12 rents did not change when new tenants moved in. Since the Costa-Hawkins Rental Housing Act went into full effect in California in 1999, landlords have been able to establish initial rents for new tenancies at market-rates (called “vacancy decontrol”).
Until 2024 when Measure BB was passed by the voters, the Rent Stabilization Ordinance (RSO) applied to approximately 21,500 units in multi-family properties built before 1980, and another 6,000 units not subject to rent stabilization were still covered by the just cause eviction regulations in the Ordinance. About 19,000 of these units were required to register at any given time and the other 2,000 units were temporarily exempt. According to analysis conducted during the drafting of the City’s most recent Housing Element (2023), approximately 90 percent of registered rental units in Berkeley had changed occupancy since 1999, while 10 percent have retained long-term tenants.
4 Measure BB (2024) changed some of these rules, creating a “fully covered” category of units built before 1980 that are covered by all aspects of the Ordinance including rent control.
Measure BB now requires single family homes and condominiums that are rented to also register, along with newer rental units built since 1980 are now considered “partially covered” because the eviction and tenant protection regulations in the Ordinance apply. In addition, some of the formerly exempt federally funded or state-funded rental units (typically serving lower income households) in Berkeley may now be partially or fully covered, depending on the federal or state rules applicable to the unit.
Housing Trust Fund
The City of Berkeley’s Housing Trust Fund (HTF) program supports the creation and preservation of affordable housing in Berkeley. Federal funds from the HOME Investment Partnerships Program (HOME) and the Community Development Block Grant (CDBG) are combined in the HTF with local sources such as commercial linkage fees, new market-rate housing fees paid in lieu of providing inclusionary units, and condominium conversions. Funds for HTF can also be expanded at any time, such as the 2018 Measure O voter-approved bond measure ($135M) or state and federal grants. The City Council can also allocate General Fund revenues to HTF, such as those generated through Measure U1.
Small Sites Program
In 2018, the City of Berkeley adopted guidelines for a Small Sites Program and allocated funding to it from the City’s Housing Trust Fund. The program was established to fund the acquisition and renovation of small (i.e., 2 to 25 unit) existing multifamily projects not utilizing
4 City of Berkeley. 2023–2031 Housing Element. Amended February 17, 2023. Page 114. Adopted by City Council Resolution No. 70,669-N.S.
Attachment 2
13 Low Income Housing Tax Credits. The program functions as an over-the-counter funding source, with expedited review and award to facilitate purchase of existing properties on the open market. A secondary purpose is to support the conversion of properties subject to rent stabilization, to ensure these units are rent-restricted (e.g., affordable) for 55 years, compared to California law allowing vacant units to be re-rented at market-rates, which usually occurs for most rent-stabilized units in a shorter time frame. The program can also be used to convert rental housing to a limited-equity co-operative, which provides low-cost ownership to its occupants. The amount of city subsidy available per unit from this program is $375,000 for buildings with 2-9 units, and $300,000 for buildings with 10-25 units. Funds are structured as a loan to be repaid from residual receipts, meaning remaining net income after debt service, which may occur in stable properties in future years.
This program aligns well with the goals of social housing, especially in the realm of preservation, because the existing Small Sites Program requires buildings to have an average affordability of 80% AMI, although the City can approve limiting all incomes to 80% AMI. To date, this program has funded the acquisition and rehabilitation of four rental properties, transitioning the units subject to market forces to permanently deed-restricted affordable housing.
In 2024, Berkeley’s City Council allocated $10M over the next two years to expand the Small Sites Program. Due to its focus and benefits of renovating housing stock and creating permanently affordable units, the Small Sites program offers one pathway via additional funding expansion to promote mixed-income (e.g., social housing) conversions of existing smaller properties, and could be structured so that the City retains ownership or provides the funding to eligible nonprofit housing organizations as the current program guidelines facilitate.
Berkeley Housing Authority / Affordable Housing Berkeley, Inc.
The Berkeley Housing Authority (BHA) manages federal housing programs within the City.
Unlike larger Public Housing Authorities (PHAs), the BHA currently does not own any housing units; its portfolio of 75 scattered-site units was sold to a private developer in 2014. Its primary function at present is to administer two types of vouchers, including project-based (dedicated to a unit) and tenant-based (assigned to a renter to use in the market). Recent data reported by BHA shows that it administers 1,600 vouches (combined total) providing $400M per year to local landlords on behalf of tenants.
In 2021, the BHA Board established a nonprofit entity, Affordable Housing Berkeley, Inc. (AHB), to serve as a nonprofit development subsidiary of BHA. Prior proceeds from the sale of BHA’s properties as well as other financing mechanisms such as BHA’s bonding authority could be used to develop new affordable housing in Berkeley, as discussed further in Chapter 7.
Attachment 2
14 Additional Berkeley Housing Programs
The City of Berkeley has adopted numerous additional programs related to the preservation of existing housing stock and tenant assistance including rehabilitation loans for senior and disabled homeowners, a housing retention program to help tenants stay in units, a rental housing safety program, and initiatives to support rehabilitation of existing affordable housing projects. More information can be found on these programs on the City’s website at:
https://berkeleyca.gov/community-recreation/affordable-housing-berkeley.
Major City Initiatives for New Affordable Housing Production In addition to ongoing financial and program support for the preservation of existing units (via the Small Sites Program), the financial support for new affordable production across numerous 100% affordable projects (via the Housing Trust Fund program), the production of affordable units in market-rate projects through the City’s Inclusionary Ordinance, and the Rent Stabilization Ordinance, the City has been working on two large sites with special planning processes: North Berkeley BART and the Adeline Corridor Specific Plan/Ashby BART.
North Berkeley BART
The City of Berkeley has worked collaboratively with the Bay Area Rapid Transit District (BART) and local community members to plan for development of the eight-acre North Berkeley BART surface parking lot into 739 units of transit-
oriented housing. A consortium of developers
including Avalon Bay (market-rate) and several
nonprofit housing developers (BRIDGE
Housing Corporation, East Bay Asian Local
Development Corporation, and Insight
Housing) have received plan approvals to build
381 subsidized affordable rental units and 358
market-rate units in phases in 13 buildings
ranging from three to eight stories. In 2021, the City reserved $53M of its Housing Trust Fund to subsidize the North Berkeley BART and the Ashby BART affordable housing.
Adel
ine Corridor Specific Plan and Ashby BART
In December 2020, the City of Berkeley adopted the Adeline Corridor Specific Plan, which defines the Adeline Corridor plan area as all frontage properties and in some cases one block deep along Adeline Street in South Berkeley. The northern boundary is Dwight Way, and the southern boundary is just south of 62
nd Street where the Oakland city boundary meets Berkeley.
Attachment 2
15 This Specific Plan, which was developed over many years with extensive community outreach, seeks to revitalize the corridor and address many years of policy that impacted the Black community centered in South Berkeley. The Specific Plan involves incentivizing development through a local density bonus program along the corridor, while at the same time committing to a Plan wide goal that at least 50% of all new housing in the corridor will offer rental and ownership housing at affordable levels across all income segments including those with the lowest income and the greatest need. While the Specific Plan provides extensive density bonuses by subarea intended to incentivize inclusion of affordable housing in mixed-income projects (aimed at the VLI and LI segments), it does not detail implementation strategies to achieve the overall corridor affordable housing goal.
5 This Adeline Corridor Specific Plan represents a significant step towards social housing because it expressly increases the current Inclusionary Ordinance goal (with a 20% affordable housing requirement for all new construction) to an incentivized “half and half” mixed-income vision for a delineated area with substantial redevelopment potential. While it does not require this half and half income mix for specific parcels, it nevertheless underscores Berkeley’s policy direction toward revitalization, anti-displacement, reparations, and transit-oriented development.
A key developable subarea within the Adeline Corridor Specific Plan is the Ashby BART station’s surface parking lots. The City of Berkeley and BART have been engaged in a multi-year process to plan for the redevelopment of surface parking lots at the Ashby BART station into a mix of affordable and market-rate units. In late 2024, after extensive planning and agreements between the City and BART to simplify ownership of two parcels and an older air rights agreement, both agencies jointly issued an RFP (due March 3, 2025) to solicit developers to build at least 600 units on the larger west parking lot, with a commitment that least half of the first 600 units will be affordable (supported by the prior City funding commitments). The City negotiated an exchange agreement with BART that will facilitate the City’s control of the site’s east lot. The agreement established that a future project will provide at least 35% affordable units on site, with a goal of 50%. A set-aside of at least 20% of the 35% affordable minimum will be reserved for Extremely Low-Income households (30% AMI). Priority for the remaining units is intended for Very Low Income (50% AMI) and Low Income (80% AMI) households.
5 See: https://berkeleyca.gov/sites/default/files/2022-03/Adeline-Corridor-Specific-Plan.pdf Attachment 2
16 Affordable Housing Supply
This section profiles the current Berkeley affordable housing inventory, along with a summary of Berkeley’s historic and current progress meeting its Regional Housing Need Allocation (RHNA).
Affordable Housing Inventory in Berkeley
Through Berkeley’s current affordable housing delivery system, the inventory of rent and sale price-restricted units has grown substantially over the past decades, resulting in a total inventory of 2,736 units through Spring 2025.
6 This inventory represents approximately 9% of the 2023 occupied rental units in Berkeley, which is an extraordinary achievement in the face of our national and state-level fragmented affordable housing system. Almost half of these units serve Very Low-Income households, largely because of the availability of Low-Income Housing Tax Credits (LIHTC) and Berkeley’s inclusionary income targets, which align with this AMI category.
Data based on Berkeley's 2023-2031 Housing Element, updated by City of Berkeley for this report.
Source: City of Berkeley, 2025.
Additions to this inventory, currently under construction, or committed to through Measure O fund reservations, will add additional units to the inventory in the next several years. However, this inventory will not meet the housing needs as outlined in this report without increased funding, streamlined delivery systems, and/or major paradigm shifts.
6 All but 14 of these units are rentals, with 14 affordable ownership units created through Berkeley’s Inclusionary Ordinance.
Figure 3: Berkeley's 2025 Affordable Housing Inventory (Restricted Rents/Sale Prices) 599
22%
1,298
47%
674
25%
164
6%
Exremeley Low
Income
Very Low Income
Low Income
Moderate Income
Attachment 2
17 Progress Meeting Regional Housing Needs Allocation (RHNA) for Affordable Units The State of California, in collaboration with each regional council of governments, allocates housing production goals by income band to every local jurisdiction on an eight-year cycle.
These goals are intended to remedy past shortfalls in housing production and to plan for future population growth across income bands. Numerous state laws and eligibility for state funding are tied to reaching RHNA production goals.
Berkeley’s long-term commitment to affordable housing, including the $135 million Measure O bond and over $50 million in local funds, has enabled the City to make significant progress toward its VLI targets in past RHNA cycles. These investments, along with rent stabilization, seem to be having a measurable impact. Between 2000 and 2020, the number of cost-burdened VLI renter households rose by 34% in the Bay Area and 22% in Alameda County, but only by 5% in Berkeley, suggesting the city’s policies are helping to mitigate affordability pressures.
In the current 2023–2031 RHNA cycle, Berkeley has seen slower permitting in its first two years.
However, upcoming projects, such as new affordable housing at the North Berkeley and Ashby BART stations, could help the city meet or even surpass its RHNA targets. Still, new production relies heavily on the nonprofit sector’s ability to secure land and financing, often through Low- Income Housing Tax Credits (LIHTC), a funding source that faces ongoing constraints and competition.
Figure 4: Berkeley's Housing Production Compared to RHNA Goals by Cycle, 1999-2023 68%
171%
30%
167%
25% 21%
4%
93%
74%
42%
16%
258%
0%
50%
10 0%
150%
200%
250%
300%
Very Low-Income <50%
AMI
Low-Income 50-80%
AMI
Moderate-Income 80-
120% AMI
Above Moderate >120%
AMI
% of RHNA Target Achieved
1999-2006 2007-2014 2015-2023
Attachment 2
18 Challenges with Low Income Housing Tax Credits
One of the main sources of financing for new affordable rental housing (as well as the acquisition-rehabilitation of larger apartment complexes) is the Low-Income Housing Tax Credit (LIHTC). While this program, initially authorized by the US Treasury in 1986, has spurred a robust nonprofit professional housing development industry in California, advocates of social housing often criticize its shortcomings.7 Many critiques of LIHTC projects and developers can be found in US social housing literature, some of which do not directly apply to developers or projects resulting from California’s allocation system or requirements.
The following is an adapted summary of critiques that may apply to the LIHTC system as experienced in Berkeley:
• LIHTC Projects Focus on a Narrow Part of All Housing Need. LIHTC involves applying for either 9% or 4% credits, which in turn must meet certain eligibility rules, and then because there is extremely high demand for available LIHTC credits in any given year, projects must score very high on numerous criteria in order to be competitive. The effect of the LIHTC allocation system is that receiving an allocation is time consuming, risky, and very prescriptive in terms of serving just rental units within a band of roughly 30-80% AMI (mostly averaging below 60% AMI in California).
• LITHC Projects Require Complex, Costly Financial Arrangements. The cost in terms of both professional fees and time to obtain multiple layers of additional subsidy to fill financing gaps for LIHTC-funded housing makes this method expensive. Additional subsidies with many layers (often including 5-8 other subsidy sources) are challenging to obtain, package, and time efficiently.
• Lack of Permanent Affordability. In California, LIHTC projects are required to maintain affordability for 55 years under regulatory agreements that set income and rent limits based on AMI. In many other states, these affordability periods are even shorter). • Developer Fees. Due to several rule changes over time, LIHTC developer fees today are rising to levels approaching profit margins for for-profit developers building market-rate projects. While there are many good reasons for these fees to support developer overhead, and other arrangements frequently defer much of the developer fee until later in the project (providing a form of gap financing), some critics fear that this trend is opposite the goal of decommodification.
7 It should be noted that the Bay Area’s high-cost cities, including Berkeley, have benefited from implementation of LIHTC in a thoughtful, sophisticated way, by the region’s many active, professionalized nonprofit developers.
Attachment 2
19 Many dedicated practitioners in the LIHTC sector have also sought reform of this system over the years. Advocates have debated proposals to lengthen the deed restriction period towards permanence, streamline the application and receipt of the credits in a coordinated system with other state subsidy programs, and raise the US Treasury limit on total tax credits allowed to be used annually in each state. Some policy analysts have also proposed a similar tax credit for middle income ownership housing, which would be less substantial per unit, but may stimulate production of small single-family homes, ownership ADUs, and small multifamily condominium projects in single family infill areas.
While federal and state housing policies may soon undergo reform, this mechanism is nevertheless likely to remain in place, playing a key role in providing external funding to Berkeley’s affordable rental programs. Shifting to a social housing paradigm, encompassing, and building upon LIHTC while realizing its shortfalls in Berkeley, is a short-term practical approach,
Challenges with Inclusionary Housing Units
A portion of Berkeley’s affordable housing inventory is produced through its Inclusionary Housing ordinance, which requires that 20% of units in a market-rate housing project be set aside at affordable rents or sale prices. Developers may satisfy this requirement by paying an equivalent in-lieu fee or using a combination of both approaches to comply with the ordinance.
Inclusionary housing programs, by design, rely on the pace and scale of market-rate housing production since the market-rate developer must satisfy the inclusionary ordinance to obtain entitlements. However, market-rate housing development is cyclical and depends heavily on economic conditions such as interest rates for debt financing, land and construction costs, market-rate rents/sale prices that create profit for the developer, and a host of other factors.
When these factors shift unfavorably, market-rate projects may be delayed or canceled, leading to slowdowns in the production of inclusionary affordable units.
A social housing approach, in general, would not rely on the inclusionary housing tool, and in fact, can function in a counter-cyclical way; when market-rate production is down, or other economic conditions are contributing to a less favorable private investment climate, these moments offer opportunities for a publicly-owned or mission-driven housing entity to acquire built units inexpensively, and/or acquire entitled proposed projects, or other strategies that counterbalance market forces.
Attachment 2
20 Social Housing: A Paradigm Shift
The City of Berkeley has a long track record of adopting progressive policies aimed at expanding affordable housing and protecting tenants, yet critical housing needs remain.
Social housing represents a paradigm shift, prioritizing mixed-income communities, providing permanent affordability, community stability, and equitable access. It challenges the prevailing investment-driven paradigm and seeks to realign housing policy with broader social and economic equity goals. Several elements will require shifts in policy approaches, including:
• Transitioning to a social housing paradigm will require substantial public investment and a fundamental shift in how housing is produced and financed. Redirecting new housing construction toward social housing means reorienting a larger share of production to serve a broader mix of incomes, particularly prioritizing lower-income households who are underserved by the current market-driven system, which primarily targets those who can pay the most. Achieving this requires a range of strategies led by the public sector, including reducing land costs, lowering construction expenses, and securing a stable, long-term source of public subsidy to close financing gaps. Two core principles of social housing emphasize serving a range of incomes and ownership by public agencies or mission-driven nonprofits: because public and community ownership enables housing to be developed and managed in the public interest rather than a private profit-driven model. • In addition to new construction, advancing a social housing framework also requires strategies to establish permanent affordability and reduce the profit-driven dynamics within the existing housing stock. Decommodifying housing involves implementing policies that promote permanent affordability, community control, and tenant stability. The other social housing pillars focus on permanent decommodification, tenant protections, ownership by public or mission-driven organizations, and resident governance. • Determining the appropriate scale for implementing social housing, whether at the city, regional, or state level, remains an open question and depends on a range of interrelated factors. While local jurisdictions like Berkeley can play a critical role, the effectiveness and scalability of social housing initiatives are closely tied to funding and the alignment of policy authority across levels of government. A more robust and coordinated approach would require state and federal leadership to establish consistent funding streams and supportive regulatory frameworks. Regardless of the level at which implementation occurs, successful social housing efforts will require agencies with the financial capacity to support new construction, the authority to acquire and manage land for public or community ownership, and the institutional scale to align public investment, planning, and policy tools in support of long-term affordability and decommodification.
Attachment 2
21 4. Social Housing Case Studies
European countries have established long-standing social housing models that offer useful lessons on ensuring affordability and housing stability. As U.S. housing programs face increasing challenges, interest in adapting these approaches has grown. This chapter presents examples from Vienna and Denmark, as well as Montgomery County (MD) and other emerging US initiatives, highlighting key features that may inform Berkeley’s housing strategies.
Vienna, Austria
Vienna is consistently ranked among the world’s most livable cities, due partly to its commitment to housing as a fundamental human right. Vienna’s globally recognized model for high-quality, affordable housing began as a grassroots response to post-WWI shortages. Today, the city maintains this tradition through an
integrated housing system that
combines municipal ownership,
nonprofit housing associations,
affordability regulations, and support for
tenants.
Vienna’s Housing Finance Model
Vienna’s unique status as both a city
and a state gives it strong control over
housing finance, supported by Austria’s progressive tax system, which includes a 1% housing tax on salaries split paid by employers and employees. In 2020, Vienna allocated $440 million to social housing initiatives. About 81% supported construction and rehabilitation, while 19% went to tenant-based subsidies, reflecting a strategy that tackles both shortage of affordable supply and the income gap that prevents households from affording housing.
The Role of Limited Profit Housing Associations (LPHAs) Vienna’s social housing model has evolved from direct municipal construction to a partnership approach. The city once built and managed all public housing, known as Gemeindebau, and today still owns about 220,000 units, 23% of the housing stock. Since the 1980s, Limited-Profit Housing Associations (LPHAs) have become the main developers of affordable housing.
Regulated under national law, LPHAs are nonprofit, reinvest surplus revenue, and now manage around 180,000 units. Combined with municipal housing, social housing makes up 43% of Vienna’s housing and serves over 60% of residents. Strict oversight ensures LPHAs maintain Attachment 2
22 affordability and financial stability.
Keeping Costs Low: Land Banking and Public Infrastructure Vienna reduces affordable housing costs through public investment in land and infrastructure.
Wohnfonds Wien, a quasi-government nonprofit, strategically plans ahead for growth, acquires and banks land, leasing or selling it to LPHAs at below-market rates. Vienna also covers most infrastructure costs, such as transit, schools, and parks, reducing the burden on developers. In contrast, California relies on developer fees, making projects more costly and less integrated.
In addition, Vienna’s SMART Housing Construction Program reflects a creative approach to cost containment, delivering affordable, high-quality homes through efficient design with broad appeal. Introduced in 2012, this program provides compact and adaptable housing for young families, couples, single parents, and individuals. This strategy supports residents through various life stages, making it politically viable by framing housing as a universal need rather than a targeted subsidy. Between 2012 and 2017, SMART flats comprised one-third of all new subsidized housing.
8 Together, these strategies help lower the cost of individual projects. In 2022, the average cost to build a social housing unit in Vienna was about $245,000.9
Vienna’s focus on cost containment also goes hand in hand with a strong commitment to livability, sustainability, and community well-being. The housing system is centrally planned to support livability, sustainability, and community. Social housing is well-designed and located near transit, schools, healthcare, and green space. The city emphasizes mixed-use, walkable neighborhoods with energy-efficient buildings closely tied to public infrastructure.
