Six years later, the Oakland developer has still not built the promised housing. City council unplugs in frustration

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For nearly seven years, an Oakland developer has been trying to raise enough money to launch a 360-unit project near Lake Merritt on city-owned land. On Tuesday, the city council voted against granting the developer a sixth extension to get the two-building project off the ground.

If council had approved the project, it would have brought affordable housing and tax revenue to the town, but officials were frustrated that the key piece of land sat empty for six years, until a council member council opens a small temporary village. for the homeless there.

The project promised 729 construction union jobs, more than $600,000 in annual tax revenue and about $4.7 million in proceeds from land sales, city staff said. But council members said public land should prioritize affordable housing projects and that the city should instead look to lease public land rather than sell it.

“I appreciate the developers and the work they’ve done,” said council chairman Nikki Fortunato Bas, who represents the district where the site is located.

But Bas said the site should be used for affordable housing, not the mixed-use project. Instead, she urged developers to partner with the city on other projects.

“While the outcome may not have been what was desired, I think we all want to continue to partner together because there is a lot of housing need across the city,” Bas said.

The project has sparked a debate in Oakland about whether city-owned property should be used for affordable housing projects as the city grapples with a spiraling homelessness crisis. Activists protested the development when the city council first approved the project in 2016 and shut down many council meetings.

Developer UrbanCore Development received five extensions from the city to kick off the project, but it still hasn’t happened. UrbanCore partnered with East Bay Asian Local Development Corporation for the building that would house affordable housing. Both developers have done other projects in Oakland.

Since the project was first approved, the land has become home to at least a dozen people in a sprawling homeless encampment. Last summer, Bas opened a small temporary village with pallet shelters and electricity for nearly 60 unsheltered people at the site.

The developer said rising construction costs and the impact of the pandemic on the real estate market have prevented it from securing the necessary financing, according to the city.

Michael Johnson, president of UrbanCore Development, did not immediately respond to a request for comment from The Chronicle. City staff said the developer requested a nine-month extension, until Nov. 15, to secure funding.

In June, Johnson told The Chronicle that development would kick off before his expansion was complete. Johnson said he needed about $85 million to build one of the towers, which was estimated to cost $236 million. Additionally, he said he needed more time to raise about $70 million to construct the affordable 91-unit, six-story mid-rise building.

The project was first approved in 2016, and the city and UrbanCore entered into a development agreement in 2017. The project included a total of 360 residential units in two buildings – the first building would have had 252 units at the price of the market and 18 affordable units, and the second building would have had 90 affordable units.

Johnson supported the small homeless village on the site, but said the original small village should have moved once it was ready to innovate.

Bas submitted a letter to the rest of the board which was discussed at Tuesday’s meeting and which outlined the “broader context” of the project. Bas pointed to a 2018 resolution that calls on the city to rent, rather than sell, public assets.

Additionally, the resolution requires city staff to submit a “written rationale” explaining why a sale is preferred over a lease. The resolution also states that developments on public land must focus on permanently affordable projects and provide the highest levels of accessibility.

Bas also pointed out that the city is way behind in its production of affordable housing, but it’s unclear how the city would fund more affordable projects.

The state has asked Oakland to license 6,949 low- and moderate-income housing units by 2023, but the city has only met 22% of that goal so far. The city has approved permits for 1,506 affordable housing units.

Oakland was also asked to issue permits for 7,816 units for upper-to-moderate income households and met 174% of that goal, according to city staff.

“Clearly, Oakland must prioritize the production of affordable housing, especially at very low income levels,” Bas wrote in the letter.

Sarah Ravani is a staff writer for the San Francisco Chronicle. Email: sravani@sfchronicle.comTwitter: @SarRavani



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