OAFC BBS - All Topics: Archive: Alameda County has nation's 6th highest home prices
And Oakland is the #4 city in the nation in high home prices. (SF and San Jose were #1 and #2)
We are so busy paying for our overpriced homes that many of us don't have any $$$$ left over for baseball tix! But hey my home escalated 150K in 16 months
So my question is why is Oakland sudsidising a predominatly market rate housing development(Uptown).
Because people are always looking for freebies.
Most of the subsidy (even with the new costs) is there to pay down the affordable housing component, which is 25% of the development. $200K subsidy x 200 apartments = $40 million, plus a little extra for 50 "moderate income" apartments. It doesn't matter where one builds a large development in Oakland, affordable housing has to be part of the equation.
So what the city needs to do is incorporate is an inclusionary housing component in its entitlment process. Basically for development projects over a certain size affordable housing is required as a component of the project and can range from 5% to 10% depending on the size of the development. Also denisity bonusus can be granted as an incentive. The cost is borne by the developer not the city. This is what San Francisco does all the time. All of the units being developed in the Leona Quarry are all market rate single family dwellings.
If only it were that easy. There are 5 different markets being served in the Forest City project: market-rate, low-income, and moderate-income apartments, student (UC) housing, and condos. Regardless of whether it's a bonus or a subsidy, it's tax dollars being paid out. Leona Quarry is basically a suburban housing tract that happens to be in Oakland, so it isn't subject to numerous requirements other than the environmental issues it's facing. Money to take care of the senior housing special interest has already been paid. Uptown has many more different interests to satisfy.
In SF all types of market rate housing developments are subject to an affordability component regardless of the density(single family detached, multifamily) or type of housing (family, elderly, student, etc.). In the case of Uptown all the sudsidized housing is being funded by the city. The way I see it Forrest Cities is attaching a market rate development onto an affordable housing project essentially financed by Oakland. This will turn into a very lucrative investment for Forrest Cities when they can concentrate on the above ground costs of a market rate development on land that they didn't have to pay for, in a region of the country with very expensive land, a hot housing market and prices going through the roof. They will get all the profits from the sale of those market rate units. We could have gotten a local developer to do this and at least kept the money in the region. It doesnt make sense to me because other developers are building market rate housing in downtown Oakland and they aren't getting anything from the city other than an expedited review process.
If I remember correctly, some of the Forest City principals contributed to Jerry Brown's mayoral campaign. Could there be a connection?
Good point, but Forest City isn't the only company getting this treatment. Signature is about to run into similar issues regarding affordable housing with the Estuary site. The problem is structural - redevelopment is set up to provide grants and assistance for nonprofits, but not incentives for for-profit developers. The nonprofits are not big enough to handle the large projects, leaving a big hole. Until that gets addressed, this will continue.
I dont think Signature is getting anywhere near the subsidy that Forrest Cities is, and Signiture is local. If I'm not mistaken the project they are doing along Broadway is of equal size if not bigger than Uptown, at least from a unit count.
No one's actually talked subsidies for the Estuary yet. Signature claims they won't need them, but they may be working under an assumption that they won't have to deal with any affordable housing rules. But the affordable housing lobby is credible and has influence. Even if the quota is only 10%, that's 310 units (3,100 planned) X $225K = $70 million.
Actually the cost for developing an affordable unit in a market rate development does not have to be 100% of the total value of the unit (assuming your 225k figure was total cost). Typically families must qualify based on their size and the median income for the region. The units can be sold at 60% of the assessed value of the new units to qualifying families. The new owners can only sale their unit to another qualifying family at 60% of the assessed value for 5 years, 10 years but rarely the entire life of the unit. This way you prevent speculative purchases from qualifying families. Therefore, 310 affordable units at 60% of the assessed value of a 225k unit would be more like 28 million cost borne buy the devloper or sudsidized by the City depending on what type of development agreements are worked out.
$225K is not the projected assessed value of the unit. It is the 40% delta between the low-income sales price and the projected market price of the unit. The subsidy was designed to address any revenue loss that the developer would have to incur, which Forest City argued would reduce the profitability of the project. The loophole is that the units are likely to be leased or rented, not sold. So the question is whether or not the developer gets this money in a lump sum, over 25 years, etc. It looks like Forest City is getting a lump sum. It's likely that a large percentage of the Estuary will similarly be leased or rented, and a similar problem will occur.
Yeah the 225K figure seemed low. The City would be better served if it just set up an endowment with the 60 million and create a permanent affordable housing funding mechanism. Grants could be delivered to a variety of market rate housing projects throughout Oakland that could be used to off set the cost of affordable housing. I just have problems giving this much of a subsidy (60 million) to some out of town carpetbaggers.
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