City government exists to protect and promote the interests of residents, and we need to be especially cognizant of our most vulnerable residents, be they homeless, low-income renters, or low-income homeowners. How do we protect renters from escalating costs while increasing available affordable units? The problem with most plans on the table is that they leave out key, vulnerable constituencies and don’t work together in way that benefits the community as a whole, shrinking available affordable rental stock as well as ensuring that fewer and fewer people of limited means can own property (or in the case of people unable to work, make a modest profit renting out a room or unit to support themselves).
Laissez-faire capitalists claim that supply and demand will fix everything, and don't understand why income inequality exists, or the basic concept of privilege. Some rent control advocates don’t seem to understand that often small landlords are just as economically vulnerable as their tenants to escalating healthcare costs, cuts in vital services, and while many may need to use whatever equity they have in their homes for old age or disability care, it’s unfair to just assume that they can either borrow against their equity (if they have any) or sell and leave communities they have lived in for years, because someone else wants to live here.
There’s a better way that encourages cooperation among natural allies instead of contention.
We should institute methods for tenants to buy into their units on a limited equity basis by income bracket, making it possible for tenants to become owners while ensuring that when they’re ready to sell, the property becomes forever affordable based on the county’s categories of income as they apply locally (extremely low income, very low income, low income, and median). This plan not only provides for many more affordable units, it does so in a way that eases the transition so we don’t simply swap one at risk group for another.
The key lies in having the city step in and help in several key ways.
1. Zoning and Low-Income Residents
There are literally thousands of ADUs already existing in Berkeley that are not legally rentable due to relatively harmless non-conforming traits that would be prohibitively expensive to fix. I’m talking about things like a ceiling that’s a few inches to low, or a step up into a bathroom (to accommodate plumbing underneath); or a staggered staircase where there isn’t space enough for a standard one.
Rather that rejecting these out of hand or requiring hundreds of thousands of dollars in repairs that would force the cost of the unit up, let’s grade the housing’s non-conforming aspects the way the Health Department grades restaurants. The grade, along with the reasons for it, would be posted outside of the building for anyone and everyone to see before entering, and tenants could opt to take the property as is by signing a waiver indemnifying both the inspector and the landlord. If some tall person comes in and bumps their head, no one would have to worry about a lawsuit.
The grade would also determine a discount below market-rate to legally offer it, and as part of a new plan to encourage potential small landlords (1-4 units) to keep or offer new properties on the market, new submarket units would be allowed reasonable yearly increase of rents commensurate with the local CPI at 100%, plus increases in any attached costs commensurate with the relative size of the unit in relation to the entire property of landlord paid expenses such as the water bill, garbage, and increased property tax assessments. This represents a fairer return, because the landlord isn’t actually profiting to a greater degree than when they first rented the unit, but they aren’t falling behind to the point where they are losing money and unable to afford to maintain the property either.
Many tenants I've spoken to don't understand that if the landlord can't make enough to cover expenses, they can't maintain the property, because borrowing against equity isn't an option for those in low income brackets or those who have borrowed the maximum amount to buy. By limiting profit to a reasonable percentage by allowing for a strictly limited number of allowable, actual expenses in any rent increases, everyone benefits. The lack of cost protections is one of the top reasons potential landlords cited to me for not feeling safe offering property for rent in Berkeley (the other being non-payment which would trigger their own financial crisis, which I covered in the last proposal post).
We could take this one step further by tying it in to the City’s grant program for seismic up retrofit upgrades. We should make those available on a sliding scale anyway, with a much more generous allowance for low-income homeowners and homeowners who would raise a property in concert with the retrofit to create more space that was up to every current code—especially those who are offering (or willing to offer) to rent part or all of their home out at a truly affordable rate with a legally binding contract specifying terms for repayment if they back out of their agreement.
