What Value is Oakland Gaining from $6 Billion in New Development?

By Peter Snarr---While development has been booming across the Bay Area for the past few years, Oakland has only recently begun to take a hard look at what “value added” the billions in new development capital is providing our city.  

One example is the new impact fees on residential developments.  While these charges are generally considered positive for the city, there are still questions about whether Oakland is charging the right amount.

This past September, Oakland began implementing its first residential impact fee, which charges developers for every market-rate unit they build. The fees collected by the city, which range from $750 to $7,000 per unit, are turned around and used to fund transportation, infrastructure and more affordable housing.

While Oakland is just jumping into this strategy, which Councilmember Dan Kalb called “long overdue” when the measure passed in September, other Bay Area cities have used impact fees to great avail. Just in San Francisco alone, there are 22 total city-wide impact fees, with four being implemented in the past four years. A report from San Francisco Mayor Ed Lee’s office released in January 2016 claimed that San Francisco would receive more than $250 million over the next five years from impact fees.

Because the implementation of the fees is so recent, it is unclear how much Oakland stands to make from developers. Starting in late spring, however, the City Council will be looking at budget reports and will be able to give a better estimate at that time, according to Zachary Wald, chief of staff to Councilmember Lynette McElhaney.

While Oakland has some of the lowest fees in the Bay Area-- Berkeley and Emeryville charge $28,000 per market-rate unit---the fees are going to climb and settle at $13,000 to $24,000 per market-rate unit by 2020.

“It has to be with the right balance,” Wald said. “The goal is to raise money for services and not stop development from happening. 100 percent of nothing is still nothing.”

Opponents of impact fees say the higher financial costs will dissuade contractors from building in Oakland, something that the city has already seen.

Madison Park Financial, which built market-rate housing in Oakland in 2013, 2014 and 2015, announced that it would not be proposing new developments in Oakland after the fees were implemented.  Other developers continue to put in applications for new projects.

And while it won’t be known fully how the fees will financially impact the city until spring, Wald remains hopeful.

“It’s looking like it will work out well,” Wald said.

 


Showing 2 reactions

  • commented 2017-03-24 14:18:58 -0700
    Affordable housing organizations and community groups such as ACCE, APEN, OCO, the Oakland Tenants Union, Just Cause, Urban Strategies Council and several others spent years trying to get the Oakland City Council to include a residential impact fee to help build affordable housing.

    Since the Oakland City Council refused to act until last year, Berkeley, Hayward, San Francisco and other Bay Area cities have collected millions of dollars while Oakland collected nothing.

    Although developers have long been on notice that a residential impact fee was coming, and have had ample time to factor this fee into there projects, when the city council finally did pass the fee they choose to not include current projects and to phase in the fee slowly the full $24,000 fee will not be in effect until 2020 when it will still be below what is charged by Hayward, Berkeley and Emeryville. This cost Oakland many more millions of dollars. One local developer favored at City Hall will save several millions of dollars in fees on his current 6 projects, non of which contain units which meet the current official definition of “affordable”.
  • commented 2017-03-06 11:50:01 -0800
    The question isn’t about how much money Oakland is charging the newcomers to live here, the question is how much does Oakland stand to gain from fair and equitable land taxation of wealthy residents who are currently subsidized by low income homeowners.