Are we downzoning or upzoning downtown Oakland?

Oh, one more thing about the downtown zoning. I’ve gotten like a dozen e-mails about that story in the East Bay Express last week, so I suppose I should address it. If you didn’t read it, the article claims that Oakland is shooting itself in the foot with respect to achieving density downtown, because the proposed new zoning (PDF) will inflate property values so high that nobody will ever be able to afford to build anything:

Pyatok explained that rezoning most of the downtown for tall buildings will articifially raise property values, thereby inhibiting development. Erecting tall buildings is already a costly endeavor, so developers need to acquire land as cheaply as possible to make it work. But if the downtown is rezoned for tall buildings, property owners are going to demand more money for their land, Pyatok explained, noting the property values usually increase when land is rezoned for high rises.

The very fundamental flaw in this argument is that downtown isn’t being “rezoned” for high rises, because it was already zoned for high rises. In fact, under the old downtown zoning, there are no height limits in the vast majority of downtown. Downtown, under the existing zoning, has twelve zones – C-40, C-45, C-51, C-52, C-55, R-80, R-90, S-2, S-7, S-8, and S-17 (all PDFs). The only one of those zones that has a height limit is C-52, in Old Oakland. So anyone who whines about how downtown is being “upzoned” because the new zoning would allow “unlimited high rises” is either lying to you or clueless.

Either that, or they don’t feel like bothering to explain to you what they’re actually talking about when they use the term “upzoning”. Perhaps they think you’re too much of a simpleton to understand, or they maybe think the actual issue won’t get you quite so riled up.

That issue is density. While the existing downtown zoning for the most part has no height limits, building sizes are limited through density restrictions. One of those restrictions is a maximum permitted residential density, which allows for 1 residential dwelling unit per X number of square feet of lot area. The residential density allowed under the existing zoning permits as little as 1 residential dwelling unit for every 450 square feet of lot area in some areas, and as much as 1 residential dwelling unit for every 150 square feet of lot area in others, although you can achieve greater density with a conditional use permit after meeting certain conditions. Under the new zoning, the permitted residential density is 1 dwelling unit per as little as 90 and as much as 300 square feet of lot area.

The other way of regulating density is through the Floor Area Ratio (FAR). FAR is determined by dividing the square footage of a building by the square footage of the land the building is on. So a one story building that occupies its entire lot will have a FAR of 1. A 2 story building that occupies only half the lot also as a FAR of 1. A 4 story building that occupies a quarter of the lot also has a FAR of 1. A 4 story building that occupies the entire lot has a FAR of 4. You get the picture.

The maximum permitted FAR under the old downtown zoning varies between 3 and 7, although you can also get bonuses to increase this by up to 50%. Shorenstein’s planned office tower on 12th Street (where the giant pit is) has a FAR of 10.5, and it conforms to the old zoning because of the all the various FAR bonuses it qualifies for. You can view a chart illustrating the allowable residential density and FAR in the existing downtown zones here (PDF) and the proposed density limits in the new zoning here (PDF). Under the new zoning, the proposed maximum FAR varies from 4.5 to 20.

So in the sense that the new zoning allows for greater densities than the old zoning, it is true that downtown is being “upzoned.” So will this upzoning immediately inflate property values and keep people from building anything in downtown Oakland, as the East Bay Express article suggests? The answer is NO, and here’s why.

As I mentioned yesterday in my post about Specific Plans, a City’s zoning code is supposed to match its General Plan. As a charter city, Oakland is not actually bound by this directive, and so, after we adopted our General Plan in 1998, we didn’t update the zoning to go with it. (We’re in the process of doing this now. This new downtown zoning proposal is part of that process.)