Everybody wins, and it makes it much easier for people of modest means, particularly elderly or disabled people who are also homeowners and dependent on a shrinking social safety net, to get by. We could even completely cover it for people who are willing to rent out units that meet set list of affordability standards, which would be based on an assessment of actual costs, with flexibility allowed for low-income or needy landlords. We could shoot for at least 25% off of market rate, and we could have an increasing number of incentives for lower rents.
If we could reduce subsidies for upper income earners (at least those not offering new affordable units), we could substantially increase the number of buildings that would be retrofit sooner as well as the amount of affordable rental stock. Let’s allocate that money
If we could reduce subsidies for upper income earners (at least those not offering new affordable units), we could substantially increase the number of buildings that would be retrofit sooner as well as the amount of affordable rental stock. Let’s allocate that money better as we look for further sources of revenue for this to incentivize more housing availability.
Disclosure: Mary Behm-Steinberg partially owns a condo which is part of a Golden Duplex (she is not a landlord: there are different owners in the other unit). She was a formerly a tenant in a rent-controlled apartment, but is not now and has never been a landlord.
Insurance Fund to Protect Both Vulnerable Landlords and Vulnerable Tenants
One barrier to more small landlords offering rooms or ADUs to rent is fear. What if we could continue to protect tenant while eliminating sources of fear for landlords? What if the mechanism for doing so would build towards providing another source of funding for more socialized housing?
We could protect both tenant and landlord interests through creating a fund that would pay the rent until the pending dispute had been decided. The fund could be funded both through a nominal monthly tax ($1) on housed residents, as well as an opt-in fee on landlords (which could be waived for low-income landlords and offered at higher rates for large landlords and developers). Assuming a housed population of approximately 112,000, that would yield an initial budget of approximately $1.35 million. Alternately, we could also do this on a sliding scale, where we exempt the lowest 2 income categories and ask for $3-10/month per person on the median to higher income categories. This amount would hurt no one and make the program instantly viable, especially if we were to engage more efficient budgeting and add funds from other city sources.
Let's break it down and see how much we could reasonably make:
Assuming a population of 122,324, which is the most recent census number I could find (July 1, 2017, ACS, https://www.census.gov/quickfacts/fact/table/berkeleycitycalifornia/PST045217) and a homeless population of approximately 1,000 we have approximately 121,324 people who would be eligible for this tax (based on the City of Berkeley's head count from January of that year, https://www.cityofberkeley.info/Mayor/Homelessness/). I applied some values based on what people I have met could reasonably afford, but not exceeding $10 a month. We could certainly revisit the arbitrary values I have used there and raise the top and spread out the bottom a bit, but for the sake of looking at a potential budget, here's one possibility:
Now let's break it down by income level:
Greater than $200K a year income x 19% of the population = 23,242 x $120 ($12/month) = 3,346,848 (rounded)
$125k-$200K a year x 15% of the population 18,348 x $120 ($10/month) = 2,201,760
$100k-$125K a year x 8% of the population 9,786 x $96 ($8/month) = 930,448
$75-$100K x 8% of the population 9,786 x $72 ($6/month) = 704,592
All other housed people at $1 a month 61,162 x$12 ($1/month) = 733,944
(Source for income distribution: http://www.city-data.com/income/income-Berkeley-California.html).
At those levels we could afford to fund other than just the insurance fund, and could distribute all but 20% of unused funds in the housing trust fund and for homeless services. This would allow the fund to build, and one we have actuarial data on how much surplus we have, we could redistribute funds for other housing programs.
In the event of fraud on either side (renter or landlord), the offending party would reimburse the fund, plus commensurate interest and penalties. In the event of a no-fault determination, the money would be considered insurance to keep vulnerable tenants secure in the most affordable housing available while keeping vulnerable landlords in their homes with secure (and sometimes vital) income. I would love to get the input of someone with experience in the insurance agency on this.
After one year, we would gain a better understanding of the average demand on the fund. Any overage would roll over to the following year, after which time and overage over 20% of average operating costs would roll into the Berkeley Community Land Trust fund, which would use it to purchase buildings with for the sole purpose of creating limited equity housing for people in extremely low, very low, low, and median income categories, keeping it forever affordable.