Reducing Speculation through Systematic Decommodification Approximately 43% of Vienna’s housing is protected from market pressures through a mix of nonprofit and municipally owned homes. The large share of below-market, price-controlled housing eases pressure on the private rental market by reducing demand, which in turn helps keep market-rate rents stable and limits rent escalation. Unlike the prevailing approach in the U.S. that relies on market-rate housing to eventually become affordable through filtering, these models demonstrate that directly increasing the supply of affordable housing is a more effective strategy for achieving long-term affordability. Private landlords must price competitively, knowing that many renters have access to high-quality, affordable alternatives.
8 Wohnfonds Wien. (2018). Developers’ competition: A model for quality assurance in subsidized housing construction. Retrieved from https://www.wohnfonds.wien.at/media/Website%20PDF- INFO%20Downloads/English%20Information/developers_competition_web_2018.pdf 9 Southern California Association of Governments (SCAG). (2022). Vienna social housing field study: Lessons for Southern California [Presentation]. Retrieved from https://scag.ca.gov/sites/main/files/file- attachments/cehd110322agn06-presentation.pdf?1667520495 Attachment 2
23 LPHAs in Vienna operate under Austria’s cost-rent principle, which ties rents to actual documented expenses rather than market rates. This includes operating costs like maintenance, administration, and ground leases, as well as financing and certain capital costs, such as for new or recently modernized buildings. Rents are designed to cover these actual costs without generating profit. Unlike private landlords, LPHAs are prohibited from charging excessive rents, and any rent increases are strictly regulated to preserve long-term affordability.
Austria’s Tenancy Act regulates rent increases even when tenants move out, preventing landlords from raising rents to market rates. Instead, rents follow set formulas based on factors like location, condition, and amenities, ensuring affordability across tenancies. About 77% of Vienna’s private rental housing is rent-controlled, with only 7% of the total housing stock exempt. Through nonprofit ownership, cost-based rents, and broad rent controls, Vienna’s housing system prioritizes stability and affordability over profit.
Income Limits and Waiting Lists
Vienna’s social housing system is designed for broad access, with income limits set high enough to include about 80% of the population, up to roughly 180% of AMI. New buildings are intentionally mixed-income: 30–40% of units go to low-income households (below 60% AMI), 40–50% to moderate-income tenants (60–100% AMI), and 10–20% to higher earners, all benefiting from Vienna’s cost-based rents.
However, there are long waiting lists due to high demand that exceeds available supply, despite the city's continued public investment
10. As of recent reports, approximately 21,000 households were on the waiting list for subsidized housing in Vienna11. To manage this, the city prioritizes applicants with greater need or stronger local ties. Those who have lived in Vienna for more than five years receive a time credit that moves them up the list. Applicants facing serious housing challenges, such as homelessness risk, overcrowding, disability, or being a single parent, also receive priority and faster placement. Wait times vary widely by need, housing type, and location, ranging from a few months to several years.
Building Tenant Trust Through Transparency: Vienna’s Annual Cost Statement Vienna’s rental system ensures transparency by requiring landlords to provide tenants with an annual cost breakdown. Each year, landlords must issue a reconciliation statement comparing
10 Andersson, J. (2023, September 6). Vienna’s social housing model: Celebrated but misused. Social Europe.
Retrieved from https://www.socialeurope.eu/vienna-social-housing-model-celebrated-but-misused 11 Burgis, B. (2023, September 21). The hidden failures of social housing in Red Vienna. Reason. Retrieved from https://reason.com/2023/09/21/the-hidden-failures-of-social-housing-in-red-vienna/ Attachment 2
24 tenants’ rent payments to the actual expenses incurred. This system gives tenants a clear view of what their rent covers and allows them to inspect receipts to verify accuracy. Beyond its practical benefits, this transparency builds public trust by showing that rents are tied to actual costs, not profit, reinforcing confidence in both the system and its nonprofit housing providers.
Other Notable Features
Vienna’s social housing system is notable for its comprehensive tenant services. The system includes strong eviction protections to prevent displacement. It also offers a range of tenant services, such as rent vouchers for low-income households, housing placement help, support in forming cooperatives, and programs to build community. Many developments provide on-site services like childcare, youth programs, and support for seniors or people with disabilities.
Unlike in the U.S., tenants in Vienna can increase their income without losing housing, avoiding disincentives to upward mobility. While some argue this limits access for lower-income households, it also promotes cohesion by allowing residents to remain in their communities.
Vienna also offers a sustainable alternative to homeownership. With affordable lifelong rentals, transferable leases, and strong public benefits like pensions and education, families can achieve housing security without owning property, supporting intergenerational stability without private wealth accumulation.
Denmark
In Denmark, social housing is provided by nonprofit associations and operates on the principle of universal access, meaning housing is open everyone, not limited by income. In 2024, one in six Danes - or 960,000 people - lived in social housing. 12 Social housing is one pillar of
Denmark’s broader welfare system, which guarantees universal healthcare, free education through university, affordable childcare and eldercare, and strong social supports, all funded by high taxes.
While Danish social housing shares features with Vienna, including rent control, cost-based rents, quality design, and public subsidies, this analysis highlights the distinctive elements of the Danish model that may offer useful insights for Berkeley. These include how universal access works in practice, Denmark’s unique tenant-led governance structure, and the tole of its national revolving loan fund.
12 BL Danmarks Almene Boliger. Beboere i Almene Boliger [Residents in Social Housing]. Available at:
https://bl.dk/viden-kartotek/beboere/ [Accessed February 25, 2025].
Attachment 2
25 Social Housing Associations
While Vienna’s social housing model consists of a mix of public and nonprofit housing, Denmark’s system is decentralized, with a network of over 500 nonprofit housing associations managing the sector. Regulated by the government, these associations collectively manage about 560,000 units, or 21% of the country’s housing. 13 Some operate nationally, others focus locally or on specific groups like students. This system is akin to the Bay Area’s network of nonprofit developers and community land trusts.
How Universal Access Works in Practice
Denmark’s social housing system is universally accessible; anyone can apply, regardless of income. However, with only 21% of housing designated as social housing, demand often exceeds supply.
There are three main ways to access social housing:
1. Municipal Allocation – Up to 25% of vacant units are reserved for people with urgent needs, such as low-income households, people with disabilities, the homeless, refugees, or the unemployed. This system allows municipalities to address local housing challenges by ensuring that a portion of social housing is reserved for vulnerable populations in need of immediate assistance. Local governments manage these placements in partnership with housing associations.
2. Flexible Allocation – Designed to promote social and economic diversity and prevent the overconcentration of vulnerable populations, this system provides flexibility to advance certain priorities. This includes employed individuals (to encourage economic diversity), students (for housing near universities), seniors (for age-friendly housing), families with children (to promote stability) or people relocating due to life changes.
Criteria vary by municipality.
3. General Waitlist – Open to all, with no income or residency requirements. It works on a first-come, first-served basis. Applicants register with a housing association, and in major cities, centralized lists allow applications to multiple associations. Wait times vary; over 10 years in cities like Copenhagen, but much shorter in smaller towns.
In Aarhus, flexible allocation boosted the share of employed tenants in certain neighborhoods.
Copenhagen used it to prioritize students and recent graduates, helping support education and workforce entry through affordable, shared housing. These three waitlists run in parallel to balance equal access, urgent needs, and community diversity in Denmark’s social housing.
13 OECD (2022), Affordable Housing Database - OECD, http://www.oecd.org/social/affordable-housing- database.htm.
Attachment 2
26 Social Housing Resident Composition
Denmark’s social housing is high-quality and affordable, but not everyone chooses it due to limited availability, location, and preference for private housing.
Social housing in Denmark mainly serves low-income individuals, young adults, seniors, non- Western immigrants, single-person households, and those receiving public assistance. A 2017 study by BL Danmarks Almene Boliger,14 found that 67% of social housing tenants lived alone (compared to 38% in the private sector), including concentrations of younger adults (25% were aged 18-34) and elderly adults (7% were over 80). Additionally, 83% of social housing households earned below the median income, with a higher reliance on public benefits than private renters.
Though access is not income-based, wealthier households tend to choose private housing, while lower-income groups are more likely to live in social housing, reflecting a natural sorting based on income, needs, and lifestyle.
Organizational Structure and Operations
Denmark’s social housing is known for strong tenant involvement, but it is also supported by a structured governance system with three main parts: tenant boards, an executive board, and professional property management.
14 BL Danmarks Almene Boliger. Beboersammensætning – Resident Composition. August 7, 2017. Available at: BL Danmarks Almene Boliger [Accessed February 25. 2025].
Figure 5: Governance Structure of Danish Housing Associations Attachment 2
27 Tenant Boards
Each housing estate elects a tenant board to represent residents. These boards do not handle daily operations but play a key role in gathering feedback, setting community priorities, and shaping the annual operating budget with management. They can propose changes like added services or renovations, though certain costs (like taxes and capital expenses) are fixed. All residents vote on the building’s budget at an annual meeting, and tenant boards can raise concerns about management to the Board of Representatives if needed.
Boar
d of Representatives
At the annual meeting, residents also elect members to a larger Board of Representatives. This board approves budgets, oversees major policies, and makes decisions on large projects like renovations or property sales.
Ex
ecutive Board and Management
The Executive Board provides professional oversight and includes tenant representatives, experts in finance or real estate, and sometimes local officials. This board hires a professional administrator to handle day-to-day operations like maintenance, tenant services, and rent collection, while also ensuring financial sustainability and compliance with regulations. Some organizations serve as administrators for multiple nonprofit housing associations. In 2022, KAB managed 64,000 dwelling units across more than 500 estates for 60 nonprofit housing associations and municipalities in Denmark. This system balances resident governance with expert oversight to manage Denmark’s social housing effectively.
Nat
ional Building Fund
The National Building Fund (Landsbyggefonden) is a cornerstone of Denmark’s social housing system. Established in 1967, its primary role is to support and strengthen the nonprofit housing sector. Rather than depending on ongoing government subsidies, the fund is sustained through tenant rent contributions. When a housing association finishes repaying its construction loans, the portion of rent that was used for debt service is not reduced. Instead, that same amount is redirected to the National Building Fund, which reinvests it back into the housing system. This creates a self-sustaining, revolving funding model.
New social housing developments are typically financed through a mix of long-ter m mortgage
loans (covering about 88% of costs), interest-free municipal loans (around 10%), and small tenant deposits. Housing associations repay these loans over time using rental income from tenants, with rents set on a cost-recovery basis.
Attachment 2
28 A key feature of the Danish model is what happens after the loans are repaid. Tenants continue to pay the same rent, but the funds that previously covered mortgage payments become surplus contributions to the National Building Fund. These pooled contributions are then used to: (1) renovate and modernize aging housing, (2) build new social housing, (3) support financially vulnerable housing associations, and (4) fund social and community programs.
By recycling surpluses from paid-off estates, it ensures continuous investment in the housing stock and the well-being of residents. This self-financing loop keeps the sector robust through economic cycles and reduces pressure on government budgets.
Housing Opportunities Commission (Montgomery County, MD)
The Housing Opportunities Commission (HOC) of Montgomery County, MD was founded in 1974 as a public agency that works to provide stable and affordable housing for county residents. What makes HOC unique is that it combines the roles of a public housing authority, a housing finance agency, and a public developer, all in one organization. This allows HOC to take a more comprehensive approach to solving housing challenges.
Figure 6: HOC - Public Housing Authority, Housing Finance Agency, and Developer
Source: HOC, 2024.
As a public developer and housing lender, HOC has long used its ability to issue bonds to finance affordable housing. In the 2010s, it used the federal Rental Assistance Demonstration (RAD) program to convert its public housing into long-term, voucher-supported units. It financed these renovations using tax-exempt bonds from its own Multifamily Program. As an FHA risk- Attachment 2
29 share lender, HOC can also offer fixed-rate, low-cost loans with long repayment periods, which helps keep project costs down.
More recently, HOC has shifted toward developing larger, mixed-income projects that include both affordable and market-rate units. This approach avoids delays tied to limited tax credits and allows for faster development. While typical affordable housing projects in the county have about 130 units, HOC’s mixed-income projects range from 250 to 450 units. With a 30% affordable set-aside, these larger projects still deliver between 75 and 135 affordable units, similar to traditional projects, but at a greater scale and with fewer financing delays.
Housing Production Fund and Public Ownership
The Housing Production Fund (HPF) is a financing tool that helps HOC build mixed-income housing with deeper affordability than most inclusionary housing policies. While many local laws require just 10–20% affordable units, HOC projects funded through the HPF must include at least 30% affordable housing, 20% for households earning 50% of the area median income (AMI) or less, and 10% for those earning around 65–70% of AMI.
The HPF is a revolving loan fund created in 2021 with an initial $50 million in bond financing, backed by annual county contributions for debt service. Another $50 million was added in 2022, bringing the fund to $100 million. It provides short-term construction loans, typically repaid within five years through long-term financing like tax-exempt bonds. This repayment replenishes the fund for future use. By using public financing instead of private equity, HOC keeps ownership and control of its projects, allowing it to prioritize long-term affordability and tenant protections.
The model works because about 70% of units in these developments rent at market rates. This higher-income portion of the project helps cover operating costs and subsidizes the affordable units. HOC also often builds on publicly owned land, like former public housing sites, which helps keep development costs down. For example, The Laureate, the first HPF-backed project, was built on the site of a former 95-unit public housing development next to a Metro station.
HOC also purchases land at market value, but public land helps stretch dollars further.
Other tools improve the financial viability of HPF projects. These include property tax abatements for publicly owned developments and access to low-interest, long-term loans through the FHA risk-share program. Together, these advantages boost cash flow and make mixed-income projects financially sustainable while meeting public goals.
HOC takes a different approach from most affordable housing developers by keeping majority public ownership of its projects. It acts as both the developer and long-term owner, unlike the common model where nonprofits or private companies build and manage affordable housing Attachment 2
30 using tax credits. This strategy is a modern version of traditional public housing—except HOC focuses on mixed-income developments.
By holding onto its properties, HOC can ensure permanent affordability, since income restrictions do not expire. However, this also means HOC is responsible for long-term management and maintenance. It handles this through its own Property Management Division, which oversees building operations and resident services. While this model gives HOC greater control, it also comes with risks, especially since most of its units are rented at market rates, making the agency more vulnerable if demand drops or the market becomes oversupplied.
Figure 7: HOC Financing Tools
Source: Montgomery County HOC, 2024
Project Example: The Sage
The Sage at Westside Shady Grove is a planned mixed-use, mixed-income community located one block from the Shady Grove Metro station. It will include 413 apartments, with 30% (123 units) set aside as affordable housing. Of those, 83 units will be for households earning 30–50% of the area median income (AMI), and 40 units for households earning up to 65% of AMI.
The project will also include 7,000 square feet of retail space, planned as a public library, along with amenities like a pool, fitness center, e-lounge, pet spa, and an entertainment kitchen. A five-story parking garage with 545 spaces will serve residents. The building is being designed to meet LEED certification, with solar panels and accessible design features. Construction is expected to begin in summer 2025.
Attachment 2
31 Originally, the project was a joint venture between HOC and private developer EYA, who had rights to purchase the site from Montgomery County. However, EYA transferred its rights to HOC, making it a fully publicly owned project. This allowed HOC to use tax-exempt bonds without hitting state-imposed limits on private activity bonds. HOC bought the site from the county for $3.6 million, about $12,400 per market-rate unit.
To manage the project, HOC created a special-purpose entity to own the site and oversee development. EYA will stay involved as the development and construction manager, receiving a development fee and fixed monthly payments.
Because the project is 100% government-owned, HOC can use lower-cost tax-exempt financing. The total development cost is $178 million, or about $431,000 per unit. Most of the funding will come from HOC-issued tax-exempt bonds through an FHA Risk Share mortgage.
This loan will convert to long-term financing once the building is complete. Additional funding includes $10 million in equity from HOC’s Opportunity Housing Reserve Fund, a $29 million loan from the Housing Production Fund (HPF), and $5 million from the Montgomery County Green Bank to support energy-efficient design.
Emerging Social Housing Initiatives in the US
There is growing momentum for social housing across the United States, with several public sector initiatives already underway or currently being explored, including:
• California Stable Affordable Housing Act of 2023 (SB 555). Signed into law in late 2023, this bill directs the State to complete a study on social housing for low- and moderate-income households by the end of 2026. The study will explore how social housing can be developed, owned, and managed by public agencies, local authorities, limited-equity cooperatives, or mission-driven nonprofits for the benefit of residents who cannot afford market rents. The law defines social housing as housing that includes a mix of income levels, from extremely low to moderate income. The California Department of Housing and Community Development (HCD) has contracted the Terner Center at UC Berkeley to lead the study.
• Public Development and Ownership of Housing: A Feasibility Study for Rhode Island. This NYU Furman Center study looks at U.S. social housing models based on public ownership. It groups them into three types:
o Mixed-Income Models (e.g., Montgomery County, MD; Atlanta, GA; Chicago, IL), which use low-cost revolving loan funds to help finance mixed-income Attachment 2
32 projects, sometimes resulting in public equity ownership. o Public Housing Conversions (e.g., Boston, MA; Cambridge, MA; Hawaii), where existing public housing is redeveloped and expanded while maintaining public ownership.
o 100% Affordable Models (e.g., Dakota County CDA in Minnesota), where public or quasi-public agencies own and operate entirely affordable housing.
The study includes financial analyses and practical tools for implementing each model. • Seattle Social Housing. This voter-approved public development authority, established in 2023, is focused on publicly owning permanently affordable housing in Seattle.
Inspired by models like HOC, the authority aims to serve households earning up to 120% AMI. It has formed a governing board and appointed a CEO. In February 2025, voters approved a second ballot measure, Proposition 1A, which will fund the initiative by taxing employers 5% on employee compensation exceeding $1 million annually. • City of San Francisco Social Housing Feasibility Study. In 2020, San Francisco passed Proposition I, increasing the transfer tax on property sales over $10 million.
Although the funds are not officially earmarked, the measure was promoted as a way to fund social housing and is expected to generate $103 million over two years. That same year, the City established the Housing Stability Fund to support permanently affordable housing with public, nonprofit, or resident ownership. These projects must serve income- qualified households, with average incomes across all units kept below 80% of the zip code’s median income.
In 2024, the City’s Budget and Legislative Analyst released a report on the financial feasibility of mixed-income social housing. Unlike traditional affordable housing, which targets only low-income households, the models studied included a mix of incomes, about half the units for households earning below 80% of AMI and half for those earning up to 110%. Because these models include higher-income tenants, they are not eligible for most federal and state affordable housing programs and would need to rely on local funding.
Four of the six models studied required upfront subsidies of $29–$62 million (or about $430,000–$490,000 per unit) and assumed access to low-interest loans. With these assumptions, five models were financially viable; the one that was not assumed an 8% interest rate. The report recommended starting with households near 100% of AMI and phasing in deeper affordability over time. It also called for exploring governance models and new local funding strategies to support social housing in the long term.
Attachment 2
33 Vienna Denmark Montgomery County Housing
Opportunities Commission Berkeley
Publicly or mission-
driven owned
Mix of municipal government
and non-profit owned (LPHAs) Mostly non-profit owned Mix of HOC / non-profit owned Mostly non-profit owned
Protected from transfer
to for-profit entities
Cannot be sold at market
prices or used to generate
profits for shareholders.
Cannot be sold to for-profit
entities, except in rare cases
No prohibition against
transfers to for-profits,
though HOC prioritizes long-
term affordability
LIHTC lacks permanent
protections; some deals
include a non-profit/tenant
right-of-first-refusal. CLTs
offer long-term protections.
Permanently affordable
and protected from
market speculation
Permanently affordable; cost-
rent principle with no profit
allowed.
Permanently afforable; cost-
rent principle with no profit
allowed.
Affordability term limited
based on regulatory
agreements
Affordability term limited,
based on regulatory
agreements; inclusionary units
are affordable in perpetuity
Inclusive of a broad
income range 0-180% No income limits Varies based on the funding source
Varies based on the funding
source
Tenant governance Tenant input available Tenant governance and participatory budgeting Tenant input available Tenant input available Resident stability
Rent transparency, security of
tenure, transfer rights,
protections against unjust
evictions
Rent transparency, right to
form unions, security of
tenure, protections against
unjust evictions
Rent stabilization, right of
first refusal to purchase,
rights to form tenant unions
Rent stabilization, just cause
protections, right to form
unions (Measure BB),
notification rights
Figure 8: Summary of Case Studies
Attachment 2
34 Summary of Case Studies and Application to Berkeley
Below are key takeaways from the case studies and how they can be applied to Berkeley:
• Social housing can be effectively owned and managed by government entities AND nonprofit organizations. Both Denmark and Vienna started with government-led housing after World War II but have since evolved. Denmark's system is decentralized, built, and managed by a network of over 500 nonprofit housing associations. Vienna shifted from direct public production to a model led by LPHAs.
