To: Honorable Mayor and Members of the Berkeley City Council
From: Thomas Lord
Subject: BRIDGE/BFHP development at Berkeley Way
Date: March 13, 2018

An open letter to Berkeley City Council


Berkeley has serious needs for shelter space, supportive housing, and available housing that is affordable even to persons with very low incomes.

The BRIDGE/BFHP efforts to develop the Berkeley Way parking lot has failed to produce a viable project.

City Council is asked tonight to commit large sums of existing funds and to try to borrow more funds in pursuit of the Berkeley Way Project. In exchange, Council is told the project might, if nothing more goes wrong, be funded and permitted by the end of 2019.

That is a bad deal. City Council should instead suspend the project and move quickly to find more viable alternatives.

Highlights of the project's problems

The parking problem is not solved

The City can not afford the loss of revenue from the public parking lot.

The sole possibly viable option identified by City Staff includes 200 spaces in a single, below-grade level, using "puzzle lifts".

While 200 spaces are potentially fiscally viable, Council should ask how well thought out this plan is.

  1. Puzzle lifts are typically slow and will limit the speed of turn-over in the lot. The parking study mentioned in the staff report mentions the total amount of use the lot gets, but does not contemplate the rate of ingress and egress.

  2. The rate of ingress is important to the Berkeley Fire Department. If ingress is too slow, and more than a few cars line up waiting for a space, the waiting cars will spill out onto Berkeley Way. As BFD has noted, that would interfere with emergency vehicle traffic leaving and returning to the fire station.

  3. When the City of Palo Alto considered using a puzzle lift system (April 11, 2017, special meeting of the City Council), their City Staff reported that the systems were slow, required training, and were not typically used in public parking garages for these reasons.

It would be a shame to commit large sums of money, only to later learn that (once again) a crisis of what to do about parking returns.

Berkeley's actual costs are $15M more than is acknowledged

When computing Berkeley's share of the project cost, staff reports regularly omit the $15M of Alameda County Measure A1 funds which are dedicated to Berkeley. That is Berkeley's money and it should be regarded as such.

Taking A1 funds, HTF funds, and $25M in proposed borrowing (total bonding cost of $40M), Berkeley will be paying more than half the total cost of the project!

It is simply false that Berkeley's money is being well-leveraged by this project. Berkeley's contributions will not even be matched dollar for dollar!

The project history is a long tale of missed milestones

Over the years Council has given money and other concessions to this project, each time establishing milestones for the project to complete. Examples include a public outreach plan, a parking study, complete financing plan, and shovel-ready plans.

The staff report mentions that the project has used over $800,000 to date. In fact, there was an additional $200,000 pre-development loan early on.

The project has spent more than $1M, in other words, without meeting a single one of the goals set for it.

The proposed borrowing is a slap in the face to renters and taxpayers

The proposal to borrow $25M, if the bonding is for 20 years, means making $2M annual payments, of which $750,000 per year is nothing but debt service.

This is absurd. In addition to de-leveraging Berkeley funds, those borrowing costs effectively make the project into a for-profit windfall on the backs of our most economically vulnerable residents.

The project costs are high relative even to today's market

By way of comparison, the 2014 pro forma for the Stonefire building describes a project that:

  1. bought land (Berkeley Way does not need to do this)
  2. built underground parking
  3. built 90 units and ground floor retail

That project cost less than half of what is proposed for the Berkeley Way project a mere four years later. Yes, the Berkeley Way project would include more units - but not twice as many more and, again, the land is free.

The project uncertainty is too high

Even if Berkeley commits more than $50M to this project, still, the City is offered the weak promise that the project might be fully entitled and financed by the end of 2019. Might.

Given the past failures of this project to ever settle on a viable plan, it is very reasonable to assume that before this project is built, the developer would once again return to Council asking for more money.

Promising alternatives are around the corner

Berkeley could instead use County A1 money and HTF money for projects such as:

  1. Building stand-alone shelter space quickly.

  2. Developing some or all of the North Berkeley parking lot as social housing, coops, and so forth.

  3. Acquiring existing housing units through a Small Sites program.

I'm sure it is politically difficult to consider suspending the Berkeley Way project but political popularity is no excuse for fiscal waste.

Don't throw good money after bad.

Suspend this project.



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Copyright (C) 2018 Thomas Lord