Oakland to impose impact fees on new housing developments

Beginning in September, Oakland will impose impact fees on new housing developments, adopting a mechanism that many Bay Area cities use to generate money for transportation, infrastructure and affordable housing. less Beginning in September, Oakland will impose impact fees on new housing developments, adopting a mechanism that many Bay Area cities use to generate money for transportation, infrastructure and affordable ... more Photo: Justin Sullivan, Getty Images Photo: Justin Sullivan, Getty Images Image 1 of / 1 Caption Close Oakland to impose impact fees on new housing developments 1 / 1 Back to Gallery

Oakland has a new solution for its affordability crisis: Beginning in September, the city will impose impact fees on new housing developments, adopting a mechanism that many Bay Area cities use to generate money for transportation, infrastructure and affordable housing.

“It’s long overdue,” said Councilman Dan Kalb, who supported the measure when it went before the City Council on Tuesday, prompting a debate that lasted well into the night. The council approved the fees by a 7-1 vote, with Councilwoman Desley Brooks dissenting.

Housing builders will face impact fees of between $750 and $7,000 per market-rate unit this year, depending on what part of the city they build on. By 2020, the fees will rise to between $13,000 and $24,000 per unit. The fees are lower than those in the neighboring cities of Emeryville and Berkeley, which charge $28,000 per market-rate unit.

City officials have worked for two years to calculate the fees, which will be applied to every new housing structure, from single-family homes, to town houses, to high-rise apartment buildings. The idea is to prompt developers to include affordable housing in their projects or pay a fee for every market-rate unit they build so the city can build its own affordable housing.

While many residents embraced the idea — which came before the council just two weeks after Oakland issued a 90-day moratorium on rent increases — some said the fees were too low, and that they will be phased in too slowly to prevent displacement.

Groups dissatisfied

“We are very concerned that the city is not acting like there is actually an emergency out there in the community,” said Jeffrey Levin, speaking at the council meeting on behalf of East Bay Housing Organizations, a group that for years has pressured Oakland to include more affordable and low-income housing in its zoning plans.

“We’re here tonight with very mixed feelings,” Levin said. He and others criticized the council for what they saw as an overly cautious approach, opting to phase the fees in on a graduated scale, so they won’t be fully implemented until 2020.

Some residents and activists saw the gradual phase-in as a sign that the council is pandering to developers, many of whom have said that any fees at all will hinder the city’s economic boom.

“I want you to do more, and do it faster,” said Margaret Cunningham, who has rented in Oakland since 1981. “Say, ‘We’re going to charge these fees now, and if you don’t like Oakland, we’ll get someone else to build here.’”

Taking what they said was a balanced approach, City Council members divided Oakland into three geographic zones. Developers in downtown, Uptown and Lake Merritt will pay $7,000 per market-rate unit starting in September, increasing to $24,000 per unit by July 2018. In West Oakland and parts of North Oakland, impact fees will start at $5,550 per market-rate unit in September, increasing to $19,250 in July 2018. In the area stretching from east of 23rd Avenue and including Coliseum City, fees will start at $750 and increase to $13,000 per market-rate unit by 2020.

Developers urge delay

Several developers who spoke at the meeting Tuesday asked the council to delay the fees, calling them an aggressive tax that would hinder new construction in the city’s downtown corridor.

“Three years from now, when these fees are permanent, and will be in place for generations, no (high-rises) will ever be built in Oakland,” said Alex Ludlum, a Chinatown resident who works in real estate.

Other speakers worried that if the council does anything to stifle development, then longtime residents will have to compete with wealthy newcomers for housing.

Some speakers reminded the council that, with Uber opening its new global headquarters in Oakland next year, the city may need new housing to accommodate thousands of techies.

“People coming in who make six-figure salaries will compete with Oakland residents who make $55,000,” said Gregory McConnell, a lobbyist representing various Oakland developers. “Who’s gonna win on that?”

But Assistant City Administrator Claudia Cappio said she has seen no evidence of impact fees deterring development in other cities. Several council members also rebuffed the claim.

“Developers will always say it has a chilling effect, no matter what you ask them to do,” Councilman Kalb said Wednesday. “We have to think of broader needs for the entire city, and not just the developers’ pocketbooks.”

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com

Twitter: @rachelswan