Berkeley has a well-established network of nonprofit developers and community land trusts, supported by the city’s track record of capacity-building investments that have helped sustain this ecosystem over time. Berkeley’s affordable housing delivery system mirrors the approach taken in these European social housing models, where nonprofit entities, rather than public agencies, play a central role in delivering affordable housing. Even HOC, a public housing authority, often partners with private entities through public-private partnerships to carry out its projects.
Berkeley should continue investing in the capacity of its nonprofit partners and convene the groups to strengthen coordination and identify opportunities for deeper collaboration.
Additionally, BHA is expanding its role in acquisition-rehabilitation through its nonprofit arm.
In partnership with BHA, the City could explore the feasibility of a municipal public development entity to further support social housing production. • Social housing plays a transformative role when it represents a substantial share of the overall housing stock. In Denmark, social housing comprises 21% of all homes. In Vienna, the impact is even more pronounced: the city directly owns 23% of the housing stock, while LPHAs own an additional 20%. Unlike the prevailing approach in the U.S. that relies on a piecemeal approach, the scale of public / nonprofit inventory in these European examples demonstrate that directly increasing the supply of affordable housing is a clear and effective strategy to stabilize prices and support an inclusive urban environment.
As of 2025, Berkeley had 2,736 deed-restricted affordable housing units, comprising 9% of the occupied rental units in the city. Looking forward, the city could consider setting a long- term social housing target to help guide policy and investment, such as defining the share of the overall housing inventory that should be permanently affordable.
Rent stabilization with vacancy control is another key policy that complements social housing by helping to decommodify the rental market. Prior to the passage of Measure BB in 2024, Berkeley’s Rent Stabilization Ordinance covered about 21,500 units built before 1980, with an additional 6,000 units protected under just cause eviction rules. While previous efforts to reform the Costa-Hawkins Rental Housing Act have not succeeded, Attachment 2
35 regaining the ability to implement vacancy control would provide Berkeley with a powerful tool to preserve affordability and reduce speculative pressures in the housing market. • A long-term commitment to sustained funding is essential to scaling production.
Vienna uses a 1% housing tax on wages, split between employers and employees, which raised $440 million in 2020 for construction, rehabilitation, and tenant subsidies. In the U.S., cities like Seattle and San Francisco have taken similar steps by taxing high earners and luxury property sales to support social housing. HOC also shows how a public agency can use tools including tax-exempt bonds, project-based vouchers, and revolving loan funds to fund new housing.
Berkeley should develop a long-term funding strategy to support social housing. In the near term, the City can leverage existing tools like CalHFA’s Mixed-Income Program and partner with emerging funds such as the Bay Area Housing Innovation Fund (BAHIF). Over time, Berkeley should explore dedicated revenue sources, such as a local tax, while continuing to use strategies like cross-subsidies and tax exemptions. Sustained, reliable public funding is essential to ensuring the long-term success of social housing efforts. • Cost containment as a central strategy for production. Vienna and Denmark employ tools such as land banking, coordinated infrastructure planning to reduce individual project costs, and innovative housing typologies to keep production expenses low. At the same time, they maintain a strong emphasis on design quality and sustainability, recognizing that subsidized housing must remain visually appealing and well-integrated into the broader urban environment.
In Berkeley, there is a more limited supply of developable City-owned land, as discussed in Appendix A. Nevertheless, there are some City-owned facilities that could be redeveloped, and other public agencies that may hold underutilized land such as UC Berkeley, the Berkeley Unified School District, BART, and other state and regional agencies. In addition, the City, especially in the current high development cost environment, could purchase properties for redevelopment (much as California local governments did under California Redevelopment Law). As discussed in the next chapter, the city could also acquire smaller apartment complexes subject to rent stabilization and implement social housing as an expanded housing preservation and decarbonization strategy. • Vienna and Denmark offer human-centered approaches to eligibility for housing at all stages of life. In Denmark, income is not a factor defining eligibility; instead, the various housing associations operate within a flexible system, seeking to provide housing to all that request it. In Vienna, income limits exist, but are defined more broadly than in the US, with eligibility up to 180% AMI, ensuring widespread access to affordable housing.
Attachment 2
36 The next chapter presents financial proformas modeling various income mixes, enabling Berkeley to assess trade-offs and use the findings to inform its social housing targets.
Another way to approach this is through a life-cycle lens. Rather than viewing affordable housing as something only for low-income households, it can be framed as a resource that supports people through different stages of life: young adults, families, and seniors. This universal framing helps build broader political support by positioning housing as a shared, long-term need rather than a narrowly targeted subsidy. • Denmark and Vienna offer important lessons on how to structure waitlists to support residential mobility within the system. Their models take a human-centered approach, allowing residents to move within the system as their needs change, whether due to job relocation, family growth, or aging.
While Berkeley already has its own preference system to prioritize certain populations, such as those displaced by redevelopment or people experiencing homelessness, the overall lack of affordable housing limits the ability to stabilize or adapt to life transitions. For example, there is no clear pathway for someone in LIHTC housing to “graduate” to a limited-equity cooperative. In contrast, Denmark and Vienna design their systems to accommodate such shifts, with flexible waitlists and transfer mechanisms. Berkeley could build on its existing framework by introducing streamlined transfer processes, mutual exchange programs, and better coordination across providers, creating a more adaptive, life-cycle–oriented housing system.
• An often overlooked but critical aspect of social housing systems is the role of demand-side support, particularly the broader social safety net. For example, in Vienna, 19% of social housing funding is allocated as direct assistance to households. In Berkeley, this may mean providing rental assistance or tenant vouchers to help low-income households afford their homes, especially since the income distribution in Alameda County means that the AMI limits translated to ‘affordable” rents often are still unattainable for many households. While Berkeley may not currently have the resources to fund a local voucher program, BHA does administer a limited number of vouchers. • Establishing meaningful tenant governance requires formal structures, education, and a balance between resident power and professional management. Tenant governance is fundamentally different from tenant input. In Denmark, governance is formalized; for example, tenants are required to vote on their building’s annual budget at a mandated annual meeting. This goes beyond consultation and gives residents real decision- making power. In contrast, the U.S. largely lacks formal governance structures in housing; most tenant participation is voluntary and advisory, with limited influence on actual decisions.
Attachment 2
37 Moving toward true governance in the U.S. would require piloting new structures and investing in tenant education. One potential step could be implementing cost transparency practices similar to Vienna’s annual rent reconciliation statements in publicly funded housing. These tools could help tenants better understand housing finances and prepare them for governance roles. Measure BB creates a potential entry point in Berkeley by allowing tenants to form unions within rental properties, an early step toward collective power. However, Denmark’s experience also shows that tenant governance must be balanced with financial oversight and professional property management to ensure long- term housing stability and performance.
• HOC provides a U.S.-based example of how elements of a social housing model can be adapted within a conventional affordable housing finance system. Evolving from its origins as a public housing authority, HOC now develops both mixed-income and fully affordable projects, often through public-private partnerships. In its mixed-income developments, particularly those funded through the Housing Production Fund, HOC retains an equity stake, maintaining public ownership and long-term control. HOC brings a full set of tools to the table: low-cost construction financing, property tax exemptions, and the use of market-rate units to cross-subsidize up to 30% affordable housing. It also uses its public status to issue tax-exempt bonds outside the federal volume cap, allowing it to finance affordable projects without competing for scarce state bond allocations.
This model is especially relevant in places like Berkeley, where many entitled projects remain unbuilt and could benefit from a public-led delivery strategy. • Both Denmark’s National Building Fund and HOC’s Housing Production Fund operate revolving funds that reinvest in social housing, but through different models.
Denmark’s fund is sustained by surplus rent from paid-off social housing loans, redirected to support renovations and new construction, creating a long-term, self-financing system rooted in tenant contributions. HOC’s Housing Production Fund, by contrast, uses public bond financing repaid through project-level permanent financing to recycle capital into future developments. Both approaches reduce dependence on private capital and ensure ongoing reinvestment in permanently affordable, publicly guided housing.
Attachment 2
38 5. Financial Modeling for Social Housing in Berkeley As noted in the case studies, a comprehensive social housing program includes several key elements: access to public land at no or low cost, effective cost containment to maximize public subsidies, sufficient funding for development or acquisition/rehab as well as operating deficits in certain models, the stabilizing role of vouchers in supporting tenants, and a reconsideration of occupancy eligibility criteria to promote income diversity and long-term stability.
To test the feasibility of creating a pilot social housing program in Berkeley, this report incorporates analysis of available City-owned land, interviews with stakeholders such as nonprofit housing organizations, community land trusts, and advocacy groups (see Appendix A for a full list), financial modeling of mixed-income approaches through a series of pro formas on both new construction and acquisition models, and discussions with potential occupants regarding socialization and governance within mixed-income projects.
The financial analysis examines two scenarios: one involving the acquisition and rehabilitation of a recently sold 21-unit building on Dwight Way, and a new construction project proposed on Shattuck Avenue within the Adeline Corridor Specific Plan Area. These scenarios were designed to test rental and homeownership models. While the income targets vary based on tenure and product type, the intent was to examine two distinct alternatives to help orient a social housing policy in Berkeley.
• Cross Subsidization. Inspired by Montgomery County’s HOC, this scenario uses a cross-subsidy, where revenue from market-rate units helps cover the cost of providing more affordable housing.
• Predominantly Affordable. The second scenario mirrors a Vienna-style approach by providing units affordable to households at 30%, 50%, 80% of AMI, alongside market- rate units, to foster income diversity within the building.
The analysis estimates the total public subsidy required and evaluates cost-effectiveness using measures such as the subsidy per affordable unit. It also examines how each model addresses Berkeley’s unmet housing needs.
City-Owned Land
This study began with an extensive review of City-owned land to formulate project designs that would physically illustrate tangible social housing projects; however, none of the sites identified in previous staff studies were suitable for the purposes of this analysis. 15 Most were either too
15 See: https://berkeleyca.gov/sites/default/files/documents/2019-10- 29%20Item%2037%20Referral%20Response%20City%20Property%20for%20Affordable.pdf Attachment 2
39 small (yielding less than 10 units total) or contained City facilities with existing departmental renovation plans. Redeveloping these properties would require additional input from City agencies, direction from City Council, or potential legal changes. One potential opportunity was a 0.5-acre, vacant lot at the North Bowling Green property, but community discussions have focused on converting it into parkland. Developing the site for housing would require a ballot measure in keeping with Measure L (see Appendix A for description of methodology and review of available City-owned land).
Given the limitations, this study shifted focus to identifying an acquisition/rehabilitation opportunity, and a new construction site in the Adeline Corridor Specific Plan area. The Specific Plan’s commitment to ensuring 50% of all new housing built in the Adeline Corridor will be affordable aligns closely with the outcomes observed in European social housing case studies, making it a fitting context for analysis. Moreover, a separate set of new construction models was developed to test how key social housing tools, such as no-cost land, low-cost financing, and cost reductions impact overall project feasibility.
Attachment 2
40 Concept 1: Acquisition/Rehabilitation of Existing Housing
Acquiring and rehabilitating existing buildings is a cost-effective social housing strategy that preserves affordability, prevents displacement, and strengthens neighborhood stability. While rent stabilization keeps rents affordable for current tenants, unsubsidized affordable housing can reset to market rates when they become vacant. Before the Costa-Hawkins Act, cities used vacancy control to maintain affordability between tenants, an approach similar to European examples.
Since state law now prohibits vacancy control, one alternative is to transition unsubsidized rental properties into nonprofit or public ownership. This allows for rents to be regulated based on long-term affordability goals rather than market returns, preserving access for lower-income households. Rehabilitating existing buildings also supports climate goals by improving energy efficiency and reducing construction-related waste.
1626 & 1654 Dwight Way
This two-building complex, located at 1626 & 1654 Dwight Way between California Street and McGee Avenue in central Berkeley, contains 21 one-bedroom units, each measuring 600 square feet each. Despite the separate addresses, the buildings are adjacent to each other and form a single property on the south side of Dwight Way near Jefferson Street. After undergoing modest rehabilitation, the complex was sold in 2023 for $250,000 per unit. Designed in a motor hotel style, the two buildings face each other across a small central courtyard, which features a swimming pool. On-site surface parking is limited, with two spaces in front of one building and another seven spaces behind the complex. The surrounding neighborhood contains a mix of well-maintained, historic single-family homes, including Victorian and 1920’s Mediterranean style residences.
To illustrate how the exterior of this complex could be modernized aesthetically, the subconsultant to this study, PlaceWorks, created the following renderings of the exterior, with new façade treatments, landscaping, and removal of poorly designed curb-cut parking as the front lawn of one of the buildings.
Attachment 2
41 Figure 8: Existing Conditions and Proposed Rendering of Front Exterior, Dwight Way
The addit
ional visuals below show the current courtyard with the small swimming pool, and a renovation scheme with solar, landscaping, modernized doors, and replacement of the swimming pool with common community space.
Figure 9: Existing Conditions and Proposed Rendering of Internal Courtyard, Dwight Way
Attachment 2
42 Rental Income Mix Options for Dwight Way
This section presents the assumptions for three scenarios analyzing the acquisition and rehabilitation of 1626 and 1654 Dwight Way for rental housing, • Baseline: This represents a typical investor purchasing an existing, rent-stabilized property. Since the building is subject to rent stabilization, the current maximum rents are publicly available and used in the analysis (see Appendix C). Assuming tenants are not cost-burdened and rents remain the same, the units are affordable to households earning between 26% and 92% of AMI, with an average affordability of 61% AMI. • Rental Option A - 80% AMI Income Average: This option reflects the income averaging approach described in Berkeley’s Small Sites Program NOFA, which aims for an overall affordability average of 80% AMI.16 No tenants are displaced upon acquisition, but as units turnover, some may be leased to households earning up to 120% AMI to offset the cost of lower-income units. This cross-subsidization uses higher-income tenants to support deeper affordability for other tenants.17
• Rental Option B - 100% Affordable: This option removes market-rate cross- subsidization entirely, focusing exclusively on serving the lowest-income households. It proposes a 100% affordable housing project with units evenly distributed at 30%, 40%, 50%, and 60% AMI, resulting in an average affordability level of 45% AMI.
Ownership Income Mix Options for Dwight Way
This analysis also considers a scenario where the building is converted to homeownership, giving existing tenants the opportunity to become owners. This aligns with models like Community Land Trusts and Limited-Equity Housing Cooperatives (LEHCs), which offer affordable homeownership by maintaining collective or nonprofit ownership of the land (in the case of CLTs) or the building (in the case of LEHCs), while allowing residents to purchase homes or shares with restricted equity to ensure long-term affordability. Resale values are capped using a fixed formula. These models create a stable stock affordable ownership by balancing wealth-building for residents with sustained affordability for subsequent buyers.
Both ownership scenarios assume residents will secure a mortgage to contribute an equity stake, similar to a condominium model. Residents are expected to pay 35% of their income towards housing, though specific structures may vary. The ownership scenarios are based on
16 Alternatively, the City can choose to cap all incomes at 80% AMI for Small Sites projects. 17 In practice, Berkeley’s regulatory agreements typically cap units 80% AMI, rather than allowing some units to be set at market rates. This approach is driven by the wish to qualify for the full welfare property tax exemption, which requires all units to remain affordable. However, for the purposes of modeling cross-subsidization, the pro forma assumes income averaging up to 80% AMI by including higher-income units in order to assess the impact on public subsidy requirements when some units are able to be set at market rents.
Attachment 2
43 the following assumptions:
• Ownership Option A: 80% AMI Average: This mirrors the Small Sites program with an 80% AMI average. Without a market study assessing demand at higher AMI levels, particularly for older housing stock, this analysis takes a conservative approach, assuming the upper limit of sales prices are capped at 100% AMI. • Ownership Option B: 61% AMI Average: this scenario assumes existing residents are offered the opportunity to purchase their units, with the building maintaining an average affordability of 61% AMI.
Except for the baseline, all rental and ownership scenarios assume $125,000 per unit in moderate rehab costs, although actual costs can vary depending on building conditions. The graph below summarizes the AMI mix for the options described above.
Figure 10: AMI Distribution for Dwight Way Rental and Ownership Options
The summary table on the next page shows the income mix and bottom-li ne project costs for each option, along with total public subsidy and per affordable unit subsidy need. For all options, it is assumed as a practical matter that this project is too small to effectively utilize Low Income Housing Tax Credits; instead, it is assumed that the City of Berkeley’s typical Small Sites Program subsidy contribution of $300,000 per unit is utilized as the primary subsidy source. If no additional funding sources are available, such as from a future Bay Area Housing Finance Authority (BAHFA) bond or s
tate funding, the City would need to cover the entire funding gap.
3 1
6 -
3 5
2 9
-
5 6
10 6
14 6
7 8
-
7 7
Baseline Rental Option
A
Rental Option
B
Owner Option
A
Owner Option
B
MI Units
LI Units
VLI Units
ELI Units
Attachment 2
44 Table 4: Summary of Acquisition/Rehab Rental and Ownership Options for Dwight Way
% Affordable
% Market
Unit Mix Units % Units % Units % Units % Units %
Extremely Low Income Units 3 14% 1 5% 6 29% - 0% 3 14% Very Low Income Units 5 24% 2 10% 9 43% - 0% 5 24% Low Income Units 5 29% 10 48% 6 29% 14 67% 6 29% Moderate-Income Units (a) 8 33% 8 38% - 0% 7 33% 7 33% Market-Rate Units - 0% - 0% - 0% - 0% - 0% Total Units 21 21 21 21 21 Total Affordable Units (b) 13 67% 13 62% 21 100% 21 100% 21 100% Average AMI for Project
Development Cost
Total Development Cost
Development Cost/Unit
Subsidy Needed
Total Public Subsidy Needed
Subsidy/Affordable Unit (c)
Funding Sources
City HTF (d)
Other Sources
a) In Berkeley, market rents in older existing buildings are generally affordable to households earning around 85% to 95% of the Area Median Income (AMI).
In this acquisition-rehab analysis, when scenarios include market rents, they are treated as Moderate-Income units because they fall within that income range. b) Affordable units are defined as ≤ 80% A
MI for rentals and ≤ 120% AMI for ownership units.
c) The Subsidy per Affordable Unit measures the amount of public funding required per affordable unit. It is calculated by dividing the total public subsidy by the number of affordable units serving households at or below 80% AMI for rentals and below 120% AMI for ownership. d) The City of Berkeley does not impose a strict cap on the per-unit subsidy under the Small Sites Program. The proformas assume the city will contribute $300,000 per unit based on the current Small Sites guidelines. If no additional funding sources are available, the city would need to cover the entire funding gap.
Sources: The Housing Workshop; Urban Math, 2025.
Baseline (Rental) Rental Option A Rental Option B Owner Option A Owner Option B As-Is Acquisition,
No Rehab
Income Average
@ 80% AMI 100% Affordable Income Average
@ 80% AMI
Income Average
@ 60% AMI
N/A 60% 100% 100% 100%
N/A 40% 0% 0% 0%
61% 80% 45% 80% 61%
5,250,000$ 9,734,542$ 9,724,921$ 9,932,958$ 9,932,958$ 250,000$ 463,550$ 463,091$ 472,998$ 472,998$ N/A 4,936,837$ 7,412,560$ 3,136,646$ 5,328,643$ N/A 379,757$ 352,979$ 149,364$ 253,745$ N/A 4,936,837$ 6,300,000$ 3,136,646$ 5,328,643$ N/A -$ 1,112,560$ -$ -$ Attachment 2
45 Summary of Acquisition Rehab Findings
• Acquisition-rehab is a cost-effective social housing strategy, with lower per-unit costs compared to new construction. Based on the pro forma analysis, the total development cost (TDC) for acquisition-rehab is estimated at approximately $470,000 per unit, compared to $725,000 per unit for new construction (described in the next section). In addition, this approach offers key advantages: it allows faster delivery of permanently affordable units and broadens the pool of groups active in social housing production, including smaller nonprofit developers such as community land trusts.
• While acquisition-rehab has a lower all-in cost, it lacks ample, dedicated sources of federal or state funding, which makes the local subsidy higher. This is why the city’s per-unit subsidy for LIHTC projects often seems lower than for Small Sites projects. It is not that acquisition-rehab projects are more expensive, but rather that the city bears most of the cost alone, without support from tax-credits or other external sources.
There are several ways to leverage additional subsidy sources to reduce the City’s contribution. For example, if BAHFA or Alameda County voters approve a new affordable housing bond, or if the state establishes a dedicated source for preservation, these could complement the City’s funding, similar to how new construction LIHTC projects layer multiple subsidy sources. This underscores the importance of advocating for complementary regional, state, and federal preservation funding to maximize the impact of the City’s investment. Additionally, scaling social housing could allow for the acquisition of several buildings and packaging into a single LIHTC application for rental subsidy (commonly called “scattered site” approach).
