market rate units for every affordable housing unit, Alameda will not house all those who provide services for the new residents of the market rate units. Alameda’s RHNA (Regional Housing Needs Assessment), which takes into account the new jobs that Alameda plans to attract as well as the demands created to service new housing addressed by the nexus studies, suggests that even to keep the current shortage of affordable housing from getting worse, Alameda would have to build less than 1 market rate unit for every affordable housing unit.

    As Mr. Sorenson points out in his comment, private financing, whether by developers or others, cannot fund the affordable housing needed to support new, high paying jobs. Still, there are many short term benefits to constructing mostly market rate housing with a dash of affordable housing – that’s why the recent developments have been so vigorously supported by developers, businesses, affordable housing advocates and politicians. For example, any amount of affordable housing will increase the immediate supply for existing residents and workers. The additional demand for affordable housing will grow slowly for years and first be a problem for those who live outside the community and endure hellish commutes to fill new jobs here. Alameda politicians generally give greater consideration to today’s needs of current voters than tomorrow’s needs of future voters, especially lower income voters currently living outside of Alameda who want to live here.

    Until Alameda, in conjunction with the entire Bay Area, manages to balance the demand for housing for all segments of the housing market, it will have to rely on strengthened rent controls to protect its low and low-middle income workers. Further, by passing a bond to fund affordable housing, like Emeryville did, and Berkeley hopes to do in November, Alameda could attract more of the State funding needed to house the future workers our community needs to grow and prosper.

    Let’s stop pretending that developers can fund the affordable housing we need to stop rent gouging. Instead, let’s develop new funding sources to relieve the chronic undersupply of housing that enables the gouging.

  5. carol says:

    I note that most of the source links seem to be dated back in 2016. There is a recent [March 2018] study by the Terner Center which you might find interesting. It examines California Development Fees, in seven cities including Berkeley, Oakland, and Fremont.. http://ternercenter.berkeley.edu/uploads/Development_Fees_Report_Final_2.pdf
    Fremont maxes out at a whopping $150,000 per single family unit. Yet Fremont is not known for being a mecca of affordable housing.
    In his book “The Best Laid Plans”, Bob Silvestri, a Marin architect who has built and managed various types of housing, including Section 8 housing, came to similar conclusions back in 2012: private developers will never solve the affordable housing problem. Government subsidization is the only thing that ever has, although that has its own problems. [I highly recommend this book for its local angles, and historical insights into the problem of housing in the Bay Area. I think it should be required reading for everyone on a local Planning Board]

  6. 2wheelsmith says:

    Thank you Carol for providing two good references, one on development fees and the other on feasible ways of financing affordable housing. They are now on my reading list.

  7. Paul S Foreman says:

    Thank you so much for your incredible research. I have been writing articles, letters to the editor and lobbying Council for at least three years to try to convince everybody of the unsustainability of our current Housing Element and the need for both increasing the inclusionary housing minimum and enacting a housing impact fee.

    It surprises me that Bill Smith is a member of Renewed Hope. A few years ago I wrote on behalf of Alameda Citizens Task Force to Laura Thomas, who was then President of Renewed Hope, asking her to join with us is asking City Council to increase the inclusionary minimum and consider impact fees. The Renewed Hope Board turned us down flat. Their view appears to be build, build, build more housing and eventually prices will drop. Eventually is way to long to wait!

    Other housing advocates react to my suggestion by accusing ACT of having the ulterior motive of stopping all housing development.

    Our Housing Element presents an inventory of about 100 acres of land that is zoned high density which combined with the density bonus would produce 36 units per acre. Since our inclusionary rate is 15% of the base 30 units per acre, this produces only 4.5 affordable units for every 36 units built on an acre. Multiply that by 100 acres and you get 450 units. Our Housing Element requires us to build 975 affordable units, Thus we cannot possibly meet our goal with the current inventory.

    To make matters worse, our Housing Element market rate goal is 748 units. With the approval of Alameda Marina we are close to triple that goal, which not only exacerbates the need for affordable housing to support the growth of low paying jobs, but devours big chunks of our vacant land, thus creating a scarcity of plots available for affordable housing.

    What a mess! Yet our Planning Staff, Planning Board and City Council continue to be the gift that keeps on giving to market rate developers!

  8. Steve Gerstle says:

    Or perhaps the problem of affordable housing would best be solved by greater income equality. Income equality grew in the U.S. after WWII and continued into the early 1970s. Afterwards, inequality grew.
    https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality
    Home prices rose modestly during the earlier time period, but afterwards saw rapid increases.
    https://www.cnbc.com/2017/06/23/how-much-housing-prices-have-risen-since-1940.html

    So, perhaps, it isn’t boom or bust leading to the problem of affordability, but growing economic inequality. Or perhaps the rise in home prices influenced the growing inequality.

