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Department of Planning & Development
Department of Planning & Development

CONDITIONS, TRENDS & ISSUES
Socio-Economic Conditions: Housing


Summary

The foremost goals of the Housing Element (last updated in 1990) of the 1977 Master
Plan are for all present and future Berkeley residents to have access to decent housing in
pleasant neighborhoods at affordable prices and to maintain the ethnic, social and
economic diversity that gives Berkeley its special character. These goals will not be easy
to achieve. Over the past decade physical stability has been easier to achieve than social
stability. Berkeley is a built-up city with anti-demolition, anti-conversion and landmark
preservation regulations which maintain the overall physical landscape of the City.
Berkeley's population size is stable, but its economic and ethnic character is changing
under severe pressure from the tight Bay Area housing market and recent changes in
City programs.

The affordability of rental housing was protected by rent stabilization during the 1980s,
but recent rent increases have brought rents close to market levels. In addition, there is
concern over the quality of maintenance and the continuing conversion of rental units to
owner-occupancy. Single-family housing is generally well maintained, but few
residents can afford current prices unless they already own. There is a wide gap
between increasingly high-income neighborhoods of single family homes and lower
income areas with substantial multi-family housing. With higher rents the gap is likely
to decrease, as lower income tenants are displaced by those that are better off.
The City has a better than average record in meeting its regional "fair share"
responsibilities for construction of new low-income housing. Much more remains to be
done to assist the homeless and very low-income people generally. It is not clear,
however, that Berkeley's citizens continue to support existing policies that call for the
City to protect low-income tenants and to encourage new housing construction in
mixed-use areas served by mass transit.

Housing policy-making is made more complex by the need for cooperation between the
City and other governments. During the 1980s the federal and state governments, which
had superior tax bases, provided assistance to cities. During the 1990s, with a severe
recession cutting into the State budget and with a massive deficit constraining the
Federal government, only small increases in support are likely. The unwillingness of
many other cities in the region to provide their fair share of affordable housing makes it
even more difficult for Berkeley to deal with its housing problems. The Regents of the
University of California control the University's level of employment and the size of its
student body, which affect local housing demand, and the amount of housing the
University provides for students, faculty and staff, which affects housing supply.

The citizens of Berkeley must now resolve major issues. Does Berkeley want to preserve
its economic diversity enough to take the steps necessary to assist its low-income
residents or will it allow the gradual displacement of low-income people to continue? If
the City should assist and protect low-income tenants, what programs could be used to
do so? How does Berkeley resolve conflicts between the desire for more affordable
housing and concerns that increases in density will harm neighborhood character or
destroy open space? How can the City decide on the location of facilities such as
homeless shelters and housing for low-income people that its citizens agree are needed
but which no neighborhood wishes to have? What is the City really willing to do in
order to maintain its diversity?

Goal 9 of the Berkeley Housing Element (1990) is to have a broad and wide-ranging
public discussion of how to meet Berkeley's diverse housing needs and whether major
changes in policies may be necessary to achieve our goals. The purpose of this overview
is to assist that public discussion.


I. Berkeley Today


Berkeley is a stable and largely built-out city with a 1990 population of about 103,000
people, nearly the same as in 1980 and substantially below the 1970 high of 114,000
(Table III-A-1). Berkeley is also one of the most diverse cities in the Bay Area. Two fifths
of its population are members of racial minorities. Over one-quarter of the population--
28,105 people--are university or college students, about two-thirds of whom attend the
University of California. The 1990 Census reported the median household (half of
households above and half below) income at $29,737 at year. While there are both high
and low income residents in every neighborhood, median household incomes are over
$60,000 a year in the Hills and Claremont area and between $20,000 and $30,000 in most
of the "flatlands" of the City. (See Figure III-A-1)A slight majority of all households (56
percent) are tenants, and 44 percent are homeowners. Renters' median yearly income
was $19,470 compared to homeowners' median income of over $50,000.

The Association of Bay Area Governments (ABAG) projects a slight increase in the
City's population over the next 15 years. The number of housing units in the City has
declined slightly, with new housing construction matched by removal of residential
hotel rooms and second units. ABAG expects that future units added will not result in
much increase in population because household sizes will continue to decline.

Berkeley has a moderate surplus of jobs over housing, with 1.15 jobs for each employed
person living in the City. An increase of 4,600 jobs in the 1980s was matched by an
increase of 4,700 employed residents, resulting from increased participation in the labor
force by women. Over the next decade, however, employment growth is expected to
continue, with little or no increase in the number of employed residents and this will
further increase housing needs. Since many adult residents of Berkeley are university
students, rather than workers, the amount of housing available to them is also a major
concern. In 1990 the Census reported 748 fewer university students than in 1980, a
decline of 2.6 percent. Since the University of California claims a decline of 3,900 in the
number of its students living in Berkeley during the same period, this may reflect an
increase in students at other institutions.

The City's housing stock of 45,800 units plus group quarters, including University of
California-affiliated student housing with 10,640 beds is also diverse (Table III-A-2).
Housing units are 44 percent owner-occupied, and 56 percent tenant-occupied. Single-
family homes constitute 45 percent of all housing units, while another 21 percent are in
small apartment buildings with two to four units and 33 percent are in larger apartment
buildings. Just under half of all rental housing and most of the student housing is
located in a U-shaped area within a few blocks of the UC campus. These proportions
have not changed much in the last ten years except for the expansion of student
housing, with 3,000 beds added since 1980.


II. Regional and City Context


High housing costs harm the entire Bay Area, putting more homeless onto the streets,
increasing the number of low-income families spending most of their income for shelter
and increasing traffic as people commute from homes far from their workplaces.
Berkeley is in the center of a region in which, over the past 15 years, housing costs have
increased faster than incomes. According to ABAG this results from a regional growth
pattern in which jobs are created more rapidly than new housing, and high and low
income jobs are increasing more rapidly than middle income jobs. The result is severe
pressure on the housing market and strain on the budgets of many Bay Area residents,
especially those that rent or have only recently bought homes.