• To scale this strategy, the acquisition model can be adapted to include larger, more recently built properties, including those that are financially distressed or have investors choosing to sell. For example, Bridge Housing recently acquired a 94-unit property built in 2014 from AvalonBay Communities, with plans to convert 50% of the units into affordable apartments while retaining the other half at market-rate. The deal, completed without public subsidies, involved Morgan Stanley, the National Equity Fund, and the California Municipal Finance Authority. A property tax exemption applies to the affordable units. A favorable acquisition price and Bridge Housing’s large credit line made it possible to achieve a 50/50 affordability split without public funding. Supporting larger nonprofits in pursuing similar mixed-income acquisition strategies could help scale and expand the impact of this model.
Attachment 2
46 • The acquisition and rehabilitation of existing properties, particularly when led by nonprofit organizations or public agencies, provides a practical pathway to decommodification. Absent vacancy control, by removing properties from the speculative market and placing them under public or nonprofit ownership, these homes can be preserved as permanently affordable. When paired with strong regulatory safeguards, this approach ensures long-term affordability, housing stability, and community stewardship. • Converting existing, unsubsidized rental housing into affordable homeownership can lower the need for public subsidies by leveraging residents’ equity contributions.
Homeownership conversions benefit from direct equity contributions of residents, which help reduce the overall public funding required. For example, in the rental model, a project targeting an average 80% AMI has a $4.9 million public subsidy gap, whereas the homeownership scenario serving the same average AMI reduces the public subsidy to $3.1 million. This is due to net sales revenue, which accounted for about 50% to 70% of the total sources, depending on the income targets.
• Homeownership through acquisition-rehab provides equity-building for households priced out of the market. The public subsidy is relatively low, ranging from approximately $150,000 to $250,000 per unit. Creating a pipeline of limited-equity housing cooperatives or similar models could be a transformative step, offering residents the chance to convert their monthly rent into equity through a modest buy-in. This approach serves as a steppingstone to traditional homeownership, allowing households to build savings over time, while also offering long-term stability for those who wish to remain. • Converting existing rental housing to ownership requires strong guidance to navigate the complex processes involved. Financing and affordability remain key concerns, as many low- and moderate-income tenants may struggle to secure mortgages without additional assistance, such as down payment support or low-interest financing programs.
AC Boost, California’s Dream for All, and Housing Trust Silicon Valley’s Home Access Program are sources of down payment assistance.
Additionally, property rehabilitation costs can be significant, especially if existing tenants need to relocate, requiring careful assessment of the building's condition and rehabilitation needs. Legal and administrative considerations also play a role, particularly in structuring ownership models, such as cooperatives or community land trusts. Paying for ongoing collective maintenance and homeowner association fees can also be a challenge, especially for the lowest income households. Some affordable ownership models include a subsidy for an emergency homeowners’ association (HOA) fund to resolve this challenge. As a result, nonprofit organizations require sufficient funding, whether through ongoing capacity funding and/or developer fees, to scale their efforts and sustain an affordable ownership model.
Attachment 2
47 • Because some of Berkeley’s Small Sites projects are fully City-funded, the City has flexibility to embed social housing principles into regulatory agreements. This can include terms such as permanent affordability, tenant governance standards, and limiting income certification to initial move-in to strengthen long-term affordability and community stability.
Attachment 2
48 Concept 2: New Construction
2655 Shattuck Avenue
During research for this study, after evaluating several City-owned properties in the Adeline Corridor Specific Plan, this proposed project at 2655 Shattuck at Derby was identified as a potential example of new construction that could be adapted to a social housing format. The project has received approvals for a mix of a 5-story and an 8-story project, including a State Density Bonus. The 95-unit project will contain 46 studios, 4 one-bedrooms, 35 two bedrooms, and 10 three-bedroom townhouse-style units located on upper floors, which can be marketed at premium prices. The unit mix makes the project well-suited for modeling a social housing approach using these premium units to cross-subsidize affordability. The project will also feature 1,870 square feet of retail and parking for 54 bicycles and 40 cars.
After obtaining approvals in the summer of 2024, the developer listed the site and its approved plans for sale (asking price unknown). This project provides an example of how the City of Berkeley, either as a part-equity owner or full owner, could get involved in social housing projects. The concept of a partial equity stake is often used by Montgomery County, MD’s Housing Opportunity Commission (see case study in Chapter 5), whereby public construction funds are contributed to the project, and then converted to a long-term equity ownership stake, Attachment 2
49 enabling permanently decommodified social housing units that can also generate cash flow over the long term (depending on the income mix of the units).
Rental Income Mix Options for 2655 Shattuck Avenue
• Baseline Market-Rate with 20% Inclusionary: This represents the project as currently entitled, with 80% of the units set at market rents and 20% of the units at 50% and 80% AMI, satisfying the city’s inclusionary housing ordinance.
18 This includes a state density bonus,
which is already factored into the development program. • Rental Option A - Half and Half: Inspired by Montgomery County’s HOC, this scenario uses a cross-subsidy, where revenue from market-rate units supports affordable units. While HOC requires a 30% affordable set-aside, this option increases the share to 50% to align with SB 423/SB35 requirements19 and the goals of the Adeline Corridor Specific Plan. At least 10% serve 50% AMI while the remaining 40% are set at 80% AMI. • Rental Option B - Predominantly Affordable: Rental Option B aligns with Vienna’s social housing model by providing affordable units across the income spectrum, with units evenly distributed at 30% AMI, 50% AMI, 80% AMI, and market-rate. Rental Option B achieves deeper affordability than Option A, as it extends support to households at 30% AMI. • Rental Option C - 100% Affordable: This scenario represents a traditional 100% affordable housing project, serving households between 30-60% AMI. The purpose of this analysis is to compare the impact of directing public subsidies toward existing 100% affordable developments versus investing in new mixed-income social housing models.
Financial Challenges Under Current Economic Conditions
It should be noted that for new construction, the baseline scenarios are not financially feasible under current conditions. High interest rates, costly Type 3 construction, and high land costs limit adequate returns.
20 Cross-subsidization is also less effective due to the gap between market rents and rising construction costs, a problem likely to worsen with new tariffs on materials. With the current market rents, the project would require adjustments, such as
18 Berkeley’s inclusionary ordinance allows developers to meet the 20% requirement through a combination of on-site affordable units and a prorated in-lieu fee. Because the current proposed plans assume a density bonus, the baseline scenario assumes the full inclusionary obligation is satisfied through on-site affordable units. 19 California Senate Bill 423, which extends and expands the provisions of SB 35, creates a streamlined and ministerial review process for multi-unit housing projects in jurisdictions. For cities that have met state housing RHNA goals for construction of above-moderate income and/or lower income housing, eligible projects must set-aside 50% of units affordable to lower income households (<80% AMI) to qualify for streamlined approval. Ministerial projects do not require the approval through a public hearing or review under the California Environmental Quality Act (CEQA).
20 Equity investors require projects to demonstrate strong cash flow, risk-adjusted returns, and long-term appreciation potential. When construction costs and interest rates are high, meeting financial feasibility benchmarks becomes more difficult. Investors are more likely to commit when a project demonstrates sufficient cash flow to meet return thresholds and includes a clear, well-aligned exit strategy to realize those returns.
Attachment 2
50 lowering the permanent loan rate or reducing land and construction costs.
A variation of the pro formas was conducted to assess the impact of key cost-reduction strategies observed in social housing models from the case studies. This analysis examines how free land, coordinated efforts to lower construction costs, and access to below-market permanent debt influence project feasibility. To model these effects, three variables were adjusted: (a) land costs were eliminated, (b) the permanent loan interest rate was reduced from 6% to 3%, and (c) construction costs were lowered by 8% to $475 per square foot.
The net impact of these adjustments is significant. In the Predominantly Affordable scenario, the total project cost decreased from $725,000 per unit in the original model to $618,000 per unit under this cost-reduction scenario, resulting in savings of about 15%. An important cost reduction comes from reducing the interest rate from 6% to 3%, which increases the supportable debt, thereby narrowing the subsidy gap and reducing the amount of public funding needed.
Despite feasibility challenges, the cross-subsidization analysis remains relevant because it explores options that rely on public subsidies. HOC’s model already assumes public investment to reach 30% affordability, so it is reasonable to test what level of subsidy would be required to achieve 50% affordability in the context of social housing. This helps the City evaluate trade-offs and prioritize how to allocate its limited resources across various housing programs.
Finally, because these projects are not feasible as traditional market-rate projects, developers, whether nonprofit or for-profit, charge fees to cover the work of securing financing, managing entitlements, overseeing construction, and ensuring project completion. This is especially important when developers do not expect to earn a profit at the end of the project, as they would in a typical market-rate deal. This models a $2.5 million developer fee, consistent with the non- deferred fee that nonprofit developers typically receive upon project completion. Many of the other assumptions align with those used in the Strategic Economics study Berkeley In-Lieu Fee and Housing Policies Economic Feasibility Analysis, dated April 12, 2024.
Ownership Income Mix Options for 2655 Shattuck
This model evaluates mixed-income ownership, exploring options at varying income levels.
Market research shows that comparable new condominium units are usually priced for households earning between 115% to 145% AMI, with some three-bedroom townhomes reaching up to 190% AMI.
• Baseline - Current Inclusionary: This evaluates a project complying with the city’s existing Attachment 2
51 inclusionary housing ordinance for homeownership, with 20% of the units at 80% AMI. • Option A – Half & Half: This scenario assumes market-rate units cross subsidize affordable units in a 50/50 split, with all affordable units targeting households at 80% AMI. This approach aligns with a similar acquisition rehab scenario targeting 80% AMI, facilitating a direct comparison between new construction and rehabilitation approaches. • Option B – Defined Affordability Targets: This scenario proposes an equal distribution of units at 50%, 80%, 100% AMI, and market-rate. This option achieves deeper affordability than Option A, with an average project AMI of 92%, compared to 100% in Option C. • Option C - 100% Affordable Housing: This scenario explores the feasibility of providing homeownership exclusively for households earning between 30% and 120% AMI. By eliminating market-rate units, this model aims to assess the financial implications of delivering deep affordability in homeownership.
The graph below illustrates the income mix for each new construction rental and ownership scenario, along with the resulting average AMI for each option in the 97-unit 2655 Shattuck example project.
Figure 9: AMI Distribution for New Construction Rental and Ownership Scenarios
The sum
mary table on the following page shows the income mix and bottom-line project costs for each option, along with total public subsidies required and the subsidy per affordable unit.
Detailed pro formas for each scenario are provided in Appendix C. 26 25 2010 9
26 48
26 20
10 40
26 24
20 49
26 4026
17 77
48 19
77 48
19 0
10 20
30 40
50 60
70 80
90 100
Baseline
Rental Option A
Rental Option B
Rental Option C
Baseline
Owner Option A
Owner Option B
Owner Option C
Rental Ownership
Units
Market Units
Mod Units
LI Units
VLI Units
ELI Units
Attachment 2
52 Table 3: Summary of New Construction Rental and Ownership Options % Affordable / % Market
AMI Targets for Affordable Units
Unit Mix Units % Units % Units % Units % Units % Units % Units % # % Extremely Low Income Units - 0% - 0% 26 27% 25 26% - 0% - 0% - 0% 20 21% Very Low Income Units 10 10% 9 9% 26 27% 48 49% - 0% - 0% 26 27% 20 21% Low Income Units 10 10% 40 41% 26 27% 24 25% 20 21% 49 51% 26 27% 40 21% Moderate-Income Units (a) - 0% - 0% - 0% - 0% - 0% - 0% 26 27% 17 38% Market-Rate Units 77 79% 48 49% 19 20% - 0% 77 79% 48 49% 19 20% - 0% Total Units 97 97 97 97 97 97 97 97 Total Affordable Units (b) 20 21% 49 51% 78 80% 97 100% 20 21% 49 51% 78 80% 97 100% Average AMI for Project
Standard Financial Approach
Development Cost
Total Development Cost
Development Cost/Unit
Subsidy Needed
Total Public Subsidy Needed
Subsidy/Affordable Unit (b)
Funding Sources
LIHTC/Bond (c)
City HTF (d)
Other Sources
Enhanced Financial Approach (e)
Development Cost
Total Development Cost
Development Cost/Unit
Subsidy Needed
Total Public Subsidy Needed
Subsidy/Affordable Unit (b)
Funding Sources
LIHTC/Bond (c)
City HTF (d)
Other Sources
a) Affordable units are defined as ≤ 80% AMI for rentals and ≤120% AMI for ownership units. b) The Subsidy per Affordable Unit = total subsidy needed divided by the number of affordable units. c) To qualify for tax credits, mixed-income projects must legally separate the affordable and market-rate components, typically through a condominium structure. d) While this model assumes a City Housing Trust Fund (HTF) contribution of $200,000 per unit, recent projects have received subsidies ranging from $200,000 to $300,000 per unit. e) The enhanced scenario tests the impact of cost reductions, reflecting strategies commonly used in social housing models abroad. In this version: (a) land costs are eliminated through the use of publicly-owned land, (b) permanent loan interest rate is reduced from 6% to 3%, and (c) construction costs are lowered by 8%.
Sources: The Housing Workshop; Urban Math, 2025.
Rental Project Owner Project
N/A 5,288,357$ 11,583,272$ 19,400,000$ N/A -$ -$ 2,022,559$ N/A 12,072,751$ 19,185,150$ 23,808,556$ N/A 354,308$ 394,467$ 466,300$ N/A 17,361,108$ 30,768,422$ 45,231,115$ N/A 622,307$ 618,078$ 613,623$ N/A 60,363,755$ 59,953,593$ 59,521,391$ N/A 17,757,962$ 13,592,047$ 14,832,049$ N/A 17,500,791$ 19,060,705$ 26,680,003$ N/A 9,800,000$ 15,600,000$ 19,400,000$ N/A N/A 12,984,374$ 20,643,746$ 25,631,802$ N/A 9,800,000$ 15,600,000$ 19,400,000$
-$ -$ -
N/A 827,395$ 638,920$ 617,153$ N/A 557,159$ 444,368$ 475,052$ -$ 40,542,335$ 49,835,793$ 59,863,851$ N/A 27,300,791$ 34,660,705$ 46,080,003$ 613,000$ 729,298$ 725,069$ 720,613$ 651,158$ 773,043$ 773,043$ 773,043$ 59,460,958$ 70,741,869$ 70,331,707$ 69,899,505$ 63,162,286$ 74,985,162$ 74,985,162$ 74,985,162$ 108% 99% 71% 45% 120% 108% 92% 75%
10% at 50% AMI,
10% at 80% AMI
10% at 50% AMI,
40% at 80% AMI
Split evenly at 30%,
50%, 80% AMI
Split evenly at
30%, 40%, 50%,
60% AMI
20% Affordable,
at 80% AMI
50% Affordable,
at 80% AMI
Split Equally at 50%,
80%, 100% AMI
100% Affordable,
at 30%, 50% 80%,
100%, 120% AMI
20% / 80% 50% / 50% 80% / 20% 100% 20% / 80% 50% / 50% 80% / 20% 100% Option A Option B Option C
Current
Inclusionary Half & Half Predominantly
Affordable 100% Affordable Current
Inclusionary
Baseline Option A Option B Option C Baseline
Half and Half Predominantly
Affordable 100% Affordable
Attachment 2
53 Summary of New Construction Findings
• For rentals, the public subsidy is lowest for Rental Option A, which includes the highest share of market-rate units (50%) to maximize cross-subsidization. Rental Option A requires $40 million in public subsidy, compared to $50 million for Rental Option B and $60 million for Rental Option C. This highlights a central trade-off in social housing policy: while cross-subsidization can enhance financial feasibility, it results in fewer affordable units.
• The Predominantly Affordable (Rental Option B) and the 100% Affordable (Rental Option C) scenarios produce more affordable units, allowing public subsidies to be spread across a larger number of affordable units. Rental Option B, for example, provides 80% affordable units and requires $50 million in public subsidies, resulting in a subsidy of approximately $640,000 per affordable unit. In contrast, Rental Option A is less efficient, with a higher subsidy cost of $827,000 per affordable unit. This gap is exaggerated by the current high-interest-rate environment, which reduces the permanent debt a project can carry. When interest rates are lower, around 3%, the subsidy per unit becomes more comparable across scenarios.
• Although affordable homeownership through new construction requires less public subsidy than rental projects due to equity contributions from buyers, it is roughly three times more expensive than achieving affordable ownership through acquisition rehab. In the 50/50 new construction scenario, with all affordable units priced at 80% AMI, the required public subsidy is $445K per unit, lower than the rental project, but significantly higher than the $150K per unit needed for the acquisition-rehab ownership model serving a similar income level.
• Cost containment should be a central focus of new production. Lowering development costs improves project feasibility by reducing total public subsidy required. Examples from Vienna and Denmark illustrate effective strategies, such as utilizing public land, modular construction, and where appropriate, designing smaller units to reduce costs. However, cost-containment should not come at the expense of habitability or sustainability. Vienna’s model, for example, still maintains high aesthetic and architectural standards. • Low-cost capital is an effective strategy to address financing gaps. Currently, high interest rates have sidelined many market-rate projects, as the cost of debt significantly reduces cash flow to equity investors, making new rental projects financially infeasible.
Finding a way to access low-cost capital, both debt and equity, can unlock projects.
Attachment 2
54 Across the country, jurisdictions are exploring innovative strategies to offer lower-cost capital for affordable and mixed-income housing.
o Montgomery County HOC issued bonds to create a revolving loan fund (Housing Production Fund) that acts as an equity investment, taking the place of traditional private equity in the capital stack.
o In Massachusetts, the state’s housing finance agency known as MassHousing offers a one-stop financing platform for mixed-income developments, combining competitive senior debt through a partnership with Freddie Mac and low-cost equity by blending government capital with private equity and other sources. o CalHFA’s Mixed-Income Program aligns well with social housing goals, combining subordinate financing with CDLAC-issued tax-exempt bonds to support projects serving households earning 30–120% of AMI, which goes beyond the tax-credit income limits.
Berkeley should actively promote and leverage this program as part of its housing strategy.
o In Seattle, voters recently approved a 2025 ballot measure that creates a new revenue stream for social housing through a 5% payroll tax on the portion of employee compensation exceeding $1 million annually.
o Locally, the San Francisco Housing Accelerator Fund launched BAHIF, which blends philanthropic and other capital to offer favorable loans for cost-saving projects, potentially reducing or eliminating the need for LIHTC. o Finally, BAHFA is planning an Innovation Funding Program to provide flexible revolving loan capital.
Berkeley has several strategic opportunities to access lower-cost capital and should evaluate options to inform a long-term funding plan. It could partner with the Berkeley Public Housing Authority to explore bond issuance, prepare for BAHFA’s anticipated Innovation Funding Program, or seek voter approval for its own bond measure. Given the range of viable options, the City should assess potential funding strategies as part of a strategic plan to guide next steps.
• With cost-reduction strategies such as no cost land, low-interest financing, and design efficiencies, Rental Option A becomes feasible with just $17M in public subsidy. In the enhanced versions of this scenario, even with a 50/50 market-rate and affordable mix, the combination of no-cost public land, favorable financing terms, and cost containment significantly lowers the public subsidy required. This mirrors the approach used by Montgomery County’s HOC through its Housing Production Fund. Berkeley could adopt a similar negotiated strategy, offering incentives like free land or low-cost financing in Attachment 2
55 exchange for higher-than-required inclusionary percentages. To close remaining funding gaps, the City could allocate local funds, establish its own Housing Production Fund, or seek support from sources such as the Housing Accelerator Fund (HAF) or the Bay Area Housing Finance Authority (BAHFA).
• Although delivering affordable homeownership through new construction is generally more costly than through acquisition-rehabilitation, it remains a strategy for equity building. By incorporating ownership models such as limited-equity cooperatives or community land trusts, new construction can provide permanently affordable, non- speculative homeownership opportunities that promote long-term housing stability and support modest wealth-building for lower- and moderate-income households. • It is challenging for Berkeley to independently generate the level of funding needed to deliver social housing at scale, particularly if the focus is on housing for extremely low- and very low-income households who face the greatest housing cost burdens.
New construction is expensive, and the City cannot realistically cover the full cost without other assistance as these projects usually rely on LIHTC and other public funding. To make a real impact, Berkeley should partner with state and regional agencies and help shape programs that support social housing. While the City’s HTF may be sufficient to support acquisition-rehab projects, delivering new construction at scale will require deeper collaboration and co-investment with external partners. The City should lead advocacy efforts to expand State and regional funding to align with its social housing goals.
Attachment 2
56 Focus Group Feedback on Social Housing Examples
As described in Appendix A, research for this report included convening a focus group of current tenants in Berkeley across all income levels to discuss housing issues and the social housing framework. From among over 20 applicants, 12 participants were invited, and 8 attended. The invitees were selected to provide a balance of ELI, VLI, LI, MI, and market-rate household incomes. All participants were renters.
The following provides a thumbnail of each of the 8 focus group participants. 21 1. A (ELI) – approximately late 30s female person of color (POC) living with three children in a one-bedroom unit in Oakland. Participant A sleeps in the living room and would love a larger affordable unit in Berkeley.
