Please provide written confirmation that you agree to an extension of the time limit set forth in Government Code section 65950.
2. Notice of Exemption. The City will be filing the Notice of Exemption (NOE) for projects that go to the ZAB or City Council. Filing the NOE starts a 35-day statute of limitations period on legal challenges to the agency’s decision that a project is exempt from CEQA.
If the NOE is not filed, a 180-day statute of limitations applies. The NOE needs to be filed with the State Clearinghouse and with the County Clerk’s office. The City will post with the State Clearinghouse, but the posting with the County Clerk’s office can be done by either the City or the applicant. If the City completes the posting, there is a fee of $920. Otherwise, the applicant can file with the County and provide the $50 filing fee directly to the County. The NOE is filed after the use permit becomes effective.
Please complete the attached form to state your preference and return it to me via email.
Note that additional information may be required to correct, clarify, or amplify the materials submitted i
n the application, to prepare the project for a ZAB decision hearing. Please provide the information requested by staff in a timely manner in order to maintain the discussed project schedule.
Please feel free to contact me with any questions regarding this letter or your application.
Sincerely,
Sharon Gong
S
enior Planner
(510) 981-7429
[email protected]
Cc:
Mia Perkins, Rhoades
Planning Group
Mark Rhoades, Rhoades Planning Group
Nathan George, NX Ventures
Xin Jin
Farimah Brown, City Attorney, City of Berkeley
Sara Stephens, Deputy City Attorney, City of Berkeley
Jordan Klein, Director of Department of Planning and Development, City of Berkeley Anne Hersch, Land Use Planning Manager, City of Berkeley Attachment:
Notice of Exemption Filing Preference Form
ITEM #3, ATTACHMENT 4
ZAB 2025-02-27
Internal
1947 Center St., 2nd Floor • Berkeley, CA 94704 • (510) 981-7400 • TDD: (510) 981-7474 • [email protected] To: Applicant
From: City of Berkeley Planning & Development
Project Address/Permit # (ZP): ___________________________________________________________ Subject: Private Projects – F
iling Notice of Exemption (NOE) form with the Alameda County Clerk-Recorder Following decision-maker approval of a project exempt from the provisions of the California Environmental Quality Act (CEQA), a NOE may be filed with the Alameda County Clerk-Recorder. It is strongly recommended that the NOE be filed in a timely manner. The filing of a NOE starts a 35-day statute of limitations period on legal challenges to the agency’s decision that the project is exempt from the provisions of CEQA. If the NOE is not filed a 180 -day statute of limitations will apply, refer to CEQA Guidelines Section 15062(d). Please note that recent legislation requires the City to file the NOE with the State Clearinghouse in the Office of Planning and Research.
Please review the attached NOE and indicate how you would like to proceed with filing by selecting one of the options below:
Berkeley Planning & Development to file the NOE: Within 30-da ys of deeming the project complete, the
Applicant
will be invoiced for the NOE filing fee, refer to the current fee schedule linked here. Please note that Berkeley Planning staff will schedule the public hearing once all outstanding fees are paid. Once the project receives final approval and after the 14-day appeal period expires, Berkeley Planning staff will file the NOE with the Alameda County Clerk-Recorder and the State Clearinghouse. Applicant to file the NOE: Applicant shall submit a copy to the A lameda County Clerk-Recorder in accordance
with CEQA Guidelines Section 15062 after the project receives final approval and the 14-day appeal period expires. The Office of the County Clerk-Recorder is located at 1106 Madison Street, Oakland, CA 94607. The Clerk will stamp the NOE, return the original set, and post the NOE for a period of 30 days. Once recorded, the applicant shall provide a stamped copy to the Berkeley Planning staff person assigned to the project. Refer to Alameda County Clerk-Recorder’s website linked here for more information on hours of operation, fees, and payment methods.
Applicant Name (please pr
int):
Applicant Signature:
Date:
Please note that categorical exemptions are not subject to the California Department of Fish and Wildlife environmental document filing fee and do not require a no effect determination (Cal. Code Regs., tit. 14, §§ 152 60-15333; Fish & Game
Code §711.4, subd. (d)(1)).
ITEM #3, ATTACHMENT 4
ZAB 2025-02-27
560 Mission Street, Suite 1900 | San Francisco, CA 94105 | T 415.743.6900 | F 415.743.6910 Holland & Knight LLP | www.hklaw.com
Genna Yarkin
+1 415-743-6990
[email protected]
Atlanta | Austin | Birmingham | Boston | Century City | Charlotte | Chattanooga | Chicago | Dallas | Denver | Fort Lauderdale Houston | Jacksonville | Los Angeles | Miami | Nashville | Newport Beach | New York | Orlando | Philadelphia Portland | Richmond | San Francisco | Stamford | Tallahassee | Tampa | Tysons | Washington, D.C. | West Palm Beach October 8, 2024
Sharon Gong - Senior Planner
City of Berkeley Planning Department
1947 Center Street, 3rd Floor
Berkeley, CA 94704
Re: 1950-1998 Shattuck Avenue - Eligibility for CEQA Exemption Dear Sharon,
We represent McSpats, LLC (the “Applicant”) in connection with its proposed mixed -use development at 1950-1998 Shattuck Avenue (the “Project Site”) in Berkeley (the “City”) with Application No. ZP2023 -0040 (the “Project”). We understand that on April 11, 2024, the City determined the Project’s application to be complete for processing. We further understand that in a May 16, 2024 letter and in other subsequent communication with the Applicant, the City has indicated a Class 32 Infill Exemption is the appropriate route for California Environmental Quality Act (“CEQA”) compliance, subject to confirmation that the Project qualifies with all eligibility criteria, and that none of the exceptions to the exemption apply.
To support the City’s determination, the Applicant has specifically prepared and submitted technical reports to demonstrate that the Project would not cause significant water quality impacts,1 noise impacts, 2 and air quality impacts 3 (in addition to the Traffic Impact Analysis and other technical reports that were previously submitted for the Project). We understand that the City has also expressed a desire for further documentation of the Project’s failure to cause cumulatively significant impacts. Accordingly, the purposes of this letter are threefold:
1. To provide the City with the requested support indicating that the Project will not have a significant cumulative impact resulting from “successive projects of the same type in the same place, over time”;
1 See FirstCarbon Solutions, Inc.’s report entitled “Water Quality Memorandum for the Proposed 1974 Shattuck Avenue Mixed Use Project in Berkeley, California,” dated August 22, 2024. 2 See FirstCarbon Solutions, Inc.’s report entitled “Noise Impact Analysis for the Proposed 1974 Shattuck Avenue Mixed Use Project in Berkeley, California,” dated August 30, 2024. 3 See FirstCarbon Solutions, Inc.’s report entitled” Air Quality Impacts Analysis for the 1974 Shattuck Avenue Mixed Use Project in Berkeley, California,” dated August 30, 2024.
ITEM #3, ATTACHMENT 5
ZAB 2025-02-27
Sharon Gong - Senior Planner
October 8, 2024
#237307236_v2
2. To remind the City of the limited scope of CEQA review as it applies to Housing Accountability Act (“HAA”) projects; and
3. To briefly document the Project’s eligibility for the protections of Assembly Bill 1633 (“AB 1633”), should they be needed in the future.
Support for Class 32 Infill Exemption Due to Lack of Significant Cumulative Impacts CEQA limits the use of Class 32 Infill Exemptions in situations where a development would cause significant cumulative impacts that are specifically from “successive projects of the same type in the same place, over time.”4
It is our understanding that “in the same place” is best understood to mean the Project Site, and at most the sites immediately surrounding it. Potential construction impacts of the Project would be temporary and confined to the vicinity of the P roject Site; moreover, potential impacts would be subject to local, regional, and State regulations to reduce effects during construction. No successive projects on the Project Site are known or expected to occur over time that would result in cumulatively considerable impacts. Rather, the Project is a single residential development that will exist in this location for at least several decades, and that will occupy the entirety of the Project Site. Finally, the technical reports that the Applicant had prepared and submitted to the City for air quality, water quality, noise, document the lack of cumulative impacts in these areas specifically.
We understand that with approval of the Project, the City will have exceeded the number of residential units that the Downtown Area Plan EIR assumed for the area. However, this fact alone says nothing about the Project’s tendency to cause significant cumulative impacts. Rather, the Project is subject to its own, independent CEQA compliance requirement separate from the Downtown Area Plan, and there is no evidence available to indicate that this specific residential development would cause such impacts, wher e previous developments that fit within the Downtown Area Plan assumptions did not. Finally, whether other applicants apply for and the City is required by State law to approve additional residential units in the area after the Project, is also not affected in any way by the Project, but rather is a matter of State law.
For all of the above reasons, the Project will not cause significant cumulative impacts from “successive projects of the same type in the same place, over time.” CEQA Compliance for HAA Eligible Projects
The Project’s status as an HAA protected affordable housing development project limits the scope of the City’s review of the Project under CEQA. As the leading treatise states: “When the discretion a lead agency may exercise in granting an approval for a project is confined, CEQA
4 CEQA Guidelines Section 15300.2(b).
ITEM #3, ATTACHMENT 5
ZAB 2025-02-27
Sharon Gong - Senior Planner
October 8, 2024
#237307236_v2
review for that approval may be limited to match the scope of that discretion.” Practice Under the California Environmental Quality Act (2d ed. Cal. CEB 2023) §12.8.