  9. 2wheelsmith says:

    Mr. Sullwold’s comment that Alameda’s current regulations fail to provide sufficient affordable housing while true, nonetheless distracts from the bigger picture. No amount of tweaking will enable the private sector to finance the thousands of affordable housing units that Alameda must finance and build to meet the demand for affordable housing here. The attitude that the developer’s costs doesn’t bother him implies that he’s fine if NO housing gets built, either affordable or market rate.

    Instead of simply saying that developers make the problem worse, he should be discussing ways that we can get them the money they need to build the needed affordable housing. Without money for affordable housing, the developers can’t stay in business. Given the housing infrastructure in our state, the developers must make the affordable housing shortage worse to survive. The fundamental problems is that State housing infrastructure reflects the voters preference for jobs over housing in their cities. Until the last vestiges of that preference are removed from the state housing regulations and finance mechanisms our housing problem will continue to metastasize.

  10. Steve Gerstle says:

    Alameda does not have a single mobile home park. Perhaps the Housing Authority could establish one at Alameda Point?
    https://www.realtor.com/news/trends/mobile-homes-next-prefab-affordable-housing-trend/

  11. Paul S Foreman says:

    2wheelsmith, I agree that State housing policy is the big underlying problem. We are moving in that direction with another State housing bond Issue that I think is headed for the ballot in November. However, as Mr. Sullwold mentions, there are things that the City can do, like raising the minimum affordable inclusionary housing requirement and imposing an impact fee. The argument that developers will balk at this is not supported by the facts. Site A at Alameda Point is offering 25% affordable housing, 10 points higher than the minimum. This rate is required at Alameda Point, why not the entire City? Other cities, not as well located as Alameda, have the impact fee, why not us? Strangely, we do have an affordable housing impact fee for commercial developers to help assure housing for their employees, but none for residential developers who create a much worse problem.

    • 2wheelsmith says:

      Mr. Foreman, I agree that the State is beginning to adopt more housing friendly land use policies and doing more to promote affordable housing. I also agree that there are things that the City can do, but only at the margins, including possibly increasing the inclusionary requirement throughout the City as you suggest. Alameda Point, with the developer paying for the massive infrastructure needed there and contributing funding toward affordable housing in return for a reduced price on the property makes the Alameda Point 25% inclusionary requirement a special case that is not directly comparable to developable properties elsewhere in the City.

      Outside of Alameda Point, the State will not allow the City to increase inclusionary fees much more as they cannot go much higher without making it impossible to finance housing construction. After they were entitled, both the project at Site A and that at Del Monte waited years for full funding and the wait at Del Monte may still not be over. If the City waived requirements on developers to fund parks, traffic mitigations, infrastructure, fire districts ….. then it could likely set higher inclusionary requirements. Or if the City shows that the price a developer can get for housing is rising faster than construction costs it could also raise inclusionary requirements.

      The City has mandatory inclusionary housing requirements, therefore it does not need to charge an impact fee on market rate developments. The City’s inclusionary requirement for affordable housing is set at the maximum feasible level that will not discourage construction. The State would likely presume that an impact fee on market rate housing subject to inclusionary requirements would be more than the market (represented by a developer) could bear.

      I’ve looked at over half-a-dozen nexus studies in the Bay area and none of the fees they support are at levels that fully mitigate the demand for affordable housing created by the associated market rate housing. Instead, they are set at a lower maximum FEASIBLE fee. Thus, with currently available financing, to insist that privately financed projects fully mitigate adverse impacts on affordable housing is actually an indirect prohibition on the construction of most housing as comparably little housing construction is funded by philanthropists, businesses and the government.

      I will join you in pushing hard for higher, but feasible inclusionary requirements. More importantly, I invite you to join me in exploring the feasibility of additional funding sources at the scale needed, on the order of $10 billion dollars a year for the 9 county Bay Area.

      • Eric Strimling says:

        I would beore amenable to the harms of market rate housing argument if it wasnt primarily being used to stop further building of the housing we so desperately need. Frankly, I don’t trust the numbers, as the entire theory comes out of anti housing activists. I first saw it a couple of years ago in an article attacking YIMBYs.

        The idea that each market rate unit, each high income family, requires an entire full time low income job to support seems prima facie false. When they buy a car, does that strain the local job or housing market? When they go on vacation, how does that impact the local economy? High ticket items do not generally consume much local labor.

        But, I strongly support the call for more money for low income housing. However, with the current administration in Washington, I do not expect it to come anytime soon. I look forward to changing that in 2020, but am not willing to wait until then for more housing to be approved.

        We’ve waited too long.

  12. 2wheelsmith says:

    Mr. Strimling, as Karen Bey pointed out, market rate housing brings many benefits to a community in addition to a small amount of affordable housing. Therefore I agree with you that, for now, full speed ahead in Alameda on the construction of market rate housing that also complies with local inclusionary requirements for 15% or more affordable housing.