Over the past two years, under the influence of the severe recession in California, rents
have increased only slowly throughout the Bay Area and advertised rents have even
declined in some areas. Neighboring Oakland provides evidence of what the local
housing market is like without rent controls. The Bay Area Council reported a median
advertised rent of $625 for a two bedroom apartment in the Oakland area in July of
1990, declining to $600 in 1992. The "low-end" advertised rent for a two-bedroom unit in
the Oakland area went from $550 to $525 in the same period. According to the 1990
Census, the median rent for all apartments in Oakland was $486. Households are
considered to be overpaying if they spend more than 30% of their income on rent, so the
median tenant household needed an income of $19,440 and an income of at least $22,000
if it was a family with three or more people and needed a two bedroom apartment.
Since the median income for tenants in Oakland was $20,240, according to the 1990
Census, it is not surprising that 51 percent of Oakland's tenants were overpaying.

The rental housing market is also affected by the price of home ownership, which was
at a median of $255,500 in the Bay Area in 1990, up from $98,000 in 1980. With even the
least expensive homes priced over $150,000, would-be home buyers with incomes of
less than $50,000 a year have several choices. They can move to the outskirts of the
region, where lower home prices come at the expense of lengthy commutes. They can
gentrify lower-income neighborhoods, often by converting housing from rental to
owner-occupancy. Or they can remain in the rental market, which increases the demand
for higher priced rentals and bids up the cost of existing rentals.

In most of the Bay Area, new housing production is almost entirely aimed at upper and
middle income people. During the 1980s the Bay Area Council reports that the region
produced about 85 percent of its total new housing need. It overproduced high-income
housing but only met 20 percent of its new lower income housing need. This focus on
new production assumes that the Bay Area has maintained the affordability of the low
income housing it had in 1980, while in reality rent and price increases have made much
of it less affordable. Overall, the Bay Area has lost more housing affordable to lower
income households than it has built since 1980. Berkeley met 96% of its lower income
production goal during the 1980s and, despite home prices which increased faster than
the Bay Area average, preserved the affordability of most of its existing rental housing
through strict rent controls and prohibition of condominium conversions during the
1980s, but allowed rents to increase dramatically in 1991 and 1992. Appendix A-1 has
further discussion of the population density of Berkeley in comparison with other cities.

The City of Berkeley faces severe constraints in its efforts to meet its housing goals.
Federal funding is limited and the Bay Area has a serious shortage of housing,
especially low cost housing, compared with the demand. Over the past decade Berkeley
has done its fair share to provide emergency shelters to assist the homeless and to build
new low cost housing. It needs the cooperation of its neighbors in the East Bay for these
efforts to succeed.


III. Efforts to Shield Residents from the Market:The Limits of Regulation


Existing Regulatory Protections

Market pressures on housing costs in Berkeley are severe. The surrounding Bay Area
housing market combines strong demand with restrictions on supply, an imbalance that
drives market prices artificially high. As a result, the median Bay Area home price rose
161 percent between 1980 and 1990 and median rent rose 136 percent. In addition to the
regional housing shortage, the City's amenities and central location and the presence of
the University of California create a strong demand for housing here. The supply of
housing is constrained by the built-out environment and a strong commitment to
protect existing neighborhood character and preventing major increases in residential
density. Without strong protection from rising prices on the housing market, Berkeley's
many low-income tenants are very vulnerable to displacement.

The City has protected residential housing and tenants through a number of ordinances
and initiatives, including:

  • Rent stabilization and just cause for eviction (Municipal Code 13.76)

  • Prohibition on subdivision of rental properties (Municipal Code 21.52)

  • Interim building demolition regulations (Ordinance 4641-N.S.)

  • Conversion of residential to non-residential use regulation (Zoning Ordinance
    Section 15.1-1)

  • Hotel non-conversion regulation (Zoning Ordinance Section 15.1-2)

  • Non-removal of affordable units (Ordinance 5626-N.S.)

  • Tenant relocation rights and assistance (Ordinances 5627-N.S., 5756-N.S., Council
    Resolution no. 51,821, Municipal Code 13.77)

Preservation of Residential Hotels

Residential hotels with single-room occupancy (SROs) provide the only housing many
very poor individuals could afford, and the loss of such housing is widely considered to
be a major cause of homelessness. In 1972 the City estimated that it had 1,118 SRO units.
In the 1980s several hotels were converted to office or tourist use, such as the 170 room
Shattuck Hotel. In 1986, in an effort to halt this trend, the City passed a residential hotel
non-conversion ordinance. Since then fire, earthquake and deterioration have removed
several hundred SRO rooms, while others are used as student housing, resulting in
approximately 440 residential hotel rooms remaining available to very low-income
residents of Berkeley. Some of these remaining residential hotels are severely
deteriorated and must be reinforced to be survivable during an earthquake if they are to
remain open.

Efforts are underway to restore some of the lost units. The Berkeley Inn, with 77 rooms,
was damaged by fire in 1986, left vacant and finally demolished in 1990 after a second
fire. Efforts continue to rebuild on the site. Another vacant hotel, the Stark Hotel, with
20 rooms, is in the planning stages for rehabilitation to provide a combination of
housing and social services for the formerly homeless. The UC Hotel, with 74 rooms,
was badly damaged in the 1989 earthquake, but has now been sold to a non-profit
housing organization and rehabilitated with Federal, State and City funds.

In a reversal of the previous pattern, a non-profit housing group proposes to convert a
motel on University Avenue from transient to residential occupancy. New residential
hotel rooms could also be added by a new privately-developed 199 room SRO hotel
approved in 1991 for the downtown area, but the developer has not yet proceeded with
construction.

Rent Stabilization

The rent stabilization ordinance, enacted in 1980, currently regulates 19,000 of the 24,500
rental units in the City. Units not covered include 2,100 that are subsidized or in limited
equity cooperatives or whose tenants have Section 8 rent subsidies, about 1,000 units in
owner-occupied duplexes, and about 750 units built after 1980. Dormitories and student
cooperative housing are also exempt. There are an unknown number of units which
should be but are not registered.