2. B (MI) – approximately early 30s White male living with his partner in market-rate housing in Berkeley.
3. D (> 120%) – approximately early 30s White male living in market-rate 4-plex in Berkeley.
4. K (VLI) – approximately late 30s female POC living in one-bedroom at a Northern California Land Trust property in Berkeley.
5. KA (VLI) – approximately early 50s female POC living with extended family members in “too small” of a unit in Berkeley, hoping some of her adult children could find other housing so she would have less crowding.
6. L (VLI) – approximately mid-40s female POC living with her son in a “good situation” in Berkeley.
7. N (MI) – approximately early 30s White female who had recently moved from East Coast city to Berkeley for a new job, living in a studio in market-rate building in Berkeley.
8. P (ELI) – approximately late 20s female POC with a special needs child, with a Section 8 voucher and other social services (she referred to her excellent social worker “team” several times), living in a one-bedroom rental in Berkeley, but had recently been approved for a two- bedroom unit.
21 Racial and ethnic descriptors used in the participant thumbnails are based on a combination of self-identification and perceived characteristics during the focus group. In some cases, participants explicitly described their racial or ethnic identity; in others, descriptors were inferred based on commonly understood visual or contextual cues. These identifiers are included to help highlight the range of lived experiences represented in the group and are not intended as formal demographic classifications.
Attachment 2
57 Satisfaction with Current Housing and Challenges in Most Recent Housing Search The focus group facilitator started out by requesting a brief description from each participant of their current living situation and how they felt about it. Most were relatively satisfied to pleased with their current living situation other than the high cost, with several also expressing feelings about Berkeley as their strong community of choice. Participants mentioned concerns with their current living situation in overcrowded conditions and/or their current unit size not aligning with their changing life stage (as children aged or as the person was planning to have children).
Next, they were asked about their most recent housing search, yielding stories about both the search itself with varying degrees of challenge and negative stories about prior living situations.
The theme that emerged from this discussion, especially among the female participants with lower incomes, was about their lack of personal safety, especially from prior landlords or their management designees (mentions of cameras everywhere controlled by prurient interest, or a “known pedophile” in charge of a building, etc.).
Rental Housing in a Social Housing Configuration
Next, the facilitator outlined the five principles of social housing, including emphasizing mixed- income, permanent affordability at 30% of income for those who could not afford market-rate housing, public or nonprofit ownership, and tenant governance. Two examples of potential social housing buildings were presented (as described in this chapter) – the acquisition/rehab on Dwight Way, and the newly approved project on Shattuck Avenue. Although the facilitator presented these as examples, some of the participants offered opinions about which example was more appealing.
The facilitated discussion then explored social housing in a rental situation, using both example projects. Many themes emerged from this discussion including:
• General agreement that mixed-income housing was an appealing concept to all participants, with some caveats (see below). It was notable that among the participants, a good rapport was present as the discussion unfolded, representing how this mix of incomes among participants could start to form a community when imagining living together. • K (living in a form of social housing in a Northern California Land Trust building) mentioned that one of the strengths is the formation of a community among her neighbors. However, she also discussed the challenge of mixed life stages, with seniors potentially needing more care than the community could provide.
• Almost all participants, when discussing a rental social housing concept, selected the smaller Dwight Way building as more desirable than the large Shattuck Avenue building, mostly because it was immediately recognized that a more stable, congenial community Attachment 2
58 could be formed in the small project with a more “homey” feel. The one exception to this was KA, in her mid-50s, who loved the idea of the Shattuck project, describing the appeal of having her own space and the convenience of a café on the ground floor. • Another interesting theme was the need across income levels to provide units meeting housing needs at different life stages, so that a single person or a young couple today wanting to have children could move to a larger unit, or if income rose, the person’s household could obtain a larger unit. One participant connected this idea to their interest in the Shattuck Avenue project, which offers a broader mix of unit sizes compared to the Dwight Way project.
• The discussion shifted to more complexity when the group was asked about tenant governance and property management of a rental project. Possibly because each participant had already described that their current landlord was not an issue, none of the participants had a strong interest in tenant governance. Discussions centered on how implementation of this social housing principle would require rules and a governing board to expedite consensus and the need for professional property management and maintenance.
Several participants then mentioned concerns about class and cultural diversity, and how those could clash in a mixed building with strong tenant governance (e.g., some wanted evening “quiet hours” and limited parties, others said they wanted the freedom to play loud music at all times).
Ownership Housing in a Social Housing Configuration
The facilitated discussion then shifted to ownership housing, which engendered many questions from the lower income participants in terms of how ownership would work relative to long-term appreciation, and questions from the moderate income/higher income participants about how this type of housing would be subsidized and how appreciation would work for the market-rate owners. Once these concepts were clarified, the following themes emerged:
• The lower income participants were universally eager to learn more about the opportunity offered by ownership housing in a social housing configuration. None of these participants seemed concerned about a limited or shared appreciation model, once the concept was explained fully. Some of the moderate to higher income participants were also interested in this configuration, but with some hesitancy.
• One participant preferred that the developer be a nonprofit rather than direct public sector ownership due to concerns about fluctuating public sector funding affecting property maintenance over the long term. Another participant in this income band expressed concern about how a mixed-income model might affect the appreciation of their own unit, and felt they would need more information to gauge interest.
Attachment 2
59 6. Opportunities for Social Housing in Berkeley
Berkeley’s housing needs across income levels, along with its near-term production goals, pose numerous challenges; many residents consider housing in Berkeley, the broader region, and the nation as at “crisis” levels. With housing
costs reaching crisis levels, this is a unique
moment to rethink how the City and public
institutions deliver housing and set a bold
example for the country on what is possible
at the local level. Moments of crisis can
produce new opportunities, an approach that
the burgeoning social housing movement
seeks to capture.
Achieving the goals and principles of social
housing in an American context will require a
reframing of affordable housing strategies at the state, regional, and local levels. As noted previously in this report, the State of California is currently studying this concept and how it could be implemented statewide. This effort will undoubtedly involve collaboration between state, regional, and local jurisdictions including the City of Berkeley.
The recommendations in this chapter can be considered as a head-start on preparing locally for potential changes to the statewide system of new unit delivery, particularly in the short term as the federal government withdraws further from a subsidized affordable housing approach. To provide a roadmap, the recommendations are organized into short-term strategies the City can implement now, and long-term approaches focused on developing a housing system that more closely aligns with the principles of social housing.
Attachment 2
60 Recommendation 1: Short-Term Actions
The recommendations in this section outline near-term steps the City of Berkeley can take to advance social housing in the next 1 to 3 years. They are grouped into four categories: building partnerships, aligning with social housing principles, improving delivery methods, and exploring potential pilot projects.
A. Strengthen Strategic Partnerships with Local Affordable Housing Providers
A1. Convene Nonprofit Housing Providers to Discuss Social Housing The City of Berkeley can take an early step toward social housing by bringing together local affordable housing providers and community land trusts to explore more flexible, human- centered approaches. The aim is to begin shifting from an income-targeted system to one that feels more universally accessible, where people at different life stages can find stable, affordable housing that meets their evolving needs.
One ac
tion is to encourage collaboration among nonprofits to support transitions across their housing portfolios. For example, a household that begins in a LIHTC unit and later earns more income could be supported in moving toward affordable homeownership through another nonprofit partner. By fostering these types of transitions and branding social housing as adaptable and inclusive, Berkeley can begin laying the groundwork for a more universal, dignified housing system. Convening these groups also creates an opportunity to collaborate and innovate around what social housing could look like in Berkeley.
A2. Create Closer Partnerships with At-Scale Nonprofit Housing Developers The Terner Center’s statewide social housing study will explore how larger, established nonprofit housing developers could help implement social housing concepts. Berkeley has a strong network of experienced nonprofit developers already working at-scale. Interviews for this report showed that some of these groups are interested in doing more mixed-income housing, especially if state funding becomes available.
Larger nonprofits, like BRIDGE Housing, have also shown that it is possible to acquire sizable market-rate properties without public subsidies using a mixed-income model. BRIDGE’s acquisition of the Avalon property created a 50/50 mix of affordable and market-rate units, with a 55-year regulatory agreement that qualified the project for a partial property tax exemption. The City can build on this approach by partnering with Berkeley’s larger nonprofits to identify more opportunities to convert existing units in larger buildings into long-term affordable housing.
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61 A3. Continue Supporting Local Community Land Trusts
There are two CLTs based in Berkeley: the Northern California Land Trust (NCLT) and the Bay Area Community Land Trust (BACLT). NCLT stewards 118 permanent affordable rental and ownership units across 22 properties in Berkeley and Oakland and is working on a new construction 65-unit ownership project. BACLT focuses on the cooperative ownership model, stewarding almost 100 units across 10 properties in Berkeley and Oakland.22 While the City provides capacity-building funding and project loans to its two active CLTs, it has been challenging to bring CLT’s throughout the Bay Area to scale to address the housing crisis.
A key advantage of using a CLT model for social housing centered on resident ownership stems from SB 196 (2019), which allows CLTs to secure property tax exemptions in for-sale projects, significantly lowering the cost of homeownership. Since CLTs typically rely on the city’s Small Sites Program for funding, there is flexibility to innovate in ways that reflect social housing principles. The City can pilot aspects by supporting efforts like shared waitlists across CLTs and simplifying income certification and leasing to improve the tenant experience. With continued City investment, this approach could be used to acquire and rehabilitate older rental properties, like the Dwight Way example.
Achieving housing for all in Berkeley will require acquiring and building thousands of permanently affordable units, an effort on the scale of major infrastructure projects that cannot be met by small community-based models alone. An analysis is needed to identify how CLTs can scale their stewardship to support a broader range of local housing delivery reforms. 23 This
highlights the need for sustained investment in organizational capacity, including ongoing funding for staffing and operations, to ensure these groups have the resources needed to grow and manage a larger portfolio.
A4. Continue to Work with the Berkeley Housing Authority to Align Efforts Continue collaboration between the City of Berkeley and the Berkeley Housing Authority to clarify each entity’s roles and powers, explore areas of alignment, and identify opportunities for collaboration in advancing social housing goals. The City and BHA can explore a mid-term partnership focused on coordinated efforts in land acquisition, project financing, and long-term stewardship. This can also include exploring joint financing opportunities, such as Public Housing Authority bond issuance, to support access to lower-cost financing.
22 See: https://www.nclt.org/ and https://www.bayareaclt.org/ 23 An example of this type of analysis, which helps bring smaller CLTs to scale by quickly studying past lessons learned and framing future public sector support can be found at:
https://www.taxcreditadvisor.com/articles/considering-a-scattered-site-tax-credit-project-be-aware-of-the-special- issues-and-necessary-skills/
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62 B. Pilot Closer Alignment with Social Housing Principles One of the core principles of social housing focuses on tenant governance, which seeks to give residents in a social housing project agency over their housing, as well as build community in a way that is vital to successful mixed-income projects.
Through the City of Berkeley’s active participation in funding many affordable projects, this set of strategies could be integrated into City best practices though coordinating closely with affordable housing providers to enhance tenant governance and rent transparency in City- supported projects. Lessons from these short-term efforts could help inform more robust mid- term strategies around tenant governance in the Strategic Plan. Short-term strategies include:
B1. Promote Tenant Leadership
Most nonprofit housing providers already engage tenants through tenant councils and/or annual meetings, and interviews with active housing providers indicated openness to deepening this work. Interviews also indicated that some providers have experimented with tenant input and leadership on community-building activities, such as social programming and artwork selection.
Also, in the focus group of Berkeley residents discussing mixed-income housing, several spoke about challenges that can arise when mixing cultures and socio-economic backgrounds; a more active tenant-led governance model in social housing projects may help to meet these challenges.
The Ci
ty could support tenant leadership by providing a brief Best Practices guide for ho using
providers, sponsoring training sessions for tenant representatives from City-supported projects, offering workshops on forming tenant unions, and convening an annual Tenants’ Governance Summit to foster knowledge-sharing, build capacity, and strengthen tenant leadership across the housing system.
B2. Pilot Annual Financial Transparency Meetings
To promote transparency and build trust in affordable housing operations, Berkeley could adopt a transparency model, similar to the approach used in Vienna. Under this practice, at an annual meeting, residents would receive a clear breakdown of their building’s finances, including total annual rent collected, operating expenses (e.g. maintenance, utilities, management fees), capital reserves, planned improvements, debt payments, and other key components. The City could test this approach as a voluntary pilot with two to three properties that have City funding. If it demonstrates improved tenant understanding and engagement, this practice could be expanded and made a requirement for all housing developments receiving City funding.
Attachment 2
63 B3. Pilot Participatory Budgeting
To strengthen resident engagement and increase transparency, Berkeley could pilot a participatory budgeting model, inspired by practices in Denmark, where residents of nonprofit housing estates vote annually on their building's operating budget. In the U.S., participatory budgeting is already used in some cities at the municipal level (for capital expenditures); extending this practice to publicly owned or nonprofit-managed housing would formalize resident input into decisions around operating costs, maintenance priorities, and capital improvements.
This
model could begin with an annual resident meeting at each property, coordinated in collaboration with professional property managers. Property managers would play a central role by preparing and presenting clear, accessible budget summaries outlining past expenditures, current financial conditions, and projected costs. These presentations would be accompanied by translated materials and facilitation to ensure inclusive participation. Residents would have an opportunity to provide input, raise questions, and vote on budget priorities, such as how much to allocate to landscaping or social programming.
B4. Integrate Enhanced Tenant Governance into City Funding A greements
To scale the approach, Berkeley could integrate enhanced tenant governance, rent transparency, and participatory budgeting requirements into local funding agreements or offer incentives to housing providers who adopt the model. Over time, this structure could be institutionalized through resident councils and supported by digital tools to ensure accessibility and accountability across the City’s affordable housing portfolio.
C. I
mprove Delivery Methods and Funding
C1. Continue Supporting Berkeley’s Small Sites Program as a Social Housing Model Berkeley’s Small Sites program reflects key principles of social housing by combining public investment with long-term community stewardship, particularly because the Small Sites projects to date have been completed by local CLTs. The program is designed to achieve deeper affordability by cross-subsidizing with market-rate units. The current NOFA measures affordability at the building level, with a goal of achieving an average of 80% AMI. This structure allows for cross-subsidization while maintaining a focus on long-term affordability and community ownership. To strengthen support for the Small Sites program, it is recommended that the City:
• Review Program Guidelines and Strengthen Social Housing Components. A key adv
antage of local funding
is the flexibility it offers. Without the constraints of larger state or Attachment 2
64 federal funding programs, the City has greater discretion to tailor policies that align with broader social housing goals. As the City defines these goals, it should review the Small Sites Program guidelines to ensure optimal integration of social housing principles. This could include introducing requirements such as tenant governance for projects receiving City Housing Trust Fund support or limiting income verification to the time of initial occupancy to promote long-term housing stability.
• Identify Sustainable Funding Source for Small Sites Program. To strengthen the Small Sites Program, it will be necessary to identify stable and expanded funding. Historically, Council has earmarked portions of the City’s Housing Trust Fund to Small Sites. A reliable and ongoing funding source would be key to scale the model.
C2. Encourage Cost Containment
To effectively scale social housing, the City should encourage cost containment as a central consideration in both policy and project development. Case studies and financial analyses show that accelerating approvals processes and lowering development costs reduces the required public subsidy, allowing more projects to move forward within existing funding constraints.24
For example, the Housing Accelerator Fund is offering flexible financing to encourage developers to innovate and lower costs. It is pioneering two loan products: the Industrialized Construction Catalyst Fund25 to focus on modular construction as a cost-containment strategy, and the Bay Area Housing Innovation Fund26 to focus on cost-containment for projects trying new, cost-saving approaches. In the short-term, Berkeley could partner with HAF on a pilot project that prioritizes cost efficiency as a core expectation in a social housing pilot (see Recommendation D1 below). Projects can test strategies like smaller unit sizes, modular construction, or simplified design.
C3. Creatively Leverage City-Owned Properties to Incorporate Social Housing On an ongoing basis, the City invests in capital improvements to its facilities, renews long-term leases, and oversees inter-agency public agreements. In the short-term, the City could creatively seek opportunities to leverage some of these activities during the planning phase, to capture additional mixed-income housing development opportunities on City-owned or other publicly-owned land, reducing downstream subsidy needs.
24 The City of Berkeley has implemented numerous streamlined residential permitting processes to reduce the housing project approvals process. For reference, see Strategy H-34 and also Programs 31, 32, 33, and 39 in the Berkeley Housing Element at: https://berkeleyca.gov/sites/default/files/documents/Berkeley_2023- 2031%20Housing%20Element_02-17-2023v2_0.pdf
25 See: https://www.sfhaf.org/2025/02/28/housing-accelerator-fund-launches-industrialized-construction-catalyst-fund- to-deliver-affordable-homes-faster-through-construction-innovation/ 26 See: https://www.sfhaf.org/bay-area-housing-innovation-fund/ Attachment 2
65 D. Pilot Programs and Projects
D1. Pilot a Mixed-Income Project using Existing Funding Sources The California Housing Finance Agency’s (CalHFA) Mixed-Income Program (MIP) is already structured around a mixed-income model and could serve as a strong foundation for piloting a new construction project that demonstrates how social housing can work in Berkeley. MIP includes a CDLAC bond allocation set-aside, providing a dedicated state funding source that reduces reliance on limited local subsidies. The program offers long-term subordinate loans for multifamily developments serving households between 30% and 120% of AMI, with requirements that ensure a balanced and inclusive income mix, at least 30% of units below 50% AMI (including 10% below 30% AMI), 10% between 60–80% AMI, and the remainder below 120% AMI, as long as the overall average is no more than 60% AMI. MIP loans are paired with 4% tax credits and tax-exempt bonds. Given its alignment with social housing income targets, Berkeley should consider issuing a Notice of Funding Availability (NOFA) to promote the use of MIP in an upcoming project and evaluate its potential as a scalable social housing model. This would offer an opportunity to pilot a project that serves a broad range of incomes and test how well it aligns with social housing goals.
In addi
tion to MIP , Berkeley can explore partnerships to prioritize cost efficiency as a core expectation in a social housing pilot. The City of Berkeley could explore working with HAF by issuing an RFP for a specific site. If the project can meet cost and time efficiency goals, it may qualify for funding from the Industrialized Construction Catalyst Fund or BAHIF, which can eliminate the need for competitive LIHTC. This kind of financing can expedite affordable housing development by avoiding the delays often associated with tax credit funding.
This model could
be especially well-suited for projects with smaller unit sizes, such as those serving young adults or seniors.
D2. Pilot a Social Housing Acquisition-Rehab Ownership Conversion Project Acquisition-rehab is a lower-cost alternative to new construction and presents a more cost- effective path to expanding homeownership opportunities, especially through models that build resident equity. While Berkeley’s Small Sites Program focuses on rental housing, the city’s shortage of affordable homeownership options suggests the need to broaden this approach.
With limited funding, acquisition-rehab stands out as a practical strategy. Berkeley could pilot a project converting a small multifamily property into a Limited-Equity Housing Cooperative (LEHC), helping to build the capacity of local community land trusts or affordable housing developers to implement similar models. This would also serve as a test case for integrating social housing principles, such as tenant governance, participatory budgeting, limiting income Attachment 2
66 verification to initial occupancy, and other components to align with social housing principles.
D3. Actively Engage in State Social Housing Funding Initiatives Berkeley city staff should engage with the Terner Center and UC Berkeley’s Othering and Belonging Institute. Both of these research centers are currently advising State housing agencies as the SB 555 California Social Housing Study progresses. Active engagement will ensure Berkeley’s perspectives and priorities are reflected in the statewide conversation.
Attachment 2
67 Recommendation 2: Affordable Housing Strategic Plan
To reframe and integrate social housing across Berkeley’s affordable housing delivery system, the City should undertake a process to develop an Affordable Housing Strategic Plan. This would serve as a mid-term strategy, guiding efforts over the next 10 or more years. The process to formulate the Plan may require a year of data collection, public engagement, and policy discussions. Key components of the Plan should include:
A. Define Policy Goals
An important step in developing a strategic plan is to clearly define the city’s policy goals, such as desired ownership structures, income mix, tenure, and levels of tenant engagement. These goals may vary and evolve based on available funding and resources. This process should align with the RHNA cycle but also look more broadly at changes underway in federal, state, and regional affordable housing delivery systems. One way is to begin by establishing a long-term target for the share of income-restricted housing in Berkeley’s overall rental stock. Currently, about 9% of the city’s rental units are income-restricted; the City can use this planning effort to set a vision for the next 10 or more years.
A key aspect of social housing that surfaced during research for this report is which household income levels social housing should serve. Some advocates view social housing as a tool to address the needs of those at the lowest end of the income spectrum, filling gaps left by the market. Others see it as a way to serve moderate-income households, those who may not qualify for subsidies but still struggle to access homeownership in today’s market. In between these points of view, a third perspective envisions social housing as intentionally serving a mix of income levels, from the most vulnerable to moderate income and even market-rate households, using cross-subsidization to reliance on public subsidies and enhance financial sustainability.
