Comments/Amendments to CASA Compact

Jesse Arreguin [Mayor of Berkeley]
Wednesday December 19, 2018 - 09:55:00 AM

To: Carol Dutra-Vernaci, MTC Commissioner

Thank you very much for requesting my thoughts on the proposed CASA Compact, as approved by the CASA Steering Committee. As an alternate to the ABAG Executive Board, I have studied the various proposals and have been actively engaged in discussions at ABAG and with key stakeholders. Overall, I agree with the goals of the CASA Compact. We are facing a housing affordability crisis that requires bold action. The proposals are ambitious, and we must focus on the three components: production, preservation and protection if we are to prevent displacement and begin to reverse the troubling trend of rising housing costs.

We were first presented with these concepts at the November ABAG meeting. I acknowledge that this proposal has improved since it was initially presented, and MTC staff have made refinements based on input from the ABAG Board and stakeholders. My general concerns with some of the Compact Elements remain, it employs a “one-size fits all” approach to addressing the lack of housing production in job rich areas. Rather than rewarding those cities and counties that have produced new housing, Compact Element # 5 proposes minimum heights near transit stations and bus lines, overriding local regulations.

The proposed financing mechanisms are varied and could conflict with the ability for local jurisdictions to place bonds, parcel taxes or sales tax measures on local ballots to fund other services. In addition, do we need to create a new regional entity to propose and administer these funds? MTC or a new merged governing body can administer these new housing funds.

According to MTC figures, Alameda County has the best rate of jobs for new housing units produced: 4 jobs to every unit. Yet some of the Compact Elements will take away the right of cities to plan for new housing, and the regional funding sources including new employee head taxes, linkage fees and revenue sharing mechanisms as proposed will largely stay in the county of origin (75% will stay in the county of origin). Job rich cities in Santa Clara County that have driven the regional housing crisis, these funds which may be significant will not go to a regional pool and help San Francisco, Oakland or other cities help produce new affordable units. Therefore the impacts of the regional crisis are not being equitably distributed.

I believe fundamentally that we need a regional housing policy that focuses taxes and regulations on those communities that have experienced significant job growth but have resisted new housing production. Additionally, those companies responsible for enormous job growth must pay their fair share.

Below are my specific comments on the various Compact Elements for your consideration. Thank you for representing the interests of Alameda County cities in this process. 

Compact Element # 1 

I strongly support the general policy proposed for a region-wide just cause eviction policy. I am however concerned about a few elements of the proposal: 

  • Allowing no-fault evictions for cases of when a unit is “unsafe for habitation” or for “demolition/substantial rehabilitation” creates an incentive for property owners to leave units in neglect in order to evict tenants and charge higher rental prices. Even in Berkeley which has strong eviction and rent controls, we have seen this occur. If a property is red tagged and is unsafe for habitation, then that is a reasonable cause for eviction. However, if a unit is in disrepair and needs to be renovated, should that be grounds for permanent eviction, or should the tenant be entitled to relocation protections?
  • Exempting “single owner-occupied residences including when the owner-occupant rents or leases 2 units” is problematic in cases where owners rent rooms in a home or have ADUs on the property. While owner-occupied properties are different from large multi-unit buildings, since the tenant resides close to the owner, in many cities many of the units are in smaller properties including owner-occupied properties. This exemption would leave a significant number of renters without eviction protections. While owner-move in evictions should be allowed, there is no minimum requirement for how long the property must be occupied by the owner in order to maintain the exemption from eviction controls.
  • It is unclear what the rationale is for denying eviction protections to tenants unless they have lived there for 12 months.
  • It is unclear how this policy will be enforced. There are really three options: county enforcement, the regional entity enforces, or private right of action.
Compact Element # 2 

I think a regional rent cap is an important protection in those cities that do not have rent control policies, however setting the rent cap at CPI + 5% may result in a large rent increase when the initial rent is set at market. For tenants on fixed incomes or who cannot afford the rising cost of living this may result in displacement. A rent cap of a fixed percentage or at CPI is a more reasonable policy. 

It is unclear how this policy will be enforced. Enforcement will be critical to ensure that rents do not increase illegally beyond the cap set. There are really three options: county enforcement, the regional entity enforces, or private right of action. 

Compact Element # 3  

Regional funding for legal representation is essential to balance the scales between tenants and landlords and to prevent unfair displacement. However, I believe that funding for representation should not be limited to just defense against eviction but should also fund enforcement of the other protection elements: just cause and enforcement of rent caps, in addition to enforcement of other state and local landlord/tenant laws. This is an important amendment to ensure the enforceability of Compact Elements # 1 and # 2. 

Compact Element # 5  

I fundamentally oppose this policy approach of applying a “one size fits all” approach to land use planning. Cities which are producing housing should not be penalized because others have actively resisted production. This Compact Element represents legislation introduced by Scott Weiner last year and is now reintroduced in SB 50. 

I do not believe the state should set minimum heights in neighborhoods adjacent to high frequency (15-minute headways) or fixed rail or ferry stops. It is too broad of a brush and prevents communities from adopting general plans and zoning standards to concentrate infill housing along commercial corridors. In Berkeley for example, the low-density residential neighborhood immediately around North Berkeley BART would automatically be up-zoned resulting in heights of up to 55 feet. This will create pressure on existing neighborhoods and will result in land speculation. There are historically low-income communities which do not meet the definition of “Sensitive Communities” who will face increased gentrification and displacement. 

