319 Chester Street, revisited

It took me longer than I planned to get around to this, but I said a while ago that I’d follow up on my post about 319 Chester Street. Better late than never, right?

So when they get to the consent calendar at the Council meeting, District 2 Councilmember Pat Kernighan is like “Okay. Let me see if I have this right. ”

  • This lot is worth $100,00.
  • We are giving the lot to the developer at no cost.
  • We are also providing the developer as much as $375,000 to build the house.
  • The total investment is therefore $475,000.
  • Then the house will be sold to someone who qualifies for affordable housing assistance.
  • Then the house will have affordability restrictions for 45 years.

Which is, well, a pretty good recap of the situation. Then she added that the idea of any house in that neighborhood selling for $475,000 seems unlikely, and that although the job training aspect of the proposal was appealing, the Council had not been given any quantifiable information about said training program, like how many people would be trained or how many hours they would work or anything like that.

So then District 3 Councilmember Nancy Nadel was like, “Well, I don’t know about the cost of the land, but I’ve been trying to make this happen for like five years. Sure, it’s possible that we won’t get all our money back, but if we’re going to take public property and put it in private hands, there has to be some public benefit, which is the reasoning behind the job training and affordable housing aspects to the plan.

So the first thing that popped into my mind when she was talking is that if it is taking you five years to figure out how to build one house on one City owned vacant lot, maybe that should be a sign that it isn’t meant to be. Right? Also, if we were to just sell the lot at a market price, it seems like there would be a public benefit to the transaction because we would get money from it that can be used to pay for services.

So then Pat Kernighan comes back and is like “Well, that’s all very admirable, but I’m concerned that we’re not going to be able to sell this house. Even if it wasn’t required to be affordable, $475,000 seems like a stretch. And why would anyone buy a house with affordability restrictions that limit their ability to benefit from appreciation when they can just get a normal house without all that for less money?”

Then she asked if staff was aware of any affordable housing anywhere in the city that had sold for $475,000, to which staff responded that there are non-affordable condos like half a mile away that have been listed for $400,000, and that since this house is going to be bigger than most of the other houses in the area, and because the neighborhood is so “centrally located” to downtown and various highways, that they expected to get a pretty good price for it.

And Pat Kernighan is all “Um…you do know that the way people normally figure out what property is worth is by looking at selling prices, not asking prices, right?” And staff was like “Oh, sorry. We don’t have any information about that.”

Nice.

So then, at-large Councilmember Rebecca Kaplan was like “Look, maybe you can sell this house for $475,000. Or you can sell it as affordable housing. But obviously not both. What is the price affordable to someone at 60% AMI anyway?”

And nobody knew!

I was pretty pleased with the conversation up to that point. But then District 6 Councilmember Desley Brooks is like “What am I missing? We own this property and we’re not doing anything with it right now. This seems like a great idea, why are we even discussing this?” And Rebecca Kaplan is all “Oh, I’m fine with us doing it for the job training if we remove the affordability requirement.” Which seemed odd to me, since nobody seemed to have any information about this training program.

Then District 5 Councilmember Ignacio De La Fuente is like “Look, this doesn’t make any sense. If we want affordable housing, then give the lot to someone who’s going to build some affordable units that will actually be affordable and stop pretending we’re going to get the money back. If we want job training, why don’t we just invest more in our existing job training programs like the Cypress Mandela training center or whatever.” I completely agree with that. I have never understand why Oakland seems to feel the need to constantly reinvent the wheel.

So then Mayor-elect Jean Quan is all “Well, there’s a lot of gentrification going on in West Oakland, so it’s important that this stay affordable. I walked West Oakland during my campaign and I’m really concerned about keeping some affordable housing there. Plus, this isn’t General Fund money anyway.”

And then Nancy Nadel is like “Oh, actually, there’s plenty of affordable housing there, so really what I want is the job training. The Cypress Mandela program is too long and lots of people can’t afford to do their 13 (actually, it’s 16 – V) week all day training program, so this is better because they can just come at night after they get off work and get trained.”

And you know what? Maybe that is the case. I have no idea. Because nowhere, in any of these discussions or reports (PDF), has anyone provided any kind of information about what this job training entails, how many people will be trained, and what the end outcomes for the trainees is supposed to be. And without that information, approving the project for job training purposes just seems totally insane to me. How can you evaluate whether a program is worth spending all this money on when you don’t even know what the program is? At the very least, you’d think the City should be providing some kind of tangible, measurable criteria for the program before doling out money.

So then Council President Jane Brunner is like “Well, I liked it when it was affordable housing and job training, but if it’s only training, then it seems silly, since we have all these other training programs already.” And then Rebecca Kaplan said she would support it if we removed the affordable housing component, although that seemed even more problematic to me, since most of the money they were proposing to use for the project was from affordable housing funds.

And then they decided that they’d go back and try to figure things out a little more and have it come back at a future meeting. And that was that.

You can watch a video of the discussion below.

