State Forces More Condos on Bay Area Cities Despite Lack of Demand
Why have cities like Pleasanton and Clayton, California, recently rezoned land to make way for more condos? Why does Dublin have so many higher density projects sprinkled throughout the City? For many, encouraging the development of more condos in today’s market would seem irrational when demand for existing condos has plummeted in recent years, yet the State of California has a different perspective. Strong-arm tactics by the State and local quasi-governmental agencies like the Association of Bay Area Governments (ABAG) have forced Pleasanton, Clayton, and numerous other cities to push for the development of additional high-density housing in order to fund the construction of Below Market Rate (BMR) homes.
The bucolic City of Clayton, CA, was recently told by the State that they need to squeeze in 84 BMR units. In order to fulfill this requirement, Clayton is considering the conversion of several parcels of land on the outskirts of town to high-density residential. While this approach may make sense for cities with Transit-Oriented Developments (TODs) and quick access to freeways, putting four-story condo buildings eight miles from I-680 makes little sense and is a deviation from the smart growth principles the State officially endorses. In essence, cities are resorting to poor planning practices as they comply with the onerous affordable housing mandates from the State.
The City of Pleasanton, CA, recently rezoned 32 acres in Hacienda Business Park from campus office to high-density residential as part of an effort to meet the State’s requirement on BMR housing. This change could result in nearly 1,000 new condos along Hacienda Drive that would yield 150 additional affordable units. In the next month or so, Alameda County Superior Court judge Frank Roesch is expected to make a decision that will force the City of Pleasanton to violate a voter-mandated housing cap that was instituted over a decade ago. Once the housing cap is removed, Pleasanton will need to plan for more than 3,000 additional BMR homes.
Many residents and some municipalities have started to wonder if the State and ABAG affordable housing requirements still make sense, given the prices of market rate homes have fallen so far in the past few years. Contra Costa County has nearly eliminated its affordable housing requirement by reducing the BMR fees from 15% of total project costs to about 1%. This decision was the direct result of Contra Costa County’s determination that market rate housing has become affordable.
The City of Dublin, CA, mandates that 12.5% of any new development be set aside as BMR units, and this requirement is alive and well even as home prices have become quite affordable. As former Mayor of Dublin Janet Lockhart had explained to the Dublin 101 class in 2008, the City of Dublin has a retail-based economy whose hard-working employees deserve a chance at home ownership in Dublin “just like everybody else.” Current City leadership is expected to maintain this position without compromise.
Readers may remember that the unincorporated town of Alamo, CA, recently held an election to see if residents wanted to incorporate and become a city. Most assuredly, one of the reasons voters decided against incorporation is that Alamo residents did not wish to become subject to the same tactics the State has used against cities, as it pillages local budgets and promotes the construction of more high-density housing on top of the surplus in existing condos.
For more information or to provide feedback on local affordable housing requirements, please contact the Association of Bay Area Governments at (510)464-7900 or info@abag.ca.gov.
11:41 PM on February 10th, 2010
Everyone deserves the homeownership and banks must loan money to everyone to buy homes no matter whether he/she can afford. Isn’t that the mentality that’s got us into the subprime mortgage mess and financial meltdown? Things have changed a lot since early 2008 and the policy needs to be changed accordingly.
3:39 AM on February 11th, 2010
Grrrr! The government needs to stay out of free markets as much as possible! BMR in and of itself is a fallacy. If there was true demand by residents for these types of homes in Dublin, or anywhere, you can bet builders would provide them. Everyone deserves a chance at purchasing a home and they have that chance now, as they always have, with saving their money and good credit, the old fashioned way. I am not saying I love the high cost of purchasing a house in our area, but I also don’t think it is the government’s job to provide something to people artificially in some sort of “leveling the housing field” effort.
9:33 AM on February 11th, 2010
The circumstance seems very similiar to the case in Hong Kong 15 years ago. The government tried to provide more affordable housing for below replacement cost by proposing a “85,000 Unit Plan” to the market. Most of them are BMR for low and very low income families. Meanwhile the goverment rezone some prime land along the water to build projects that include thousands of units. It turns out that the housing price dropped 70% from the peak in most area. The substantial drop was partly due to the recession in Asia. All the hard working people in Hong Kong, where most people work 50 hours a week were scared of the plan. The governement were critizied of wasting the tax payer dollars to grand those precious lands for affordable housing. With the potential profit of sell the land, they could had built more units in other lower cost area.
This certainly prove that our states government does not have a know how to change according to market condition. They are pouring lots of affordable housing to the desirable area. Hoping that people will blend together to create a harmonious community. Not a bad thought. However, with the already depressed housing price, plan could have been changed. We all need a governor to manage this mess left by Arnold. He is a very charming actor, but we need someone to have business vision to run this quasi-bankrupted state back to an economy engine.
1:34 PM on March 1st, 2010
We don’t need anymore condo complexes in Dublin! It took Elan forever to get sold-out and now the prices are so low, I bet most are under water in their mortgages right now. If there was such a big demand for condos, they would have sold out sooner. Building more condos without a demand will further depress the real estate market.
2:46 PM on April 5th, 2010
It is very discouraging how many people are so opposed to BMR units. My husband and I would love to afford a new home but unfortunately, we could not afford one in this area. We are currently renting but it would be amazing if we could get a BMR unit. My husband works full time and I stay home with our young daughter and I am going to school full time to become a nurse. Right now, we do not make enough money, but we will eventually. We are productive memebers of our community. Do not take advantage of government programs and do as much as we can to support our community. I wish you all had a better idea of the type of people who are in the BMR units.
3:48 PM on April 5th, 2010
Just because you are productive member of society does not ENTITLE you to home ownership. Home ownership is a privilege to be earned through hard work, not a government-run program funded on the backs of people who get into homes by saving many years for a down payment.
I agree that we should set aside some rentals to be BMR precisely for people in your situation, but do we really need 10-15% set aside for every new development? How did Dublin come up with that percentage anyway? How is it that while homes have become more affordable, that percentage is not changing? Seems totally arbitrary to me.
Once you start working, you and your husband will be able to put away money for a down payment on a market-rate home. In the mean time, you should simply rent. Set a good example for your daughter, so she will know that the best way to home ownership is through hard work and sacrifice. That way what happened with the subprime mortgage will not happen again when she becomes of age.
9:20 AM on June 30th, 2010
We don’t need anymore condos when we have too many that aren’t selling with more to come because of this foreclosure mess. Sheesh! I think what turns some buyers off are the outrageously high HOA dues that only seem to go up and up. I don’t blame people for not wanting to buy a condo. With the new/newer single family homes, you have HOA dues, but they are not as high as condos. Owning a home is very expensive.