While the tenant protections, affordable housing requirements and labor standards are good additions, it should not come at the expense of destroying neighborhoods. 

Here is what I propose: 

Exempt those counties and cities that are producing new housing from the “Minimum Zoning Near Transit” policy. 

Instead job rich communities, where there is a significant disparity between jobs and housing production should be automatically opted in to these “Minimum Zoning” standards. Perhaps the standards need to be increased in this case. However, they should apply to commercially zoned land. Land zoned for open space or industry should not be included. Also these “Minimum Zoning” standards should not be tied to transit. This creates an incentive for communities to resist new transit investments, and also essentially gives land use powers to transit agencies when they make adjustments to bus frequencies. 

Another alternative approach could be to only apply “Minimum Zoning” standards to areas immediately around fixed rail stops. The language allowing taller buildings along “High quality bus service” routes is problematic. 

Compact Element # 6 

The section “Standards for Processing Zoning-Compliant Residential Applications with Fewer than 500 Units” includes good elements such as requiring jurisdictions to have clear and up-to-date information on all rules, fees and standards that apply to residential development applications. 

However, the proposal to lock in “historic status” at the time of application would pre-empt the right of cities, particularly Charter cities, to enforce landmark rules. Berkeley for example requires that our Landmarks Preservation Commission review an application involve a property over 40 years old before it proceeds to entitlement approval. This provides our commission the opportunity to designate it before it goes to public hearing. This pre-emption of landmarking does not even include a process whereby owners can request a pre-designation determination. If a local jurisdiction for whatever reason is unable to designate a property it is barred while the project is underway, paving the way even for demolitions. 

Compact Element # 7 

The proposed criteria for qualifying streamlined projects are generally positive, however I question whether providing just middle-income housing is a good policy. What I would propose is a mix of low-income and middle- income housing to satisfy the 20% on-site requirement. Middle-income housing generates higher rents which can support project financing and operating costs. 

The proposed “Financial Incentives to Offset Costs” includes some problematic elements. “Cap[ping] impact fees at a reasonable level that allows project feasibility” is vague. What constitutes as “reasonable”. This would pre-empt local jurisdictions from being able to charge fees sufficient to offset the impacts of projects on local services (affordable housing, child care, infrastructure, public safety, schools). Fees under the state Mitigation Fee Act and U.S. Constitution cannot be at a level that would prevent financial feasibility of construction or constitute a taking. Given this applicable legal standard, what is the point of this new policy to cap fees at “reasonable” levels, and who determines what is “reasonable”? 

By creating a new density bonus of 35%, is this in addition to the existing state density bonus which caps at 35%, and could this result in a 70% density bonus? 

Automatically allowing developers to elect to reduce parking by 50% of the local requirement may not work in all cases. Allowing cities to allow in specific cases parking reductions or waivers is appropriate subject to analysis and mitigations. But blanket reductions are another “one size, fits all” approach which results in a windfall to builders but externalizes impacts on neighborhoods. This allowance for parking reductions does not require developers to provide bike parking, car share or transit subsidies to residents to offset impacts. 

Compact Element # 9  

Pursuing regional housing funding strategies is an important step to addressing the regional imbalance. However, they should focus on those employers and cities which have principally been responsible for the disparity between jobs and housing units, and the funds should be shared regionally, with priority given to those jurisdictions which are producing new housing. 

The different funding sources are varied and ambitious. Some may yield sufficient revenues, however not all can be pursued. 

Pursuing parcel taxes, bonds or sales tax measures could compete with countywide and city needs and make it difficult to pass additional taxes in the future. I believe greater emphasis needs to be made to promote Proposition 13 reform and a new Redevelopment law which will create more local revenue to fund new affordable housing. This would distribute the tax increment from new commercial development towards housing and other city services. 

I believe the following funding sources should be actively pursued: 

  • Commercial Linkage Fee charged to developers
  • Gross Reciepts Tax on employeers
  • Head Tax levied on employers
  • Revenue Sharing Contribution into a region-wide housing program
However, the focus should be on those major employers which have generated a substantial number of jobs or those jurisdictions where there is a significant jobs-housing imbalance. 

I am concerned that the proposed “Allocation formula” does not include potential funding for infrastructure projects or transportation while the Compact aggressively promotes new housing development, increasing impacts on roads, sewers and transit systems without funding to address the increased demands. 

The “Distribution formula” is also fundamentally flawed. Keeping 75% of funding in the county of origin, particularly in Contra Costa County where most tech companies are located, does nothing to address the regional imbalance. A greater portion of those funds perhaps 50% should go to a regional program which will enable those jurisdictions which are producing housing to compete for needed housing funds. 

Compact Element # 10 

I question whether a new regional entity needs to be created, this will result in a lack of accountability and overhead, which will eat into housing funding. A better approach would be to designate MTC or a new combined regional governing body if created (MTC-ABAG) to administer the funding. This was an MTC initiated program which implements Plan Bay Area 2040. It should stay within the jurisdiction of MTC-ABAG.