Dear Rashi :

Thank you for your detailed response to my email. In theory, these are all good ideas ……but the "law of unintended consequences" will most definitely come to play here as it has so many times before in Berkeley.

1) Construction costs are about $650 to $725/ sq foot. At these costs plus the $30K or more in permits, there is nothing middle about any new housing in Berkeley - whether multi-unit or small starter home. New construction in California must meet green energy requirements and be resistant to earthquakes, fire etc….a 1500 sq foot starter home costing $1 - 1.15 million dollars is NOT a starter home. the monthly mortgage would be over $6500/month and the property tax (which you want to increase to support this concept) would be approx $12,500 per year. Add insurance, PGE and Water and your Middle Housing is going to cost the buyer more than $8000 per month, not including unpredictable maintenance etc. AI suggests that one (or a couple) would need to earn over $320,000 per year to cover this.

1.1) Renting this unit would also require a high rent similar to the homeowner costs to cover the cost of the investment

2) Only higher income residents or developers can afford to build at these costs and they are not building for middle and low income residents. Those condos on Hearst are, as budgeted above, not middle income homes.

3) Under this Middle Housing plan developers will most definitely take advantage of lower income, legacy homeowners in west and south Berkeley by buying them out and building high density, and higher cost housing and gentrifying these legacy neighborhoods of Berkeley and destroying the social fabric of these neighborhoods.

4) The ADU laws now make it VERY easy to add an ADU or two to almost any property (even a rental property with a small yard). Higher income property owners can easily afford to build ADUs and have done so. However , note that many of these ADUs sit empty due to the Rental Housing Program which scares the shit out of the homeowners because it makes getting rid of problem tenants in one's own back yard nearly impossible. Older homeowners in particular have this fear
AND
These ADUs are primarily in the better neighborhoods and are rented at higher rents than “middle housing” people can afford.
OR
They are built to house the children of the homeowner until they can move into the main house….

5) Berkeley is trying to implement a version of Middle housing that exceeds what any other city has done (density wise, property coverage and heights) and without including the residents/property tax payers of Berkeley in the discussion . What gives Berkeley its charm is the look of our residential neighborhoods. High density housing in downtown makes sense and supports the local merchants. High density housing in R1 and R2 neighborhoods is not the solution.

6) A developer that builds middle housing can also, by law, build an ADU or two, on the same property - even denser housing in R1 and R2 neighborhoods that currently do NOT have the infrastructure to support this density. Has the council budgeted for construction of sewage systems in R1 and R2 neighborhoods? What about water supplies? Does PGE have the capability, in R1 and R2 neighborhoods to bring in 400 or more amps to a lot previously needing 200?

7) If Berkeley really wants to create opportunities for generational wealth in the black and other underserved communities (something I wholeheartedly support), I have the following suggestion:

In the low income neighborhoods with legacy homeowners, the city Berkeley should offer 1) generational wealth education and 2) ADU grants, financing and incentives to eligible home owners (obviously, this needs to be defined) to add an ADU (for a child or to rent out). In this way a homeowner in an historically underserved community can add an ADU to their back yard, develop an additional income stream from renting to strangers or provide cost effective Berkeley housing for another generation in the family - this will start to create generational wealth. Some conditions would need to be applied to the loans to prevent the owner from using the funds and then flipping the now more valuable property for a huge profit to, most likely, a dbl income couple with tech or other higher income jobs, but still not high enough for North Berkeley or the hills … gentrification (decomposition of the neighborhood) would result without such restrictions.

Berkeley can further facilitate this program by identifying 1, 2 and 3 bedroom of pre-fab / modular ADU options that are pre-approved and can be “installed” at a lower price point and meet the green and other requirements. There are many such options out there.

I should also note that these ADUs will be in neighborhoods that have generally lower rents than North Berkeley and the Berkeley Hills - thus , developing lower rent units.

Note that just offering a program does not make it happen. Many people don’t realize how the ADU will benefit them and provide generational wealth and others only see the hassle of owning rental property. Generational wealth is not something one understands at birth. It is something that one learns from one’s parents. If it is not learned it needs to be taught by reaching out to the community and educating the community

For the older Berkeley homeowners in these legacy areas a significant advantage of such a program would be to create age-in-place opportunities. The elders can move into the ADA compliant single story ADU and the children or grandchildren can live in the house and provide support for the elder…..that is generational wealth development.

Finally, let’s talk about the elephant in the room….Why, with all the new apartment builds going up in Berkeley, do we still have a rental unit shortage for the Middle and Lower Income families. In order to promote more housing , Berkeley has waived rent control fees and ordinances for new construction. This was supposed to create / motivate developers to build more housing units which would supposedly bring rents down due to the abundance of housing (supply and demand). It did NOT. The big apartment buildings that have been constructed by developers offer only absurdly high-rent housing.

Rents in these buildings are far too expensive, some examples:

Stonefire on Milvia: 582-1578 sq ft starting at $3,770.00 to $5,990.00
The Addison: base rent for a studio apartment starts at $2,295, while larger 2-bedroom units can range from $3,275 to $4,545.
The Standard; ranges from $3989 to $14,060 per month.
Parker: Studio to 3 beds $2565 -$7231

These developers have been given a pass on Rent Control and pay lower per unit annual rent board fees than small owners do. Furthermore, they have set high rents which have generally encouraged all owners of rental property to set their rents higher....not sure how any of this has helped the middle and low income residents.

I could go on….but I think that the city must really evaluate all the possible the unintended consequences of the Middle Housing plans, as currently proposed, and reach out to the property tax payers for their input. Let’s not do Hopkins Street again…..

Regards,

Maggie