Berkeley tenants are a diverse group, 61 percent white, 19 percent black, 16 percent
Asian and 7 percent Hispanic, closely reflecting the overall population of the City.
Census data does not allow us to separate students out from the rest of the low-income
population, but a 1988 survey of tenants in controlled units found that 22 percent of all
controlled units were occupied by students, most of whom are very low-income, at least
temporarily. The 78 percent of all controlled units that were occupied by people who
were not students included 30 percent very low income households (under 50 percent of
East Bay median income for their household size), 16 percent low-income (50-80 percent
of median), 19 percent moderate income (80-120 percent of median) and 14 percent with
above moderate incomes.

From 1980 to 1990 the rent stabilization program held across-the-board annual increases
to an average of 54 percent, and also granted several thousand individual adjustments,
while the Bay Area Consumer Price Index (CPI) increased by 64 percent over the same
period and the CPI index of rents in the Bay Area as a whole increased by an even 100
percent. In 1991 the Rent Stabilization Board approved a series of regulations allowing
major rent increases. As shown in Table III-A-5, the median one-bedroom rental under
rent stabilization in 1990 was only $348 but by January 1993 the median controlled rent
for a one-bedroom was $508, a 46 percent increase in three years. The median two-
bedroom rental was $449 in 1990, but by 1992 the median controlled rent on a two-
bedroom apartment was $639, an increase of 42 percent. From 1980 to 1993 rents
increased a total of 153 percent, nearly twice the 79 percent inflation in the Bay Area
during the same period and roughly equal to the increase in rents throughout Alameda
County for the same period.

The City has estimated what median market rents could be for Berkeley in 1993, so we
can compare current controlled rents and estimated market rents. On the average, rents
in Berkeley are about 15% below market. (The figure for All Units is misleading in this
regard, because this includes exempt units.) The Annual General Adjustment increases
granted since 1990 have been higher than market increases as measured by the
Consumer Price Index for Rent, Residential, so that controlled rents continue to come
closer to market levels. Since there are a range of rents under the rent stabilization
system, a substantial number of owners with relatively higher rents now have rent
ceilings that are at or even above market levels.

With median tenant income below $20,000 a year, even with the 1990 controlled rents
that were far below market levels, fully 45 percent of tenant households in Berkeley
were overpaying. By 1992, with the rents about 40 percent higher, the City estimates
that at least 60 percent of tenants are overpaying for rent and that about 3,000 very low-
income non-student households are paying over half of their income for rent, a rent
burden which places them at risk of homelessness.

Limits on Conversion of Units from Rental to Owner-Occupancy

Since 1980 the City of Berkeley has not permitted subdivision of rental property into
condominiums, stock cooperatives or community apartments, each of which allow
individual ownership of units or of exclusive rights to the use of units. This is because
the conversion of rental units to owner-occupancy results in a major loss of affordability
as units are sold and resold at prices whose monthly costs for mortgage, taxes and
insurance are much higher than monthly rents.

Despite the condominium conversion ban, conversion to owner-occupancy continued
among single-family homes and through "tenancies in common" (TICs), which allow
people to use joint ownership of multi-unit buildings to become owner-occupants,
without actually subdividing the property. In TICs people share ownership of a
property with multiple units and agree among themselves on each part-owners' right to
occupy one unit. TIC owner-occupancies have been created in properties ranging in size
from two to twelve units. This alternative means of shifting rental units to owner-
occupancy evades all State and local subdivision regulations and has resulted in major
problems for some buyers, who believed they were buying the equivalent of a
condominium. At the beginning of 1991 a new City ordinance required that TIC sellers
give prospective buyers a "Tenants in Common General Information Statement". This
ensures that buyers receive basic information on the complexities and potential
problems of owning property jointly with others.

The 1990 Census reported an increase in owner-occupancy of 2,115 units, of which 215
were built during the 1980s, for a net conversion from rental of 1,900. Of the newly
owner-occupied units, 1,446 were in single-family houses, 397 were in duplexes, 136
were in three or four-unit buildings and 131 were in properties with five or more units.
Some of the newly owner-occupied single-family houses are in properties with multiple
detached cottages, so that they may also be owned through tenancy in common
arrangements. Approximately 1,000 units were probably converted to TIC ownership in
the 1980s. In a 1989 survey of Berkeley households, of those owners reporting that their
unit was formerly a rental, 25 percent report that they bought the unit they once rented
and 75 percent that other renters had lived there. Nearly 60 percent of the owners of
units converted from rental to owner-occupancy previously lived in Berkeley.

The average $930 monthly mortgage payment for the TIC units is affordable to a
household making $33,500 a year. The average rent on these units would have been
$650 monthly, affordable to a family making $26,000 a year. This represents a
substantial loss of affordability.

TICs are located throughout the City, but with concentrations on the South and North
sides of Campus. Advertised TIC units are generally small, about 55% have one
bedroom, 40% have two bedrooms and 5% have three bedrooms. Advertisements for
TIC owner-occupancies mostly list prices in a range between $75,000 and $175,000. This
is affordable to moderate-income households with incomes ranging from $25,000 to
$60,000.

The shift to owner-occupancy results primarily from the increased demand for and
price of single-family housing in the Bay Area, which in turn increases the return to
owners of rental property if they sell to owner-occupants. Rent control strengthened this
effect by reducing the return from rents, but the relaxation of rent controls on these
units to allow substantially higher rents has made them less affordable. Affordability,
rather than rental or ownership status as such, is the key policy problem for the City in
such conversions.

In its early stages, the effects of conversion from rental to owner-occupancy were
moderated because the conversions were concentrated among the higher rent single
family and duplex units. With the pool of single-family and duplex rentals seriously
reduced, however, the late 1980s saw conversion of units in larger buildings, where
more affordable units are concentrated. In response to this threat, in 1992 the City
Council passed a permanent ban on conversion of properties with four units or more to
TIC projects, and instead, allowed limited condominium conversion. All existing TICs
will be allowed to convert to condominiums and will pay a fee of three percent of value
to the City's Housing Trust Fund as the condominium units are sold by their current
owners. In addition, 100 units of rental property may convert annually.

Since nearly one-third of Berkeley's tenants are moderate income or above, conversion
of units at prices affordable to these tenants may not have harmful consequences to
other tenants if adequate mitigations are kept in place. In rental conversions, at least
half of the units must be sold to current tenants, all low and moderate income tenants
who do not buy are protected from eviction, and substantial housing mitigation
payments are required. These payments are made into the City's Housing Trust Fund as
each unit is sold.