So then, there we were, in a situation where all of a sudden we have this General Plan, our “constitution,” which says that you can build X somewhere, but the zoning says you can’t. To deal with the discrepancy, we adopted a set of interim land use controls (PDF) two months later. They basically say that if your project would be allowed under the General Plan, but is prohibited under the existing zoning, the General Plan wins and your project is allowed. Or if you want to build something that is permitted by the old zoning, but banned by the General Plan, oh well, too bad for you. They were originally only supposed to last for three years, but since we never got around to that zoning update, we had to extend them in 2001, 2003, 2006, and 2007. And we’ll probably have to do it again when they expire in January 2010 because I seriously doubt the zoning update will actually be complete by then.

Since May of 1998, these interim land use controls have allowed the General Plan to be the primary tool for governing allowable density. Under the General Plan, downtown is given a maximum FAR of 20. That’s the same as the FAR in the new zoning proposal for the two height areas that allow for the biggest buildings. It is higher than the FAR in every other proposed height area downtown. So, in effect, what this new zoning does is downzone downtown from what we have be permitting for the past 11 years. If a FAR of 20 meant that nobody would ever build anything downtown because it inflates property values too much, then nothing would have been built downtown since 1998. Obviously, that didn’t happen. And there’s no rational reason to think it would start happening now.

The East Bay Express article justifies the assertion that the best thing for density is to limit building heights by saying Seattle does it that way:

Other cities, particularly Seattle, have recognized this problem and thus limited tall buildings to small sections of the city while only allowing buildings of up to 75 feet tall eslewhere, Pyatok said. The 75-foot height limit keeps property values low, making land more attractive for developers.

It is true that Seattle limits the tallest buildings to “small sections of the city.” Problem is, that section of the city is downtown, where there are large areas that allow unlimited building heights, and other areas with height limits of 500 and 400 feet. (Also, the building height limits everywhere else are not actually 75 feet.) You can view a map explaining downtown Seattle’s height and FAR limits here (PDF). Seattle adopted these new limits in 2006, after deciding that the more restrictive zoning they had previously adopted were limiting downtown growth (PDF) too much. The new proposed zoning regulations for downtown Oakland are actually pretty similar to what Seattle ended up doing in 2006.

18 thoughts on “Are we downzoning or upzoning downtown Oakland?

  1. Christopher

    Will the East Bay Express print a retraction of their NIMBY article? Now I remember why I don’t read print newspapers.

    Is Pyatok misinformed, misquoted, or does he have an agenda?

  2. Izzy Ort

    Pyatok’s argument makes no sense. The increase in property values would be SOLELY because you could build more on it. The value of the land will increase only to the point where you can build an increased density building AT A REASONABLE PROFIT, and no further. The value of the land will not increase to the point where a developer CANNOT profitably build more on it, because the developer cannot afford the price of the land. The value of land, or of anything, is the amount someone is willing to pay you for it, not some notional inflated value. Of course, if most people understood this, jewelers would not flog their wares by guaranteeing they will ‘appraise for double.”

    Pyatok’s premise is apparently that the current landowners will set a selling price that permanently overshoots the market. There is about zero chance of that happening. And if there were a chance of this happening, it could happen at any level of value, or permitted density. You could just as easily argue that a DECREASE in density would mean no more development, because the current landowners would refuse to drop the price of their land to reflect its diminished value to developers.

  3. Jim T

    Thanks, V, for your point of view on the EBX article. The article didn’t really make sense to me, and now I see why. Perhaps the EBX staff were just so enamored with the point they wished to make that they failed to see the logical fallacies of them. Somehow, though, I don’t see a retraction in the future…

  4. Carlos Plazola

    V, thanks for clarifying the issue. I think city staff should be complemented for the work they did on the downtown rezone effort. It is a good proposal given what they had to work with. Naomi Schiff and Mr. Pyatok, while I’m sure they mean well, may have overshot on this one, even with Gammon’s support.

  5. Naomi Schiff

    If you start to look for disinvestment in buildings around Oakland, you can see the effect. We have more than a few examples of owners who have held onto property but not offered long-enough leases to get good tenants, do solid tenant improvements, and maintain their buildings. These folks are landbanking. They may be filled with long term hope, but they are creating immediate problems, eyesores, and abandonment in the meantime. Overzoning can exacerbate this condition. Some of the very landlords who are hopeful of someday building highrises are also guilty of letting properties sit vacant or underused for years.

