On this blog, I often address issues relating to planning and real estate development. Construction shapes the future of a city, and land-use regulation is the most powerful tool available to local governments. As Oakland enters a critical phase (a “crossroads,” according to Ignacio de la Fuente), Oakland’s priorities and opportunities will be shaped the private sector’s responses to land-use regulations as well as the local market. This blog intends to put these issues in their policy context.
If someone gets their hands on a chunk of capital and wants to build something in Oakland, that person becomes a developer. Developers purchase property, acquire legal permission to change the use of that property, and, when permission is secured, either construct, lease and sell the new building, or sell the entitled land to a secondary company, which will handle the actual creation and disposal of the new use. This process is called real estate development, and ever since Scooby Doo and the preservation movements of the 1970s, it has been a widely derided part of local economies. It is also regulated to an extent that would surprise a tourist used to reading The Economist praise America’s relatively laissez-faire approach to investment.
Fundamentally, cities use their “police power” over land to “zone” the entire city, designating parcels (the building blocks of property) to define their desired use. Zoning originated in the late Victorian era to separate the new middle class from noxious industries, but Oakland was not zoned until 1935. Houston TX does not have zoning. Oakland’s current zoning map is mostly from the 1960s. Generally, it permits dense residential construction in most neighborhoods while reserving commercial streets for lower-density commercial uses. Zoning encompasses both density and type of use.
Density can mean many things, but here it reflects the intensity of use of a piece of land. Construction density is set by FAR (Floor Area Ratio), which defines how many feet of (primary-use) building area can fit on a lot relative to its size. So, with a FAR of 4.0, a four-story building could encompass the entire lot area, or instead a developer could construct an eight-story building on half the lot and make the other half a lobby. Height restrictions affect the design of a building within the given FAR. Office and retail is a more intensive use of land than residential (i.e., there are more people per square foot), so density is only part of the zoning code.
Zoning also regulates use of the property. For example, R-80 (High Rise Residential) permits only residential use of the property, so unless there’s an S-9 overlay (providing for “Retail Frontage”), zoning would prohibit a “nonconforming” use on the ground floor. You can find all of Oakland’s zoning codes here (click on Title 17). Typical zones outside of downtown are R-40 (Garden Apartment Residential), C-40 (Thoroughfare Commercial), and M-30 (General Industrial). There are also “combining zones” that reflect Oakland’s newer, design-oriented, mixed-use goals for development, like S-17 (Downtown Residential Open Space), or S-4 (Design Review).
While zoning is the regulation attached to every last parcel in the city, the overall vision of the city’s land-use is set by the General Plan, specifically the Land Use and Transportation Element. In some states, planning power is exclusively determined by cities. In HI, OR and MA, state-level planning sharply limits the ability of local governments to approve or deny projects. In California, the state requires and approves General Plans that guide zoning (and accommodate expected growth), but the ultimate decisions are left to the cities.
Oakland’s General Plan was adopted in 1998, and took about five years to complete. The LUTE identifies an overall vision for the city, including identifying “Showcase Zones” for large-scale growth, areas to concentrate residential development, and suggest new opportunities. Other sections of the General Plan include the Housing Element (currently expired), the Bicycle Master Plan (being redone right now), the Open Space and Recreation (OSCAR) Element, and the Estuary Policy Plan. The LUTE is written for the general public, and I highly recommend giving it a look. You can download the (poor quality) PDF here, or get it for $10 at the CEDA office.
Overall, the LUTE (which is usually what people mean when they say General Plan) represents a major shift in planning for Oakland along the lines of Smart Growth. It calls for the creation of mixed-use zones, intensification of use around BART stations and neighborhood centers, and an end to allowing high-density construction within residential areas away from main streets. The city has very successfully implemented major parts of the LUTE, like creating the HBX (Housing-Business Mix) zone for transitional areas like Jingletown and West Oakland, and implementing the 10K Plan (albeit without formal zoning changes). Now that the Zoning Update is coming to established neighborhoods, people are fighting the General Plan’s vision of high-density transit districts while taking the simultaneous reduction in side-street density for granted. Because the General Plan is a more fundamental law than the zoning, developers have used the planning process to avoid the restrictions of outdated zoning.
The Planning Process
While the confines of the zoning code generally set the use of property, the actual shape and character of buildings is determined by the planning process. Developers can apply for and receive exemptions from any and all zoning laws, up to and including General Plan Amendments. There are three parts to the process: administrative oversight, the Planning Commission, and the City Council, which is the final word on all development (though that can be appealed with a referendum).
Developments that require Design Review or any sort of planning permission are overseen by the Planning Department staff, led by Claudia Cappio. The staff have enormous discretion to interpret planning code when working with developers and architects. Late in the process, planners may publicly support or oppose any aspect of the development application when it is presented to the Planning Commission. For example, last week staff supported the Shorenstein T-12 office high-rise while maintaining their objection to the top appearance, which is a purely aesthetic position.
The Planning Commission, appointed by the mayor and confirmed by the City Council, is the public body that decides on all aspects of planning. If a developer wants to build something as dense as the General Plan will allow but it is not permitted by zoning, they must seek a Conditional Use Permit from the Planning Commission. Environmental Impact Reports are certified by the Commission (exemptions must be confirmed as well). The Design Review Committee can suggest changes to a project, or uphold staff objections to the architecture. Most Planning Commission decisions can be appealed to the City Council, and all involve public hearings.
The City Council ultimately must decide on many major projects. EIRs and CUPs can be appealed to the Council. The City Council can also grant General Plan Amendments when projects do not conform to the LUTE. For example, the LUTE did not anticipate residential development in much of West Oakland, and other plans (like the Estuary Policy Plan) put much more emphasis on commercial construction than the market would currently support. As I have written before, the presence of anti-development groups, the low cost (to them) of an appeal, and the multiple avenues for appeal have created a situation where the Council is acting like the Planning Commission. This is problematic primarily because it is costly to the developer (in terms of added uncertainty and delay), and because it gives the City Council too much arbitrary power over individual projects, blurring the line between setting and implementing policy.
I know this blog is long and pedagogical, but planning policy is the way that Oakland shapes its future. A grasp of the basic elements of planning, in the local context, is necessary for a rational discussion of policy changes and development opportunities. Currently Oakland depends on redevelopment taxes for most of its spending, including almost all of its housing subsidies. Sales and business taxes are also directly linked to real estate development. Therefore, the ability of the private sector to fulfill Oakland’s planning vision is inextricably linked to the other challenges facing the city. Planning is a powerful tool to encourage sustainable growth, economic opportunity, and transit use, and taking advantage of its potential requires knowledge of the basics.
I highly recommend that everyone read the General Plan.
There are two very interesting private studies about development commissioned recently by the city. They are the Hausrath Report, which discusses development costs and types in different areas, and explores how profit would be negatively impacted by price controls. The other is the Conley Report (PDF), part of which discusses the importance of design standards to successful retail.
Oakland’s Community and Economic Development Agency.
Major Projects division (with a projects list, updated quarterly).