Over the past several years, Oakland has been working on a new policy for how it approves the use and development of its publicly owned land. Considering the housing shortage that has pushed Oakland’s housing prices to among the highest in the nation, many have asked how public land might be put to use to create affordable housing. In 2016 this debate came to a head as the city sought proposals for a one-acre parcel near Lake Merritt known as the East 12th Street site. Since that time, city officials have been meeting with a community coalition to identify areas of agreement that could form the basis for Oakland’s public lands policy. The results of this discussion may come to City Council early this winter.
At issue is whether prioritizing affordable housing on public land would pit affordability against other important imperatives like generating funding for city services and creating well-paying local jobs. We’ll get to SPUR’s take on these trade-offs later in this post, but first let’s take a look at the definition of “public land,” the state law that regulates its use and the progress so far on updating Oakland’s policy.
What Is Public Land?
In Oakland’s municipal code, “public land” is property owned or managed by the city, including libraries, public works property, fire stations, parking garages, parks and open space, as well as sites owned by the former Oakland Redevelopment Agency. Oakland’s public lands range from large sites such as the Coliseum to small parcels that could only accommodate small-scale uses such as one or two new homes. The broader definition of public land encompasses property owned by agencies such as the Oakland Unified School District, the Peralta Community College District, Caltrans, BART, AC Transit and the East Bay Municipal Utilities District, but Oakland’s new public lands policy will not apply to these areas.
Under the requirements of the state Surplus Land Act, a public agency seeking to sell or lease a piece of its land must prioritize affordable housing as a use on the site. The agency must send housing developers notification of the opportunity to develop low and moderate-income housing. They must also enter into good faith negotiations with interested parties, giving top priority to those that propose a project where at least 25 percent of the housing will be affordable to low-income households earning up to 80 percent of the Area Median Income. (In Alameda County, this translates to $80,000 for a family of four.) If there is no proposal for projects including 25 percent affordable housing, or if the good faith negotiations don’t result in a final deal, then at least 15 percent of the units in the final project must be affordable to low-income households.
Updating Oakland’s Public Land Policy
How the Surplus Land Act applies to Oakland’s public lands is part of an ongoing discussion between the city and various stakeholders. Writing to the Oakland City Council in June 2016, the Oakland Citywide Anti-Displacement Network (which includes East Bay Housing Organizations, Communities for a Better Environment, Causa Justa :: Just Cause, East Bay Alliance for a Sustainable Economy, Communities United for Restorative Youth Justice, the East 12th Coalition, Public Advocates and others) expressed their concern that the city’s initial public lands policy proposal did not go far enough in addressing the housing crisis. The network argued that the Surplus Land Act should be used as a baseline set of requirements but that in order to address the housing crisis, the city’s public lands policy should exceed the state requirements and adopt a policy that maximizes “deeply affordable housing on city-owned land.”
Since then, a working group of representatives from the Citywide Network, senior members of city staff and others have met regularly, facilitated by Enterprise Community Partners. The questions that must be answered to reach an agreement are significant: Is it better to develop all or most parcels as affordable housing? Or should some parcels be developed as a mix of market rate and affordable, with the market rate portion helping to subsidize affordable housing on another site — especially if this may yield a greater number of affordable units overall? Is it possible to incorporate labor requirements on city-owned parcels while also including a significant requirement for affordable housing? Should the city seek to obtain a deeper level of affordability for housing on public lands, or try to maximize the number of affordable units? How do all of these requirements impact the value of the underlying city-owned land, and the amount of revenue the city can hope to receive from leasing these sites? These issues were discussed in a recent SPUR forum on public lands and will continue to be the subject of more dialogue in coming months.
Trade-Offs and the Public Good: SPUR’s Take
The question of what the city should do with its public land elevates the question of what constitutes the public good. Is it doing the greatest good for the greatest number of Oaklanders? Is it helping the most vulnerable? Is it possible to do both simultaneously? At the SPUR forum, one panelist described the public lands policy as an expression of the city’s values. That’s certainly true. But there are real policy trade-offs to be made if public lands are going to support the creation of development that realizes those values.
Developing and leasing public land can help create new affordable housing, but it can also provide desperately needed funding for the city to do all the things a city needs to do, like keep the streets clean and the libraries, recreation centers and Head Start programs open. Recently city workers went on strike to secure greater wages to perform these services. But the more we ask of public land in terms of providing affordable housing and jobs, the less financially productive it becomes for the city. The amount of revenue public land can bring in is fixed because the rent that can be charged on the site is set by the market. Meanwhile, the amount it costs to develop the land — the construction costs and financing fees — is also fixed. As the requirements on the land increase, the amount of funding remaining after hard costs are paid for decreases. At some point that amount becomes zero and development is rendered infeasible, which ultimately doesn’t help anyone.
With regards to housing as a use on public land, SPUR believes that a great public lands policy creates the maximum amount of affordable housing possible, allowing for flexibility in figuring out how to make that happen while also enabling the funding of city services and allowing for well-paying jobs. Part of that flexibility might be found in developing different performance requirements for different sized sites. For very large sites, such as the Oakland Coliseum complex, requirements for affordable housing and quality jobs should be higher, whereas on smaller sites, such requirements might not be feasible. The future public lands policy should take these differences into account.
The region is experiencing a massive housing shortage. Between 2010 and 2015, the Bay Area added 550,000 jobs but only 60,000 housing units. We believe that adding more market rate homes to the housing supply can help to address the city’s housing shortage while also helping to subsidize affordable housing. By encouraging market rate housing on some publicly owned parcels, the city could potentially generate even more affordable housing since market-rate projects must pay a fee to support building new affordable housing. Market-rate housing could also afford to pay on-going lease payments to the city for the public land, which could be used to support city services.
Oakland’s public lands policy currently excludes land owned by other public agencies. The city’s planning process should ultimately take the holdings of all public agencies into account. In our report A Downtown for Everyone, we called for the city to craft a unified strategy for the disposition and development of public land across all public agencies, including BART, AC Transit, the Oakland Unified School District, the Peralta Community College District, Alameda County and others. A coordinated strategy could present additional opportunities to achieve both the city’s long-term goals and the goals of those agencies. The completion of the city’s Asset Management Plan for City-Owned Real Estate is an important first step that can help support the creation of a unified strategy.
Public land has a financial value and a symbolic value. It is critical that the city’s public lands policy addresses the needs of Oaklanders — both the most vulnerable residents and the city as a whole. It’s also important to keep in mind the financial value of public land and the financial constraints impacting the city. A great public lands policy will balance all these complex concerns, doing so in a way that involves and is transparent to the public. SPUR looks forward to being part of the conversation in the coming months as proposals for Oakland’s public lands policy move forward.