The City encourages conversion of rentals to limited-equity cooperatives, which
preserve affordability by limiting price increases. Between conversions and new
construction there are about 300 units of cooperative housing and, another three such
conversions under way in properties with a total of 50 units.

Removal of Units

While units that shift from rental to owner-occupancy are still part of the housing stock,
still other units remain vacant or are withdrawn from the rental market for various
reasons. As of December 1990, the rent stabilization board records show a total of 780
units exempt from annual registration fees because they were vacant or unavailable for
rent, and 19,300 units that should be registered, for a 4.0 percent vacant and not
available rate. The percentage of vacant and unavailable units is highest among
properties with from two to nine units, with 11 percent of units in two-unit properties
vacant or unavailable, seven percent of units in three and four unit properties and five
percent of units in five to nine unit properties. The vacant and unavailable rate for
properties with ten or more units is only one percent.

The 1990 Census showed an increase in total vacancies of 664, going from 1,618 in 1980
to 2,282 in 1990. This included 94 more houses vacant and for sale, 28 more units vacant
and for rent, two more units held for occasional use and 540 more units simply held
vacant. Again, the vacancy rate was highest in two-unit structures, at 11 percent, going
down to nine percent for properties with three to nine units and to under four percent
for properties with ten or more units.

There are several possible reasons for these units being off the market. Some are being
renovated and will be rented again when repairs are completed. Resident owners
sometimes use other units in their building as extensions of their own living quarters,
even though they cannot legally merge units together into a single larger unit. Owners
may also have held units off the market in order to have a vacant building to sell in the
growing TIC market. The number of newly exempt units grew steadily during the
1980s, starting with 10 in 1980 and rising to a peak of 246 new exemptions in 1989 as
home prices peaked (Table III-A-6). Home ownership exemptions followed the same
pattern. The number of exemptions then declined in 1990, as home prices stabilized. The
increase in not available for rent and vacancy exemptions is likely related to increasing
home prices and the shift to owner-occupancy.

There are approximately 40 vacant buildings in Berkeley, mostly single-family, with a
total of about 60 units aside from the two vacant residential hotels. This figure has
remained fairly constant throughout the 1980s. The vacant buildings are scattered
around the City and result from various individual problems of their owners. The City's
new Anti-Blight Ordinance requires that vacant residential buildings be kept up to
Code inside and out in order to reduce their harmful effects on the surrounding
neighborhood and to increase the costs of holding property vacant.

The 1990 Census also reported a decline in the total number of units in Berkeley, from
46,334 to 45,735. Since City records showed a net addition of 740 units in the 1980s, there
is a loss of 1,340 units that requires some explanation. Nearly half of the loss comes from
the removal of approximately 400 residential hotel rooms during the 1980s and an error
by the Census, which miscounted another 200 rooms as group quarters. The other units
removed are located as follows: 280 in the Hills, 230 in South Campus, 150 in North and
Central Berkeley, 70 in South Berkeley, and none in West Berkeley. Given the locations,
many of these losses may be secondary units, often illegal, now reabsorbed into a main
home. An additional reason may be the use of multiple units by a single family.
According to the Census Bureau, if a single family occupies all of a multiple unit
building it is counted as one unit. The City's own Housing Stock Changes report
showed substantially fewer units in the City in 1980 than were reported in the Census,
but agrees with the Census for 1990. This is further evidence that part of the apparent
loss was in the removal of illegal units.


IV. Affordability Problems


The Cost of Home Ownership

Home prices in Berkeley have increased substantially faster than in the East Bay as a
whole. In 1990 the average single-family detached home in the Berkeley area sample
tracked by the Real Estate Research Council of Northern California was $320,000. This is
affordable to families making $90,000 a year and having at least $64,000 for a
downpayment and closing costs. Less than 10 percent of Berkeley households have such
an income. A few small detached houses in less desirable neighborhoods, condominium
apartments and TIC shares are still sold for between $100,000 and $150,000, which is
affordable to households making $32-48,000 with a $10-15,000 downpayment. About
one fifth of Berkeley's renters could afford to buy a $100,000 home and less than 10
percent could afford a $150,000 home, and only if they have $15-20,000 for a
downpayment and incidental expenses.

Many long-time owners are moderate- or low-income, particularly those who bought
prior to 1976 and paid much lower prices for their homes than the current market rates.
As these owners sell, however, they are gradually replaced by people with higher
incomes. The rapidly rising prices of owner-occupied housing, combined with stability
in rent levels, may be creating a bifurcated income distribution with a decreasing
percentage of middle income households. What, if anything, the City should do about
this trend raises difficult issues. The suggestion that the City control home prices was
unanimously rejected by the City Council in 1988. Maintaining an adequate supply of
middle-income housing must be done in other ways.

Increasing the supply of middle-income owner-occupied housing requires either a
substantial increase in construction of new condominiums, which many residents
would strongly oppose, or conversion of the existing rental housing stock to owner-
occupancy, which many residents also strongly oppose. At present the City is doing a
little of both. Thirty new condominiums received approval in the last year. In addition,
the City will allow conversion of 100 units of rental housing annually. Such conversions
must be sold primarily to current tenants and are accompanied by substantial
mitigation fees to compensate for the permanent loss of affordability.

Programs can also be created to assist tenants to purchase homes. Berkeley participates
in Alameda County's 1990 Mortgage Credit Certificate (MCC) program, which gives
first-time moderate- and low-income buyers a Federal tax credit worth about $200
monthly. During fiscal year 1991-92 the program was used by 13 Berkeley buyers.
Discussions with mortgage lenders indicate that the downpayment is a more important
barrier for eligible families than the $200 monthly benefit provided by the MCC.
Discussions with other cities indicate that prospective buyers are very reluctant to use
City downpayment assistance programs that require sharing the equity and
appreciation with the City when the units are sold.

