Part 2: Q & A with Councilmember Kate Harrison on Berkeley’s Complex Housing Crisis
Elana and Negeene sat down with Councilmember Kate Harrison (District 4) to understand better the complex housing situation in Berkeley. This is part two of a two part series.
Q1: What is the crux of the housing problem in California? In Berkeley?
A1: While Berkeley met the prior housing targets set by the state, California has not produced enough housing; even conservative estimates put the number of needed housing units at 1.5 million statewide. Nor is housing fairly allocated throughout urban areas and no city is producing housing affordable for most of us.
The crux in Berkeley is affordability for current and prospective Berkeleyans. We just are not building enough affordable housing for teachers or retail workers not to mention people living on our streets. The idea that just building expensive market rate housing will make housing affordable for the majority of Berkeley residents is a rehash of trickle-down economics. More market rate housing may lower the price of market rate housing, but it will not help lower the price of lower income housing in time to maintain our diversity. Prices continue to skyrocket here despite increased building. Doubling down and saying let’s do more of the same is not the answer. Berkeley has taken many steps to address affordability and tenant protections but those will become less and less effective over time.
Housing experts agree that loosening zoning won’t lower Berkeley’s stratospheric housing prices. “There’s no hope; it will never be affordable again,” says Professor Karen Chapple, formerly at U.C. Berkeley. She adds that more housing will slow the growth of the exurbs. That is an important goal, but without affordable housing, our less well-off neighbors will continue to endure overcrowding and overspending on housing.
Exacerbating this trend is the movement of Wall Street into the housing market, increasingly buying up housing and displacing existing residents. Once pandemic-related tenant eviction protections expire, we will likely see a tsunami of evictions with soaring rents.
Q2: Prior to the pandemic, Berkeley’s reported vacancy in the American Community Survey was 3,300 dwellings. What is causing this imbalance of supply and demand?
A2: During a housing shortage, every unit should be available for longer-term tenants. Unfortunately, the drive for corporate profits and our nation’s flawed tax policy keep literally thousands of units vacant or unavailable. In some cases, property owners are purposely leaving units vacant and emptying out buildings so that they can be redeveloped or torn down and built into something else. This is especially true of housing owned by corporations as a financial instrument; they can offset the lost rent through tax write-offs and increased rents in nearby properties.
Contributing to this problem are short-term rentals, such as AirBnB, occupying whole rental units — not just a spare bedroom. This is something we’ve been trying to limit. Our Planning Department has found that over half the units listed as short-term rentals are rented in a repeated cycle of between 14 and 30 days, displacing longer-term residents who add to our community.
Last November’s measure MM will provide us with a rental registry for all Berkeley. After we get the first results in May, we’ll have a better idea of Berkeley’s actual vacancy rate.
Q3: Statewide, single family home prices have been going up at an astronomical rate. During the pandemic, more than 30,000 homes were purchased by one single LLC, Wedgwood. What is this phenomenon and where are these houses going once accumulated?
A3: We’ll know more once the rental registry is complete. Available data suggest that potentially 4,000 single-family homes and condominiums in Berkeley are not taking advantage of the homeowner exemption; many of these are likely rented out (or kept vacant) by corporations, LLCs or other large property owners. A recent commenter on KQED’s Forum claimed that corporations weren’t really buying homes in Berkeley. Tell that to families trying to buy their first home who are consistently and significantly outbid by all-cash offers.
Corporate owners are looking to buy these properties to quickly fix and flip them, subjecting residents to displacement. Even if returned to the rental market after renovation, these homes are likely to increase in price. Even if not sold, the landlord lives somewhere else and is often less responsive to tenant needs.
Q4: What do you think about Berkeley’s proposed upzoning ordinance? Do you have issues with it?
A4: My issues center on protecting tenants and homeowners from displacement, building in affordability, and setting objective design standards. The order in which we do things matters. We need more displacement protections in place before this becomes a reality. The Berkeley Tenants Union asked for a requirement that property owners who build multiple units on their properties to live there for eight years to prevent flipping. Similarly, if we want the Tenant Opportunity to Purchase Act to work, it has to be in place before upzoning leads to even higher prices. I agree with Erin Baldessari of KQED when she said, “…you’ll bring down the cost of housing, assuming that you also have strong tenant protections in place and you’re also funding affordable housing.” This begs the question of who is to fund that affordable housing.
We have to build affordability requirements into any upzoning policy. Why do developers want fourplexes? Because Berkeley’s affordable housing fee only applies if a property can accommodate more than five units. (Proposed state law — SB 9 — compounds that problem by requiring cities to allow lot splits into properties as small as 1,200 square feet. It doesn’t keep anyone from owning adjoining lots).
We should look at setting the square foot fee lower for smaller projects. Bigger buildings enjoy economies of scale but I don’t accept that smaller projects cannot afford any fee. A house in West Berkeley was torn down and replaced with four units, each selling for $1.4 million. You cannot tell me that they did not make a healthy profit.
The whole idea of land value capture — which is official city policy — is that, when we rezone, we capture part of the financial benefit we gave developers through rezoning. Fourplex zoning is an upzoning and a significant opportunity for land value capture. To miss that opportunity is to miss the entire point that developers make money from upzoning while increasing the need for additional services. They should pay their fair share.
This was first published on May 20, 2021 in the Berkeley Times.