Community and Developers Ask: Why Is There so Little Money in the City’s Affordable Housing Fund?

Affordable housing protest at Oakland City Hall

By Ken Epstein

Where have the city’s funds for affordable housing gone?

That’s a question City Council President Rebecca Kaplan and council members want to answer as they look at why there is so little money in the city’s affordable housing trust fund at a time when booming high end construction in Oakland should be generating many millions of dollars in “impact fees” that housing developers are required to pay to avoid building a certain percentage of affordable units on a project.

Since 2016 when impact fees went into effect, the fund has only collected $8.8 million, according to a city report. Of this money, the city has committed $4.9 million to three affordable housing developments, totaling 162 units that not yet completed.

However, the city since 2016 has issued about 10,000 building permits that are moving ahead and are expected to build more than 17,000 new units by 2024, which means that  city officials could have collected an estimated $25 million in impact fees in the past four years and, as much as $50 million as the projects move toward completion.

Impact fees can cost developers between $5,000 to $24,000 for each market rate unit they build, depending on the location of the project and when the permits were issued.

In response to questions raised by Council members Kaplan, Nikki Fortunato-Bas and others, the city administration has hired an independent analyst to audit the fund and improve procedures for collecting the money.

“These are steps in the right direction, but if we are to truly meet our goal of 4,760 affordable homes by 2024 (we are at 751), we must most aggressively enact policies and procedures that accelerate affordable housing creation and funding,” said Kaplan in a letter to the council and the public.

Speaking at Wednesday evenings council meeting, Assistant City Administrator Marasheshia Smith said the full report on impact fees would be available in the spring.

“We don’t think there are missing funds,” she said, pointing out that her department is short staffed and that most of current staff members, including herself, are new. “We are trying to understand what processes were put in place to account for the funds…We would like an audit because we’d like to see some process improvement.”

Jeffrey Levin of East Bay Housing Organizations (EBHO), speaking at last week’s Community and Economic Development (CED) Committee meeting, said impact fees were supposed to be a way for the city to get private developers to help pay for affordable housing.

“It is shameful that the city cannot explain how it is in an unprecedented building boom (that) we have so little money to show for it,” Levin said. “Something is just not adding up, We don’t know what’s wrong, but nobody can explain it either, and we wait and we wait, and that waiting is not without consequence.”

“We raised this issue in January, we raised it again in May, (and) we were assured that in a couple of months an accounting would be done … Now we’re being told it will be March, April or April or May (2020) before we can see the numbers. That is just not good enough…There is no accountability and no transparency,” said Levin.

Representing developers, Greg McConnell of the Oakland Jobs and Housing Coalition said that affordable housing advocates are not the only ones who want to know what has happened to the funds.

“Developers are pretty interested in this too,” he said.

McConnell added that developers served on the Mayor’s Housing Cabinet, served on commissions and boards and helped develop the impact fee ordinance. “Little did we know it would be years down the road trying to figure where the money went. It’s a cause of great concern,” he said. “(Developers) who helped put all these cranes up that you see they have put money into the city, and the money hasn’t been spent, and the housing crisis goes unabated.”

Stevi Dawson of EBHO thanked Council President Kaplan for pushing the city to produce a report on the fees. “If she hadn’t intervened, we’d still be asking for this staff report. We need more transparency. We do not need to spend a year and a half asking for something that should be published (every year). There should be a yearly accounting.”