🏡 Why did the Bay Area abandon a $20B affordable housing bond?
Neighbors demand road safety, BART board member sounds off, lead found in drinking water at 22 OUSD campuses
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What happened: The Bay Area Housing Finance Authority (BAHFA) decided to remove a $20B bond measure from the November ballot that would have funded 70K+ subsidized apartments and houses across 9 Bay Area counties over the next 15 years.
Oakland alone could have received $750M, making it one of the largest beneficiaries in the region. In total, Alameda County would have accounted for around $2B.
Rewind: Formed in 2019 by the California state legislature, the BAHFA is a regional agency that can raise and allocate funds for affordable housing. It’s made up largely of local elected officials — Mayor Thao is Oakland’s representative.
They have the ability to place bond measures on the ballot for voters to approve.
The bonds are essentially loans from investors, and the investors would be paid back by increases in property taxes over a certain number of years.
Why they changed course: The bond was dead on arrival and faced a number of hurdles…
Among them, it was dependent on another ballot measure — Prop 5 — also passing. Prop 5 would lower the threshold for voter-approved housing and infrastructure bonds from two-thirds to 55%. Without that lower threshold, it wouldn’t have stood a chance.
We know this because the housing bond polled around 55%, so even with the lower threshold, it wasn’t a sure thing.
Supporters of the bond argue many Bay Area cities and counties are now left stranded without funding for housing projects.
In Alameda County, the homeless population has more than doubled in the past 10 years to more than 9,000 — Oakland accounts for more than half that with >5,000.
When BAHFA first put the bond on the ballot in June, they said the lack of affordable housing options had pushed 37K people into homelessness, and 1.4M Bay Area renters spend more than half of their income on rent.
The bond would offer rental housing to people who earn $31,000 to $99,500 per year.
Skeptics had a number of concerns around the true cost of the bond and how it would be managed by local leaders.
First, it would have been incredibly expensive. Marketed as a $20B bond, the total cost to property owners, via increase in property taxes, would have been closer to $50B (2.5x the amount raised!) after interest payments.
Second, the funds would have been largely managed at each county’s discretion — or in Oakland’s case, the city’s. This leads to concerns over whether government leaders can efficiently and effectively deploy public resources, or if the money will just be mismanaged and squandered.
There’s also a broader question around whether funneling more money into government-funded housing programs is the best way to address the housing crisis.
California has 1M+ extremely low-income renter households — it would take more than $1 trillion to build enough affordable housing, a quarter of California’s total GDP.
On the flip side of subsidized housing is privately funded market-rate housing, which some argue is a more efficient way to address both supply and affordability.
There are also other ways governments can help, such as building public housing to sell (vs rentals only), which has been successful in places like Singapore.
Why is “affordable” so expensive? It costs upwards of $1M per affordable unit, whereas private developers can build for a fraction of the costs. According to UC Berkeley’s Terner Center, prototype market-rate units can cost nearly 40% less in the East Bay.
Because affordable or subsidized units are funded by local governments, they are required to only use government-approved contractors and often all union labor.
An unwillingness to revisit these expensive policies has been a hot topic around Oakland’s structural budget deficit and ongoing crisis. And next month, Oakland City Council is set to vote on a new Project Labor Agreement that would impose even more expansive union contracts on affordable housing developers.
This begs the questions, is our housing problem due to a lack of money? Inefficient city services? Bad policy decisions?
For example, why has Oakland only now begun distributing funds from Measure U, the $350M affordable housing bond approved by voters in 2022? Other similar delays have been widely reported.
In 2023, Oakland permitted 795 new homes, more than half of which qualified as affordable housing. This is down from the peak of 4,617 in 2018. Permits for ADUs were also down year-over-year.
To put this into context, the $750M that could have been allocated to Oakland would still have only resulted in 750 new units over more than a decade.
Systemic problems: While interest rates are partly to blame, there are systemic issues within city government around permitting and bureaucracy.