These variations of how social housing can be implemented in Berkeley can be accommodated in individual projects, or across a portfolio with projects targeting different parts of the income spectrum. Defining policy goals will guide future investments and clarify expectations for developers and the community.
In addition to defining income targets, the City’s housing policy should also identify key subpopulations that represent different life stages present in Berkeley, such as seniors aging in place, young adults entering the workforce, families with children, and university students facing housing insecurity. These groups have distinct housing needs that should inform goal-setting and resource allocation.
Attachment 2
68 To better understand the housing needs of a significant segment of the population, conduct a University Student Housing Needs Survey. Berkeley’s large student population represents a unique influencing factor in the local housing market. This effort is needed to refine available data regarding the impact and needs of students across the income spectrum as well as their relationship to more long-term residents with overlapping housing needs. Data collection should include a statistical sampling to develop estimates of students by undergraduate (year), and graduate/PhD analyzed by household size, household income, rent paid currently, rent burden, patterns of housing search, and future housing needs. UC Berkeley has several data, housing, and public policy institutes that could serve as leaders in this initiative.
To ensure the City’s Strategic Plan reflects community needs, values, and priorities, the City should conduct a robust stakeholder engagement process as part of the study. This process should include outreach to affordable housing providers, community land trusts, tenant organizations, housing advocates, equity-focused groups, market-rate developers, and residents with lived experience in Berkeley’s housing system.
B. Determine the City’s Role in Housing Development and Ownership Social Housing models vary in terms of government capacity and role. As part of the Strategic Plan, the City should define its intended role in the development, ownership, and long- term stewardship of affordable and social housing. The City should consider a continued role as a funder/facilitator or a transition towards direct public ownership and development (e.g., Montgomery County, Seattle).
The Strategic Plan should outline how the City will collaborate with the Housing Authority and nonprofit partners to leverage their respective strengths, avoid duplication, and pursue shared goals. This evaluation should consider governance structure, staffing capacity, legal authority, and access to financing tools such as tax-exempt bonds or project-based vouchers.
This evaluation will provide the foundation for building a coordinated delivery system.
The Berkeley Housing Authority has established Affordable Housing Berkeley, Inc. (AHB), a new subsidiary with the goal of developing new residential projects. These projects would be funded through proceeds from the sale of its property inventory and other potential tools available to Public Housing Authorities (PHAs). The new development subsidiary has not yet built up staffing or expertise to oversee at-scale project development, but a partnership between the City and the BHA could lay a foundation for an at-scale development authority in the future. This could combine bonding authority with a coordinated approach to social housing production and preservation. Initially, this arrangement could also be implemented by engaging an experienced developer on a fee basis, while the public authority retains ownership.
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69 C. Conduct Social Housing Sites Inventory
Identifying no- or low-cost land for new construction housing projects will be essential to social housing initiatives. As noted in Appendix A (Report Methodology), Berkeley has limited City- owned land that is both readily developable and zoned for multifamily housing. In addition, during the formulation of the 2023-2031 Housing Element Update, the City conducted a detailed assessment of developable Opportunity sites; however, this process used criteria to eliminate identification of sites not already zoned for residential use, and also did not focus on publicly- owned land (particularly by other public agencies).
This recommendation takes an inverse approach to identify additional no- or low-cost sites, including underutilized or surplus public land or sites that may be available for affordable housing by mission-driven owners open to low-cost transactions. Land acquisition is one of the most significant drivers of total development cost; every dollar saved on land reduces the subsidy needed to serve lower income households. The following list provides a starting point for a broader search, which can be conducted by reviewing the Alameda County Assessor’s property database with follow-up on selected properties. • Sites/Underutilized Buildings Owned by City. There may be sites owned by the City not currently zoned for residential use, and other sites currently occupied by underutilized buildings or City-owned buildings slated for renovations such as the South Berkeley Senior Center. In addition, the City Auditor recently released a memorandum describing City properties currently under leases or licenses to other users along with recommendations for improved property oversight; these may offer potential for redevelopment in future years.
27 • Sites/Buildings Owned by Other Public Agencies. A thorough review of the Alameda County Assessor’s database could identify these additional sites owned by other public agencies such as EBMUD, PG&E, USPS, Caltrans, BART, UC Berkeley, and the Berkeley Unified School District.
• Sites/Underutilized Buildings Owned by Religious Organizations. Another category of potential social housing sites that could be obtained through low-cost ground leases or purchase by the City is property owned by churches or other religious institutions.
These properties have the benefit of new state laws to streamline entitlements, such as SB4 (adopted in 2023). This law enables the eligible institutions to utilize their property to develop 100% affordable housing projects “by right,” avoiding rezoning and other
27 See:
https://berkeleyca.gov/sites/default/files/documents/2009_Leases_Audit_Follow_Up_Berkeley_Faces_the_Same_Ris ks_16_Years_Later.pdf
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70 sometimes lengthy approval processes.
• Privately-Owned Sites with Functionally Obsolete Uses. At the private property level, there are many functionally obsolete low density commercial properties throughout Berkeley’s commercial corridors, such as older auto mechanics shops, office buildings, closed former retail bank buildings, and many types of retail with shrinking footprints due to increased e-commerce and other shifts in the local economy.
D. Formulate a Funding Strategy
There are several potential options for creating a local funding strategy, which should be shaped by the goals of the Strategic Plan as well as the availability of new regional and state resources.
As programs such as the statewide social housing initiative and BAHFA’s regional funding efforts continue to develop, the Strategic Plan should clearly outline how Berkeley’s social housing program could take advantage of these funding sources. In the mid-term, local funding tools that could be considered include:
• Voter-approved bonds similar to Measure O
• Parcel tax
• Local high earner employer tax such as the initiative recently approved by voters in Seattle to fund its Social Housing Seattle
28 • Creation of a Berkeley Fund modeled on the Housing Accelerator Fund29 combining contributions from large organizations active in social impact funding.
The City should also evaluate whether to pursue the creation of a local financing tool modeled after Montgomery County’s Housing Production Fund (HPF). This revolving loan fund, backed by public capital and administered by a public entity, has allowed HOC to accelerate the production of mixed-income housing without relying solely on traditional, competitive funding sources. A similar tool in Berkeley could provide financing for social housing projects, especially those led by the City, the Housing Authority, or nonprofit partners. The City should assess the legal, financial, and administrative structures needed to establish such a fund, including whether it would be housed within an existing agency like the Berkeley Housing Authority or managed through a new public development entity.
28 See: https://www.socialhousingseattle.org/
29 See: https://www.sfhaf.org/
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71 E. Establish Formal Cost Containment Standards
The City can formalize cost containment standards for social housing projects, based on innovations tested in partnership with the HAF and other pilots. Potential standards could include unit size limits to control construction and operating costs, legally defined per-unit cost ceilings to discipline in design and development, caps on developer fees, and guidance on material selection and design efficiencies. Establishing these standards can lower production costs and support the scalability of social housing.
F. Encourage Innovative Public Financing Tools to Reduce Infrastructure Costs The City can actively pursue innovative public financing mechanisms, such as Enhanced Infrastructure Financing Districts (EIFDs) to reduce predevelopment and infrastructure-related costs. EIFDs can play a crucial role in unlocking sites for social housing by funding critical upfront investments like utility upgrades, environmental remediation, and public amenities without increasing the financial burden on individual projects.
A comparable example is the proposed EIFD for Ashby BART, where tax increment financing would fund public amenities and infrastructure. The City can replicate this model in other areas, such as Specific Plan areas, to help reduce development costs for social housing. By capturing future property tax growth, EIFDs can cover expenses like streets, utilities, and public improvements, removing these expenses from individual projects. This approach also supports long-term planning by channeling growth and investment into priority areas.
G. Strengthen Strategies to Decommodify Housing
The City should explore strengthening strategies to decommodify housing, shifting it from a profit-driven asset to a community-centered public good. This includes continuing strategies to
decommodify housing by preserving affordability in expiring properties and embedding long-term protection in new developments. The City typically preserves and extends affordable housing deed restrictions on LIHTC projects via rehabilitation loans. The City should identify dedicated rehabilitation funds to support project longevity and secure long-term affordability. For new affordable housing developments, the City should explore additional mechanisms that ensure long-term decommodification from the outset, such as incorporating a right of first refusal or public ownership options into funding agreements.
Additionally, the City should consider additional strategies to gradually decommodify segments of the unsubsidized housing stock. While State law limits rent control, policies like COPA (Community Opportunity to Purchase Act) or TOPA (Tenant Opportunity to Purchase Act), paired with dedicated acquisition funding, could assist the City or nonprofit partners to convert existing market-rate units into permanently affordable housing over time. The Strategic Plan should Attachment 2
72 assess the full range of policy tools, funding mechanisms, and regulatory frameworks needed to support this transition toward a more stable, community-controlled housing system.
H. Formalize Tenant Governance Structures
The City should formalize tenant governance practices to ensure meaningful, ongoing resident participation in decision-making. Building on pilot efforts, the City can establish a clear framework for tenant engagement that includes participatory budgeting, where residents have a formal role in reviewing and approving building budgets. This process should be structured to work collaboratively with professional property management, ensuring that residents are supported by transparent information and capacity-building tools while allowing management to meet regulatory and operational responsibilities. To support this, the City should also institutionalize cost transparency practices, such as providing tenants with clear, cost-based rent statements that break down how their monthly payments support building operations, maintenance, and financing.
To make tenant governance meaningful and equitable, the City must also invest in tenant education and support services. Tenants need to understand their rights, including the right to form unions, and have access to resources when issues arise. Affirming the right to tenant governance means ensuring the infrastructure exists to support it, including funding for education, facilitation, translation, and technical assistance.
I. Design a Human-Centered, Life-Stage Responsive Social Housing System As part of its Affordable Housing Strategic Plan, the City should aim to develop a human- centered housing system that supports people across different life stages, reflecting the values of universal access seen in many European models. In these systems, social housing is viewed not as a last resort, but as a public good, similar to health care, that people can rely on at key moments in their lives: when starting out after school, raising a family, or aging on a fixed income. For example, in Denmark, purpose-built housing exists for young people, small, affordable units designed to support individuals as they begin their careers after graduation.
Similarly, seniors often have unique needs as they transition into retirement or live on fixed incomes. In Berkeley, the large student population is a major influence on the local housing market. As part of a mid-term strategy, the City could conduct targeted surveys of both students and seniors to better understand their housing needs and guide the development of appropriately scaled, affordable housing options.
This approach recognizes that housing needs change throughout a person’s life. By intentionally creating and branding housing for different life stages, whether for students, working adults, families, or seniors, the City can help shift perceptions of affordable housing from being need- Attachment 2
73 based or stigmatized to being a universal, inclusive public good.
This strategy should also focus on reframing affordable housing in Berkeley to emphasize dignity, flexibility, and responsiveness. That means designing policies and programs that allow households to adjust their housing as their needs change, such as moving into larger units when their families grow or downsizing as they age. It also includes improving how waitlists are managed and prioritizing access for those facing urgent or transitional needs. Ultimately, the goal is to build a housing system that is centered on people, not just units, and coordinated with supportive services where needed. As part of this shift, the City should also consider how branding and communications can help reshape public perception of social housing as a universal, community-oriented option.
Attachment 2
74 Appendix A: Methodology for Report
Social housing has been rising as a strong theme in affordable housing policy discourse throughout the United States for the past several years. While this report presents a summary of recent literature and common principles of social housing advanced by various advocacy groups, the implementation of the concept at the local level is still evolving. Aspects of the concept can vary based on the advocacy focus. For example, some tenant unions and organizers connect social housing with tenant governance and ownership models, such as Tenant Opportunity to Purchase Act (TOPA), which provides tenants a legal pathway, and in some cases, funding, to purchase their buildings from the private owner upon sale. Other advocates draw inspiration from European models that evolved after World War II when publicly owned housing was needed to rebuild and accommodate population growth. This study focuses primarily on social housing’s applicability to the City of Berkeley, with European models providing background in how large-scale social housing systems have evolved.
The findings of this report are based on research and analysis per the following steps:
1. Literature Review. Background research for this study involved extensive literature review which is compiled in Appendix D: Additional Resources.
2. Local Stakeholder Interviews. Feedback from local stakeholder interviews is incorporated throughout this report. The consultants interviewed local stakeholders in Berkeley and the broader East Bay region who have functioned as advocates of social housing or could potentially be implementation organizations for a new local social housing program.
Advocacy group interviewees included East Bay for Everyone, Healthy Black Families, and the Othering & Belonging Institute (at UC Berkeley). Additional potential social housing implementation partners interviewed include the Berkeley Housing Authority, Northern California Land Trust, Bay Area Community Land Trust, BRIDGE Housing, Insight Housing, RCD, SAHA, EBALDC.
3. Case Studies. European models of social housing are frequently highlighted in literature and conferences discussions. For this study, two international examples were selected:
Vienna, a city often cited in media profiles for its extensive municipal housing system, and Denmark, which operates a nationwide system of affordable social housing. Additionally, Maryland’s Montgomery County Housing Opportunities Commission, which has been developing mixed-income projects as a public agency in innovative ways, is considered a model of adaptation of some social housing principles within the American context.
4. Review of Available City-Owned Properties. The initial premise of the study was to demonstrate the feasibility of a social housing program on City-owned land that could be Attachment 2
75 made available at no cost to contain newly constructed affordable social housing units. Land costs typically constitute 20-40% of total new development costs, so the elimination of the cost of land from a project immediately enables it to achieve more affordability.
City staff had been in the process of identifying potential City-owned housing sites when the study team commenced its work in spring 2024. First, in 2016, the City Council directed the City Manager to explore city-owned sites for possible affordable housing development. On February 14, 2017, staff provided a report to the City Council with extensive detail on city- owned properties (many of which contained buildings then in use for city functions). That memo concluded that there were 6 potential sites, each with some drawbacks, which were at least 15,000 square feet, had multifamily zoning or a pathway to achieve it, and could be further considered. In 2019, City staff provided a follow-up memo to City Council, reporting on the North Berkeley BART station and Ashby BART station (both of which had not been included in the prior reporting).
30 After reviewing staff memos and the status of City efforts underway on some of the previously-identified sites, The Housing Workshop initially planned to focus this study on the North Bowling Green site, the West Berkeley Senior Center, and potential city-owned sites within the Adeline Corridor Specific Plan, which included a goal of achieving 50% affordable housing production in new construction planned for the corridor. However, further discussions with City staff concluded that none of these 3 sites would be developable in the near term. The North Bowling Green is subject to voter approval if changed to housing; the West Berkeley Service Center was planned for rehabilitation, and none of the City-owned sites within the Adeline Corridor Specific Plan that were currently not in use were large enough to provide more than 10 units of new housing. Given these constraints, the study team shifted its focus to exploring opportunities on privately-owned properties. 31 5. Identification of Available Privately-Owned Property Examples. This report profiles two examples of privately-owned property that could work well for reconfiguration as a mixed- income social housing project, and both illustrate the kinds of opportunities to acquire property to implement this concept through transacting with the private sector. These examples were identified in spring/summer 2024 as follows.
The Dwight Way property was selected through the study team’s review of older multifamily rental properties that had sold on the open market in the prior twelve months. The Dwight Way property was well suited for further analysis in several ways – it had sold for a relatively
30 For the 2019 staff memo packet containing the earlier 2016 and 2017 memos as well, see:
(https://berkeleyca.gov/sites/default/files/documents/2019-10- 29%20Item%2037%20Referral%20Response%20City%20Property%20for%20Affordable.pdf 31 The study team did not have the resources to identify other City-owned properties not currently zoned for housing (the first criteria used in the earlier staff memos), or to identify sites owned by other public agencies (as outlined in Recommendation 2 for a needed site inventory).
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76 low per-door value, was located in typical central Berkeley neighborhood, represented a common multifamily preservation opportunity, and with 21 units, was a manageable size for smaller nonprofit housing providers to potentially acquire and manage.
The Shattuck Avenue entitled project was identified while researching the status of properties in the Adeline Corridor Specific Plan. It was entitled in summer 2024 and advertised for sale as an entitled development opportunity shortly thereafter.
6. Focus Group with Mixed-Income Berkeley Tenants. Research for this report included convening a focus group of eight local residents. For market-rate renters, recruitment efforts began with outreach to several new market-rate rental management companies to request permission to distribute flyers in their buildings, but they declined. The team then engaged several real estate brokers working with existing market-rate Berkeley tenants seeking to buy their first home if they could recommend clients. This yielded three participants. The study team also reached out to Healthy Black Families, Inc. (HBF), South Berkeley-based nonprofit organization working on social equity and justice, and HBF provided recruitment support. All prospective participants completed a short online screening survey to collect basic information on age, household size, current tenure, and estimated household income to ensure a broad mix of extremely-low to moderate- and above-moderate incomes represented. In total, there were over 20 applicants, and 12 were selected to participate. All 12 RSVP’d, and 8 attended the event held in a conference room at the South Berkeley Senior Center in August 2024. With participants’ consent, the session was recorded, and the footage was provided to City staff for review.
7. Pro Forma Financial Analysis. The financial pro formas provided in this report were developed by The Housing Workshop and Urban Math. They are structured to reflect several possible mixed-income scenarios for the two example projects, encompassing both rental and ownership options. Assumptions for the pro formas were developed by the consultants, in collaboration with City staff and compared to other recent consultant reports for the City of Berkeley on related affordable housing policies. Descriptions of each key variable are included in the body of this report, with documentation for market rate rent and sale price assumptions provided in Appendix C.
Attachment 2
77 Appendix B: Detailed Housing Data
Appendix B1: Population and Household Trends, 2000-2023
Appendix B2: Berkeley Age Distribution, 2000 – 2023
Age 2000 2023 % Change 2000 2023 % Change 2000 2023 Change Under 18 14,513 12,642 -13% 354,572 315,933 -11% 1,601,858 1,449,589 -10% 18-24 22,159 33,444 51% 138,416 128,131 -7% 595,173 599,560 1% 25-34 18,360 16,652 -9% 241,073 244,512 1% 1,120,919 1,099,924 -2% 35-44 14,310 14,218 -1% 248,706 258,895 4% 1,172,570 1,106,183 -6% 45-54 14,325 11,992 -16% 200,518 217,551 8% 964,638 989,988 3% 55-64 8,592 9,929 16% 112,865 196,139 74% 571,095 944,325 65% 65-74 4,993 10,933 119% 75,699 151,102 100% 389,437 748,212 92% 75-84 3,969 7,046 78% 53,069 81,729 54% 272,643 417,811 53% 85+ 1,522 2,106 38% 18,823 28,196 50% 95,427 153,207 61% Total 102,743 118,962 16% 1,443,741 1,622,188 12% 6,783,760 7,508,799 11% Media
n Age 32.5 32.9 34.5 39.5 35.6 40.3
Notes:
(a) The Bay Area includes Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Sonoma, and Solano counties.
Sources: US Census, 2000, 2020; ACS 1-Year Estimates, 2023; THW, 2024.
City of Berkeley Alameda County Bay Area (a)
% Change % Change % Change
Population in Households 2000 2010 2020 2023 2000-2010 2010-2020 2020-2023 City of Berkeley 96,921 99,731 106,604 105,578 2.9% 6.9% -1.0% Alameda County 1,416,006 1,472,829 1,628,520 1,582,968 4.0% 10.6% -2.8% Bay Area (a) 6,640,972 7,003,059 7,590,783 7,339,611 5.5% 8.4% -3.3% Population in Group Quarters
City of Berkeley 5,822 12,849 17,717 N/A 120.7% 37.9% N/A Alameda County 27,735 37,442 53,833 N/A 35.0% 43.8% N/A Bay Area (a) 142,788 147,680 174,857 N/A 3.4% 18.4% N/A Total Population
City of Berkeley 102,743 112,580 124,321 118,962 9.6% 10.4% -4.3% Alameda County 1,443,741 1,510,271 1,682,353 1,622,188 4.6% 11.4% -3.6% Bay Area (a) 6,783,760 7,150,739 7,765,640 7,508,799 5.4% 8.6% -3.3% Households
City of Berkeley 44,955 46,029 47,606 49,088 2.4% 3.4% 3.1% Alameda County 523,366 545,138 591,636 608,534 4.2% 8.5% 2.9% Bay Area (a) 2,466,019 2,608,023 2,793,526 2,830,712 5.8% 7.1% 1.3% Average Household Size
City of Berkeley 2.16 2.17 2.24 2.15 0.5% 3.2% -4.0%
Alameda County 2.71 2.70 2.75 2.78 -0.4% 1.9% 1.0%
Bay Area (a) 2.69 2.69 2.72 2.59 -0.1% 1.0% -4.6%
Notes:
(a) The Bay Area includes Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Sonoma, and Solano counties.
Sources: US Census, 2000; ACS 1-Year Estimates, 2023; THW, 2024.
