Shared from the 12/10/2019 San Francisco Chronicle eEdition

Oakland fee hasn’t led to promised housing

Michael Short / Special to The Chronicle

Adam Kuperman of Satellite Affordable Housing Associates checks window blinds in a new Oakland project.

Michael Short / Special to The Chronicle

Pedestrians pass Satellite Affordable Housing Associates’ new 37-unit development, called Camino 23, on 23rd Avenue and International Boulevard in Oakland.


In April 2016, the Oakland City Council passed an ordinance that would impose impact fees on developers building market-rate housing projects in Oakland.

Fees were meant to make up for the lack of affordable housing units being built. The city makes grants to affordable housing developers through an application process. Those developers then use those funds to qualify for state funding.

Market-rate housing developers must pay the first half of their impact fee upon receiving their building permit, and they pay the second half after receiving their certificate of occupancy. Developers can opt out of paying the fee if they build the equivalent in affordable housing units.

The city was divided into geographic zones, and the fees were implemented in phases:

Developers in downtown, Uptown and Lake Merritt pay $24,000 per unit.

In West Oakland and parts of North Oakland, impact fees are $19,250 per unit.

In the area stretching from east of 23rd Avenue and including Coliseum City, fees will top out at $13,000 per market-rate unit by 2020.


Oakland passed an impact fee on new residential developments three years ago to jump-start the city’s construction of affordable housing. But little has happened since then.

The city has collected just under $9 million in fees and distributed $4.8 million to help fund about 160 new affordable units — none of which are yet under construction. Oakland has not approved any new projects that have applied for funds from the fees since 2017.

When the measure was enacted in 2016, the city forecast it would collect close to $65 million in fees over 10 years.

Critics, including current City Council members, say collections are running far behind what they anticipated, and they have grown frustrated. Some advocates and developers say that the city should have collected close to $20 million into its impact fee fund.

“We have been asking these questions for a year and not getting answers — so we don’t know if it is a failure to collect, being expended improperly or if the fund(s) are sitting somewhere, but not being tracked,” said Oakland City Council President Rebecca Kaplan.

Unable to fully account for the program’s performance, the city recently hired an outside auditor to investigate how it is working and how the city tracks the fees. At issue isn’t a potential misappropriation of funds, rather the slow process to get answers and the lack of transparency, city officials said.

Affordable housing nonprofit organizations say they are waiting for money to be released and are missing out on state funds that are available only if they have a financial commitment from their local governments.

“We have been in a holding pattern,” said Susan Friedland, chief executive officer of Satellite Affordable Housing Associates. “It’s just frustrating. The whole process has been stuck by the lack of resources, and we feel that the impact fees are one of the biggest pieces of that program.”

Jeff Levin, a policy director at East Bay Housing Organizations, which represents nonprofit developers, initially raised questions about the impact fee collections.

“They should have had plenty of time to think through how they were going to administer this and how they were going to collect data, but apparently they did not,” Levin said.

Staff from the planning and building departments say they have collected the correct amount in affordable housing impact fees, but the city’s two software programs weren’t tracking the fees properly because the programs weren’t “talking to each other.”

City staff have since said they corrected the problem and have the correct amounts. Still, they have hired an outside auditor to check their work.

“We are looking right now at the processes and making sure we have good reconciliation,” said Bill Gilchrist, director of the city’s planning and building department. “We have not uncovered anything that has given me concern.”

The issue underscores a larger question about Oakland’s commitment to creating affordable housing. One council member has suggested the city increase its affordable housing stock by requiring that a certain amount of new construction be affordable for people with low to moderate incomes. Councilwoman Nikki Fortunato Bas said she also plans to review the impact fee ordinance and look for ways to boost the fees.

“When you look at the level of affordable housing that has been permitted and you overlay that with what we might be able to build for the next couple of years with impact fees, we are just not getting to the numbers that we need,” Bas said.

To date, the city has deployed about $4.8 million of the funds from the program approved in 2016 to three affordable housing projects: $1.2 million for a 55-unit project on 95th and International, $2 million for 50 units at the Friendship Senior Rental Housing Development at 1904 Adeline St. and $1.6 million for the 57-unit Nova Apartments at 445 30th St.

Nova Apartments is under a final review by the Planning Department. The other two projects have been approved by the Planning Department and are in the pre-development stage. None has broken ground, The Chronicle confirmed by visiting the sites.

The amount developers pay into the fund depends on what part of the city their project is in, with payments ranging from $13,000 to $24,000 per unit.

Combined with impact fees for jobs and transportation, Oakland has fees that add up to about $65,000 per unit. San Francisco has fees that add up to more than $165,000 per unit.

More broadly, Oakland has been pushing aggressively to add new housing, though, like many California cities, its affordable housing efforts have moved slowly.

In 2016, Mayor Libby Schaaf set a goal of protecting 17,000 households from displacement and building 17,000 new homes — both affordable and market rate — by 2024. About 28% of those new homes would be affordable. By the end of 2018, Oakland had built 9,341 market-rate homes and 751 affordable units.

Under the 2016 program, developers of market-rate housing can opt out of paying an impact fee if they build the equivalent in affordable housing units.

Council members and advocates question whether that is contributing to the the low dollar amount collected so far, but the city has been unable to provide an answer.

The city is working with a consultant to automate invoices for impact fees and is expected to be done by Dec. 20. Identifying a consultant and producing reports has been a slow process. And the audit won’t be done until next spring.

Councilman Loren Taylor said at a recent committee meeting that it was astounding it took the city so long to identify a consultant.

Councilman Larry Reid pressed the city administration on coming up with answers before the spring and said “sooner is better than later.”

Meanwhile, developers are unhappy with the lack of movement in deploying the funds.

“They are angry because they are saying this raises the fundamental question of competency,” said Greg McConnell, head of the Jobs and Housing Coalition, which represents developers. “The city hasn’t spent that money on affordable housing. It just looks bad all the way around.”

Sarah Ravani is a San Francisco Chronicle staff writer. Email: Twitter: @SarRavani

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