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Editors, Daily Planet: 

In reviewing the history of Panoramic Interests’ 1950 Martin Luther King, Jr. Way project I ran a across a curious property transaction. As reported by the County Assessor, 1950 MLK (parcel 057-2060-001) was sold in February 2001 by its long-term owners to Aldar Investments at a transfer price of $2,650,000. Aldar Investments (Avi Nevo, Sole Director) held the property for 14 months, and then sold it on April 30, 2002 to 1950 MLK, LLC (Patrick Kennedy, Agent for Service) at a transfer price of $5,700,000. This represents a gross profit of $3,050,000 on an unknown investment by Mr. Nevo. What is so curious is that this transaction took place not between a rube and a city slicker, but between arguably the two most astute developers in Berkeley.  

This transaction has increased the land-cost basis of a project at 1950 MLK from $13,750 to $28,500 per unit (assuming 200 units). While this increase may in fact reflect a true doubling of land values along University Avenue over a 14 month period, it is also important to remember that land-cost is one of the major drivers of increases in density for affordable housing projects. Unlike in our world, where a homeowner, landlord, or developer who overpays for land is forced to eat their mistake, a developer of affordable housing project who overpays becomes eligible for additional ‘concessions’ on density and open space to make the project “feasible,” thus transferring the consequences of their bad judgment to the public at large, and the neighborhood in particular. 

We have all heard of “virtuous circles,” where positive change reinforces positive change. At first glance this is what we have here, a circle where land value drives increased density, which in turn increases land value, ad infinitum. Unfortunately I fear that what we really have is a development death spiral where Berkeley’s quality of life increases housing demand, which drives increased development and density, which will inevitably destroy our quality of life. Will the people of Berkeley let developers continue to build their over-sized mixed-use buildings until only those who can tolerate the traffic, noise, and lack of community along Berkeley’s transit corridors will be willing to live and shop here? 

When Mr. Kennedy’s project moves beyond the planning stage the city will be given the details of this transaction if he requests anything beyond the mandated 25 percent density bonus and a single zoning concession. I look forward to the city’s review of this transaction so they can assure the public that it was not an attempt to inflate the land-cost basis of this project, and that Mr. Nevo has no continuing interest in this project or any of Mr. Kennedy’s projects. 

Stephen Wollmer