This legal principle was affirmed in a recent, lengthy discussion by the First District Court of Appeal in Tiburon Open Space Committee v. County of Marin (2022) 78 Cal.App.5th 700 (“Tiburon”). The Tiburon court’s full discussion is illuminating:
“CEQA ... recognizes that an agency’s discretion is limited by its own legal obligations. A
ccordingly, where a legal obligation limits an agency’s discretion, the scope of environmental review likewise is limited. ( See, e.g., Sequoyah Hills Homeowners Association v. City of Oakland (1993) 23 Cal.App.4th 704, 714- 716, 29 Cal.Rptr.2d 182.) This is also consistent with CEQA’s requirement that an agency exercise its discretionary powers in a manner ‘consistent with express or implied limitations provided by other laws.’ CEQA Guidelines, § 15040, subd. (e). …Where a lead agency’s discretion already is limited by legal obligations, therefore, the scope of environmental review adjusts in relation to the amount of discretion. …
Accordingly, an EIR must reflect any applicable legal obligations that limit the agency’s discretionary authority, and thus the scope of review. And while CEQA imposes a duty on lead agencies to avoid or mitigate significant environmental impacts caused by projects, such duty exists only to the extent feasible. … Mitigation measures that con flict with legal obligations are legally infeasible and ‘need not be proposed or analyzed.’ CEQA Guidelines § 15126.4, subd. (a)(5); se e
also § 21004. Alternatives that conflict with obligations also are legally infeasible and need not be analyzed. CEQA Guidelines § 15126.6, subd. (a) (‘An EIR is not required to consider alternatives which are infeasible ...’).” Tiburon, 78 Cal.App.5th at 732- 33 (internal quotations omitted) (emphasis added). See also Practice Under the California Environmental Quality Act (2d ed. Cal. CEB 2023) §19.39 (“The agency is not required to assess environmental impacts that are outside the scope of its discretionary authority.”); San Diego Navy Broadway Complex Coalition v. City of San Diego (2010) 185 Cal.App.4th 924, 938 (“Where an agency has no authority to modify a project based on the analysis contained in the EIR, there is no basis for requiring the agency to prepare the EIR.”).
As such, regardless of what the proper scope of CEQA review would typically be, for this Project it is significantly limited by the HAA. To that end, the City should ensure that environmental review is confined to those issues over which it possesses discretionary authority – specifically, potential health and safety impacts, as discussed above, and it is entirely appropriate for the Project to proceed using a Class 32 Infill exemption, as also detailed above.
ITEM #3, ATTACHMENT 5
ZAB 2025-02-27
Sharon Gong - Senior Planner
October 8, 2024
#237307236_v2
The Project’s Eligibility for AB 1633
The new protections afforded by AB 1633 further confine the City’s environmental review of the Project. AB 1633 established new violations of the HAA. It is now a violation of the HAA to fail to grant qualifying projects a CEQA exemption, where there is substantial evidence in the record that the project is eligible for such an exemption. AB 1633 limits the City’s authority to require analysis that is not legally required and beyond the limited scope of its discretion.
As detailed in Attachment A to this letter, the Project’s site satisfies all the criteria n ecessary to be eligible for AB 1633 , and the Project is not within any of the following locations of environmental concern:
• Coastal zone
• Prime farmland
• Wet
lands
• Sites on the Cortese List
• A state-delineated earthquake fault zone
• A special flood hazard area subject to a 100-year flood • A Federal Emergency Management Agency (“FEMA”) designated floodway • A site designated for conservation
• Habitat for protected species
• A site encumbered by a conservation easement
• A very high fire hazard severity zone
Therefore, the City must adhere to the procedural requirements governing consideration of the Project’s eligibility for an exemption. The Applicant seeks to ensure that the City’s CEQA review proceeds in strict conformance with these heightened standards to help streamline the delivery of much needed housing in Berkeley, in line with the goal of addressing the state’s housing crisis.
We appreciate your continued attention to this Project.
Sincerely,
HOLLAND & KNIGHT LLP
Genna Yarkin
ITEM #3, ATTACHMENT 5
ZAB 2025-02-27
Sharon Gong - Senior Planner
October 8, 2024
#237307236_v2
ATTACHMENT A
Analysis of Project Eligibility for AB 1633 Protections
FAILURE TO MAKE CEQA EXEMPTION DETERMINATION
ELIGIBILITY CRITERIA PROJECT CONSISTENCY
(1) “[S]ubstantial evidence in the record before the local agency that the housing development project is not located . . .” in the following areas:5 Within specified areas of a coastal zone6 The Project site is not located within the coastal zone.
“Either prime farmland or farmland of
statewide importance . . . designated on the
maps prepared by the Farmland Mapping
and Monitoring Program of the
Department of Conservation, or land zoned
or designated for agricultural protection or
preservation by a local ballot measure that
was approved by the voters of that
jurisdiction.”7
The Project site is not designated prime
farmland or farmland of statewide importance
by the California Department of Conservation.
Rather, the Project site is i
n an infill location
zoned for urban development.
Wetlands8 The Project site is fully developed with urban uses and does not contain wetlands.
A hazardous waste site listed on the
Cortese List “or a hazardous waste site
designated by the Department of Toxic
Substances Control,” unless the
Department of Toxic Substances Control
has cleared the site for residential or
residential mixed uses.9
The Project site is not listed on the Cortese List
and it is not designated by the Department of
Toxic Substances Control as a hazardous waste
site.
10 Within a state-delineated earthquake fault
zone, “unless the development complies
with applicable seismic protection building
The Project site is not located within a state-
delineated earthquake fault zone.12
5 Gov. Code § 65589.5(h)(6)(D)(i)(I) (“(ia) On a site specified in subparagraphs (A) to (C), inclusive, or subparagraphs (E) to (K), inclusive, of paragraph (6) of subdivision (a) of Section 65913.4”; and “(ib) Within a very high fire hazard severity zone, as determined by the Department of Forestry and Fire Protection pursuant to Section 51178, or within a high or very high fire hazard severity zone as indicated on maps adopted by the Department of Forestry and Fire Protection pursuant to Section 4202 of the Public Resources Code.”). 6 Gov. Code § 65913.4(a)(6)(A) (as amended by SB 423 (2023)). 7 Gov. Code § 65913.4(a)(6)(B).
8 Gov. Code § 65913.4(a)(6)(C) (“as defined in the United States Fish and Wildlife Service Manual, Part 660 FW 2 (June 21, 1993)”).
9 Gov. Code § 65913.4(a)(6)(E).
10 See https://calepa.ca.gov/sitecleanup/corteselist/; see also the Project’s Phase I Environmental Site Assessment. 12 See City GIS.
ITEM #3, ATTACHMENT 5
ZAB 2025-02-27
Sharon Gong - Senior Planner
October 8, 2024
#237307236_v2
code standards adopted by the California
Building Standards Commission . . ., and
by any local building department . . ..”11
“Within a special flood hazard area subject
to inundation by the 1 percent chance of
flood,” unless the project has been issued a
Letter of Map Revision or flood plain
development permit.13
The Project site is not within a special flood
hazard area.14
Within a floodway, unless the project has
received a no-rise certification.15
The Project site is not located within a
floodway.16
“Lands identified for conservation in an
adopted natural community conservation
plan . . ., habitat conservation plan . . ., or
other adopted natural resource protection
plan.”17
The Project site is developed for and planned for
urban uses and is not within a conservation plan
area.
“Habitat for protected species identified as
candidate, sensitive, or species of special
status by state or federal agencies, fully
protected species, or species protected by
the Federal Endangered Species Act . . .,
the California Endangered Species Act . . .,
or the Native Plant Protection Act . . ..”18
The Project site is developed with urban uses
and entirely surrounded by urban uses. It does
not serve as habitat for protected species.
“Lands under conservation easement.”19 There are no conservation easements recorded on the property, as demonstrated by the Project
site’s title report.
“Within a very high fire hazard severity
zone, as determined by the Department of
Forestry and Fire Protection.”20
The Project site is not located within a Very
High Fire Hazard Severity Zone.21
11 Gov. Code § 65913.4(a)(6)(F).
13 Gov. Code § 65913.4(a)(6)(G).
14 See City GIS.
15 Gov. Code § 65913.4(a)(6)(H).
16 See City GIS.
17 Gov. Code § 65913.4(a)(6)(I).
18 Gov. Code § 65913.4(a)(6)(J).
19 Gov. Code § 65913.4(a)(6)(K).
20 Gov. Code § 65589.5(h)(6)(D)(i)(I)(ib) (“Within a very high fire hazard severity zone, as determined by the Department of Forestry and Fire Protection pursuant to Section 51178, or within a high or very high fire hazard severity zone as indicated on maps adopted by the Department of Forestry and Fire Protection pursuant to Section 4202 of the Public Resources Code.”).
21 See City GIS.
ITEM #3, ATTACHMENT 5
ZAB 2025-02-27
Sharon Gong - Senior Planner
October 8, 2024
#237307236_v2
(2) The project’s parcel(s) is legal22 and located “within an urbanized area23 and meets one or the more of the following criteria . . ..”24
Located within 0.5 mile “walking distance”
of “a high quality transit corridor,” as
defined in Public Resources Code Section
21155(b), or “a major transit stop,” as
defined in Public Resources Code Section
21064.3.25
The site is within 0.5 mile walking distance of
the Downtown Berkeley BART Station.
“[L]ocated in a very low vehicle travel
area”26
The site is located in the City of Berkeley’s
“low-VMT areas.”
“[P]roximal to six or more amenities . . . as
of the date of the” application’s
submittal.27
A project is proximal an amenity if it is
within:
• .5 mile of “[a] bus station” or “[a] ferry
terminal”; OR
• 1 mile of “[a] supermarket or grocery
store,” “public park,” “community
center,” “pharmacy or drugstore,”
“medical clinic or hospital,” “public
library,” or school serving any grade -
kindergarten to 12th grade.28
The Project is within 0.5 mile of a BART station,
and is within 1 mile proximity to other listed
amenities as well including public parks,
grocery stores, pharmacies and drugstores, a
museum, a high school and elementary school,
and more.