    My reference to the one low income job per market rate unit was confusing. The multiple nexus studies cited by Mr. Sullwold support your claim that each market rate unit generates less than 1 lower income service job for its occupants. I did not intend to claim that the market rates do so directly. What I meant to claim was that for a city’s new housing construction to remain balanced, its ratio of total affordable units to total market rate units must exceed one to provide housing for both the workers who support the new market rate housing and the workers who support the new jobs the City is expected to add. My apologies for the misunderstanding my confusing phrasing generated.

    My claim that more than one affordable unit per market rate unit is required is based on the RHNA (Regional Housing Needs Assessment) requirement in the housing element of nearly every Bay Area jurisdiction. In these housing elements the required zoning ratio of affordable to market rate housing is greater than 1. In Alameda’s housing element that required ratio is about 1.5.

    As Paul Foreman points out in one of his comments, Alameda’s actual constructed ratio is far below 1, strong evidence that the new market rate housing constructed in Alameda will not meet the goals for 2022 set in the housing element, ultimately increasing, not decreasing, the number of its own workers Alameda is unable to house. Since 2014, Alameda has not built sufficient housing for all the low and moderate income workers who provide services to either the occupants of the new market rate housing or fill the hundreds of new jobs the City expects to add by the end of the housing element period.

    In addition to the many nexus studies cited by Mr. Sullwold, several case studies by the UC Berkeley Urban Displacement Center, including some in the Bay Area, provide convincing evidence that a new construction ratio of affordable to market rate of more than 15 affordable per 100 market rate units (15%) is required throughout the Bay area to provide the homes needed to support increases in the number of jobs in cities. The IGS (Institute of Governmental Studies) Research Brief by Miriam Zuk and Karen Chapple of the Urban Displacement Center titled “Housing Production, Filtering and Displacement: Untangling the Relationships” cited by Mr. Sullwold provides an excellent overview of their findings. Their diplomatic language makes their findings more palatable to all sides of the debate about much affordable housing must be built to house a larger percentage of low and moderate income workers.

    Regrettably, I fear that the number of families doubling up in apartments, key workers fleeing the Bay area and the size of homeless camps will have to at least double before voters will provide government with the mandate to find the necessary funding for affordable housing. Funding on the scale needed could be provided by one or more of the following:

    1) employee head taxes on all mid- and large- businesses in the SF Bay Area

    2) the designation of the entire SF Bay area as a redevelopment area with a significant part of future increases in property taxes distributed by a new regional agency representing all nine counties in the Bay Area to fund affordable housing, or

    3) increased property taxes generated by reassessing all residential property in the state at least every three years whether it is sold or not (i.e. ending of the Prop. 13 tax exemption with provisions made to assist owners on fixed incomes, especially the disabled and low and middle income seniors).

    Unless it becomes clear that the region is not making progress toward increasing the funding available for affordable housing, I will support the construction of new housing as long as each project includes the maximum feasible number of affordable units.

  13. Barbara Thomas says:

    ABAG’s Housing needs allocation was done without compliance with CEQA. Communities that are linked with mass transit and freeways – BART, 580, 980, 880, 680 will create lesser impact on the environment when adding more units and that should have been taken into consideration. The Greenhouse Gas emissions from cars taking 30 minutes to get through the tubes is incredible and only increasing. Yet it is mandated by the State to be reduced significantly. So the barristas and operators of cleaning, repair, salons, etc. won’t be able to live here, but will be forced to drive through the already congested access points.

    Alameda is an island and cannot house all of the world’s 8 billion that want to live here, just as Coronado and Catalina cannot. Affordable housing to whom? How many of us can realistically buy a $600,000 home – and that is the cost per unit that the City is projecting in its homeless needs assessment adopted in May of 2018. Although Alameda with only 204 homeless, has provided 200 units for 500 persons at the naval air station, and is allowing another 237 units to be built, the cost estimate is $600,000 per unit. And the Senior housing courtesy of the City via Tim Lewis, also cost $600,000 + per unit. If you think that “Affordability” is permanent, think again. Once the density bonus given to Marina Independence Plaza for seniors ran out – they all do in 30 or 50 years- the seniors are now facing 10% and 20% increases for the next five years. What Tim Lewis is “giving” will be gone in the next few decades. The need will remain, but the affordable housing will vanish. Thus triggering the need for even more affordable new housing. Catch 22. How many coffee servers can qualify for a $520,000 loan at 5% with 20% down?

    Let’s face it. The truth is that there are too many people here and it is becoming too expensive to maintain the quality of life in such a small space. They have become the Eloi of today. Tim Lewis and the City are the Morlocks. Jules Verne did not write science fiction, he predicted the future. Especially where the Eloi stood idly by unconcerned and unmotivated to intercede, as one of their own was drowning. Happened here in 2011 with Raymond Zack and Alameda’s fire fighters. Perhaps we will vanish like Tribbles.

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