    When Russo was still on the city council, we had a discussion about whether there were some stronger means to create disincentives to longtime neglect. At one point I seem to remember he was trying to figure out whether you could tax vacant property higher than occupied. Tonight, I heard mention about blight enforcement.

    It does seem to me that it is overdoing it to zone for high rise so much larger an area than is so zoned in San Francisco, with its larger population and bigger head of corporate steam.

    The paucity of highrises constructed during the boom just past underscores that we should be focussed on other aspects of development. Most of the new construction was in the 4-12-story range, wasn’t it?

    I’d like to see much better new business promotion and incentives, with a lowered business tax for the first couple of years in business. CED seems to do a pretty minimal job of assisting businesses and retaining them. I wonder if one could figure out an incentive program for businesses that move into long-vacant spaces? That has been one function the arts community has provided, in many cities, over many years. Thinking big about development has sometimes meant that Oakland doesn’t recognize the pattern of more modest—but more-likely-to-actually-happen—projects that have formed the backbone of local business.

  6. Joe DeCredico

    V, thanks for getting this out there. There is one additional constraint to development potential I’d like to add, and that is floor plate limitations. This constrains large parcel development more than small parcels, but combined with the density and FAR limits you described, means height will rarely be the limiting factor. Perhaps this is why the previous zoning didn’t bother with height limits in most areas of downtown. They knew the real constraints.

    Pyatok’s comments are consistent with how he works, and how he sees the world, so while it was disappointing that he would introduce them in the 11th hour, it is not surprising.

    Having worked at this more than 20 years now, I would like to share an observation/opinion about why more Oakland properties in the downtown have not developed. First, there are two distinct species of land owners in the downtown, the landlords and the developers. I have many clients who are quite happy acquiring and holding property as a means of income. They do not have the stomach for the risk associated with development, and are happy to buy and hold. The developers are a different breed. Some would say they are visionary, some would say greedy, and some would say they are crazy. The one’s I work with embrace the risk, although they work their proformas forward and backward to limit that risk. For years, downtown Oakland has been popular with landlords. Building costs were comparatively low, rents and demand (except the retail) fairly stable, along with other advantages. Not so much with developers.

    If you look at the major speculative development prior to the Jerry Brown administration, it was a series of failures. The early Jack London Square development went belly up, the initial effort to develop the Rotunda was a failure, efforts to rehabilitate Broadway were wasted, and even the Kaiser Center, my client, proposed multiple development scenarios on their property post earthquake but were unable to make any of them work. The projects that worked needed Federal, State or City funding.

    Oakland has long been a tough town to develop in, not because of entitlements, but because the return wasn’t there. Shorenstein bought in Oakland because the City Center was distressed and they cherry picked it along with the additional entitled development sites and still got stung on their new building.

    So to say that height is the cause of land banking, to me, is as specious as proclaiming that a universal 75′ height limit with what Pyatok called a cap and trade, or what I like to call entitlement commodities, is a good zoning tactic. It doesn’t take a genius to figure out that if I have a one or two story, fully occupied building, holding on to my development rights and allowing them to escalate over the years is like free money, especially if I am happy being a landlord. In fact, the fundamental premise of cap and trade is to ceate an entitlement bank.

    What is clear to me is that there have been many recent proposals for tall buildings in Oakland and all of them are on hold. That is a market issue not a zoning issue.

  7. Carlos Plazola

    Another good starting point might also be that when someone does propose building in the downtown, including high rises, we (the Oakland activist community and city leaders) don’t start by throwing tomatoes at the proposal. We should come together as a community, and encourage ways of making the proposal better, and then, if the developer is smart (which some are and some aren’t) he or she will listen and create the best project possible. Then it’s up for a vote and this is when the tomatoes, or flowers, can be tossed.