22 The Project site is on legal parcels.
23 A parcel is within an urbanized area if it meets the definition provided in Public Resources. Code Section 21071.
Gov. Code § 65589.5(h)(6)(D)(ii)(V). The Project site is located in an urbanized area because Berkeley is a qualifying incorporated city with a population greater than 100,000. 24 Gov. Code § 65589.5(h)(6)(D)(i)(II).
25 Gov. Code § 65589.5(h)(6)(D)(i)(II)(ia).
26 Gov. Code § 65589.5(h)(6)(D)(i)(II)(ib). “‘Very low vehicle travel area’ means an urbanized area, as designated by the United States Census Bureau, where the existing residential development generates vehicle miles traveled per capita that is below 85 percent of either regional vehicle miles traveled per capita or city vehicle miles traveled per capita.” Gov. Code § 65589.5(h)(6)(ii)(VI)(ia). “‘[A]rea’ may include a travel analysis zone, hexagon, or grid.” Gov.
Code § 65589.5(h)(6)(ii)(VI)(ib). “For the purposes of determining ‘regional vehicle miles traveled per capita’ . . ., a ‘region’ is the entirety of incorporated and unincorporated areas governed by a multicounty or single-county metropolitan planning organization, or the entirety of the incorporated and unincorporated areas of an individual county that is not part of a metropolitan planning organization.” Gov. Code § 65589.5(h)(6)(ii)(VI)(ic). 27 Gov. Code § 65589.5(h)(6)(D)(i)(II)(ic).
28 Gov. Code § 65589.5(h)(6)(D)(ii)(IV).
ITEM #3, ATTACHMENT 5
ZAB 2025-02-27
Sharon Gong - Senior Planner
October 8, 2024
#237307236_v2
75% of the project site’s perimeter (or 3
sides of a 4 sided project site) is adjoined
by urban uses.29
The Project site is adjoined on all four sides by
urban uses.
(3) The project’s density meets the following criteria
“[M]eets or exceeds 15 dwelling units per
acre.”30
The Project far exceeds the requirement for at
least 15 du/acre.
(4) “There is substantial evidence in the record that” 31 • The “project is eligible for an
exemption”32; AND
• That any categorical exemption sought
is not barred by an applicable
exception.33
The Project qualifies for the Class 32 Urban
Infill Exemption and is not barred by any
applicable exception - see Applicant Statement
and the body of the above letter.
29 Gov. Code § 65589.5(h)(6)(D)(i)(II)(id).
30 Gov. Code § 65589.5(h)(6)(D)(i)(III).
31 Gov. Code §§ 65589.5(h)(6)(D)(i)(IV)(ia), (ib).
32 Gov. Code § 65589.5(h)(6)(D)(i)(IV)(ia).
33 Gov. Code § 65589.5(h)(6)(D)(i)(IV)(ib).
ITEM #3, ATTACHMENT 5
ZAB 2025-02-27
2991 SHATTUCK AVE, #203 | BERKELEY, CA. 94705 | P: 510.647.5291| STRATEGICECONOMICS.COM
MEMORANDUM
To: Sharon Gong, City of Berkeley
From: Dena Belzer and Jake Cummings, Strategic Economics Date: November 7, 2024
Subject: Peer Review of Pro Forma Assumptions for University Corners
BACKGROUND AND PURPOSE
The City of Berkeley retained Strategic Economics to conduct a peer review of the financial pro forma for the University Corners development proposal in downtown Berkeley (“applicant proposal”). The development site is at the corner of University and Shattuck Avenues and consists of five parcels spanning the addresses 1071 to 1079 University Avenue and 1950 to 1988 Shattuck Avenue. The applicant proposes to redevelop the site into a 28-story building that will include 599 residential units (489 studios and 110 two-bedrooms), ground floor and rooftop retail totaling 16,142 square feet, and 154 parking spaces. The specific details of this development program may be revised as the applicant proceeds through the entitlement process.
For this study, Strategic Economics reviewed available market data and conducted independent research to verify that the key assumptions in the applicant’s pro forma are consistent with current market conditions and standard development practice. The pro forma assumptions under review include ongoing revenues and expenses for the project, construction (“hard”) costs, soft costs , and municipal fees. Strategic Economics gathered current market data from CoStar and other sources .
Strategic Economics also spoke with two developers that were interviewed for a similar study, performed for the City in 2023, to get updated estimates for development costs and ongoing expenses.
Because the applicant proposal’s land cost is not available, Strategic Economics was unable to verify this element of the pro forma; however, this report includes an estimate of market land costs for similar developments in Berkeley.
Memo Organization
The first section summarizes the results of the pro forma review and includes a discussion of the robustness of the results related to any potential future changes in the applicant’s development program. The second section contains a detailed discussion of the methodology Strategic Economics applied to verify each of the key assumptions and arrive at the findings.
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 3
SUMMARY OF RESULTS
For each of the key pro forma assumptions, Strategic Economics developed an independently researched range of likely values to compare with the assumptions provided in the applicant’s pro forma. Strategic Economics’ researched values are untrended estimates of costs and revenues in the current market. Conditions are subject to change over the multi-year period of development and lease- up. The comparison of pro forma assumptions is summarized in Figure 1.
The applicant’s residential revenue assumptions are optimistic compared to current market rents. As shown in Figure 1, the residential market rent assumption of $8.03 per square foot is higher than Strategic Economics’ estimated range of rents attainable in the market today. This assumption implies gross potential revenues for the project’s residential area would be approximately 13 percent higher than the midpoint of the rent range for existing projects. The operating expense ratio of 31 percent and standard vacancy assumption of five percent are within Strategic Economics’ estimated ranges, but in both cases toward the lower end of the range . Taken together, the applicant’s assumptions result in a net operating income of $16.5 million on the project’s residential area, approximately 20 higher than Strategic Economics’ midpoint estimate. Strategic Economics’ analysis, corroborated by developer interviews, indicates that the market is currently softer than in recent years due to the pace of new units entering the market. However, the applicant’s higher revenue performance assumptions may reflect a belief that conditions will improve by the time the project starts leasing in the coming years.
Revenue assumptions for the retail area and parking are within the estimated ranges based on current market conditions. The retail rent assumption of $6.00 per square foot, triple net, is at the very top of the estimated range by Strategic Economics, while the assumption for parking at $200 per month is at the bottom of the range. The retail assumption may be conditioned on the ultimate retail uses and the cost of tenant improvements that might be offered to help lease the space . The low monthly parking rates may reflect the relative attractiveness of parking with mechanical stackers. In both cases, the potential variation in retail and parking revenues constitute a small share of project revenues and are unlikely to have a significant impact on overall project performance.
The applicant’s development costs are within the range of current market values, but at the lower end of the range. The applicant’s pro forma assumes construction costs will be $555 per square foot. For a high-rise development with a high unit density of furnished units, basement parking, and a project labor agreement, Strategic Economics estimates construction costs of $550 to $600 per square foot.
The soft cost assumption is similarly low, but within the estimated ranges , at 20 percent of hard construction costs.
Strategic Economics estimated municipal fees of $35,638 per unit, approximately ten percent lower than the applicant’s pro forma assumption of $40,000 per unit. While Strategic Economics estimated the main categories of fees for the project, it is possible other municipal fees may apply to the applicant’s proposal, or that the applicant is assuming a contingency in its budget for fees.
While l and costs for the applicant proposal were unavailable, Strategic Economics estimates the market value of land for high rise development in downtown Berkeley to be $70,000 to $120,000 per unit. The applicant reports that the development site is controlled by a purchase and sale agreement, of unknown value, that has been negotiated with the separate entities that own different portions of the development site.
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 4
FIGURE 1: COMPARISON OF KEY PRO FORMA ASSUMPTIONS TO VALUES ESTIMATED BY STRATEGIC ECONOMICS
Strategic Economics
Estimated Value
Applicant Pro
Forma Assumption
Residential Monthly Rent
Market Rate Units, per sf $6.50 to $7.75 $8.03
Retail Monthly Rent per sf (NNN) $4.50 to $6.00 $6.00
Parking Monthly Rent per space $200 to $250 $200
Vacancy and Collections Loss 5% to 10% 5%
Operating Expenses 30% to 35% 31%
Construction Costs per gsf $550 to $600 $555
Soft Costs (excl. Fees) per gsf
(% of constr. Costs)
$110 to $150
(20% to 25%)
$113
(20%)
Municipal Fees per unit $35,638 $40,000
Land Cost per unit $70,000 to $120,000 not available
Source: Strategic Economics, 2024.
Applicability of Results to Proposal Revisions
For this study, Strategic Economics evaluated a working development proposal that may be revised as the applicant proceeds through the entitlement process. Within the context of the current market, limited modifications in the applicant’s proposed programming and design would not change the general conclusions of the peer review , provided these modification s retain the key defining characteristics of the development that determine market revenues, costs, and fees. Some of these defining characteristics include:
• High-rise construction of at least 180 feet in height; • Includes a project labor agreement;
• Any retail is high quality ground floor retail or other retail that constitutes a minor component of the overall development;
• Includes subterranean parking, at similar parking ratios, utilizing mechanical stackers; • Residential units are furnished and generally targeted to the student housing market , with a small average unit size (300 to 600 square feet).
A significant deviation from these development characteristics would affect the pro forma assumptions applied to this study. For example, a significant increase in unit sizes would reduce the cost of utility systems and furnishings while also impacting the achievable rent per square foot for the project.
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 5
REVIEW OF KEY ASSUMPTIONS
The following section reviews the approach and sources of information used to verify each key assumption.
