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> Phased-in impact fees can build affordable housing – by Chamber President and CEO Barbara Leslie

For over 110 years, the mission of the Oakland Chamber of Commerce has been to promote economic growth and opportunity for Oaklanders. Part of that mission is advocating for government policies that are responsive to our city’s needs; and right now, one of our greatest needs is more housing. The Bay Area is in the midst of an unprecedented housing crisis. In order for Oakland to realize its considerable economic potential, we Barbara Leslie must build more housing. Every new unit built in Oakland – at any income level – helps relieve the housing shortage, as well as create jobs and retail spending. It’s critical to our city’s continued growth that we implement policies that both address the region’s affordability crisis and support new development in Oakland. Oakland lost its most valuable tool for building affordable housing with the dissolution of redevelopment agencies in 2012. While no single policy solution can make up for the loss of redevelopment

funds, many cities have turned to per-unit impact fees on new market-rate development in hope of generating funds for affordable housing. As Oakland considers adopting an affordable housing impact fee, the critical question is how to design an effective fee program that continues to support new development. Unless it is phased in properly, an impact fee could render many existing projects unfeasible and discourage new investment during a time of great opportunity for Oakland. This would only serve to worsen Oakland’s housing crisis. As many of our neighboring cities experience unprecedented development, building in Oakland continues to be slow. Despite a growing local economy and rising rents, institutional capital remains hesitant to invest in Oakland due to high construction costs, slim margins, low yields, and perceptions of public safety. Until Oakland has a track record of successful projects, it will continue to be difficult to secure financing as investors weigh risk with potential reward of building here. There is a very real danger that an overly aggressive fee program will discourage new development and therefore fail to generate any money for affordable housing – something neighboring cities have experienced. Only recently have we seen institutional investors choose Oakland. An effective fee program should work to encourage that, not stop it in its tracks. The Chamber believes a responsible fee program could include a four-year phase-in at increments of $5,000, $10,000, $15,000, and $20,000 per unit, with exemptions for projects that submit building permit applications before the end of 2016. While fee levels can be determined based on the timing of the permit application, it’s important to allow the payment to be made upon occupancy to ensure the availability of rental income to help offset the fee expense. Given current market conditions, it’s likely that this is the most aggressive fee schedule Oakland can tolerate. If an impact fee stops market-rate development, not only will that exacerbate the housing shortage, it won’t generate any money for affordable housing. The goal should be to maximize the number of new privately developed units, which in turn will maximize the funds collected for affordable housing. While a reasonable and properly phased-in impact fee will hopefully play a part in addressing the housing crisis, it’s also important to remember that impact fees are only one tool in the city’s toolbox. Oakland needs a comprehensive local housing policy that encourages new construction for all types of housing. Oakland should also exhaust county, state, federal, and its own resources – such as converting city-owned and tax-liened properties to housing – as well as work with neighboring jurisdictions to find solutions. The housing crisis is not limited to Oakland; the solutions shouldn’t be either. As Governor Brown pointed out in his recent budget proposal, California’s economy is finishing its seventh year of expansion – two years longer than the average recovery. While the timing is uncertain, the next recession is getting closer. Policies enacted during economic peaks must take into account their effects during the valleys that follow. Oakland’s time is now. Virtually every economic indicator is headed in the right direction. With the right policies, this is our opportunity to continue the work of building an economic foundation that is prosperous, equitable, and lasting. We can’t afford to miss it. The Community and Economic Development Committee will discuss the impact fee proposal at its Feb. 9 meeting. For more information or to voice your opinion, contact Aly Bonde at abonde@oaklandchamber.com. Welcome Paola to the Chamber family The Chamber is pleased to welcome Paola Castellanos, our new Events and Membership Manager. Fluent in Spanish and French, and a Saint Mary’s College alum, Paola has extensive experience in business development with a diverse array of companies, from nonprofits to large privately-held global corporations. She also has more than 10 years of event and project management experience, Paola Castellanos with a focus on community engagement and corporate social responsibility. In her new role with the Chamber, she looks forward to creating opportunities for collaboration among members and Oakland residents. ■

FEBRUARY 2016 |

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February 2016 Oakland Business Review