    I once sat at a table with a local activist who said their role was to turn the screws until they caused the developers pain. Then they’d know they were making progress. Ouch. This actually causes developers and investors to say “screw it” I’ll go somewhere else.

    I recently sat in a room with a council member who said “I don’t know if I want anything developed on that site”, in essence insisting that the developer should be denied their property rights. This kind of statement reverberates around the investment community. Our leaders should be careful of their words.

    We have a long, long way to go in Oakland, and unfortunately, we’re out of time (budget deficit will only get worse). This does not mean that developers should be given a free pass. It means that we should be more sophisticated about our analysis.

    Developers need to be driven by profit in order to mitigate the risk that few among us are willing to take (though we all certainly enjoy sipping our mocha’s or drinking our Martinis in the buildings they build). They are investing in Oakland, so this is a GOOD thing because our aging infrastructure, like it or not, requires continuous investment to improve. Like the plant world, cities have two choices–growth or senescence. Unfortunately, these are our only two options, though some among us choose to fool themselves into thinking that there is some place between these two states where a homeostatic Utopia exists. There exists no such stable state–in humans, in plants, in cities, in the universe.

    And usually, developers are smart enough to know they have to work WITH the community to be successful.

    Starting with these as premises, I think we can take out some of the risk they perceive in coming to Oakland, encourage more development downtown, while also cajoling the best possible buildings in the process.

    Carlos

  8. Robert

    Carlos, you bring up a very important point. The process in Oakland seems to be that a developer comes up with an initial proposal, and then the various activist groups in the area pile on with objections and make unreasonable (even in their own eyes) demands. Then both sides begin compromising (not negotiating) to get to something that satisfies no one fully. All sides walk away unhappy. Wouldn’t it be better if after the initial proposal (or even before) for both sides to get together and discuss their real motivations and desires, and then work together and get a consensus plan? Everybody can then feel like they won in that situation.

  9. Naomi Schiff

    There are many examples of good cooperation, and I’d not say that “activitist groups pile on . . .” in every case. Of course, because they go on for longer and make more noise, it’s the controversial ones we hear most about. Look at SKS, 1100 Broadway: it’s had two projects approved and entitled at that site in recent years (others longer ago), with participation and discussion with the community, but minimal objection. Actually, the only problem is economics, so building hasn’t started yet. Similarly, I think Swig Co. started to do outreach well before they began their EIR prep for entitlements to do two huge buildings on Webster. And I think relationships have been pretty amicable around the proposal by Peter Wong on Broadway. Often, it happens just as you say would be ideal. But then you won’t hear much about it, because it is not entertaining to write about a nonfight.

  10. Carlos Plazola

    Robert, I agree. And I think that kind of cooperation and honesty must be pushed by the Oakland leadership for it to happen. Too often, what we see however, is that our leaders pick their side, right out of the gate, and then the community activists follow suit. Wouldn’t it be nice if our city leaders stayed neutral and objective on development deals early on and instead encouraged the kind of honest dialogue you refer to, and even chastised people for being extremist, polarizing, or dishonest?

    Naomi, while I enjoyed, and gained hope from, our dialogue and discussions during the rezone process, I must say that your 11th hour “75 foot max height” effort with Pyatok was exactly the kind of polarizing thing that could ruin a good working relationship.

  11. John Klein

    Robert, I disagree. Two examples. The Swig proposal for twin towers at 20th and Webster. CALM doesn’t have an issue that project – it is far enough from the Lake and is in an area planned for that kind of development. They will have great views of the Lake, too, btw.

    The other project is the Encinal project on 19th-20th and Franklin. It will be 50+ stories tall with a mix of office and residential spaces. I attended the community meeting last year. Personally, I think that is the most perfect site in Oakland. It is at a BART station, it is two blocks from the Lake, it is on the Broadway corridor with Webster and Frankling streets to boot. What is not to like?

    I am not aware of any significant opposition to either of these projects, at least not from CALM.

