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Floating a fair housing bond

A bond is an opportunity to leverage the wealth of the entire city in a way that is fair, progressive, and allows everyone to participate. Unlike, say, impact fees, which only apply to new development, a parcel tax-based bond would allow every property owner in the city to contribute to building affordable housing. The funds raised would be significantly larger than could be accomplished with even punitive fees on developers, which jeopardize the property taxes they pay.
A bond offers many opportunities for expanding and maintaining the affordable housing stock. The recent ABAG/MTC report on Bay Area housing notes that many housing units have affordability restrictions that will expire within five years. Alameda County has by far the most such “at-risk” units, almost 2100. A housing bond could allow the city to purchase these units, or to offer financial incentives for landlords to renew the affordability restrictions. For example, if the city had a pot of money from a bond, the OHA could have purchased the Chinatown units whose affordability expired recently. Instead, the city had to unload them on EBALDC, who will, of course, sell them off as BMR condos. The opportunity to keep them as low-income rentals was lost.

The large sum generated by a bond could jumpstart rehabilitation programs like those I discussed yesterday, and provide funds to purchase vacant lots or abandoned buildings, which could then be conveyed to affordable or market-rate developers. Alternatively, the long-term funding provided by the bond could go to programs like downpayment or first/last month’s payment assistance, as Just Cause asked in the last budget cycle. The bond should not be used to construct new housing, simply because it’s too expensive and the bond will not last forever. Also, it’s likely that new housing constructed by non-profit developers would be BMR condos, which provide very little value to the community and are only technically “affordable.” Because the bond is paid by existing residents, the funds should go to helping existing residents, not building median-income condos that will most likely be purchased by new residents.

There are many challenges facing floating a housing bond. First and foremost, it requires a 2/3s vote. In Los Angeles, where the debate over the city’s housing shortage is much more advanced than our own (because there is a strong consensus that the problem is lack of housing, not housing costs or “gentrification”), a housing bond failed narrowly in November 2006. Other challenges include the possibility that IZ activists will try to hijack the bond so that it goes to subsidizing non-profit developers instead of helping the poor. Finally, a careful campaign will have to persuade Oaklanders that low-income housing assistance will not lead to more run-down OHA units in their neighborhoods (thus the emphasis on rehabilitation and purchasing abandoned land). But these challenges are not insurmountable. Rather than trying to stick market-rate developers and their customers with outrageous fees and mandates, all Oaklanders should share in the responsibility to provide housing for the poor, through a progressively-funded bond.

Posted in california, citycouncil, housing, iz, oakland.

4 Responses

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  1. Ryan says

    You imply in the last paragraph that you don’t want a housing bond “subsidizing non-profit developers instead of helping the poor.” But then earlier you say the money from a housing bond “could then be conveyed to affordable or market-rate developers.”

    So do you support directing some housing bond money to nonprofit affordable housing developers? And if so, what did you mean when you said you did not want to “subsidize” nonprofit developers, in your last paragraph? Do you mean excessive funding for nonprofit developers or something?

  2. dto510 says

    The bond shouldn’t be used for operating subsidies, but land purchases would be a good use of the funds. I said that land could be conveyed to developers, not the money. Because non-profit developers are now completely wedded to the BMR model, they are no longer offering much of value to Oakland. The city should figure out how to direct money to the needy, not people making $90k/yr.

  3. Ryan says

    I see. What you’re talking about is not unlike the investment the city made in Uptown, where is effectively pumped money into the project by helping finance infrastructure improvements and environmental cleanup (can’t remember if that’s all the city funded), and the result is 700 units of rental housing.

    In the early days of the city’s decision to support the project, there was grumbling the site could have been conveyed to condo developers, who would have needed less subsidy (if any). But based on the rental threshold for affordability you discussed in your other post (~$1800 per month) it could very well be a large block of affordable housing.

Continuing the Discussion

  1. Affordable housing trust fund - a dedicated revenue stream | A Better Oakland linked to this post on October 31, 2007

    [...] dto510 discusses the idea of floating a bond to fund affordable housing and rehabilitation. A bond is a good idea, and we should do it. But we [...]