Rental Housing

Prior to 1991, rent stabilization kept rents from increasing more rapidly than incomes,
but after the recent increases approximately 3,000 very low income non-student
households are paying over half of their income for rent. These households constitute
an "at risk" population for homelessness because they have very little margin to draw
on should their income decrease or their rents increase. Of these at risk households, 22
percent were households with children (600 households City-wide), and 67 percent
were single adults living either alone or in shared housing (2,000 households) with the
remaining 13 percent couples without children (about 400 households). There are about
5,600 very low-income non-student households in privately owned, unsubsidized
housing in Berkeley, virtually all of whom are overpaying for rent and would be eligible
for some form of rental assistance if it were available. There are about 2,800 households
who receive some form of rental assistance. Figure III-A-2 shows the number of very
low income households as well as the number of households receiving housing
assistance for each Census Tract.

There are two methods of protecting low-income tenants. One long-term solution is to
create non-profit housing, in which rents will increase only with actual operating costs
rather than with the market. Non-profit housing can also be organized as or converted
to limited-equity cooperatives, which provide home ownership to low-income people
without destroying affordability. The City has recently begun a Rental Acquisition
Program to assist non-profit organizations to purchase housing occupied primarily by
low-income tenants.

There are 1,101 units of publicly-assisted housing in the City of Berkeley, with 1,017
units under different forms of non-profit ownership, ranging from limited equity
cooperatives to the Housing Authority to non-profit corporations. Two projects, Allston
House, with 48 units, and Melrose Apartments, with 36 units, have for-profit ownership
and are subject to eventual termination of use as low-income housing. Another
subsidized project, Lorin Station, is under construction with 16 subsidized units. (Figure
III-A-3: the "Inventory of Publicly-Assisted Housing" lists all subsidized housing
projects.)

The other way to protect very low-income tenants is match rent increases with subsidies
to the tenants. Such subsidies are the only means to protect large numbers of tenants in
the short run, although they are more expensive over the long run. The Federal Section
8 rent subsidy program currently serves 1,700 households in Berkeley, including over
1300 very low income families, many of them single parents with children, and over 300
very low-income elderly households. (See Figure III-A-4: Distribution of Section 8
Tenants by Census Tract.) Under the program tenants pay no more than 30 percent of
their income for rent. In Table III-A-7 we can see that without rent subsidies a poor
household receiving welfare payments would have to spend most of its income for rent
to afford the average rent-controlled apartment.

The Berkeley Housing Authority has 1,500 households on its waiting list for studio and
one-bedroom units. This list has not been opened up in several years. A new list for two
and three bedroom units was established in 1990 and has 2,500 households.
Unfortunately, due to the limited federal resources devoted to housing the number of
available certificates will increase only slowly. Any major increase in tenant subsidies
would require local funding.

Even if there is an increase in the Berkeley Housing Authority's allotment of Section 8
certificates and vouchers it is not clear how much this will help tenants in Berkeley.
Units rented to tenants who receive rental assistance are exempt from rent controls, so
that, until the recent rent increases, landlords who rented to Section 8 tenants received a
substantially higher rent than they would otherwise receive. With this financial
incentive, many landlords chose to rent to Section 8 tenants, but with rents now closer
to market levels, a number of landlords have already taken steps to remove their units
from the Section 8 program.

In addition, Federal regulations which took effect in 1990 allow people with Section 8
certificates to use them in any city. In November 1992, 402 households used their
certificates in other cities, most often in Oakland, where they rented larger units with
two or more bedrooms that are hard to find in Berkeley. Only 107 households in
Berkeley were using vouchers from other Housing Authorities, with the majority
renting studio and one-bedroom units. If these trends continue they will result in a
substantial loss of poor families from Berkeley, reducing the economic diversity of the
City.

The only current source of funding for direct housing subsidies to tenants is the Federal
government. Federal Section 8 housing subsidies would have to be tripled to cover the
very low-income people living in Berkeley, and while the potential certainly exists for
increases in Federal social spending over the next decade, such a substantial increase
seems unlikely. The residents of Berkeley could raise additional funds locally.

Discussion of the needs of low- and moderate-income residents of Berkeley is made
more complicated by the presence of a substantial, but uncounted population of artists,
writers, social service providers, post-doctoral researchers and others who often receive
little monetary compensation for their work unless they become famous. They are an
important part of making Berkeley an intellectual, cultural and creative community, but
it is frequently argued that these people are "voluntarily poor" and thus not deserving
of consideration in City housing policies. City policies that support creation of
affordable live-work space for artists in West Berkeley are the main current form of
assistance for this population.


V. Special Housing Needs


The Homeless

Homelessness is the most dramatic manifestation of the Bay Area's housing crisis. Its
causes include the region-wide loss of low-cost housing, lack of federal assistance for
housing and social services, the loss of well-paid unskilled and semi-skilled jobs and
inadequate education and support services. The City is taking a three-tiered approach to
rehouse the homeless, providing emergency shelters, then transitional housing, and
finally permanent low-income housing such as residential hotels.

Many people who are homeless and or at risk of homelessness have special needs:
children who need care, physical and mental disabilities, lack of employment skills and
histories of alcohol and drug abuse. The City now encourages creation of housing
accompanied by support services, as is planned for the Stark and UC Hotels. With
inadequate funds to meet all urgent needs, the City must decide on a balance between
expenditures on permanent housing, temporary housing and support services.

The 1990 Census counted 765 homeless people in Berkeley and service providers
estimate the total at about 1,000. The homeless are a changing part of the most
vulnerable and poorest of our people, falling into homelessness and many eventually
finding the resources to get off the streets. Homeless assistance programs help over
2,000 different people annually, at a cost of over $2,000,000 a year. The City currently
has an emergency shelter capacity of 220 beds nightly and provides 73 units of
transitional housing (Table III-A-8). The City also tries to open up temporary emergency
shelter space during the worst of Winter weather. The City has substantially increased
its shelter capacity over the past five years with the help of state and federal funds, but
other cities must do their fair share to provide shelter for the homeless as well. Berkeley
provides 30 percent of the emergency shelter beds in Alameda County, while only one
sixth of the county's homeless identify Berkeley as their home town.

Single Parents, Large Families & the Disabled

Low income single heads-of-household with children need affordable housing and also
childcare, health care and education or job-training. Six percent of Berkeley households,
a total of about 2,800, fall into this category. Berkeley has about 1,850 households
receiving Aid to Families with Dependent Children (AFDC), most of whom are single
parents. Creative housing arrangements, such as co-housing or house sharing could
meet some of these needs. Under recent changes in the rules for housing certificates and
vouchers, all Housing Authorities will be required to coordinate housing subsidies with
a package of job training and placement services, child care, and transportation
assistance.