Oakland’s permitting department is notoriously slow and opaque, with onerous zoning regulations and approval processes, making it difficult and risky to attract private investment.
Bottom line: The $20B bond was unpopular. Asking property owners to pay for a bond when interest rates are at multi-decade highs is a tough sell. But we’re not going to solve affordability and homelessness without more houses and apartments for people to live.
Our leaders need to make it markedly easier, more attractive, and more efficient to build all types of housing, not just affordable rental housing.
While $20B is a large number, it is only a small fraction of the capital needed to solve our housing crisis. Ultimately, Oakland and the Bay Area will need to attract private investors to build enough housing.
What’s next: While the $20B bond is dead for now, the BAHFA’s focus shifts to Prop 5, with the hopes of making it easier to pass another attempt at a housing bond in 2026. However, Bay Area voters are also expected to decide on a separate mega-bond for transportation infrastructure in that same election two years from now, giving taxpayers even more to think about.
In other news…
Neighbors in East Oakland recently took matters into their own hands to stop reckless driving and sideshows. They installed makeshift road barriers in the center lanes and in the middle of an intersection to force roundabout traffic. The city sent crews to remove the barriers calling them unsafe. Residents were not pleased and said they planned to reinstall the barriers, saying the city hasn’t done enough to keep roads safe (KTVU)
A BART board director, Debora Allen, penned a harsh op-ed against her own agency saying “BART prefers to play victim and not address its money problems.” She said it’s because groups like its labor-dominated board members, executive management, elected officials, transit activists, non-profits, and labor unions all stand to benefit by asking for more government funding, rather than fixing its structural financial shortfalls (Mercury News)
At a public safety meeting, Oakland’s new police chief Floyd Mitchell said violent crime is down compared to last year, but they still have a long way to go. He credited cease-fire operations, outside agency support, and proactive measures like saturation patrols. Mitchell also acknowledged the lagging crime data – which has been covered extensively — saying OPD has a new system in the works. When asked about property theft and burglaries, he acknowledged it’s still a problem but needs to prioritize the resources they do have.
This came during a week of continued gun violence. Last week, a 33-year old mother was shot and killed by suspected drug dealers who she confronted for selling what she thought were marijuana vapes in front of her house. This weekend, a verbal confrontation led to a quadruple shooting with 2 killed and 2 injured. In both cases suspects are still at-large.
Nearly two dozen OUSD schools found elevated levels of lead in the water, forcing the schools to make water fountains and other drinking sources off limits. Parents were alerted last week, despite the water testing report being dated April 2024. OUSD will need to replace pipes and filters at the affected schools and test again to ensure levels are safe. Frustrated parents pointed to 20+ other instances of lead contamination over the years, including at McClymonds High in 2016 (KQED)
In a conversation about the future of the Coliseum, KQED hosted AASEG’s Ray Bobbitt (buyer and developer of the Coliseum site), Oakland community leader Dave Peters, and others (KQED)
⚽️ Oakland Proud
The Oakland Roots soccer team will play their 17 home games at the Oakland Coliseum next season. The Roots are currently tied for second place in the Western Conference of the USL, the league right below MLS, and will compete for a playoff spot with just 10 games remaining. You can catch the Roots at one of their six remaining home games at CSU East Bay in Hayward. (NBC)
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The often repeated slogan of "Because affordable or subsidized units are funded by local governments, they are required to only use government-approved contractors and often all union labor" as being the reason that a 400 square foot low income unit costs $1,000/square foot to acquire land and build vs. $150 for a single family home has no support. A public records act request for properties built by major develeopers, reveals that for a $14 mil project $4 mil goes to land acquisition and construction, the other $10 mil goes to the developer fees. You are welcome.
“To put this into context, the $750M that could have been allocated to Oakland would still have only resulted in 750 new units over more than a decade.”
This isn’t correct. City $ is only seed $ in the capital stack. It is multiplied many times over.
A big criticism of the BAHFA bond is it only would have returned 80% of the tax amount from Oakland to Oakland