    So, along with these and the project Mrs. Schiff mentions, your position that every project that comes to town is opposed by activists is dispproven. It also disproves the “anti-development” rhetoric of others regarding CALM.

  12. Robert

    John, your straw man approach is tiring. I am sure that there are some projects that do not generate significant opposition. But I am thinking of projects like the apartments/condos at 51st and Telegraph, or the College Ave Safeway, and what appears to be starting with the Rockridge Safeway.

    I just drove down Lakeshore this afternoon. While the Tribue Tower is visible from a number of places, it is hardly iconic anymore becuase of the buildings in the background. City hall is only visible from a few locations, and the only one that gives a good view would require cutting a wide diagonal path through downtown in order to preserve the view. I dont think that the people on the East shore of the Lake will be losing much in more highrises are built in downtown. Max can speak for the benefits to West Oakland.

  13. len

    jdc, elaborate on the plate construction constraint.

    am i summarizing and extrapolating your post correctly: that even in the recent bubble, high rise developers decided not build in DTO because they couldn’t get condo prices and rents high enough to justify their risk of incurring land and building and holding costs; and that was before factoring in the risks of community opposition, providing below any percentage of below market set units, and various other entitlements?

    from the other posts, it seems that it is the developers of smaller, lower projects for whom the community opposition and entitlement costs are a higher percentage of their costs? is that an economy of scale thing, that big developers have consultants on staff to handle those issues or just that those costs are relatively small compared to land and construction for big projects?

    -len raphael
    temescal

  14. Naomi Schiff

    Carlos, I think the confusion about some 75-feet idea is truly confusion. OHA did not propose some blanket 75-foot limit, as was evident by our submissions to the Council for the last two years, up to this week. Our proposed height map has not changed in many weeks. You have seen it repeatedly, exactly as we submitted it. (Not that our suggestions were followed, but anyhow we tried.) Our submission to the council this week was identical to the one we submitted to the CED committee, with the exception that we slightly revised our cover summary sheet.

    Mr. Pyatok has been working extensively in several cities in the northwest, including the much-discussed Seattle, and carries his own independent views. He does not represent Oakland Heritage Alliance. He has long experience and has been an architect in Oakland for decades. He has every right as an Oakland citizen to say whatever he feels will contribute to the discussion. I agree with some of his views. I don’t agree with all of them. I guess you don’t agree with all of them either.

  15. Carlos Plazola

    Naomi:

    See this:

    http://www.yelp.com/topic/oakland-the-future-of-downtown-oakland–meeting-tonight

    Seems OHA agrees with a lot that Mr. Pyatok says, so much that you all asked people to cede time to him, and I heard from a city staff person two weeks before Pyatok’s letter came out that “Naomi Schiff thinks that the downtown should have heights reduced to 75 feet max”. I ignored this statement at the time, but then the Pyatok letter came out, with the EB Express in tow, and well…

    Again, just trying to say that all this “working relationship” and “dialogue” stuff works a lot better if we just shoot straight with each other.

  16. Naomi Schiff

    “Naomi Schiff thinks that the downtown should have heights reduced to 75 feet max”.

    I have NEVER said this. I don’t think it either. Whoever told you this was trying to make me look bad, I guess, or possibly was being facetious. It is not true. Our map shows what we suggested, and we were always open to further discussion of our suggestions. I can send you a copy if you would like it. I think I handed you our package at CED committee. We advocated for unlimited heights on numerous underused and surface parking sites, and we said so at every single meeting.

    We did say (in those same submissions) that it seemed that too large an area of downtown was zoned for 275 feet and higher. (Tallest buildings in Oakland currently are in the 20-30 story range.) Maybe somebody dropped off the 2? That is why we were interested in having Mr. Pyatok speak, and it is in that regard that we agree with him.

    I really would not have said that, Carlos, and don’t know who told you this. It wouldn’t make any sense, of course. If you want me to go speak with that person, let me know to my email, and I would happily do so. It seems it was the source of some misunderstanding.