In 2016, Mayor Libby Schaaf announced an ambitious goal. Oakland would create 17,000 new housing units by 2024, including 4,760 for low-income residents. She called it the “17K/17K Plan,” because the city would also aim to protect 17,000 additional households from displacement.
Five years later, Oakland has soared past one of Schaaf’s goals, building more than 22,000 new housing units throughout the city. But only a small fraction of those units are below market-rate. Oakland is on track to build 2,489 affordable units by 2024, about half of the mayor’s target, according to a new two-year “action plan” released by the city’s housing department.
Oakland would need to produce close to 1,000 affordable units a year until 2024 to meet the original 17K/17K goal. And that number could double as a result of regional housing targets set by the Association of Bay Area Governments, which are set to increase soon.
Meeting these goals won’t be easy. According to a presentation by city staffers, Oakland lacks $329 million it needs to carry out the 4,760-unit affordable housing plan. The funding gap is characterized in the action plan as “staggering.”
“We’re anticipating a deficit of around 2,200 units,” said Christina Mun, senior advisor for the housing department, at Monday’s meeting of the City Council’s Community and Economic Development Committee.
Much of Oakland’s recent and planned low-income housing is supported by money that’s no longer available, city staff explained. Bond Measure KK generated $100 million for affordable housing, for example, but it’s all been allocated by now.
“As the housing crisis deepens and the economy rebuilds, the City will not have enough resources to meet Oakland’s dire housing needs,” the plan document says.
Given the financial challenges of building new apartments, the action plan pitches a shift in Oakland’s approach to affordable-housing production. The housing department wants to spend more money—about half its affordable-housing budget—on buying buildings and preserving existing low-income housing. The other 50% would continue to be used on construction.
“We don’t have to grind our production pipeline to a halt, and must continue to develop units,” said Shola Olatoye, Oakland’s housing director, at Monday’s meeting. But the 50/50 strategy would also “target projects that result in immediate housing solutions,” according to the plan. It’s cheaper and quicker to buy a hotel building and turn it into supportive housing than it is to acquire land, finance a new apartment complex, and build it from scratch.
Last year, Oakland created the largest number of affordable units it has in a single year in the past decade—624—largely because the city was able to use COVID-19 aid to acquire and convert existing buildings into housing.
Staffers noted that Oakland may end up in a better position than the current projections imply, since the action plan was written before the mayor and governor proposed their upcoming budgets, and because it doesn’t take into account anticipated state and federal grants.
City to study developer fees
When Schaaf announced the 17K/17K Plan in 2016, she touted several new ways to raise money for housing production, including a bond measure (which was passed as Measure KK later that year), as well as raising landlord fees and creating a new developer fee program. The landlord fee was raised in 2019, reportedly bringing in $8 million the following year, a 30% annual increase.
In 2016, Oakland launched its “affordable housing impact fee” requirement. The fees are levied on developers to mitigate the impact of their projects on surrounding communities, by helping to pay for affordable housing production. If a developer includes affordable units in the project itself, they can sometimes skip paying the impact fee.
Since the fees were instated, Oakland has collected a total of $13 million from developers for affordable housing, according to an annual report presented at Monday’s meeting. Additional impact fees generate money for transportation projects, job creation, and other mitigating benefits.
For many housing projects, there was a large discrepancy between the fee amount originally assessed for the proposed building and what was ultimately paid. Developers pay part of the fee when they receive a building permit, and the rest when the project is complete. Because many projects don’t pan out, are delayed, or are canceled, Oakland often misses out on much of the money it plans for.
Widespread concern about whether the city was accurately tracking fee collection in the past prompted Oakland to hire an auditor in 2019 to make sure the data were accurate. Advocates of the fees continue to believe Oakland should demand more of developers or better ensure the program actually yields revenue, while skeptics have questioned whether the fee could dissuade development.
The Planning Department is conducting a mandatory five-year review of the impact fee program, aiming to present its report in the fall and to propose policy changes next spring. The review will analyze whether fee amounts should be changed, whether to alter the requirement for including affordable units on site, the fee payment schedule, the geographic distribution of the fees, and more.
Housing insecurity greatest in East Oakland
Overall, the housing department’s action plan focuses on three broad strategies: “protection” against displacement of Oakland residents, “preservation” of existing affordable housing, and “production” of new housing.
The city enlisted data analysts at Stanford and the University of Pennsylvania to identify inequities in Oakland housing and to examine how the city can best target its housing resources at communities most in need of support.
Oakland’s Black population has dropped by a third over the past 20 years, according to the Stanford analysis. Meanwhile, high-income residents have increased dramatically.
While East Oakland residents experienced the greatest financial insecurity after the Great Recession, the analysis found that the negative economic impact of the COVID-19 pandemic is more geographically dispersed throughout the city. However, renters in East Oakland, both below and above Interstate 580, still struggled most to pay rent during summer 2020.
The conditions have prompted a “significant out-migration of Oakland residents because of housing instability,” Olatoye said, most greatly affecting Black residents and other Oaklanders of color. The city must focus its housing production efforts on extremely low-income residents, she said.
In the years since Schaaf pledged to protect 17,000 households from displacement, Oakland has strengthened its slew of tenant protections, both through ballot measures and updates to city policy. The city’s pandemic eviction moratorium is considered one of the strongest in the country by tenant advocates.
Council committee members seemed largely satisfied with the action plan Monday, approving of the emphasis on housing acquisition and preservation, and the focus on racial equity.
“I think this is a really good direction we’re headed in, if we can implement some of the things in this report,” said Councilmember Carroll Fife, who represents downtown and West Oakland.
Councilmember Dan Kalb, of North Oakland, asked staff whether the city will track its progress on meeting “all these broad goals and philosophical tenets of what we want to happen.”
Olatoye said she wants the department to develop a data “dashboard,” since comprehensive evaluation of the city’s housing plans is “really lacking.”