Large families and the disabled face particular problems resulting from the rapid
increase in the price of the City's single-family and duplex units. Of three or more
bedroom units in Berkeley, 96% are in buildings with one to four units.

The 1990 Census reported that Berkeley had over 6,081 people with disabilities who
were between the ages of 16 and 64, and 3,287 of these people were not in the labor
force. Approximately 3,300 people in Berkeley receive Supplemental Security Income
for the Disabled (SSI). In the case of housing for the disabled there are physical barriers
which make much of the City's older housing stock inaccessible. The City's large stock
of wood-frame housing in buildings with one to four units readily lends itself to the
installation of ramps and interior access changes. City funding allows the Center for
Independent Living to make about 70 homes a year wheelchair accessible.

Large families also find most of the larger units with more than two bedrooms in one to
four unit buildings. The majority of these units are owner-occupied and the increase in
home prices makes it more difficult for middle and lower income large families and
households with disabled members to find housing in Berkeley. There are about 1,000
low-income households with five or more people in Berkeley.

Housing Discrimination

Housing discrimination hurts those who are already most vulnerable, (racial minorities,
families with children, single parents and the physically and mentally disabled. There
are legal protections for all of these groups, but continued education and enforcement is
needed. Housing Rights Inc. investigated 65 complaints of discrimination in Berkeley in
1988. The City commissioned a testing program for racial discrimination which was
conducted in the 1990-91 fiscal year. The study found that more favorable treatment
was given to the Caucasian applicants in 53% of the units for rent in Berkeley.


VI. Maintenance


Permits for improvements to residential buildings have increased substantially in the
1980s. Currently, the City is granting approximately 140 permits annually for additions
of bedrooms and other livable space to residential buildings. The majority of additions
are in single-family homes in North Berkeley and the Hills.

Owner-occupied housing is generally in good condition, reflecting increasing property
values. However, there are several thousand low-income, mostly retired homeowners
who need assistance in maintaining their homes. The City runs a free minor home-
repair program which employs and trains youthinterested in the construction trades.
The program assists 120 homeowners annually and has a lengthy waiting list. The City
also has a low-interest loan program for low-income homeowners, operated by
Alameda County, that can help about 15 homeowners. Christmas in April, a volunteer
program that will receive some City assistance, does major renovation for about 25 low-
income elderly or disabled homeowners a year.

The City's recent earthquake safety study determined that as many as 390 multi-family
and mixed-use buildings containing 3,890 units may need reinforcement in order for
their occupants to survive a major earthquake. About 95 buildings containing 1,735
units were built before 1933 and appear to be constructed with unreinforced masonry.
Reinforcement is essential to ensure the safety of their residents, but it is also expensive.
Most of these buildings provide low cost rentals and their residents cannot afford
substantially increased rents. The $80 million in bond money available Statewide for
seismic reinforcement of low-income multi-family rental buildings can meet only a
fraction of the total need. Low-income homeowners also need assistance in securing
foundations and making other safety improvements. The City faces difficult trade-offs
between safety and affordability. (See also the Conditions, Trends & Issues section on
Safety.)

There is a technical problem in those cases where, due to poor initial construction or
severe deterioration, it would be more economical to demolish and replace a building
than to repair it. Many areas have been down zoned after buildings were constructed.
As a result, if a building is demolished by a disaster, not all of the units could be
replaced. A modification in the Zoning Ordinance may need to be considered to allow
replacement of all existing units. In addition, there are an unknown number of illegal
second units in the city, and efforts need to be made to bring them up to Building Code
standards so that they are safe to live in, but without displacing tenants and reducing
the low-cost housing supply.

There is widespread concern over the adequacy of ongoing physical maintenance of the
rental housing stock in Berkeley. Half of the City's housing was built before 1940, and
many of the later buildings were poorly built and are difficult to maintain. Bay Area
Economics' 1988 tenant survey found that 16 percent of residents in rent controlled
apartments reported their building was in poor condition. Fully 80 percent reported at
least one maintenance problem, including problems with heat (22%), plumbing (41%),
roofs (21%), paint (48%) and security or lighting (32%).

Many residents feel that rental property maintenance has declined, especially
maintenance of building exteriors and yards. Some residents argue that this is the result
of a decade of strong rent controls. Other residents argue that building maintenance,
especially cosmetics, has always been poor in Berkeley because of the highly transient
student market and that rent controls' tenant protections strengthen code enforcement.
While neglect of exterior appearances is not a threat to the building itself, it has harmful
effects on the overall appearance of the neighborhood. The City has recently passed an
Anti-Blight Ordinance that strengthens its powers to act against vacant residential
buildings and properties whose appearance has blighting effects on the surrounding
neighborhood.

The City currently receives about 350 complaints annually that lead to the discovery of
serious (A or B) code violations which create unsafe conditions, virtually all in rental
housing. There are 5,545 multi-unit (2+) structures in Berkeley, so about six percent
annually are found to have violations and brought up to code by the enforcement
process. The City currently uses an estimate of a twenty-year cycle or five percent
annually to project the number of buildings deteriorating to substandard conditions
each year. If this estimate is accurate and all major violations in a building are caught
whenever a unit within it is inspected, then the rental housing stock should then be in
stable condition, with violations being caught and repaired as they develop. Adequate
information to evaluate the maintenance of rental housing is not currently available.

Vacant buildings are the most severe manifestation of failure to maintain the housing
stock. At present there are approximately 40 vacant buildings in Berkeley, and most of
them are single-family homes. Vacant buildings are a particular target of the new Anti-
Blight Ordinance.

Drug-related violent crime has created severe maintenance problems in some buildings,
and some owners may leave units vacant to avoid the possibility of renting to drug
users. The extent of such problems is not known. Landlords may properly evict tenants
who abuse property or engage in illegal activities. At the same time, this simply sends
problem tenants and their families elsewhere or onto the streets. A new form of assisted
housing which combines security and social services could conceivably provide
appropriate places to which such tenants could be offered relocation.

