Extra

At tomorrow’s Land Use Policy Committee, we will discuss requiring on-site inclusionary units in Qualified Opportunity Zones (QOZs). I introduced this item and it is co-sponsored by all Councilmembers who represent QOZs – myself, Councilmember Davila, and Councilmember Bartlett.

The meeting is tomorrow, Thursday February 20 at 10:30am on the 6th floor of 2180 Milvia.

Qualified Opportunity Zones are census tracts designated as “economically distressed” in the 2017 Trump tax cuts. Housing projects built in these zones see massive federal tax relief, including deferring upfront capital gains taxes, forgiving taxes on the proceeds of the sale of the building, and more. All told, the Congressional Research Service says that projects can increase investment by 70%! Berkeley is going to see projects across the Downtown, South Berkeley, and Southwest Berkeley that will generate huge profits, and the City has a responsibility to recapture some of these profits by strengthening affordability requirements and preventing displacement in these low-income areas.

Berkeley has long required that new buildings include 20% affordable units, but we have provided the option to pay a fee instead of building the units. Developers typically choose the fee because it costs less, or utilize the state density bonus to provide 10% of units at a single level of affordability, then pay a fee for the rest. This means that affordable housing is built more slowly and in separate nonprofit buildings, rather than integrated in with market rate units. The courts have upheld a city’s right to require onsite units, rather than always paying the fee.

The City of Berkeley is facing two issues: the federal government is providing tax relief to gentrify low-income neighborhoods, and we need more affordable housing. The item I am introducing seeks to have these problems solve one another by requiring affordable units be built onsite by those projects that can most afford to do so because they are receiving these tax breaks. We are not changing the percentage or otherwise altering the affordability requirements, but rather ensuring that affordable units actually get built in these neighborhoods.

I hope you will join me in supporting this important piece of legislation.