As limited equity housing grows and purely rental housing shrinks, we will be able to shift more resources into the land trust and away from funding for landlord/tenant disputes, because an increasingly high percentage of the population will have control over their own units.
State “Google Tax" in Concert with Neighboring Cities tp Fund the Housing Trust Fund, Reduce Greenhouse Gases, and Mitigate the Effects of Income Inequality by Workers from Large Corporations
As part of our new commitment for flexing our political muscle by teaming up with other municipalities with the same goals, we should lobby Sacramento for a new payroll tax for the largest corporate employers in the area. The tax would be for each employee who commutes from other communities, and it would be graduated, with more money going to communities that are further away. This would mean that a Google employee living in Berkeley wouldn't just be encouraging the growth of luxury apartments and likely adding to greenhouse gases with a long car commute, they would also be significantly contributing the the growth of the Berkeley Land Trust. Other cities could use their share to start catching up to us with by increasing their own housing stock.
We could also earmark a percentage of the funds for environmental programs, such as the "Berkeley Gleans" program I suggested on my page, which would employ able-bodied at-risk people to build and maintain food gardens in peoples' yards, giving a share to the owners and taking the rest for a free farmer's market for our neediest citizens as Urban Adama did, or contributing to Dorothy Day House, Meals on Wheels, or the Food Bank. This is also a win-win situation, because we would be reclaiming yards from weeds, feeding the vulnerable and saving money on our own food bills, and reducing greenhouse gasses associated with food transportation. The tech industry has been an (unwitting, perhaps) contributor to the lack of affordable housing and long commutes outside of Silicon Valley. This is one big way they could give back and mitigate some of the effects.
In order to cut down on greenhouse gases, the fee could be mitigated for every working day that the employee telecommutes, which could be determined by cookies on both their home and work computers. Not only would this cut down on regional commuting, but hopefully, it would enable workers to live outside the area altogether and reduce demand here.
This tax would also incentivize large tech, banking, and biotech companies to pressure the cities they are located in to produce more housing for their workers that live there, again cutting greenhouse gases.
Alfred Twu (city council candidate for District 8) mentioned a related suggestion in which cities that are far underbuilt for the jobs located in them (such as Mountain View and Cupertino) would have to pay a per employee tax until there were enough available units for any worker to stay within city limits. It is another possibility for taking stress in both affordability and availability off of East Bay cities and to a lesser extent, San Francisco.
Those numbers are ONLY for Berkeley. When you factor in other affected cities, you're starting to talk about some real money! Especially if recent reports are the increase in supercommuters hold, that would, best case scenario, more than double Berkeley's current housing budget. I didn't do the numbers for other cities here.
Grants Funding and Efficiency Posts
I’d like to institute a system for having the different departments in the city coordinate better with each other, so that we can fill multiple needs with each major program we embark on. The city’s programs should work together and complement one another. Right now, it seems to me that the city spins its wheels and wastes a tremendous amount of money pursuing policies that are inefficiently run and in the end, serve far too few urgent needs. A coordinator between departments would then put together a plan that would bolster and enhance programs between departments, and that person or one working closely with them would find funding sources that would allow us to do this work without constantly asking for more bonds (or at the very least, provide a mechanism for greatly reducing the size of those bonds, which are a terrible way to finance public projects when one considers that we end up paying at least 1.5% of the borrowed amount to finance them). I personally have found millions of dollars in grants that council members and key staffers on various commissions didn’t even know existed.
A sample of how this might work is a question that people have asked a few times regarding how to help homeless and disadvantaged youth. One way to do this would be to provide temporary housing, say, at Pathways or through a program such as Homeless to Homecoming, which matches potential hosts with homeless students. We could then give them scholarships to Laney in the trades. This in turn would ensure cheap health benefits in the event of severe Medicaid cuts at the federal level, provide access to cheap transportation, and of course, job skills that are in great demand right now. In turn, graduates of the program would pledge to give back to the City by agreeing to work a set number of hours, at $15 an hour (keeping in mind that they have already been provided housing during this period) either rehabbing more permanent housing for themselves or others. With one program, we would have done job training for a very vulnerable population; ensured healthcare and transit, provided housing, and secured a pathway for solid, long-term, well-paid employment. In addition, we could add those who performed particularly well to the city’s list of preferred vendors.