Government subsidies are needed when low-income tenants can not afford the
increases necessary to finance building maintenance and rehabilitation. The City offers
subsidized rental housing rehabilitation loans to landlords of low-income tenants. The
rental rehabilitation loans have renovated 35 buildings since the program began in 1985,
usually accompanied by Section 8 subsidies for the tenants. The loan program has
contributed $1.4 million, matched by equal amounts from private lenders, and can be
expanded as demand increases. The supply of Section 8 certificates, unfortunately, is
more limited.

Housing maintenance and rehabilitation are an essential part of the City's housing
policies. With limited public funds and major increases in rents, City policies need to
ensure that private owners to increase their investment in housing maintenance.


VII. Building Berkeley's Fair Share


Housing Production: 1980-1989

The City of Berkeley is one of the slowest growing cities in the Bay Area. Nonetheless, it
has an good record in the production of new housing for lower income residents. The
Association of Bay Area Governments (ABAG) is required by the State of California to
determine new housing needs for all Bay Area cities. Figure III-A-5 depicts the numbers
of units built in each Census tract between 1972 and 1990. From January 1980 through
December 1989 about 740 new units were added as well as the equivalent of 564 units
(two beds = one unit) of student housing, for a total of 1,304. This was four-fifths of the
1,611 units ABAG set as Berkeley's 1980-1989 regional fair share. The 446 subsidized
units built for low and very low income households and at least 282 unit equivalents of
student housing occupied by low income students meet 96 percent of the City's low-
income housing goal. (Student housing is counted both because students are residents
of the City and because student housing takes pressure off the local housing market and
makes more housing available to others.) In addition, in 1989-90 a 760 bed student
residence was completed and 320 units of privately developed housing and 16 units of
subsidized housing received building permits. Nearly 250 units that received approval
have yet to be built, however. The Savings & Loan crisis and the recession have made
housing development much more difficult in recent years.

Housing Production Goal: 1988 - 1995

Jobs-housing balance is now an important consideration in setting housing goals (see
Appendix A-2). Since Berkeley is expected to continue to add employment faster than it
adds housing, ABAG has increased the City's 1988-1995 housing need determination by
826 units, enough to house half of the additional employees. The City is also asked to
produce 888 units to meet current needs and expected household growth, for a total of
1,714 units. Of the 1,714 total, 514 are supposed to be affordable to very low income
households (below 50-55% of median), 291 to low income households (50-80% of
median), 326 to moderate income households (80-120% of median, i.e.. middle income),
and 583 to households with incomes above moderate.

So far, of the 1,714 unit goal, only 207 units were added in 1988 through 1991, partly due
to the loss of 62 units in the Berkeley-Oakland fire in 1991. Another 246 units were given
building permits in 1989 and 1990 but have not yet been built. In addition the
University has approved 900 new beds (450 unit equivalents), with 760 already
completed. Assuming these are all built, the remaining need will be 811 units, or 270
units a year from 1992 to the beginning of 1995.

According to the Specific Plans or current zoning for Downtown, West Berkeley, South
Berkeley and the commercial areas along Telegraph and North Shattuck, there is
enough vacant and underutilized land for as many as 2,000 units. In addition the
University has plans for an additional 2,500 to 3,500 beds over the next 20 years. (See
also the University section of this report.)

The majority of the vacant and underutilized land which is available for housing
development is expensive to build housing on and is also available for non-residential
uses which may be more profitable. Currently the City uses a housing impact fee to
ensure that non-residential development also increases housing supply. The City also
has an inclusionary zoning ordinance to ensure that new housing production increases
the low-income housing supply.

One approach to housing growth is emerging in area plans and commercial district
zoning revisions that encourage mixed commercial-residential projects and concentrate
housing where it has easy access to mass transit. In the North Shattuck and Telegraph
Avenue districts and in South Berkeley the City encourages inclusion of residential uses
in new commercial developments. Driving and car ownership is discouraged in the
high-density Telegraph Avenue area because no parking will be provided for most new
residential units in this area. The West Berkeley Plan includes live/work units, and the
expansion of residential uses in this area also creates the potential for loss of
manufacturing employment.

The University of California is the largest single housing producer within the City. At
present, since University housing is required to pay for itself, the University of
California funds construction of new student housing by spreading the costs among all
residents of University-owned student housing. This keeps the cost down for residents
of the new housing, but raises it for students in University housing generally. The
effects of a major building program on the affordability of student housing are
unknown, but either State subsidies for new student housing or expanded support for
student financial aid may soon be needed. (See also the University section of this
report).

Housing Production Scenarios: 1995 - 2005

Beyond 1995, the extent of Berkeley's housing need is hard to predict. Assuming that
slow employment growth continues and that the City commits itself to jobs-housing
balance, from 1995 to 2005 there could be a 3 to 9 percent growth in housing, adding
from 1,300 to 4,100 units. This range is based on three different scenarios: the first using
ABAG's Projections '92; the second using this projection plus additional housing need
resulting from growth in employment at UC and in spin-off industries; the third making
more efficient use of existing housing and increasing the percent of City residents
employed within Berkeley.

Scenario One: 2,800 units needed.

For the year 2005, ABAG projects an increase of 520 households over 1995. ABAG also
projects 3,840 more jobs in the City and 1,500 fewer employed residents, for a deficit of
5,340 employed residents. In this case, following ABAG's guideline of providing
housing for half of the increase in employees over employed residents (2,670), and
assuming 1.2 workers per household, the City will need 2,225 new units to maintain
jobs-housing balance. With the addition of the projected 520 additional households, the
City would need a total of nearly 2,800 units. If the University builds 2,800 beds of
proposed student housing, which is counted as 1,400 units at two beds equals one unit,
then an additional 1,400 other units would be needed.

Scenario Two: 4,300 units needed.

If University-related development addsanother 1,000 jobs beyond that projected by
ABAG, then at 1.2 workers per household, the City would need an additional 400 units
to house half of the additional workers. If ABAG changed its formula to require housing
all additional workers, rather than half of them, then another 1,100 units could be added
to existing need, for a total of 4,300. Building 2,800 beds of proposed student housing
would create the equivalent of 1,400 units and leave a need for 2,900 other units.

Scenario Three: 1,300 units needed.