11 thoughts on “319 Chester Street, revisited

  1. MarleenLee

    When I read this summary, I have to admit I am at a loss. I just don’t understand this whole “affordable housing” concept, and how or why local government is even involved in distorting market prices or even in the business of “job training.” We are on the verge of bankruptcy and our police force was just decimated by layoffs, and our elected officials want to waste their time debating other ways to throw money away?

    I just checked the MLS and it looks like there are plenty of huge, charming old houses available in West Oakland – one or two for even less than $100,000 http://www.grubbco.com/f_listings.html Now, I’m sure they need some work, but why wouldn’t that qualify as “affordable housing?” Also, if you don’t have $20,000 for a down payment or whatever, what’s wrong with renting? Aren’t there places in West Oakland that have “affordable” rental rates? Why should local government be subsidizing the privilege of home ownership?

  2. Born in Oakland

    I listened when the actual conversation was taking place and was simply dumbfounded by everyone except Pat K and IDLF. Thank you for the recap, the conversation (and concept) was as ridiculous as I initially thought.

  3. Dax

    How about if we just sell the lot and take the $100,000 to promote the new Oakland ID Card.

    That way we could insure Oakland would always have a steady supply of workers to soak up all those residential construction jobs as they become available.

    Or are construction companies now thinking of actually hiring young men who have grown up in Oakland? When did they change their practices, did I miss that memo?

    I suppose in the past, the “training” was the only thing that was missing.

  4. ralph

    I am truly baffled by staff. I am not even going to read the report but it just doesn’t seem like that they do enough analysis to make informed decisions.

    I am curious how we got to a lot value of $100K.

  5. ralph

    I am even more baffled by the estimated cost to complete. I am not in the construction business but that just seems excessively and inconsistent with the other projects.

  6. Dax

    How about Oakland conducts a special auction for the lot.

    With a added stipulation/bonus, that who ever buys it must build and complete a house within 24 months. City agrees to throw in expedited inspections and free city building fees.

    Oh yes, and the contractor and his sub-contractors must agree to use the same hiring practices that city itself does with regard to hiring only legally documented workers.

    Or is that simply asking too too much these days? By doing so, we could see if there is any need for training more residential construction workers, or is the market is already flooded with willing and ready workers.

    Otherwise, why begin yet another “job training” program for which there is no job demand after completion?

  7. livegreen

    Thanks V for your post. This is absolutely ridiculous.

    –Besides the totally unrealistic sale price, why would it cost $375,000 to build the house?

    –Are City Staff & the City Council Members who believe we need yet another job training program saying there’s something inherently wrong with or ineffective about Cypress Mandela? & how about employing graduates of existing programs? I bet there are at least a few who aren’t employed. Shouldn’t we be putting them to work? Or is the City only interested in training and not actual jobs.

    –All this time spent on just 1 vacant lot??

    There has to be something missing in this. It’s either that or outright Staff incompetence.

    Thank you Pat K & Ignacio for at least adding a bit of logic and normalcy.
    (& a 1/2 thanks to Rebecca Kaplan).

  8. Dax

    Six of the eight council members considering this item, are the same ones who have been guiding Oakland finances and projects for the past 8 years.

    Over those 8 years, have their been any similar projects or plans where their financial acumen has shown itself to be savvy?

    Or are they once again floundering about in a world they either don’t understand, or don’t care about, regarding sensible financial outcomes?

    Example, for the net dollars expended, how many individuals will be trained “to the degree necessary” to obtain a job?

    4 individuals? cost $100,000?
    $25,000 per job…for which there are already 500 trained Oakland residents, ready, willing, and able to do the job.

    Who is gonna pay the “trainers”…
    Credentials of the same, such that anyone would look upon the training as significant?

    How about something more focused.
    Like sell the lot, taking the $100,000 and setting up an apprenticeship program with 10 local plumbing firms, where each one takes one individual on for a year at minimum wage, with the city covering half that wage.

    10 young men, getting “real” training, for a extended time, learning 1 narrow skill, taught by people who really know the trade.

    At the end, you have 10 young men/women who can really do something useful.

    But of course, the city would have to set up a “coordinator” to run that project, the salary and benefits of which, would eat up the entire $100,000 available for that year. The “Oakland Way” (Like the famous HP Way)

  9. livegreen

    Dax, The City could use existing employees to monitor such programs. For example, pull 2 or more employees from this project and put 1 of them to work doing this City-wide.

    Then put in requirements (if they don’t already exist) to make sure all City dispensed HUD & Block Grant funding of housing rehabs is going to medium-longtime Oakland residents with a % of new employees hired among Cypress Mandela (or other) graduates.

    Voila, it’s all in the private sector, no additional publicly funded jobs training program ($375k for 1 house) necessary. Just the right public sector inducements to private contractors.

    If the job hiring requirements already exist, just tighten and enforce them.

  10. len raphael

    Which department’s staff did the workup on this? Not the same dept that oversaw the Fox construction loan or would oversee a Kaiser tranistion? Those would be real estate and project management pros, right?

    btw, someone should ask Nancy Nadel whether city funded projects are exempt from the standard noise requirements that construction can’t be performed during the evening.