Outside Community Coordinator to Leverage the City’s Political Clout together with Other Cities and NGOs Who Share the Same Needs and Goals
The two positions mentioned above can only be bolstered by the longer-term strategy of an outside organization liaison. That position would coordinate with other cities and non-profits that share our goals to leverage influence over state and federal legislators, as well as other potential funders. Some of the examples of what we could do for housing include allying groups and cities with housing trusts to create movement behind a nationwide effort to greatly increase HUD funding and block grants, which the City could then use to obtain more buildings as well as build new ones, for its limited equity co-housing program. Working with other entitities not only makes it possible for us to improve life across the country (and hopefully reduce housing pressures here), but also to create more opportunites so that we can help each other build programs, rather than competing with each other for funds that are far too scarce.
Another example of how this kind of office would be useful is in the fight to save Alta Bates. The state legislature passed a bill that would have required the Attorney General to approve any community hospital closure before it could go through. Governmor Brown vetoed it. San Pablo recently saw the closure of its own vital ER, and we should have immediately started coordinating with them to challenge the Governor, very publicly, on his decision, which puts lives at risk.
Reverse Mortgage Program for Elderly or Disabled Homeowners to Obtain Further Housing for the Land Trust
Berkeley is already building a land trust to create more affordable housing in perpetuity. What if could set up a system, much like public television does, where we could get homeowners who need more than their Social Security and savings to survive could to do a reverse mortgage with the city, in which the city gives them a down payment, they get to stay in their home, and the city makes a monthly payment to them until their death(s) (plural in the case of a couple).
Other examples of this can be found in European real estate deals in popular cities such as Barcelona and Paris, only there, the deals are made between private parties rather than as a scheme to build stock of socialized housing while ensuring old-age security for homeowners for whom any adequate socialized care plan will be too late in coming. This would be great for elderly and disabled homeowners, and would build the city’s housing stock which could then either be rented out by the city at affordable rates, equally distributed among the County’s categories of income up to the area median income? They could also be sold in limited equity schemes where any future sale had to be predicated on the income bracket (extremely low, very low, low, median) that it was purchased in (no more than 30% of the monthly income in each bracket. Most of the private deals I found involved the property staying in the hands of the original owner until death, but examples I published prior to their sale seemed to imply that the original owner may move out sooner.
Another possibility for someone who needed assisted living and couldn’t afford it might be to have a person in a qualifying bracket move in after the city had paid the down payment, with a monthly stipend (guaranteed by the city) paid to the owner(s) until their death. This property would then be either the city’s rental, or a limited equity purchase through the city. The original property owner would have the safety and security that inspired so many to take on home ownership in the first place. This is another scenario where everybody wins, and it could be easily further incentivized by allowing the homeowner to pick the new tenant in a qualifying income bracket, perhaps someone they might have otherwise left the house to outright. In this way, we could take care of our friends or families while also doing right by the long-term health of our communities.
I'm including a link to a link for a "private investor" model of this concept. Imagine what we could do if we made it part of our social housing transition model?
Photo of a unit currently available in Barcelona under the investment scheme described above. The photo is from the idealista.com listing in the link below.
Assistance to Potential Buyers of Limited Equity Units
Once the City has obtained a significant number of units through grants, reverse mortgages, gifts, government funding, etc., it would set rates of sale in equal amounts to the lowest income categories determined by Alameda County: extremely low, very low, low, and median.
When these units are resold, they must be resold to someone in the same income category, under the same terms, keeping the units forever affordable. The city will assist with down payments where necessary, to be repaid with a modest amount of interest upon sale. If the person buying the unit should run into financial hardship, I propose a single entry system for assistance that links between available assistance from the city and groups like Acorn to cut down on make work and stress for people who are having enough difficulties.