Rental Rates for Residential
The applicant expects $25.7 million in gross potential revenues per year for the residential portion of the development, equivalent to $7.55 per rentable square foot. This average rental rate is a blended number that includes both market rent assumptions and below market rents, which are set not by the market or the developer but by federal housing policy where rents are set based on a fixed percentage of area median incomes. To evaluate the market rent assumption, Strategic Economics disaggregated this blended rental rate to establish the average rental rate assumed only for the market rate units in the project. By subtracting out the portion of rental revenues from the below market rate units (Figure 2), the balance of revenues was attributed to the market rate units (Figure 3). This calculation yields an average monthly rent assumption of approximately $ 3,800 per market rate unit, or $8.00 per rentable square foot.
FIGURE 2: CALCULATION OF GROSS POTENTIAL REVENUE FOR BELOW MARKET RATE UNITS
Total Dwelling
Units
Below Market
Rate Units
Percent Below Market
Rate Units
Below Market
Monthly Rent
Annual Income from
BMR Units
Studio 489 48 10% $1,411 $812,736
2-BR 110 10 9% $1,558 $186,960
Total 599 58 10% $999,696
Note: Below Market Rents were calculated as 30 percent of Alameda County Area Median Income Limits for Very Low (50% of AMI) Income households, with an assumed household size equal to the number of bedrooms plus one person.
Sources: Project Application Packet, City of Berkeley, 202 4; U.S. Department of Housing and Urban Development, 202 4; Strategic Economics, 2024.
FIGURE 3: CALCULATION OF MARKET RATE POTENTIAL REVENUE AND AVERAGE RENTS All Units Below Market Rate Units Market Rate Units
Gross Potential Rent $25,748,973 $999,696 $24,749,277
Dwelling Units 599 58 541
Rentable Square Feet per Unit 475 475 475
Total Rentable Square Feet 284,535 27,551 256,984
Average Rent
Per dwelling unit $3,582 $1,436 $3,812
Per net sf $7.55 $3.02 $8.03
Sources: Project Application Packet, City of Berkeley, 2022; Strategic Economics, 2023.
To validate the market rent assumption, Strategic Economics reviewed average rents from CoStar for comparable developments in downtown Berkeley (Figures 4 and 5) and interviewed area developers.
According to developers, student housing represents the highest and best use for the site . Student housing in Berkeley is generally offered fully furnished and often with multiple occupancy bedrooms ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 6
(two or more residents per bedroom). The applicant’s pro forma includes a line for fixtures, furnishings, and equipment, which further suggests the development will be marketed as student housing.
As shown in Figure 4, CoStar reports the average rent in comparable student housing to be $6.69 per square foot; however, the reported rent performance among the developments varies significantly, from $4.05 to $8.52 per square foot. Figure 5, which plots the rent assumption for the applicant proposal against the comparable developments , shows that the rent assumption of $8.03 is on the high side of a wide range of average rents for comparable developments. Considering the size of the units, the rent assumption is approximately 15 percent higher than what would be predicted by a trend line for the proposal’s average unit size of 475 square feet.
The applicant’s high rent assumption could be explained by the potential to charge a rent premium on the upper floors of the development. However, since no comparable existing development is higher than 12 stories, there is little evidence available to support the higher assumption. Developers interviewed for this study were mixed on the potential for a significant view premium. In past studies, Strategic Economics has estimated the assumption for average rents could rise up to ten percent for a building of this height, but the rent premium could be negligible when considering the limited depth in the ultra-premium segment of the student housing market.
A second concern, expressed in developer interviews, is whether the market rents as reported by CoStar adequately account for the significant concessions that student housing properties often need to offer to attract tenants in the current market. As shown in Figure 6, average effective rents declined by more than 20 percent between 2023 and 2024, while vacancy rates have inched up from nine to 12 percent. In the past ten years, 3, 300 new units have been added to Berkeley’s student housing inventory (Figure 7), while the cumulative absorption of these units lags 12 percent behind that number. These trends point to a softening of the student housing market, with achievable rents that may be lower than the available data would suggest.
Owing to the factors above, Strategic Economics estimates that the achievable rent for the applicant’s proposal under current market conditions is between $6.50 and $7.75 per square foot ($3,100 to $3,700 per unit). This range represents a rental rate of $7.14 per square foot as predicted in Figure 5, plus or minus approximately ten percent. The upside of this range accounts for the potential for view premiums, while the downside accounts for the rent concessions and discounts likely necessary to absorb the excess supply in today’s market. As demand catches up to new supply over the upcoming period in which the development begins leasing, more favorable conditions could lift average rents to $8.00 as assumed in the applicant’s proposal.
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 7
FIGURE 4: COMPARABLE STUDENT HOUSING DEVELOPMENTS IN BERKELEY* Property Name
Year
Built
Number Of
Units
Number Of
Stories
Avg Unit
SF
Avg
Effective
Rent per
Unit
Avg Effective
Rent per SF
The Panoramic Berkeley 2019 70 6 718 $5,397 $7.51
The Durant 2020 56 5 437 $3,515 $8.03
The Standard at Berkeley 2021 318 8 715 $6,098 $8.52
The Den 2021 40 7 1,229 $5,111 $5.79
Identity Logan Park 2022 204 8 819 $4,826 $5.89
Rise at Berkeley 2023 48 7 371 $1,995 $5.38
Ace Berkeley 2024 163 12 801 $3,244 $4.05
HUB Bancroft 2024 87 8 713 $5,939 $8.33
Aquatic 2024 74 8 389 $2,614 $6.71
Average 688 $4,304 $6.69
* Comparable developments are student housing developments in Berkeley of at least 25 units and built in 2019 or later.
Sources: CoStar, 2024; Strategic Economics, 2024.
FIGURE 5: AVERAGE UNIT SIZE AND AVERAGE MONTHLY RENT FOR APPLICANT PROPOSAL AND COMPARABLE DEVELOPMENTS*
* Comparable developments are student housing developments in Berkeley of at least 25 units and built in 2019 or later.
Sources: CoStar, 2024; Strategic Economics, 2024.
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
0 200 400 600 800 1,000 1,200 1,400
Monthly Rent per Square Foot
Average Square Feet per Unit
Applicant
Proposal
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 8
FIGURE 6: AVERAGE RENT PER SQUARE FOOT AND AVERAGE VACANCY OF STUDENT HOUSING IN BERKELEY, 2015 TO 2024
Sources: CoStar, 2024; Strategic Economics, 2024.
FIGURE 7: CUMULATIVE NEW STUDENT HOUSING INVENTORY AND NET ABSORPTION SINCE 2014
Sources: CoStar, 2024; Strategic Economics, 2024.
Rental Rates for Retail
Strategic Economics developed assumptions for retail rental rates by speaking with two brokers familiar with leasing in downtown Berkeley. While no data was available for recently constructed retail spaces or rooftop restaurants in downtown Berkeley, brokers estimated that achievable rents in the current market would range from $4.50 to $6.00 per square foot on a triple net basis, depending on 0%
5%
10%
15%
20%
25%
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
$9.00
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
YTD
Effective Rent Per SF
Vacancy Percent
0 500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
YTD
Units New Inventory
Net Absorption
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 9
factors such as type of retail or restaurant use, tenant improvement allowance, and the size of spaces offered.
Rental Rates for Parking
Strategic Economics collected pricing information from three parking garages in downtown Berkeley that offer parking at a monthly rate. As shown in Figure 8, monthly parking rates range from $210 per space to $250 per space. The applicant’s assumption for parking prices at $200 per space is slightly below the range in parking rates at nearby garages, but this may be an appropriate assumption considering the reduced convenience of parking using mechanical stackers.
FIGURE 8: COMPARABLE RENTS FOR GARAGE PARKING IN DOWNTOWN BERKELEY Monthly Rent per Space
Center Street Garage $250
2020 Kittredge Street (resident unreserved parking) $210 1922 Walnut St (Modera) $225
Source: Parking garage websites, interviews, 2024; Strategic Economics, 2024.
Vacancy and Collection Loss
The applicant’s pro forma assumes an average vacancy and collection loss rate of five percent. This is a standard assumption for residential development in the San Francisco Bay Area; however, interviews with developers indicated that vacancy rates for student housing could be higher than five percent in the current market. The average vaca ncy reported by CoStar for comparable building s, (excluding those built in 2023 or 2024, which may still be in their lease -up periods) currently stands at 7.2 percent . Therefore, S trategic Economics expects the stabilized vacancy rate for new developments to be five to ten percent under current market conditions.
Retail space typically has a higher stabilized vacancy rate than five percent, while below market rate units generally have a lower rate. Because these uses represent a minor source of revenue for the project, substantial variations from the five percent vacancy assumption are not expected to significantly impact the net operating income for the overall project.
Operating Expenses
Based on developer interviews, Strategic Economics expects operating expenses to range between 30 and 35 percent of gross revenues, with the upper end of the range likely for buildings with higher personnel costs associated with around -the-clock security a nd desk attendant. At 31 percent, the applicant’s pro forma is consistent with this range of values.
Construction Costs
To estimate construction costs, Strategic Economics updated its assumptions for a similar study in 2023 by interviewing two developers experienced with high rise residential construction in Berkeley.
Based on these interviews, Strategic Economics estimates a range of construction costs of $5 50 to $600 per square foot of gross building area for the applicant’s proposal . The applicant’s pro forma assumes $555 per square foot of gross building area, which is consistent with, but at the lower end of, the estimated range.
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 10
Major considerations for this range of costs include:
• The project labor agreement, which is expected to elevate average costs by 20 to 30 percent over nonunion labor;
• The additional costs for furniture, fixtures, and equipment; • The average unit size of 475 square feet, reflecting a unit mix with 80 percent studios. Smaller units tend to increase per square foot construction costs due to the greater density of utility systems, fixtures, furnishings, and equipment;
• Parking is provided below ground in two basements levels, which tends to be significantly more expensive than above ground parking;
• Finally, t he additional costs of LEED enhancements and certification were judged to be negligible, according to developers interviewed for this study.