More intensive utilization of existing units through shared and co-housing
arrangements could conceivably reduce the number of additional households, and thus
units needed, by 1,000. Increased local employment, through active use of the First
Source program, people working at home and other changes could eliminate the
projected decline of 1,500 employed residents, reducing need by 600 units. Additional
housing need would then be only 1,200 units. Assuming 2,400 beds of student housing
was built, equal to 1,300 units, then no additional housing would be needed.

These scenarios simply indicate the wide range of future possibilities. ABAG could
change its formula to require much more housing in areas near transit corridors, for
example, so that even with all the demand reduction efforts described in Scenario Three
a substantial increase might be called for. California's recession might level off
population growth so that no additional units would be required. The scenarios do
suggest that Berkeley will need to prepare itself for either significant social changes or
substantial physical changes within at least some neighborhoods.

New construction raises intensely controversial issues, since many Berkeley residents
express strong concern about increasing densities within the City, despite its stable
population (See Appendix A-1). Can the impacts of new housing be clearly specified
and mitigated by other means than limiting housing growth--such as measures to
reduce auto use, improve City services and ensure high quality design compatible with
surrounding neighborhoods? Is the City willing to stabilize demand, and thus reduce
the need for new housing, by limiting expansion of employment, commerce and
cultural facilities?

There are no easy solutions. Working at home, for example, is easier with modern
computer and telecommunications capabilities. This trend reduces commuting and
increases the number of employed residents, but it can also generate more traffic from
clients and customers. Commuters are more likely to use mass transit and car pools to
get to work, while customers prefer to use cars due to slow off-peak transit service,
multiple destinations and the need to transport purchases.


VIII. Issues for Discussion


The City will continue to face the controversial issues raised in this report. The
discussion of how to meet diverse needs is essential if we are to develop creative
solutions and make the hard choices necessary to provide decent and affordable
housing in a high-quality environment for all Berkeley residents.

Housing Element Goal 1: Affordability

The City has three major housing programs that can help make housing affordable: rent
controls, household subsidies, and support for non-profit ownership of housing. At
present, none of these programs provides adequate assistance to very low-income
tenants. The citizens of Berkeley should have the chance to deliberate over whether,
having loosened up controls on rent levels for all tenants, they are willing to provide
additional resources to its very low-income population, which programs the City will
use, and who will be taxed to provide those resources.

Some additional questions:

  • Should the City subsidize housing in mixed-income projects for people with a range
    of incomes in order to maintain diversity within housing developments, or should City
    subsidies be focused entirely on very low-income people whose need is greatest?

  • Should the City assist tenants to purchase homes even if the homes do not remain
    permanently affordable, or should City subsidies be restricted to projects that remain
    permanently affordable?

Goal 2: Maintenance of Existing Housing

  • Should the City modify the zoning ordinance to allow replacement of all units after
    demolition of a non-conforming structure due to a natural disaster or because it is no
    longer economically feasible to repair the existing structure?

  • Can the City preserve the affordability of unreinforced masonry buildings while
    ensuring that they are made safer during earthquakes?

Goal 3: Expansion of the Housing Supply

  • When conflicts arise, how do we balance our goals of preservation of open space or
    architectural heritage with meeting housing needs?

  • Should the City encourage construction of condominium apartments to create home
    ownership opportunities for middle-income residents and can potentially harmful
    impacts on surrounding neighborhoods be adequately mitigated?

  • Can the impacts of new housing construction be clearly specified and mitigated by
    measures to reduce auto use, improve City services and ensure design compatible with
    surrounding neighborhoods?

  • As an alternative to expansion of the housing supply should the City seek to limit
    growth in employment, commerce and cultural facilities to stabilize demand?

  • As an alternative to expansion of the housing supply should the City encourage
    shared housing and working at home--and what effects might these have on the
    character of existing neighborhoods?

Goal 4: Meeting Special Housing Needs

Homelessness

  • What is the appropriate balance between expenditures on temporary housing,
    permanent housing and on social services to help the homeless?

  • Is there a housing and social service combination that can house low-income tenants
    (and family members) whose substance abuse or disruptive behavior requires their
    eviction from normal assisted housing?

  • Can and should emergency and transitional housing and social service centers be
    located more evenly throughout the City?

  • Should the Zoning Ordinance be amended to allow "site by right" so that emergency
    or transitional housing could be established in any neighborhood?

The Disabled and Large Families

  • How can the City continue to assist the disabled and large families, when the most
    accessible and suitable housing, one to four unit wood-frame buildings, is increasingly
    costly and increasingly owner-occupied?

  • Should single-family homes be exempt from rent control in order to encourage their
    use as rentals, and would their more intense use as shared housing have any negative
    impacts on their neighborhoods?

Goal 5: Relationship With the University

  • How can the City encourage the University to build housing compatible with
    existing neighborhood character?

  • How can the City encourage the University to reduce student enrollment so that the
    additional housing will reduce commuting and pressure on the housing market?

  • Can the University maintain the affordability of existing student housing and can the
    City of Berkeley be of any assistance in obtaining subsidies for student and faculty
    housing?

Goal 6: Fair Housing

  • Most people agree that assisted housing should be dispersed throughout the City,
    but is this economically and politically feasible?

  • Should the City continue to support new subsidized housing construction or increase
    its Section 8 rental assistance if assisted housing can not be dispersed?

Goal 7: Regional Cooperation

  • Should the City work within ABAG, local legislators, civic organizations and low-
    income housing advocates to support new legislation which ensures that all cities do
    their fair share, even if such legislation might threaten local control over housing
    policy?

  • What should the City's position be on proposals to combine existing regional
    agencies into a single regional planning body, as proposed by the Bay Vision 2020
    Commission?


IX. Conclusion


Housing is a basic human need. Safe and affordable housing is essential to a decentstandard of living. Housing is also the most expensive part of most people's budgets, so that affordable housing is essential if low income people are to have a decent standard of living. The homeless on our streets are only the tip of the iceberg, warning us that there is a housing affordability crisis in the City of Berkeley and in the State of California. Berkeley's Housing Element recognizes adequate housing as a human right. Whether and how we act to turn that right into a reality will be a major statement about who we are as a community.

 

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