Weighted Lottery System to Ensure that Native Peoples, Black and Latinex peoples, Disabled persons, Single Parents, Teachers, Artists, Service Workers, and Social Justice Workers Have a Better Shot at a Place in the City.
As supply would outstrip demand, residents would be chosen by lottery. Everyone who is interested would get a ticket in their income bracket. People from particularly disadvantaged groups would get extra tickets in a nod to intersectionality. So, for example, native people, African Americans, Latinex people, single parents, and disabled people, etc., would each get an extra ticket, as would teachers, artists, and social justice workers, for example.
Like Vienna’s model social housing program, multi-unit buildings would have people from a variety of income levels to foster a greater sense of community. We would divide units up according to the current county estimates of income levels, and set prices for each no higher than one third of the highest monthly income for each category.
Create a Graduated, Regional Approach to Homelessness
We need to use our Community Liaison to create a regional approach to homelessness. As a stop-gap measure, we need to create sanctioned encampments with basic sanitation, which would later be built up to tiny houses and eventually, more permanent housing. Those homeless people with sufficient income would be eligible for the limited equity co-housing lottery under conditions outlined previously for all applicants.
One thing that needs to stop now is the blanket punishment that happens when one person violates codes of conduct or standards for services. In talking to homeless people in my neighborhood, I learned that the City used to charge $2 for showers at Harrison House. I don't understand why the City feels the need to charge homeless people for services in the first place, but as I understand, that option was taken away when someone was caught doing drugs in the shower. I can understand banning that person from that service, with alternate necessary treatment for addiction and mental health services offered, of course. It's not fair to penalize everyone in that way, and that has to stop.
We also need to coordinate our efforts with local activists better. Larez Davenport, a local citizen who is working with local faith communities to allow homeless people to shelter inside places of worship, came up with the idea of "pop-up service centers," where basic necessities like toothpaste, toilet paper, and socks could be distributed. The centers would move all around the City at different points in time. I love ideas like this, and would like to see more coordination with local people already working hard to make things better.
Homeless people come from a broad spectrum of circumstances, so the solutions are not uniform. Those with severe mental iillnesses would be eligible for help with our fledgling mental health services, which must be grown and developed sooner. Those engaging in criminal activities would be dealt with through the criminal justice system, but if their “crimes” involved stealing for food or drug use, they would be referred to the appropriate non-penal services. And the new regional authority would take in people for whom there was no available space here and assist them in finding housing in cities that have historically underserved their homeless populations (but would now be cooperating through our new regional office, which could be mandated by state law, if necessary). We could also explore more placement in the Central Valley, which has far lower housing costs and higher ability to absorb communities of people who want to stay together, when we are unable to accommodate them all in Berkeley.
Please refer to the section on efficiency above for one example of how we can tie job training programs for disadvantaged youth to real experience here, making one pot of money serve multiple purposes. By training disadvantaged youth in the trades at Laney, for example, we can ensure cheaper medical care (in the event of massive cuts to Medical), cheap transit, and housing that is built by the students themselves once they are certified, as well as require service to the City for a specified amount of time at $15 an hour (a living wage while they are in free housing, which would go to the next wave of homeless or at-risk people once they start making a real salary and move up the housing chain).
Hold Developers to Their Promises on Arts Programming
The coming of large new developments that only house high income people has hobbled the arts community in Berkeley. We must hold developers to their promises on community arts spaces. As the many empty retail spaces in new buildings are becoming a blight, I propose below-market rents for local community arts groups, which will also allow developers to take a tax write-off. I’d also like to see opportunities for local artists to mural new construction and create usable, public green space as part of new developments to increase livability in the city.
Adopt the city council measure on ADUs heading for the ballot to both encourage more ADU development and protect small landlords who need extra income and might not have another way of obtaining it while making more housing available.