Soft Costs
According to developers, soft costs for high rise construction, before considering municipal fees, tend to total approximately 20 to 25 percent of hard costs. On a construction budget of $550 to $600 per square foot, soft costs would then typically range between $110 to $150 per square foot excluding municipal fees, which are discussed in the next section. The applicant reports total soft costs of $70.6 million, of which $24.0 million is budgeted for municipal fees, leaving $46.6 million in other soft costs.
This equates to $113 per square foot , within the lower end of the range estimated by Strategic Economics.
Municipal Fees
Strategic Economics estimated the major categories of municipal fees for the project using the City’s online reference materials and fee estimators, as shown in Figure 9. Because detailed technical specifications to calculate sewer connection fees for the building were unavailable, Strategic Economics estimated these fees based on the average per unit fees from a recent project (2352 Shattuck Avenue).
Strategic Economics estimated municipal fees of $35,638 per unit, approximately ten percent lower than the applicant’s pro forma assumption of $40,000 per unit.. While Strategic Economics estimated the main categories of fees for the project, it is possible other municipal fees may apply to the applicant’s proposal, or that the applicant is assuming a contingency in its budget for fees.
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 11
FIGURE 9: CALCULATION OF MUNICIPAL FEES
Fee Calculated Amount Notes
BUSD Developer Fee $2,056,681 $5.17 per sf residential, $0.84 per sf commercial Building Permit Fees $5,025,272 From online calculator
Plan Check Fees $3,266,427 From online calculator
Other Permit Fees (Fire Plan, etc) $2,400,772 From online calculator Affordable Housing Mitigation Fee $2,968,663 From Affordable Housing Compliance Plan SOSIP (Residential) Fee $881,269 $2.23 per net new sf residential SOSIP (Commercial) Fee $0 No net new commercial sf
Sewer Connection $2,236,929 Assumes $3,734 per unit based on similar projects 1% Arts Fee $2,511,411 0.8% of construction costs
Total $21,347,424
Per Unit $35,638
Per sf $52
Sources: City of Berkeley Development Fee Schedule, August 202 4; City of Berkeley Online Fee Estimator, 202 4; Applicant packet, 2024; Strategic Economics, 2024.
Land Costs
According to public documents, the five parcels that constitute the development site are currently owned by four separate entities; however, the entire site is controlled by the development group under a Purchase and Sale Agreement with the fee owners . Because the negotiated value of this PSA has not been made public, the land cost for the applicant proposal is not known.
For a similar study in 2023, Strategic Economics prepared a set of comparable land sales for high rise development in downtown Berkeley. These comparable sales (no other relevant sales have occurred since the 2023 study) , are provided in Figure 10 below as supporting information, but without the details of the applicant’s ownership agreements, Strategic Economics was unable to make a land value comparison.
Based on comparable land sales, Strategic Economics estimates current market values for land to be $70,000 to $120,000 per unit . Three land sales for high -rise development in downtown Berkeley in the last ten years were available: 2190 Shattuck Avenue ($70,552 per unit), 1951 Shattuck Avenue ($82,209 per unit), and 2274 Shattuck Avenue ($29,289 per unit). Of these, the land cost for 2274 Shattuck appears to be an anomaly and is inconsistent with general land costs for high -rise development in the Bay Area. This may be because of additional cost burdens, such as historical landmarking, associated with redevelopment of the site. Representing an upper bound on land values, an 83-unit mid-rise development at 2538 Durant had a land cost of $120,484 per unit.
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
November 4, 2024 12
FIGURE 10: COMPARABLE LAND SALES IN DOWNTOWN BERKELEY
Property Address Building Type Sale Date Sale Price Units Sale Price
per Unit
2190 Shattuck Ave High-rise 2015 $23,000,000 326 $70,552 1951 Shattuck Ave High-rise 2017 $13,400,000 163 $82,209 2274 Shattuck Ave High-rise 2022 $7,000,000 239 $29,289 2538 Durant Ave Mid-rise 2022 $10,000,000 83 $120,482
Source: Costar, 2023; Strategic Economics, 2024.
ITEM #3, ATTACHMENT 6
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
ITEM #3, ATTACHMENT 7
ZAB 2025-02-27
Z ONIN G
A DJUSTMENT S
B OAR D
Notice of Public Hearin g
Land Use Planning Division
1947 Center Street, Second Floor, Berkeley, CA 94704 Tel: 510.981.7410 TDD: 510.981.7474 Fax: 510.981.7420 E-mail: [email protected]
1950-1998 Shattuck Avenue
Use Permit #ZP2023 -0
040 to demolish five commercial buildings; merge
four lots; and construct a 28 -story (312-foot tall, plus 5 -foot parapet), 411,610-square-foot, mixed-use building with 599 dwelling units (including 58 Very Low-Income Density Bonus qualifying units), 16,142 square feet of commercial area, and 154 parking spaces.
The Zoning Adjustments Board of the City of Berkeley will hold a public hearing on the above matter, pursuant to Zoning Ordinance,
Section 23.404.050 (Public Hearings and Decisions)
When: Thursday, February 27, 2025, 7:00 pm
Where: Berkeley Unified School Dis
trict meeting room , 1231 Addison Street, (wheelchair
accessible) with remote/hybrid option (via Zoom).
Please visit: ht
tps://berkeleyca.gov/your-government/boards-commissions/zoning- adjustments-board and click on the hearing date to access the most up-to-date meeting information, or call the Land Use Planning division (510) 981-7410.
PUBLIC ADVISORY: THIS MEETING WILL BE CONDUCTED IN A HYBRID MODEL WITH BOTH
IN-PERSON ATTENDANCE AND VIRTUAL PARTICIPATION AVAILABLE FOR MEMBERS OF THE PUBLIC.
For in-person attendees, face coverings or masks that cover both the nose and mouth are encouraged. If you’re feeling sick, please do not attend the meeting in-person as a public health precaution.
Currently, there are no physical distancing requirements in place by the State of California or the Local Health Officer for an indoor event similar to a Commission meeting. However, all attendees are requested to be respectful of the personal space of other attendees. An area of the public seating area will be designated as “distanced seating” to accommodate persons that need to distance for personal health reasons.
ITEM #3, ATTACHMENT 8
ZAB 2025-02-27
1950-1998 SHATTUCK AVENUE NOTICE OF PUBLIC HEARING
EBRUARY 13, 2025
File: G:\LANDUSE\Projects by Address\Shattuck\1974-1998\ZP2023-0040\8-FINAL DOCUMENTS\2025-02-27_ZAB_PHN_1950-1998 Shattuck.docx
A. Land Use Designations:
• General Plan: DT – Downtown; Downtown Area Plan
• Zoning: C-DMU (Corridor) – Downtown Mixed-Use Commercial District, Outer Core Sub-Area B. Zoning Permits Required:
• Use Permit under Berkeley Municipal Code (BMC) Section 23.326.070(A) to demolish non- residential buildings
• Use Permit under BMC Section 23.204.020(A) to construct a new mixed-use development • Use Permit under BMC Section 23.204.020(A) to construct dwelling units • Use Permit under BMC Section 23.204.030(A)(1) to create new floor area of 10,000 square feet or more
• Use Permit under BMC Section 23.204.130(E)(2) to construct a building that exceeds the district height limit, and that is over 75 feet but not more than 120 feet • Use Permit under BMC Section 23.204.130(E)(3)(b) to modify the front, side, and rear setback requirements and to exceed 120 feet in width in diagonal measurement above 120 feet in height
• Administrative Use Permit under BMC Section 23.304.050(A) to allow architectural projections to exceed district height limits
• Administrative Use Permit under BMC Section 23.302.070(E)(2) for a food service establishment over 3,000 square feet in area
• Use Permit pursuant to BMC Section 23.310.020(B) to begin alcoholic beverage service (distilled spirits incidental to food service).
• Administrative Use Permit pursuant to BMC Section 23.204.020(A) for Amplified Live Entertainment in a commercial district
• Administrative Use Permit pursuant to BMC Section 23.302.020(D)(3) for outdoor use not abutting a residential district.
C. Concessions and Waivers Requested Pursuant to State Density Bonus Law (California Government Code Section 65915):
• Concession from BMC Chapter 23.316 to allow an exemption from the Percentage for Public Art on Private Projects in-lieu fee
• Waiver of BMC Section 23.04.130(E)(1) to exceed building height limits – to be 317’ to roof (plus 5’ parapet), where 120 feet is the limit (plus 5-foot parapet, by right, with a use permit) • Waiver of BMC Section 23.204.130(E)(3)(a) to reduce the front setback (University Ave, Shattuck Ave, and Berkeley Way) requirement to 0 feet, where 15 feet is the minimum, above 75-foot building height
• Waiver of BMC Section 23.204.130(E)(3)(a) to reduce the interior left side setback requirement to 10 feet, where 15 feet is the minimum, above 75-foot building height and more than 65 feet from the frontage
• Waiver of BMC Section 23.204.130(E)(3)(d)(i) to exceed diagonal width, to be 239 feet, 10 inches, where 120 feet is the maximum, above 120’ in height • Waiver of BMC Section 23.204.130(E)(4) reduce usable open space minimum to 12,491 square feet, where 47,920 square feet is required
D. CEQA Exemption Determination: Pursuant to Government Code Section 65589.5, it is staff’s determination that the project is categorically exempt under Section 15332 (“Infill Development Projects”) of the CEQA Guidelines.
D. Project Recommendation: A
pprove Use Permit #ZP2023-0040, pursuant to BMC Section
23.406.040(D)
ITEM #3, ATTACHMENT 8
ZAB 2025-02-27
1950-1998 SHATTUCK AVENUE NOTICE OF PUBLIC HEARING
EBRUARY 13, 2025
File: G:\LANDUSE\Projects by Address\Shattuck\1974-1998\ZP2023-0040\8-FINAL DOCUMENTS\2025-02-27_ZAB_PHN_1950-1998 Shattuck.docx
E. Parties Involved:
• Applicant: Isaiah Stackhouse, Trachtenberg Architects, Fourth Street, Berkeley, CA 94710
• Property Owner: 1974 Shattuck Avenue, LLC, 2140 Shattuck Ave, Ste 705, Berkeley, CA 94704
Further Information:
All application materials are available online at:
https://aca.cityofberkeley.info/CitizenAccess/Welcome.aspx.