Attachment 2
78 Appendix B3: Household Income Distribution, 2023
Appendi
x B4: Median Household Income by Tenure, 2000-2023
Household Income Berkeley
Alameda
County Bay Area
Less than $15,000 13.2% 7.3% 6.4%
$15,000-$24,999 7.6% 4.2% 3.8%
$25,000-$34,999 3.4% 4.0% 3.8%
$35,000-$49,999 6.8% 6.4% 6.0%
$50,000-$74,999 11.5% 10.7% 10.3%
$75,000-$99,999 8.3% 9.6% 9.6%
$100,000-$149,999 15.0% 16.9% 16.4%
$150,000-$199,999 8.4% 11.7% 12.0%
$200,000 or more 26.1% 29.1% 31.6%
Total 100.0% 100.0% 100.0%
Notes:
(a) The Bay Area includes Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Sonoma, and Solano counties.
Sources: ACS 1-Year Estimates, 2023; THW, 2024.
Median Household Income
2000 (a) 2023 % Change
Berkeley
Owners 157,877$ 169,878$ 7.6%
R
enters 53,739$ 61,525$ 14.5%
All Households 86,958$ 98,086$ 12.8%
Alameda County
Owners 148,058$ 162,956$ 10.1%
Renters 73,571$ 82,021$ 11.5%
All Households 109,282$ 119,931$ 9.7%
Notes:
(a) All incomes adjusted to 2023 dollars.
Sources: US Census, 2000; ACS 1-Year Estimates, 2023; THW, 2024.
Attachment 2
79 Appendix B5: Households by Tenure, 2000-2023
Appendi
x B6: Berkeley Distribution of Area Median Income by Tenure, 2000 Note: 2000 was last year this data is available.
Sour
ces: HUD Comprehensive Housing Affordability Strategy (CHAS) Database, 2016-202 0; The Housing Workshop,
2025.
85%
77%
64%
56%
35%
15%
23%
36%
44%
65%
Up
to 30% AMI
30% to 50% AMI
50% to 80% AMI
80% to 120% AMI
Greater than 120% AMI
Renter Households Owner Households
City of B erkeley Alameda County Bay Area (a)
Tenure (#) 2000 2023 2000 2023 2000 2023
Ow ner Households 19,214 20,063 286,277 328,166 1,423,958 1,593,329 Renter Households 25,741 29,025 237,089 280,368 1,042,061 1,237,383 Total 44,955 49,088 523,366 608,534 2,466,019 2,830,712 Tenure (%)
Ow ner Households 42.7% 40.9% 54.7% 53.9% 57.7% 56.3%
Renter Households 57.3% 59.1% 45.3% 46.1% 42.3% 43.7%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
% Change, 2000-2023
Ow ner Households 4.4% 14.6% 11.9%
Renter Households 12.8% 18.3% 18.7%
Notes:
(a) The Bay Area includes Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Sonoma, abd Solano counties.
Sources: US Census, 2000; ACS 1-Year Estimates, 2023; THW, 2024.
Attachment 2
80 Appendix B7: Building Permits, City of Berkeley, 2000-2023
Appendix B8: B erkeley Housing Production in Current RHNA Cycle
Very Low-
Income
(<50%
AMI)
Low
Income
(50-80%
AMI)
Mod
Income
(80-120%
AMI)
Above
Mod
(>120%
AMI) Total
Berkeley RHNA, 2023-2031 2,446 1,408 1,416 3,664 8,934
Permitted Units 2021-2023 (a) 64 52 29 286 431
Balance to Permit 2024 - 2031 2,382 1,356 1,387 3,378 8,503 Permitted Units, as % of RHNA 2.6% 3.7% 2.0% 7.8% 4.8%
Goal for 2021-2023 Period in HE
6th Cycle 25.0% 25.0% 25.0% 25.0% 25.0%
Notes:
(a) The California Department of Housing and Community Development (HCD) evaluates progress meeting RHNA goals based on the number of building permits issued, not per entitled units.
Sources: CA HCD Housing Element Implementation and APR Dashboard, 2025. 0 100
200
300
400
500
600
700
800
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Single-Family Units Multifamily 2-4 Units Multifamily 5+ Units Attachment 2
81 Appendix B9: Berkeley Housing Cost Burden for Renter Households by AMI, 2020
Appendix B10: B erkeley Housing Cost Burden for Owner Households, 2020
885
960
5,895
530
1,595
1,695
2,040
1,195
445
1,220
695
15 7,650
545
35 -
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
Income < 30% AMI Income 30-50% AMI Income 50-80% AM Income 80-100% AM Income > 100% AMI
110
300
925
445
300
420
1,125
360
545
895
365
175
11,775
1,490
290
-
2,000
4,000
6,000
8,000
10,000
12,000
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
Income < 30% AMI Income 30-50% AMI Income 50-80% AM Income 80-100% AM Income > 100% AMI
Attachment 2
82 Appendix B11: Berkeley Housing Cost Burden by AMI, Senior Renter Households, 2020
580
535
1,045
240
285
124
530
130
70 275
50 -
560
95 -
-
200
400
600
800
1,000
1,200
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
No Cost Burden
Cost Burden (30-50%)
Severe Cost Burden (50%+)
Income < 30% AMI Income 30-50% AMI Income 50-80% AM Income 80-100% AM
Income > 100% AMI
Attachment 2
83 Appendix B12: Berkeley’s Population Change by Race & Ethnicity, 2000 - 2023
Population % S ha rePopulation % S ha re
Hispanic/ Latino (b) 10,001 9.7% 13,055 11.0% 30.5%
Not Hispanic/Latino 92,742 90.3% 105,907 89.0% 14.2%
White 56,691 55.2% 56,727 47.7% 0.1%
Black/ African American 13,707 13.3% 8,415 7.1% -38.6%
Native American 293 0.3% 101 0.1% -65.5%
Asian 16,740 16.3% 29,340 24.7% 75.3%
Native Hawaiian/ Pacific Islander 121 0.1% 34 0.0% -71.9% Other Race Alone 598 0.6% 992 0.8% 65.9%
Two or More Races 4,592 4.5% 10,298 8.7% 124.3%
Total 102,743 100.0% 118,962 100.0% 15.8%
Hispanic/ Latino (b) 273,910 19.0% 378,596 23.3% 38.2%
Not Hispanic/Latino 1,169,831 81.0% 1,243,592 76.7% 6.3% White 591,095 40.9% 440,498 27.2% -25.5%
Black/ African American 211,124 14.6% 146,345 9.0% -30.7% Native American 5,306 0.4% 2,630 0.2% -50.4%
Asian 292,673 20.3% 540,143 33.3% 84.6%
Native Hawaiian/ Pacific Islander 8,458 0.6% 11,050 0.7% 30.6% Other Race Alone 4,676 0.3% 9,602 0.6% 105.3%
Two or More Races 56,499 3.9% 93,324 5.8% 65.2%
Total 1,443,741 100.0% 1,622,188 100.0% 12.4%
Hispanic/ Latino (b) 1,315,175 19.4% 1,861,753 24.8% 41.6% Not Hispanic/Latino 5,468,585 80.6% 5,647,046 75.2% 3.3% White 3,392,204 50.0% 2,568,718 34.2% -24.3%
Black/ African American 497,205 7.3% 398,854 5.3% -19.8% Native American 24,733 0.4% 12,473 0.2% -49.6%
Asian 1,278,515 18.8% 2,173,467 28.9% 70.0%
Native Hawaiian/ Pacific Islander 33,640 0.5% 39,416 0.5% 17.2% Other Race Alone 18,451 0.3% 48,682 0.6% 163.8%
Two or More Races 223,837 3.3% 405,436 5.4% 81.1%
Total 6,783,760 100.0% 7,508,799 100.0% 10.7%
Notes:
(a) The Bay Area includes Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, Sonoma, and Solano counties. (b) Includes all races for those of Hispanic/Latino background.
Sources: US Census, 2000; ACS 1-Year Estimates, 2023; THW, 2025.
City of Berkeley
Alameda County
Bay Area (a)
2000 2023 %
Change
2000-2023
Attachment 2
84 Appendix B13: Current Rents for Recently Built Berkeley Rental Projects
Appendi
x B14: Berkeley Newer Construction, Recently Sold Condominiums Name/Location (a) Year Built Floorplan Asking Rent (b) Unit Size Rent/Sq.Ft.
B28 (2028 Bancroft) 2023 Studio 2,695$ 338 7.97$ 1-Bdrm 2,995$ 576 5.20$
2-Bdrm 4,195$ 621 6.76$
The Artisan (2072 Addison) 2023 2-Bdrm 4,295$ 779 5.51$ The Shattuck (2701 Shattuck) 2024 Studio 2,195$ 311 7.06$ 1-Bdrm 3,595$ 634 5.67$
2-Bdrm 4,595$ 642 7.16$
Berkeley Place (2067 University) 2023 1-Bdrm 2,750$ 400 6.88$ 2-Bdrm 3,650$ 594 6.14$
a) Does not profile The Hub, The RISE, The Aquatic @U, Helios, The Lair, or Ace Berkeley because those are targeted at students with furnished units and rents based on a per-person occupancy.
This is a product type designed to serve as a private dorm, located near campus. b) For this table, the smallest unit with the lowest rent for each floorplan is shown, Asking rents on same floorplan with more sq. ft. or views, are higher.
Sources: aparments.com; THW, 2025.
Address Sale Date
Unit
Type
Year
Built Sale Price Beds Baths Sq.Ft. $/Sq.Ft. HOA (a)
1-Bedroom Units
2747 San Pablo Ave #212 5/31/2023 Condo 2020 583,000 $ 1 1.5 773 754$ 461$ 2747 San Pablo Ave #408 8/18/2023 Condo 2020 620,000 $ 1 1 771 804$ 461$ 2747 San Pablo Ave #215 4/15/2024 Condo 2020 678,000 $ 1 1.5 1,006 674$ 562$ 2747 San Pablo Ave Unit LW1 6/25/2024 Condo 2020 525,000 $ 1 1 1,130 465$ 514$ 2747 San Pablo Ave #206 11/8/2024 Condo 2020 475,000 $ 1 1.5 910 522$ 554$ Average 576,200$ 918 644$ 510$
2-Bedroom Units
1171 Hearst Unit A 3/10/2023 Condo 2022 975,000 $ 2 1.5 875 1,114$ 337$ 1169 Hearst Unit B 3/20/2023 Condo 2022 950,000 $ 2 1.5 846 1,123$ 335$ 1171 Hearst Unit B 3/24/2023 Condo 2022 950,000 $ 2 1.5 846 1,123$ 335$ 2747 San Pablo Ave #208 6/21/2023 Condo 2020 968,000 $ 2 2.5 1,372 706$ 504$ 2747 San Pablo Ave #504 10/2/2023 Condo 2020 748,000 $ 2 1 896 835$ 470$ Average 918,200$ 967 980$ 396$
3-Bedroom Units
1811 63rd St Unit B 2/7/2025 Twnhse 2021 1,350,000$ 3 2.5 1,552 870$ 133$ Average 1,350,000$ 1,552 870$ 133$
a) HOA is per month.
Based on sales shown in Redfin, flitered by built 2020 or later, sale date 2023 or later.
Only sales in Berkeley are shown (several units just over the Oakland border are not shown).
Sources: Redfin, 2025; THW, 2025.
Attachment 2
85 Appendix C: Detailed Pro Forma Financial Analysis
The table below provides information on the current rental rates per unit in the Dwight acquisition/rehab pro forma example (e.g., used for baseline scenario).
Table 4: Maximum RSO Rents in 2023 (Sale Year)
Unit # (a) Unit Type
Rent
Ceiling (b) AMI Equivalent (c)
Year Tenant
Moved In
A1 2-Bedroom $1,030 29% 1980
A2 2-Bedroom $1,044 30% 1992
A3 1-Bedroom $748 26% 2005
A4 2-Bedroom $1,775 51% 2005
A5 1-Bedroom $1,283 44% 2006
A6 Studio $1,068 39% 2008
A7 Studio $1,149 42% 2010
A8 1-Bedroom $1,229 42% 2012
A9 2-Bedroom $1,944 55% 2013
A10 2-Bedroom $2,185 62% 2020
A11 Studio $2,245 82% 2021
A12 1-Bedroom $2,349 80% 2021
A13 1-Bedroom $2,349 80% 2021
A14 1-Bedroom $2,453 84% 2021
A15 Studio $2,500 92% 2022
A16 1-Bedroom $2,095 72% 2022
A17 1-Bedroom $2,125 73% 2022
A18 1-Bedroom $2,500 86% 2022
A19 2-Bedroom $3,000 86% 2022
Average Project AMI 61%
Notes:
(a) To maintain tenant anonymity, the unit numbers in this table are not the actual unit identifiers. (b) The rent ceiling represents the maximum allowable rent the landlord could charge, determined by applying the annual rent escalator permitted by the City of Berkeley to the initial rent. The City of Berkeley does not disclose the actual rents charged for each unit. (c) The AMI equivalent estimates the income level served based on the rent ceiling, assuming an average household size of 1 person for studios, 1.5 persons for one-bedroom units, and 3 persons for two-bedroom units. This is an approximation, as actual household sizes may vary by unit.
Sources: City of Berkeley, 2024; THW, 2025.
Attachment 2
Appendix C1: Acquisition Rehab Rental - Baseline
This building sold for $5.25 million in 2023. The scenario assumes a standard real estate investor purchases the property with existing tenants remaining in place. It is intended to illustrate the acquisition of an existing, unsubsidized building in Berkeley.
Development Program and Assumptions
Baseline:
As-
Is, No Rehab Development Costs
Baseline:
As-Is, No Rehab
Site Size (sf) 15,240 Acquisition 5,250,000$
Total Number of Units 21 Rehab Costs -$
Affordable Units Required (a) 0% - Soft Costs -$
Number of Market Rate Units 100% 21 Financing Costs -$
Dwelling Units/Acre 60 Capitalized Reserves -$
Units (b) Total Development Costs 5,250,000$
Studios 5 Total Development Cost per Unit 250,000$
1-Bedroom 10
2-Bedroom 6 Development Feasibility and Financing
3-Bedroom - Net Operating Income (NOI) 260,941$
Average Unit Size 611 Capitalized Value 5,798,680$
Total Residential Space (sf) 12,832 Less Total Development Cost (5,250,000)$ Total Open Space (sf) 5,000 Profit / (Loss) 548,680$
Number of Parking Spaces 9 Return on Cost 10.5%
Parking spaces per unit 0.43 Feasible for Market-Rate Project? (e) #REF! Development Costs Sources of Financing
Acquisition Cost per Residential Unit (b) 250,000$ Supportable Loan 2,993,169$ Hard Costs - Avg. Rehab Cost/Unit (c) -$ Private Equity (f) 2,256,831$ Hard Costs - Open Space Traditional Capital Stack to Fill Gap Soft Costs exc Fees (as % of hard) 20.0% City HTF N/A
Financing Costs (Construction) Other N/A
Loan to Cost Ratio 60.0%
Interest Rate 7.0% Operations
Loan Fees 1.5% Gross Income (b) 458,148$
Construction Period (months) 12 Less: Vacancy (22,907)$ Avg. Outstanding Bal During Construction 60.0% Less: Op Expenses excluding Property Taxes (111,300)$ Financing Costs (Permanent) Less: Property Taxes (63,000)$ Loan to Cost Ratio 70.0% Less: Reserves -$
Interest Rate 6.0% Net Operating Income (NOI) 260,941$
Debt Coverage Ratio 1.20
Capitalized Reserve (d) Affordability Metrics
Non-Profit Developer Fee Average Project AMI 61%
Market Rents % of Units Serving ELI Households 14%
Studios N/A % of Units Serving VLI Households 24%
1-Bedroom N/A % of Units Serving Low Households 29%
2-Bedroom N/A % of Units Serving Moderate Households 33% Operations % of Units Serving Above Mod Households 0%
Vac
ancy 5.0% % Units Serving <=80% AMI Households 67%
OpEx per unit (exc. prop taxes) (b) 5,300$
Property Tax Rate 1.20%
Cap Rate (e) 4.5%
Notes:
a) Real estate investors who purchase existing buildings are not required to set-aside any units for affordable housing. For buildings built before 1995, Berkeley's rent stabilization ordinance applies. Rent increases are capped at the annual allowable rate set by the Rent Board.
However, when a tenant vacates, landlords are permitted to reset to market rents under the Costa-Hawkins Rental Housing Act. b) The unit mix, rents, operating costs, and acquisition price are based on a 21-unit apartment building in Berkeley that sold in October 2023. c) This baseline scenario assumes no rehabilitation. In rent-stabilized buildings, owners typically wait for tenants to vacate before upgrading units to achieve higher rents from new tenants. This scenario establishes a baseline to assess a landlord's return based on current rents. d) Market-rate projects of this scale typically do not capitalize operating reserves and instead rely on accumulated reserves and cash flow to cover unexpected costs.
e) The cap rate is based on the actual rate at the time of sale, calculated by comparing the building’s net operating income (NOI) to its sales price. In contrast, the other proformas use current market cap rates, which are now higher than when this property was sold. f) This represents the funding needed to cover the gap between project costs and supportable debt. Market-rate projects close this gap using private equity, including developer contributions, preferred equity, and other private sources seeking competitive returns.
Sources: The Housing Workshop; Urban Math, 2025.
86 Attachment 2
Appendix C2: Acquisition Rehab Rental - Income Average @ 80% AMI (Berkeley Small Sites) This scenario models the income averaging allowed in Berkeley's Small Sites Program, as it allows for cross-subsidization. In this scenario, existing tenants remain in place, and upon turnover, units can be rented to households earning up to 120% AMI, providing the opportunity to cross-subsidize lower-income units while maintaining an 80% AMI average.
Development Program and Assumptions
Option A:
Income Average
@ 80% AMI Development Costs
Option A:
Income Average @
80% AMI
Site Size (sf) 15,240 Acquisition 5,250,000$ Total Number of Units 21 Rehab Hard Costs with Contingency 3,018,750$ Affordable Units Required (a) 60% 13 Landscaping 150,000$ Number of Market Rate Units (b) 40% 8 Soft Costs 633,750$ Dwelling Units/Acre 60 Subtotal Const Costs Before Financing 3,802,500$ Units (c) Financing Costs
Studios 5 Points 81,473$
1-Bedroom 10 Construction Period Interest 228,123$ 2-Bedroom 6 Subtotal Financing Costs 309,596$ 3-Bedroom - Capitalized Reserves 82,446$ Average Unit Size 611 Developer Fee 290,000$ Total Residential Space (sf) 12,832 Total Development Costs 9,734,542$ Total Open Space (sf) 5,000 Total Development Cost per Unit 463,550$ Number of Parking Spaces 9
Parking spaces per unit 0.43 Development Feasibility and Financing Development Costs Net Operating Income (NOI) #N/A
Acquisition Cost per Residential Unit (c) 250,000$ Capitalized Value #N/A Hard Costs - Avg. Rehab Cost/Unit (d) 125,000$ Less Total Development Cost (9,734,542)$ Hard Costs - Open Space (e) 30$ Profit / (Loss) #N/A Rehab Cost Contingency 15.0% Return on Cost #N/A
Soft Costs exc Fees (as % of hard) 20.0% Feasible for Market-Rate Project? (j) Financing Costs (Construction) Sources of Financing
Loan to Cost Ratio 60.0% Supportable Loan #N/A
Interest Rate 7.0% Gap Financing (k) #N/A
Loan Fees 1.5% Subsidy per Affordable Unit #N/A
Construction Period (months) 12 Traditional Capital Stack to Fill Gap Avg. Outstanding Bal During Construction 60.0% City HTF (l) #N/A Financing Costs (Permanent) (f) Other (l) #N/A
Loan to Cost Ratio 80.0%
Interest Rate 6.0% Operations
Debt Coverage Ratio 1.20 Gross Income #N/A Capitalized Reserve (g) See note Less: Vacancy #N/A
Non-Profit Developer Fee (h) 290,000$ Less: Op Expenses excluding Property Taxes (111,300)$ Market Rents (i) Less: Property Taxes (j) (38,486)$
Studios 2,300$ Less: Reserves (10,500)$ 1-Bedroom 2,800$ Less: Annual Compliance Monitoring (1,500)$ 2-Bedroom 3,300$ Net Operating Income (NOI) #N/A Operations
Vacancy 5.0% Affordability Metrics
OpEx per unit (exc. prop taxes) (c) 5,300$ Average Project AMI 80% Property Tax Rate (i) (j) 1.20% % of Units Serving ELI Households 5% Cap Rate 6.00% % of Units Serving VLI Households 10%
Reserves (per unit per year) 500$ % of Units Serving Low Households 48% Annual compliance monitoring (per year) 1,500$ % of Units Serving Moderate Households 38% % of Units Serving Above Mod Households 0%
% Units Serving <=80% AMI Households 62%
87 Attachment 2
Notes:
a) Real estate investors who purchase existing buildings are not required to set-aside any units for affordable housing. For buildings built before 1995, Berkeley's rent stabilization ordinance applies. Rent increases are capped at the annual allowable rate set by the Rent Board.
