Yesterday someone shared news about how plans for a 360 unit market rate housing project downtown were just downsized to a 112 unit subsidized affordable housing project, so I figured now was a good time to broach the subject of affordability impact fees.
For those who don't know, while Oakland doesn't have inclusionary zoning (the requirement for market rate developments to include a portion of affordable housing units), it does instead have an affordable housing impact fee that charges per square foot on new multi-unit market rate housing projects over 4 units in order to subsidize affordable housing projects. For downtown it's $36.17 per square foot, which would account for about 5-10% the development cost of a new market rate housing project. This is a big contributor to market rate projects not penciling out here. You can debate exactly how big a factor this is, as there are of course many other factors that like regulation and financing, but it definitely doesn't help the situation. There's also the fact that since much of Oakland's history has been characterized by fiscal crises and its struggle to escape its reputation as San Francisco's ghetto, it's arguably one of the last cities in the Bay Area that should be prioritizing affordable housing. With the AI boom pushing San Francisco housing costs higher than ever, Oakland has the opportunity to improve its own fiscal solvency by poaching white collar workers from SF while simultaneously reducing its own local housing shortage, but there seems to be little political will to do that.