The Zoning Adjustments Board final agenda and staff reports will be available online 6 days prior to this meeting at: https://berkeleyca.gov/your-government/boards-commissions/zoning-adjustments- board.
Questions about the project should be directed to the project planner, S haron Gong, at (510) 981-7429
or [email protected].
Written comments or a request for a Notice of Decision should be directed to the Zoning Adjustments Board Secretary at z
[email protected].
Communication Disclaimer:
Communications to Berkeley boards, commissions or committees are public record and will become part of the City’s electronic records, which are accessible through the City’s website. Please note: e- mail addresses, names, addresses, and other contact information are not required, but if included in any communication to a City board, commission or committee, will become part of the public record. If you do not want your e-mail address or any other contact information to be made public, you may deliver communications via U.S. Postal Service or in person to the secretary of the relevant board, commission or committee. I
f you do not want your contact information included in the public record, please do not include that information in your communication. Please contact the secretary to the relevant board, commission or committee for further information.
Written Comments, C
ommunications, and Reports:
Written comments must be directed to the ZAB Secretary at the Land Use Planning Division (Attn: ZAB Secretary), or via e-mail to: [email protected]. All materials will be made available via the Zoning Adjustments Board Agenda page online at this address: https://berkeleyca.gov/your- government/boards-commissions/zoning-adjustments-board
All persons are welcome to attend the hearing and will be given an opportunity to address the Board.
Comments may be made verbally at the public hearing and/or in writing before the hearing. The Board may limit the time granted to each speaker.
Correspondence received b
y 5:00 PM, eight days before this public hearing, will be provided with the agenda materials provided to the Board. Note that if you submit a hard copy docu ment of more than 10 pages, or in color, or with photos, you must provide 15 copies. Correspondence received after this deadline will be conveyed to the Board in the following manner:
• Correspondence received by 5:00 PM two days before this public hearing, will be conveyed to the Board in
a Supplemental Communications and Reports, which is released around noon one day before the public hearing; or
ITEM #3, ATTACHMENT 8
ZAB 2025-02-27
1950-1998 SH
ATTUCK AVENUE NOTICE OF PUBLIC HEARING
File: G:\LANDUSE\Projects by Address\Shattuck\1974-1998\ZP2023-0040\8-FINAL DOCUMENTS\2025-02-27_ZAB_PHN_1950-1998 Shattuck.docx
• Correspondence received after 5:00 PM two days before this public hearing will be saved in the project administrative record.
Accessibility Information / ADA Disclaimer:
To request a disability-related accommodation(s) to participate in the meeting, including auxiliary aids or services, please contact the Disability Services specialist at 981-6342 ( V) or 981-6345 (TDD) at least
three business days before the meeting date.
SB 343 Disclaimer:
Any writings or documents provided to a majority of the Commission regarding any item on this agenda will be made available to the public. Please contact the Land Use Planning Division ([email protected]) to request hard-copies or electronic copies.
Notice Concerning Your Legal Rights:
If you object to a decision by the Zoning Adjustments Board regarding a land use permit project, the following requirements and restrictions apply:
1. If you challenge the decision of the City in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice.
2. You must appeal to the City Council within 14 days after the Notice o f Decision of the action of
the Zoning Adjustments Board is mailed. It is your obligation to notify the Land Use Planning Division in writing of your desire to receive a Notice of Decision when it is completed.
3. Pursuant to Code of Civil Procedure Section 1094.6(b) and Government Code Section 65009(c)(1), no lawsuit challenging a City Council decision, as defined by Code of Civil Procedure Section 1094.6(e), regarding a use permit, variance or other permit may be filed more than 90 days after the date the decision becomes final, as defined in Code of Civil Procedure Section 1094.6(b). Any lawsuit not filed within that 90-day period will be barred.
4. Pursuant to Government Code Section 66020(d)(1), notice is hereby given to the applicant that the 90-day protest period for any fees, dedications, reservations, or other exactions included in any permit approval begins upon final action by the City, and that any challenge must be filed within this 90-day period.
5. If you believe that this decision or any condition attached to it denies you any reasonable economic use of the subject property, was not sufficiently related to a legitimate public purpose, was not sufficiently proportional to any impact of the project, or for any other reason constitutes a “taking” of property for public use without just compensation under the California or United States Constitutions, the following requirements apply:
a. That this belief is a basis of your appeal.
b. Why you believe that the decision or condition constitutes a "taking" of proper ty as set forth above.
c. All evidence and argument in support of your belief that the decision or condition constitutes a “taking” as set forth above. If you do not do so, you will waive any legal right to claim that your property has been taken, both before the City Council and in court.
ITEM #3, ATTACHMENT 8
ZAB 2025-02-27
1 Gong, Sharon
From: Gong, Sharon
Sent: Thursday, February 20, 2025 8:15 AM
To: Gong, Sharon
Subject: FW: 1998 Shattuck monstrosity
From: Phoebe Thomas Sorgen <[email protected]>
Sent: Wednesday, January 15, 2025 3:09 PM
To: Burns, Anne M <[email protected]>
Subject: 1998 Shattuck monstrosity
WARNING: This is not a City of Berkeley email. Do not click links or attachments unless you trust the sender and know the content is safe.
Hello,
I wholeheartedly agree with Margot Smith’s concerns re plans for a 1998 Shattuck. Please keep me informed re how we can stop this monstrosity.
"This building is far too large for Berkeley. It ignores our history as a family and student town; it creates Manhattan for the East Bay. More Traffic! More high income housing! Where do working people live? families? I hope you nix this 24 or more story market rate building for high income people. It is not appropriate for Berkeley. 154 cars for 599 apartments? Really, where will people park? We used to have height limits, did we vote to change this? Is this planning commission representing us? Do you know if the housing already built is occupied? what is the vacancy rate? Are students rich enough to afford this?
Do not approve this building. It is not right for Berkeley. "Currently, this is the tallest proposal in the city's pipeline and would potentially become the tallest structure in the city. The 317-foot height eclipses the 307-foot tall Campanile bell tower on the UC Berkeley campus. The current tallest building in Berkeley is the 1971-built Chase Building, with a rooftop height of 186 feet, followed by the 180-foot tall Anchor House, a UC-developed dormitory that opened last year.
The proposal is expected to rise 317 feet tall with 411,330 square feet of floor area, including 599 apartments, 16,140 square feet of retail, and a 154-car garage. Additional parking will be provided for 284 bicycles. Unit types include 489 studios and 110 two-bedroom residences. The structure will offer 13,030 square feet of residential open space across the second-floor open space, podium-top terraces, and rooftop deck."
Sincerely,
Phoebe Thomas Sorgen, Berkeley resident since 1989 and Commissioner emerita ITEM #3, ATTACHMENT 9
ZAB 2025-02-27
1 Gong, Sharon
From: Gong, Sharon
Sent: Thursday, February 20, 2025 8:14 AM
To: Gong, Sharon
Subject: FW: 1998 Shattuck
From: Hans
Sluga <[email protected]>
Sent: Wednesday, January 15, 2025 3:41 PM
To: Burns, Anne M <[email protected]>
Subject: 1998 Shattuck
WARNING: This is not a City of Berkeley email. Do not click links or attachments unless you trust the sender and know the content is safe.
OK, let's have highrise buildings in Berkeley, But what good is the Design Review Committee when the end result are those trite boxy structures with weird beige and brownish surfaces? The Trachtenberg architects are producing nothing but inferior buildings in Berkeley. 1998 Shattuck promises to be another one of their flops.
Hans Sluga
ITEM #3, ATTACHMENT 9
ZAB 2025-02-27
1 Gong, Sharon
From: Gong, Sharon
Sent: Thursday, February 20, 2025 8:14 AM
To: Gong, Sharon
Subject: FW: 1998 Shattuck Avenue, Berkeley
From: Margots999@soni
c.net <[email protected]>
Sent: Tuesday, January 14, 2025 11:01 AM
To: Burns, Anne M <[email protected]>
Subject: 1998 Shattuck Avenue, Berkeley
WARNING: This is not a City of Berkeley email. Do not click links or attachments unless you trust the sender and know the content is safe.
This building is far too large for Berkeley. It ignores our history as a family and student town; it creates Manhattan for the East Bay. More Traffic! More high income housing! Where do working people live?
families? I hope you nix this 24 or more story market rate building for high income people. It is not appropriate for Berkeley. 154 cars for 599 apartments? Really, where will people park? We used to have height limits, did we vote to change this? Is this planning commission representing us? Do you know if the housing already
built is occupied? what is the vacancy rate? Are
students rich enough to afford this?
Do not approve this building. It is not right for
Berkeley.
"Currently, this is the tallest proposal in the city’s pipeline and would potentially becom e the tallest structure in the city. The
317-foot height eclipses the 307-foot tall Campanile bell tower on the UC Berkeley campus. The current tallest building in Berkeley is the 1971-built Chase B
uilding, with a
rooftop height of 186 feet, followed by the 180-foot tall Anchor House, a UC-developed dormitory that opened last year.
The proposal is expected to rise 317 feet tall with 411,330 square feet of floor area, including 599 apartments, 16,140 square feet of retail, and a 154-car gar age. Additional parking will be provided for
284 bicycles. Unit types include 489 studios and 110 two-bedroom residences.
The structure will offer
13,030 square feet of residential open space across the second-floor open space, podium-top terraces, and rooftop deck."
