Tuesday, September 15, 2020

Olivia Redux - Part II

Councimember Catalano talks about chess, but there’s no strategy in simply granting everything a developer wants over the course of many years. That’s not playing chess, that’s the developer playing Heads I Win, Tails You Lose. Apparently 100% affordable housing is what Catalano is most afraid of. I must ask, why? What would be the problem with 100% affordable housing? Wouldn’t it be more inclusive to provide more housing at lower income levels?

Don’t get me wrong, I’m generally opposed to affordable housing mandates, but that’s because they are market distortionary and provide for a less efficient allocation of resources as a matter of public policy. But any individual project is not going to have market wide impacts so I don’t find 100% inclusionary housing to be a negative that must be avoided in this instance. No, the issue that I, and what I find most people who are opposed to this project had, was because it was under parked, and too dense for the space and location. If the project was 2 stories with substantially the same amount of parking, I would expect the resistance to the project would evaporate, regardless of the amount of inclusionary housing.

Catalano likes to link to a 2015 Pioneer article discussing a previous plan saying that residents rejected it. That’s misleading in several ways. First, there’s no mention of how many residents were present and voiced opposition. Second, from the folks that I spoke with, many who are currently opposed were either not here at the time, or were unaware because the city did a poor job of letting them know. Third, the only person actually on record is Kent Ipsen. The article quotes Kent Ipsen who at the time was actually in favor of the project because he saw it was reasonable. Currently Ipsen has voiced public opposition to the current plan because it is not reasonable. Fourth, the plan was never presented to the city so there was no ability for the developer to actually negotiate or to see what could really work in that space. As Catalano well knows, residents do not have the ability to reject a plan, otherwise we wouldn’t be where we are at today.

Foresight matters, so does leadership. Blaming the residents from 2015, blaming the state, that’s not leadership. Even before being elected, I engaged with the developer in trying to communicate what I thought the residents would find reasonable. If foresight matters, why didn’t this happen with our actual elected leadership? If foresight matters, then why did Catalano agree with the developer’s request to exempt this project site from the sensitive use designation that would have limited the number of units able to be built? That’s not foresight, and giving in to everything a developer asks for without seeking compromise is not leadership. It’s an abdication of the responsibility that our residents entrusted its leadership with.

Let’s look at what a reasonable compromise could be. Currently the proposal calls for 81 units, 7 of which are ‘very low income’ (blended unit rate of $2,200 market rate, and $800 very low income rate). Based on the financial information presented, that would yield about $165K/month in rents at approximately $27M in build costs. That’s the status quo.

If the number of units drops to let’s say, 60 units for a two story build, market rate would then yield approximately $132K/month. That’s less than the status quo, however if the project were to go down to two stories, the building costs would be substantially decreased. The administrative cost to the city over time would also decrease if the monitoring for inclusionary units wasn’t present. The financing cost would be lower and financing would be easier because in the current environment financing is not as easy to come by. With a lower build cost, less investors may be necessary, increasing individual return. If we also consider the potential risks that may come out of CEQA review as I’ve suggested, it becomes even more of a reasonable compromise.

We should have that discussion, but our residents are at a severe disadvantage when the Council surrenders at every opportunity. Hopefully we’ll be able to change that after the discussion tonight.