Margot Smith
510-486-8010
510-660-5508 (Text)
[email protected]
ITEM #3, ATTACHMENT 9
ZAB 2025-02-27
Attachment 4
NOTICE OF PUBLIC HEARING
BERKELEY CITY COUNCIL
ZAB APPEAL: 1950-1998 Shattuck Avenue “University Corner”, Use Permit #ZP2023- 0040
The public may participate in this hearing by remote video or in-person.
Notice is hereby given by the City Council of the City of Berkeley that on TUESDAY, June 3, 2025 at 6:00 P.M. a public hearing will be conducted to consider an appeal against a decision by the Zoning Adjustments Board approving Use Permit ZP#2023-0040 to demolish five commercial buildings; merge four lots; and construct a 28-story (312-foot tall, plus 5-foot parapet), 411,610-square-foot, mixed-use building with 599 dwelling units (including 58 Very Low-Income Density Bonus qualifying units), 16,142 square feet of commercial area, and 154 parking spaces.
The hearing will be held at the Berkeley Unified School District Board Room located at 1231 Addison Street, Berkeley CA 94702.
For further information, please contact Anne Hersch, Land Use Planning Manager at (510) 981-7411
A copy of the agenda material for this hearing will be available on the City’s website at https://berkeleyca.gov/ as of May 22, 2025. Once posted, the agenda for this meeting will include a link for public participation using Zoom video technology, as well as any health and safety requirements for in-person attendance.
Written comments should be mailed or delivered directly to the City Clerk, 2180 Milvia Street, Berkeley, CA 94704, or e-mailed to
[email protected] in order to ensure
delivery to all Councilmembers and inclusion in the agenda packet.
Communications to the Berkeley City Council are public record and will become part of the City’s electronic records, which are accessible through the City’s website. Please note: e- mail addresses, names, addresses, and other contact information are not required, but if included in any communication to the City Council, will become part of the public record. If you do not want your e-mail address or any other contact information to be made public, you may deliver communications via U.S. Postal Service or in person to the City Clerk. If you do not want your contact information included in the public record, please do not include that information in your communication. Please contact the City Clerk at (510) 981-6900 or [email protected] for further information. __________________________________
Mark Numainville, City Clerk
Mailed by: May 20, 2025
Noticed Pursuant to: Berkeley Municipal Code Section 23.404.040(B), Public Hearing Notice
Attachment 4
NOTICE CONCERNING YOUR LEGAL RIGHTS: If you object to a decision by the City Council to approve or deny (Code Civ. Proc. 1094.6(b)) or approve (Gov. Code 65009(c)(5) an appeal, the following requirements and restrictions apply: 1) Pursuant to Code of Civil Procedure Section 1094.6, no lawsuit challenging a City decision to deny or approve a Board or Commission decision may be filed more than 90 days after the date the Notice of Decision of the action of the City Council is mailed. Any lawsuit not filed within that 90-day period will be barred. 2) In any lawsuit that may be filed against a City Council decision to approve or deny a Board or Commission decision, the issues and evidence will be limited to those raised by you or someone else, orally or in writing, at a public hearing or prior to the close of the last public hearing on the project.
If you challenge the above in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City of Berkeley at, or prior to, the public hearing. Background information concerning this proposal will be available by request from the City Clerk Department and posted on the City of Berkeley webpage prior to the public hearing.
Administrative Record
This attachment is on file and available for review at
the City Clerk Department, or can be accessed from
the City Council Website. Copies of the attachment
are available upon request.
City Clerk Department
2180 Milvia Street
Berkeley, CA 94704
(510) 981-6900
or from:
The City of Berkeley’s Website
http://www.berkeleyca.gov
Attachment
Office of the City Manager
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.cityofberkeley.info/manager
INFORMATION CALENDAR
June 3, 2025
To: Honorable Mayor and Members of the City Council
From: Paul Buddenhagen, City Manager
Submitted by: Henry Oyekanmi, Director, Finance Department Subject: Section 115 Trust Investment Report for: Inception to Period Ended June 30, 2024
SUMMARY
In June 2018, the City Council approved the establishment of a Section 115 trust to help address pension obligations, with administration by the City Manager or their designee.
Since May 2019, Keenan Financial Services has managed and invested in this fund. This report provides an overview and analysis of the performance and current market situation as it pertains to the City’s Section 115 Trust investment portfolio. The trust consists of two distinct accounts: the Fixed Income Account and the Moderate Growth Account. These accounts encompass various asset classes, including fixed income mutual funds, domestic equities, international mutual funds, and alternative investment funds with a focus on real estate.
I. Fixed Income Account (#7590):
The Fixed Income Account predominantly comprises fixed income mutual funds. As of the latest available data, this portion of the portfolio has been performing steadily, slightly below market expectations for fixed income investments. It's important to note that fixed income investments are generally considered a lower-risk component of a portfolio, providing stability and consistent income.
II. Moderate Growth Account (#7600):
The Moderate Growth Account represents a diversified mix of asset classes, including domestic equities, international mutual funds, and alternative investment funds that focus on real estate.
29
Section 115 Investment Report: FY2023 4th Qtr INFORMATION CALENDAR Ended June 30, 2024 JUNE 3, 2025
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.cityofberkeley.info/manager As of June 30, 2024, the City Section 115 Trust Fund Investment Fund Activity for the period from July 1, 2023 to June 30, 2024 is summarized in Table 1 and Table 2 below on a market value basis. Before considering the change in market value, the City’s Section 115 Trust Fund earned 4.92% in FY2024.
Table 1. Investment Fund Activity from July 1, 2023 to June 30, 2024 Table 2. Investment Fund Activity By FY
Discussion of Changes in Market Values
Pooled Cash Fixed Income
Account
Moderate Growth
Account Total
Beginning Value (7.1.2023) 4,687,819$ 8,307,805$ 6,137,707$ 19,133,331$ - - - -
1,487,226 - - 1,487,226
4,190,640 - - 4,190,640
678,156 458,104 211,858 1,348,118
- (166,618) 432,107 265,488
- (25,078) (13,996) (39,073)
Ending Value (6.30.2024) 11,043,841$ 8,574,213$ 6,767,677$ 26,385,730$ Trust Fund
Management Fees
Change in Market Value
Net Contributions
Dividends/Interest
CalPERS Savings
Transfer from other funds
FY 2021 FY 2022 FY 2023 FY 2024
10,634,799$ 12,454,721$ 16,540,906$ 21,405,174$ Contributions:
a. Concil authorized transfers 113,724 2,151,632 2,645,968 4,190,640 b. Prepayment of CalPERS
Unfunded Liability discount 1,318,502 1,479,360 1,634,103 1,487,226 412,481 490,659 626,281 1,194,713
(24,785) (35,466) (42,085) (32,715)
12,454,721 16,540,906 21,405,174 28,245,038
378,132 (2,116,151) (2,271,842) (1,859,307)
12,832,853$ 14,424,755$ 19,133,331$ 26,385,730$ Beginning Book Value
Ending Balance - Market Value
Change in Market Value
Subtotal before marking
investments to market
Management fees
Dividends and Realized Gain/Loss
Section 115 Investment Report: FY2023 4th Qtr INFORMATION CALENDAR Ended June 30, 2024 JUNE 3, 2025
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.cityofberkeley.info/manager Generally accepted accounting principles requires that investments be marked-to- market. This term refers to a method under which the fair values of accounts (i.e., assets and liabilities) that are subject to periodic fluctuations can be measured. The goal is to provide time to time appraisals of the current financial position of a company or organization, by incorporating the prevailing market conditions.
In the tables above, there is a line for changes in market values, which is negative. That is because, in some cases, the City may have investments with a current market value that is greater or less than the recorded cost. These changes in market value are due to fluctuations in the market and have no effect on yield, as the City does not intend to sell securities prior to maturity. For this reason, Table 2 above shows the Section 115 Trust Fund balance before and after adding the changes in market value, so that management and the City Council can get a more realistic picture of how the Section 115 Trust Fund is performing.
Investment Performance
A. Overview from July 1, 2023 to June 30, 2024
As of July 1, 2023, the Trust Fund reported a total balance of $16,540,906, with $8,307,805 allocated to the Fixed Income Account and $6,137,707 allocated to the Moderate Growth Account, along with $4,687,819 invested in Pooled Cash. Fixed Income Account: During FY2024, the Fixed Income Account earned $291,486, resulting in a yield of 3.51%. This performance was shaped by the impact of rising interest rates, which led to a drop in the market value of existing bonds as new bonds with higher yields became more attractive. Despite this, the account maintained steady income from dividends, showing resilience in generating returns even as bond values fluctuated.
Moderate Growth Account: The Moderate Growth Account, during FY 2024, reported substantial earnings of $648,940, resulting in a return of 10.59%. This return was driven primarily by strong gains in equity holdings, which benefited from equity markets that were close to all-time highs.
B. Rate of Returns by Account and Fiscal Year
1. Account 7600 (40.8% Equities, 54.7% Fixed Income and 4.6% Alternatives):
As summarized in Table 3, in account 7600, the Section 115 fixed income portion of the portfolio outperformed the benchmark* in FY 2024 (3.39% versus
2.63%). The equity portion of the portfolio underperformed the benchmark in FY 2024 (20.29% versus 24.56%).
Section 115 Investment Report: FY2023 4th Qtr INFORMATION CALENDAR Ended June 30, 2024 JUNE 3, 2025
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.cityofberkeley.info/manager Table 3. Account 7600 Rate of Return by FY and Asset Allocation *Benchmark: Bloomberg U.S. Aggregate Bond Index
**Benchmark: S&P 500 Total Return Index
2. Account 7590 (100% Fixed Income):
As summarized in Table 4, Account 7590 outperformed the benchmark in FY 2024 (3.43% versus 2.63%).
Table 4. Account 7590 Rate of Return by FY and Asset Allocation *Benchmark: Bloomberg US Aggregate Bond Index
CURRENT SITUATION AND ITS EFFECTS
The yield of the Section 115 Trust Fund for the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023, was as follows. As shown in Table 5, for FY2024, the fixed income account yielded a return of 3.51%, while the moderate growth account returned 10.59%. This represents an increase of 261 basis points from the 0.9% return in FY2023 for the fixed income account and an increase of 372 basis points from the 6.87% return in FY2023 for the moderate growth account.
FY2024 FY2024
Benchmark
Fixed Income 3.39% 2.63%*
Equities 20.29% 24.56%**
Alternatives 7.23% N/A
Total Account 10.57%
FY2024 FY2024 Benchmark
Fixed Income 3.43% 2.63%
Total Account 3.51% 2.63%
Section 115 Investment Report: FY2023 4th Qtr INFORMATION CALENDAR Ended June 30, 2024 JUNE 3, 2025
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.cityofberkeley.info/manager Table 5. Yield by Fiscal Year
Economic overview and Investment Outlook
Fixed Income: The fixed income market is navigating a complex environment characterized by slowing inflation and a low risk of recession in the U.S. in the near future However, longer-maturity government bonds face challenges due to valuation pressures, the Federal Reserve's tightening monetary policy and huge federal budget deficits. Despite these uncertainties, employment remains strong, and the goods sector shows signs of improvement, supported by capital expenditures and fiscal initiatives. As inflation continues to decline, there is potential for more monetary policy easing, which could benefit shorter-maturity bonds. Credit markets have tightened, particularly in investment-grade non- financials, while high-yield markets remain volatile, underscoring the importance of selectivity in high-yield investments. Shorter-maturity securitized credit, especially non-agency residential mortgages, is favored for its attractive risk-return profile. Overall, fixed income presents appealing opportunities, with a cautious approach advised for longer-maturity bonds and a preference for shorter maturities and select credit investments.
Subsequent to the June 30, 2024 date of this report, significant developments took place:
1. Trump was elected for another term as President;
2. The Federal Reserve cut the Federal Funds rate by .50% and .25% on September 18th and November 7 th, respectively;
3. The Fed’s favorite measure of inflation for September 2024, Core Personal Consumption Index (Core PCE) declined to 2.1%, one tick above the Fed’s
2.0% long-term goal; and,
Trust Fund 6/30/2024 6/30/2023
Fixed Income Account 3.51% 0.90%
Moderate Growth Account 10.59% 6.87%
For Year Ended 6/30/2024 Compared to 6/30/2023
Section 115 Investment Report: FY2023 4th Qtr INFORMATION CALENDAR Ended June 30, 2024 JUNE 3, 2025
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.cityofberkeley.info/manager
4. In October 2024, employers in the U.S. only added 12,000 jobs compared to an estimate of 100,000.
The Fed is expected to cut short-term rates further, but Staff believes the developments above make it unclear how quickly those reductions will come and how large they will be, for the following reasons:
1. Trump has promised to use a significant increase in the use of tariffs as his primary trade policy, which will be inflationary;
2. In addition, the President has promised to extend the tax cuts enacted during his first term in office, which would also be inflationary and would increase the already huge $ 35+ trillion U.S. federal debt;
3. The Fed’s reduction of rates in November were likely a response to the weak October job’s report. However, that low number of jobs created was probably depressed by the Boeing strike (which has now ended) and the fallout of back- to-back hurricanes in the Southeast; and,
4. On top of a $1.8 trillion U.S. federal budget deficit for the upcoming fiscal year, these developments will put upward pressure on long-term interest rates, like mortgages and keep them higher for a longer period of time. Staff believes a sign of what is to come is reflected in the reaction long-term rates had to the Fed’s move to lower short-term interest rates on September 18, 2024 by .50%:
Many Analysts had expected long-term rates, like mortgages, to drop as the Fed lowered short-term rates. In fact, the average rate on a conventional 30- year mortgage increased from 6.08% in late September 2024 to 6.54% in the week ending October 24, 2024.
Global Equity: The equity markets have experienced an apparent shift, with growth-oriented sectors such as consumer discretionary, communication services, and information technology leading the recovery. The surge in interest surrounding generative artificial intelligence (AI) has provided a renewed boost to technology mega-caps, following a challenging 2022. By June 2024, a broader cyclical recovery is evident; however, a significant portion of U.S. index returns is concentrated among the 'magnificent seven' (Meta, Apple, Nvidia, Amazon, Microsoft, Alphabet, Tesla), which collectively account for a substantial weight in the S&P 500 Index. The remaining constituents have experienced relatively modest performance.
Section 115 Investment Report: FY2023 4th Qtr INFORMATION CALENDAR Ended June 30, 2024 JUNE 3, 2025
BACKGROUND
At the November 28, 2017 Council meeting, the City Manager was instructed to present a proposal for establishing an Irrevocable Supplemental Pension Trust, along with other options proposed by the staff.
On June 26, 2018, the City Council adopted a Resolution appointing the City Manager as the Plan Administrator. This resolution authorized the City Manager to initiate the necessary steps for negotiating and executing documents to establish a Section 115 Trust Fund, intended to serve as a pension rate stabilizing fund. Additionally, it delegated authority for managing the Section 115 Trust Fund investments.
On May 14, 2019, during the Council meeting, the City Council adopted a Resolution authorizing the City Manager to execute a contract with Keenan Financial Services to establish a pension Section 115 trust. This contract includes Keenan Financial Services providing trust administration, trustee/custodian, and investment advisory services. The structure of the trust includes the following components:
Trust Administrator: Keenan
Trustee/Custodian: Benefit Trust Company
Investment Manager: Morgan Stanley
Benefit Trust Company (BTC) actively manages plan assets. The City's individual trust account is part of a larger Multiple Employer Trust administered by Keenan Financial Services and BTC. BTC also provides the City with monthly and quarterly statements detailing the activity of the City's accounts.
The primary purpose of the Pension Stabilization Trust is to accumulate, hold, and distribute pension plan assets exclusively for the benefit of retiree pensions, as defined by IRS Code Section 115. These plan assets are irrevocable and can only be used for the intended purpose of the Trust.
The City's principal objective in establishing the Pension Trust is to control long-term costs and mitigate the annual operating budget's volatility. The trust offers increased flexibility to the City, allowing for more consistent contributions and reduced year-to-year contribution volatility.
ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
There are no identifi able enviro nmental effects or opp ortunities associate d w ith the subject of this report.
CONTACT PERSON
Henry Oyekanmi, Director, Finance Department, 981-7326
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.cityofberkeley.info/manager
Section 115 Investment Report: FY2023 4th Qtr INFORMATION CALENDAR Ended June 30, 2024 JUNE 3, 2025
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-7000 ● TDD: (510) 981-6903 ● Fax: (510) 981-7099 E-Mail: [email protected] Website: http://www.cityofberkeley.info/manager
1. Portfolio Evaluation from July 1, 2023 to June 30, 2024
2. Investment Report Analysis from July 1, 2023 to June 30, 2024
ATTACHMENTS
ATTACHMENT 1
Portfolio Evaluation
As of June 30, 2024
Analysis by Fiscal Year
6/30/2024 6.30.2023 6.30.2022 6.30.2021 9.30.2020
(Inception)
Total Portfolio
Pooled Cash $
11,043,841
$
4,687,819 $ 407,748 $
1,432,226 $ -
Fixed Income Account (7590)
8,574,213
8,307,805 8,257,710
6,469,347 6,356,407
Moderate Growth Account (7600)
6,767,677
6,137,707 5,759,296
4,931,280 4,278,393
Total Cash and Investments $
26,385,730
$
19,133,331 $ 14,424,755 $
12,832,853 $ 10,634,799
Earnings
Fixed Income Account (7590)
291,486 74,673
(984,712)
127,368
Moderate Growth Account (7600)
648,940
395,917
(1,018,912)
663,245
Total Earnings $
940,426
$
470,590
$
(2,003,624)
$
790,613
Yield
Fixed Income Account (7590) 3.51% 0.90% -15.22% 2.00%
Moderate Growth Account (7600) 10.59% 6.87% -20.66% 15.50%
4.92% 3.26% -15.61% 7.43%
ATTACHMENT 2
Investment Report Analysis
As of June 30, 2024
Cash and Investments Trust Investments Total
Portfolio $ 10,634,799 $ 10,634,799
Unrecognized gain/(loss) 4,707,090 $ 4,707,090 Total Investments $ 15,341,890 $ 15,341,889
Cash Pooled Cash Total
Cash Deposits in Bank 11,043,841 11,043,841
Total Cash 11,043,841 11,043,841
Adjusted Grand Total (All Cash and Investments) $ 26,385,730 $ 26,385,730 Section 115 Trust Portfolio Breakdown As of June 30, 2024 Book Value Market Value
Fixed Income 8,687,089.21 12,275,080.23
Equities 1,703,409.07 2,761,056.46
Alternatives 244,301.08 305,752.83
Total Investments $ 10,634,799 $ 15,341,890
Communications
All communications submitted to the City Council are
public record. Communications are not published directly to the City’s website. Copies of individual communications are available for viewing at the City Clerk Department and through Records Online.
City Clerk Department
2180 Milvia Street
Berkeley, CA 94704
(510) 981-6900
Records Online
https://records.cityofberkeley.info/
To search for communications associated with a particular City Council meeting using Records Online:
1. Select Search Type = “Public – Communication Query (Keywords)”
2. From Date: Enter the date of the Council meeting
3. To Date: Enter the date of the Council meeting (this may match the From Date field)
4. Click the “Search” button
5. Communication packets matching the entered criteria will be returned
6. Click the desired file in the Results column to view the document as a PDF