However, when a tenant vacates, landlords are permitted to reset to market rents under the Costa-Hawkins Rental Housing Act. b) The distribution of affordable and market-rate units by bedroom size is as follows:
Affordable Market Market Rate AMIs
Studios 3 2 84%
1-Bedroom 6 4 96%
2-Bedroom 4 2 94%
Total 13 8
c) The unit mix, rents, operating costs, and acquisition price are based on a 21-unit apartment building in Berkeley that sold in October 2023. d) Rehabilitation costs can vary depending on the building's condition, the scope of the work, required code compliance upgrades, and the presence of any hazards. Since the level of rehabilitation can range from minimal to extensive, this proforma assumes a building in relatively good condition requiring a moderate level of improvement. The goal of the rehabilitation is to ensure the building remains in good condition over time, preserving its long-term value and functionality. e) This includes funds for exterior upgrades, such as enhancing community gathering spaces and other outdoor improvements. f) The permanent financing terms assume more favorable conditions from a CDFI or another lender experienced in acquisition-rehab projects.
These lenders can offer better terms than commercial lenders if they have partnered with public agencies providing take-out financing. g) Berkeley's Small Sites Program mandates a capitalized operating reserve equal to 25% of annual operating expenses and a capitalized replacement reserve set at the greater of $2,000 per unit or the amount required to cover replacement costs for the next 10 years. Also, the replacement reserve requires an annual deposit of $500 per unit. h) The developer's fee is modeled after Berkeley's Small Sites Program, which is $80,000 + $10,000 per unit, capped at 5% of project costs excluding the developer fee.
i) Market rents are calculated using the average of the upper quartile of rents upon vacancy reset, based on data from Berkeley Rent Board for properties with new tenant move-ins from January to May of 2024. Market rents for NOAH currently range from 85-95% AMI. j) Mixed income projects may qualify for a partial property tax exemption under California's Revenue and Taxation Code Section 214(g).
The exemption is prorated based on the percentage of units restricted to low-income households. A community land that owns the land can also qualify for a property tax exemption with higher income limits. k) This represents the funding needed to bridge the gap between the acquisition-rehab cost and the supportable debt. l) The City of Berkeley does not impose a strict cap on the per-unit subsidy under the Small Sites Program. However, the $300,000 per unit figure serves as an estimate to evaluate how far local funds can stretch when leveraged with other funding sources. If no additional funding sources are available, the city would need to cover the entire funding gap.
Sources: The Housing Workshop; Urban Math, 2025.
88 Attachment 2
Appendix C3: Acquisition Rehab Rental - 100% Affordable In this model, 100% of the units are designated as affordable, without cross-subsidization, serving households at 30% AMI, 40% AMI, 50% AMI, and 60% AMI.
Development Program and Assumptions
Option C:
100% Affordable Development Costs
Option C:
100% Affordable
Site Size (sf) 15,240 Acquisition 5,250,000$ Total Number of Units 21 Rehab Hard Costs with Contingency 3,018,750$ Affordable Units Required (a) 100% 21 Landscaping 150,000$ Number of Market Rate Units (b) 40% - Soft Costs 633,750$ Dwelling Units/Acre 60 Subtotal Const Costs Before Financing 3,802,500$ Units (c) Financing Costs
Studios 5 Points 81,473$
1-Bedroom 10 Construction Period Interest 228,123$ 2-Bedroom 6 Subtotal Financing Costs 309,596$ 3-Bedroom - Capitalized Reserves 72,825$ Average Unit Size 611 Developer Fee 290,000$ Total Residential Space (sf) 12,832 Total Development Costs 9,724,921$ Total Open Space (sf) 5,000 Total Development Cost per Unit 463,091$ Number of Parking Spaces 9
Parking spaces per unit 0.43 Development Feasibility and Financing Development Costs Net Operating Income (NOI) 201,589$
Acquisition Cost per Residential Unit (c) 250,000$ Capitalized Value 3,359,810$ Hard Costs - Avg. Rehab Cost/Unit (d) 125,000$ Less Total Development Cost (9,724,921)$ Hard Costs - Open Space (e) 30$ Profit / (Loss) (6,365,111)$ Rehab Cost Contingency 15.0% Return on Cost -65.5%
Soft Costs exc Fees (as % of hard) 20.0% Feasible for Market-Rate Project? (j) #REF! Financing Costs (Construction) Sources of Financing
Loan to Cost Ratio 60.0% Supportable Loan 2,312,361$
Interest Rate 7.0% Gap Financing (k) 7,412,560$
Loan Fees 1.5% Subsidy per Affordable Unit 352,979$
Construction Period (months) 12 Traditional Capital Stack to Fill Gap Avg. Outstanding Bal During Construction 60.0% City HTF (l) 6,300,000$ Financing Costs (Permanent) (f) Other 1,112,560$
Loan to Cost Ratio 80.0%
Interest Rate 6.0% Operations
Debt Coverage Ratio 1.20 Gross Income 341,988$ Capitalized Reserve (g) See note Less: Vacancy (17,099)$ Non-Profit Developer Fee (h) 290,000$ Less: Op Expenses excluding Property Taxes (111,300)$ Market Rents (i) Less: Property Taxes (j) -$
Studios 2,300$ Less: Reserves (10,500)$ 1-Bedroom 2,800$ Less: Annual Compliance Monitoring (1,500)$ 2-Bedroom 3,300$ Net Operating Income (NOI) 201,589$ Operations
Vacancy 5.0% Affordability Metrics
OpEx per unit (exc. prop taxes) (c) 5,300$ Average Project AMI 45% Property Tax Rate (i)(j) 1.20% % of Units Serving ELI Households 29% Cap Rate 6.00% % of Units Serving VLI Households 43%
Reserves (per unit per year) 500$ % of Units Serving Low Households 29% Annual compliance monitoring (per year) 1,500$ % of Units Serving Moderate Households 0% % of Units Serving Above Mod Households 0%
% Units Serving <=80% AMI Households 100%
89 Attachment 2
Notes:
a) Real estate investors who purchase existing buildings are not required to set-aside any units for affordable housing. For buildings built before 1995, Berkeley's rent stabilization ordinance applies. Rent increases are capped at the annual allowable rate set by the Rent Board.
However, when a tenant vacates, landlords are permitted to reset to market rents under the Costa-Hawkins Rental Housing Act. b) The distribution of affordable and market-rate units by bedroom size is as follows:
Affordable
Studios 5
1-Bedroom 10
2-Bedroom 6
Total 21
c) The unit mix, rents, operating costs, and acquisition price are based on a 21-unit apartment building in Berkeley that sold in October 2023. d) Rehabilitation costs can vary depending on the building's condition, the scope of the work, required code compliance upgrades, and the presence of any hazards. Since the level of rehabilitation can range from minimal to extensive, this proforma assumes a building in relatively good condition requiring a moderate level of improvement. The goal of the rehabilitation is to ensure the building remains in good condition over time, preserving its long-term value and functionality. e) This includes funds for exterior upgrades, such as enhancing community gathering spaces and other outdoor improvements. f) The permanent financing terms assume more favorable conditions from a CDFI or another lender experienced in acquisition-rehab projects.
These lenders can offer better terms than commercial lenders if they have partnered with public agencies providing take-out financing. g) Berkeley's Small Sites Program mandates a capitalized operating reserve equal to 25% of annual operating expenses and a capitalized replacement reserve set at the greater of $2,000 per unit or the amount required to cover replacement costs for the next 10 years. Also, the replacement reserve requires an annual deposit of $500 per unit. h) The City’s NOFA allows developer fees of up to the lesser of 10% of total development costs or $2 million for non-tax credit projects. To keep this scenario comparable to others, the developer fee was capped at $500,000. i) Market rents are calculated using the average of the upper quartile of rents upon vacancy reset, based on data from Berkeley Rent Board for properties with new tenant move-ins from January to May of 2024. Market rents for NOAH currently range from 85-95% AMI. j) Mixed income projects may qualify for a partial property tax exemption under California's Revenue and Taxation Code Section 214(g).
The exemption is prorated based on the percentage of units restricted to low-income households. A community land that owns the land can also qualify for a property tax exemption with higher income limits. k) This represents the funding needed to bridge the gap between the acquisition-rehab cost and the supportable debt. l) The City of Berkeley does not impose a strict cap on the per-unit subsidy under the Small Sites Program. However, the $300,000 per unit figure serves as an estimate to evaluate how far local funds can stretch when leveraged with other funding sources. If no additional funding sources are available, the city would need to cover the entire funding gap.
Sources: The Housing Workshop; Urban Math, 2025.
90 Attachment 2
Appendix C4: Acquisition Rehab Ownership -Targeted 80% AMI Average This scenario illustrates the acquisition of an existing rental property, allowing current tenants the option to purchase. It accounts for the possibility that some tenants may choose to vacate, and aims to achieve an average affordability level of 80% AMI across the building.
Development Program and Assumptions
Option A:
80% AMI Average Development Costs
Option A:
80% AMI Average
Site Size (sf) 15,240 Acquisition 5,250,000$
Total Number of Units 21 Rehab Hard Costs with Contingency #REF! Affordable Units Required (a) 100% 21 Landscaping 150,000$ Number of Market Rate Units (b) 0% - Soft Costs #REF!
Dwelling Units/Acre 60 Subtotal Const Costs Before Financing #REF! Units (c) Financing Costs
Studios 5 Points #REF!
1-Bedroom 10 Construction Period Interest #REF!
2-Bedroom 6 Subtotal Financing Costs #REF!
3-Bedroom - Capitalized Reserves #REF!
Average Unit Size 611 Developer Fee 290,000$
Total Residential Space (sf) 12,832 Total Development Costs #REF! Total Open Space (sf) 5,000 Total Development Cost per Unit #REF! Number of Parking Spaces 9
Parking spaces per unit 0.43 Development Feasibility and Financing Development Costs Sales Revenue 7,154,013$
Acquisition Cost per Residential Unit (c) 250,000$ Less Marketing Costs (357,701)$ Hard Costs - Avg. Rehab Cost/Unit (d) #REF! Net Sales Revenue 6,796,313$ Hard Costs - Open Space (e) 30 Less Total Development Cost #REF! Rehab Cost Contingency 15.0% Profit / (Loss) #REF!
Soft Costs exc. Fees (as % of hard) 20.0% Return on Cost #REF! Financing Costs (Construction) Feasible for Market-Rate Project? (i) #REF! Loan to Cost Ratio 60.0% Sources of Financing
Interest Rate 7.0% Net Sales Revenue 6,796,313$
Loan Fees 1.5% Gap Financing (h) #REF!
Construction Period (months) 12 Subsidy per Affordable Unit #REF! Avg. Outstanding Bal During Construction 60.0% Traditional Capital Stack to Fill Gap Capitalized Reserves (f) 3.0% City HTF #REF!
Nonprofit Developer Fee (g) 290,000$ Other #REF! 80% AMI Sales Prices
Studios 286,333$ Public Benefit Metrics
1-Bedroom 338,139$ Average Project AMI 80%
2-Bedroom 390,160$ % of Units Serving ELI Households 0% Sales Assumptions % of Units Serving VLI Households 0%
Marketing Costs 5.0% % of Units Serving Low Households 67% % of Units Serving Moderate Households 33%
% of Units Serving Above Mod Households 0%
% Units Serving <=80% AMI Households 67%
Notes:
a) Real estate investors who purchase existing buildings are not required to set-aside any units for affordable housing. For buildings built before 1995, Berkeley's rent stabilization ordinance applies. Rent increases are capped at the annual allowable rate set by the Rent Board.
However, when a tenant vacates, landlords are permitted to reset to market rents under the Costa-Hawkins Rental Housing Act. b) The distribution of affordable and market-rate units by bedroom size is as follows:
Affordable Market
Studios 5 -
1-Bedroom 10 -
2-Bedroom 6 -
3-Bedroom - -
Total 21 -
c) The unit mix, rents, operating costs, and acquisition price are based on a 21-unit apartment building in Berkeley that sold in October 2023. d) Rehabilitation costs can vary depending on the building's condition, the scope of the work, required code compliance upgrades, and the presence of any hazards. Since the level of rehabilitation can range from minimal to extensive, this proforma assumes a building in relatively good condition requiring a moderate level of improvement. The goal of the rehabilitation is to ensure the building remains in good condition e) This includes funds for exterior upgrades, such as enhancing community gathering spaces and other outdoor improvements. f) Capitalized reserves are set aside to cover unforeseen costs during sales and operations of the condominium or cooperative. They may be used for startup costs, warranty obligations, or carrying costs for unsold units. Typical reserves range from 2% to 5% of total project costs. h) The developer's fee is modeled after Berkeley's Small Sites Program, which is $80,000 + $10,000 per unit, capped at 5% of project costs excluding the developer fee.
h) The City of Berkeley does not impose a strict cap on the per-unit subsidy under the Small Sites Program. However, the $250,000 per unit figure serves as an estimate to evaluate how far local funds can stretch when leveraged with other funding sources. If no additional funding sources are available, the city would need to cover the entire funding gap.
Sources: The Housing Workshop; Urban Math, 2025.
91 Attachment 2
Appendix C5: Acquisition Rehab, Conversion to Ownership for Existing Residents (Average 61% AMI) This scenario models the acquisition of an existing rental building, with all tenants remaining in place and opting into a homeownership structure designed to ensure long-term affordability.
Development Program and Assumptions
Baseline:
Current Tenant
Mix Development Costs
Baseline:
Current Tenant Mix
Site Size (sf) 15,240 Acquisition 5,250,000$ Total Number of Units 21 Rehab Hard Costs with Contingency #REF! Affordable Units Required (a) 100% 21 Landscaping 150,000$ Number of Market Rate Units (b) 0% - Soft Costs #REF! Dwelling Units/Acre 60 Subtotal Const Costs Before Financing #REF! Units (c) Financing Costs
Studios 5 Points #REF!
1-Bedroom 10 Construction Period Interest #REF! 2-Bedroom 6 Subtotal Financing Costs #REF! 3-Bedroom - Capitalized Reserves #REF! Average Unit Size 611 Developer Fee 290,000$ Total Residential Space (sf) 12,832 Total Development Costs #REF! Total Open Space (sf) 5,000 Total Development Cost per Unit #REF! Number of Parking Spaces 9
Parking spaces per unit 0.43 Development Feasibility and Financing Development Costs Sales Revenue 4,846,647$
Acquisition Cost per Residential Unit (c) 250,000$ Less Marketing Costs (242,332)$ Hard Costs - Avg. Rehab Cost/Unit (d) #REF! Net Sales Revenue 4,604,315$ Hard Costs - Open Space (e) 30 Less Total Development Cost #REF! Rehab Cost Contingency 15.0% Profit / (Loss) #REF!
Soft Costs exc. Fees (as % of hard) 20.0% Return on Cost #REF! Financing Costs (Construction) Feasible for Market-Rate Project? (i) #REF! Loan to Cost Ratio 60.0% Sources of Financing
Interest Rate 7.0% Net Sales Revenue 4,604,315$
Loan Fees 1.5% Gap Financing (h) #REF!
Construction Period (months) 12 Subsidy per Affordable Unit #REF! Avg. Outstanding Bal During Construction 60.0% Traditional Capital Stack to Fill Gap Capitalized Reserves (f) 3.0% City HTF #REF!
Nonprofit Developer Fee (g) 290,000$ Other #REF! Sales Assumptions
Marketing Costs 5.0% Public Benefit Metrics
Average Project AMI 61%
% of Units Serving ELI Households 14%
% of Units Serving VLI Households 24%
% of Units Serving Low Households 29%
% of Units Serving Moderate Households 33%
% of Units Serving Above Mod Households 0%
% Units Serving <=80% AMI Households 67%
Notes:
a) Real estate investors who purchase existing buildings are not required to set-aside any units for affordable housing. For buildings built before 1995, Berkeley's rent stabilization ordinance applies. Rent increases are capped at the annual allowable rate set by the Rent Board.
However, when a tenant vacates, landlords are permitted to reset to market rents under the Costa-Hawkins Rental Housing Act. b) The distribution of affordable and market-rate units by bedroom size is as follows:
Affordable Market
Studios 5 -
1-Bedroom 10 -
2-B
edroom 6 -
3-Bedroom - -
Total 21 -
c) The unit mix, rents, operating costs, and acquisition price are based on a 21-unit apartment building in Berkeley that sold in October 2023. d) Rehabilitation costs can vary depending on the building's condition, the scope of the work, required code compliance upgrades, and the presence of any hazards. Since the level of rehabilitation can range from minimal to extensive, this proforma assumes a building in relatively good condition requiring a moderate level of improvement. The goal of the rehabilitation is to ensure the building remains in good condition e) This includes funds for exterior upgrades, such as enhancing community gathering spaces and other outdoor improvements. f) Capitalized reserves are set aside to cover unforeseen costs during sales and operations of the condominium or cooperative. They may be used for startup costs, warranty obligations, or carrying costs for unsold units. Typical reserves range from 2% to 5% of total project costs. h) The developer's fee is modeled after Berkeley's Small Sites Program, which is $80,000 + $10,000 per unit, capped at 5% of project costs excluding the developer fee.
h) The City of Berkeley does not impose a strict cap on the per-unit subsidy under the Small Sites Program. However, the $250,000 per unit figure serves as an estimate to evaluate how far local funds can stretch when leveraged with other funding sources. If no additional funding sources are available, the city would need to cover the entire funding gap.
Sources: The Housing Workshop; Urban Math, 2025.
92 Attachment 2
Appendix C6: New Construction Rental - Baseline
This represents a typical market-rate project with an inclusionary set-aside, where 20% of the units are affordable and 80% of units are market-rate. Of the affordable units, half are at 50% AMI and, half are at 80% AMI. All townhomes will be rented at market rate.
Development Program and Assumptions
Baseline:
Current Inclusionary Development Costs
Baseline:
Current Inclusionary
Site Size (sf) 23,527 Land 5,820,000$ Total Number of Units 97 Construction and Soft Costs Affordable Units Required (a) 20% 20 Site Work 588,175$ Number of Market Rate Units 80% 77 Hard Costs - Residential 36,876,550$ Dwelling Units/Acre 180 Hard Costs - Parking 2,940,000$ Units (c) Soft Costs 8,889,040$
Studios 49 School Fee 421,205$ 1-Bedroom 20 Art Fee 323,238$ 2-Bedroom 18 Subtotal Const Costs Before Financing 50,038,207$ 3-Bedroom (Townhouses) 10 Financing Costs Average Unit Size 615 Points 450,344$ Net Residential Space (sf) 59,655 Construction Period Interest 3,152,407$ Common Area 21,816 Subtotal Financing Costs 3,602,751$ Total Residential Space (sf) 81,471 Capitalized Reserves -$ Total Open Space (sf) 4,292 Developer Fee (h) -$ Number of Parking Spaces 49 Total Development Costs 59,460,958$ Parking spaces per unit 0.51 Total Development Cost per Unit (inc. land) 613,000$ Development Costs Total Development Cost per Unit (exc. land) 553,000$ Land per Residential Unit (d) 60,000$
Land per Site sf 247$ Development Feasibility and Financing Construction Type Type 3 Net Operating Income (NOI) 2,597,123$ Site Work (per sq.ft. of site) 25$ Capitalized Value 57,713,833$ Hard Costs - Res (e) 450$ Less Total Development Cost (59,460,958)$ Hard Costs - Open Space 50$ Profit / (Loss) (1,747,125)$ Parking Costs (per podium space) 60,000$ Return on Cost -2.9% Soft Costs exc. Fees (as % of hard) (f) 22.0% Feasible for Market-Rate Project? (j) No Impact Fees (g) Sources of Financing
BUSD School Fee 5.17$ Supportable Loan 31,086,046$ 1% Arts Fee 0.8% Private Equity (k) 28,374,912$
Financing Costs (Construction) Traditional Capital Stack to Fill Gap Loan to Cost Ratio 60.0% LIHTC N/A
Interest Rate 7.0% City HTF N/A
Loan Fees 1.5% Other N/A
Construction Period (months) 30
Avg. Outstanding Bal During Construction 60.0% Operations Financing Costs (Permanent) Stabilized Gross Income 3,930,336$ Interest Rate 6.0% Less: Vacancy (196,517)$
Debt Coverage Ratio (Perm) 1.15 Less: Op Expenses excluding Property Taxes (582,000)$ Capitalized Reserve (# of months) (h) - Less: Property Taxes (j) (554,697)$ Nonprofit Developer Fee (i) 2,500,000$ Net Operating Income (NOI) 2,597,123$ Market Rents
Studios 2,850$ Affordability Metrics 1-Bedroom 3,500$ Average Project AMI 108% 2-Bedroom 4,400$ % of Units Serving ELI Households 0% 3-Bedroom (Townhouses) 6,800$ % of Units Serving VLI Households 10% Operations % of Units Serving Low Households 10%
Vacancy 5.0% % of Units Serving Moderate Households 0%
OpEx per unit (exc. prop taxes) 6,000$ % of Units Serving Above Mod Households 79% Property Tax Rate (j) 1.20% % Units Serving <=80% AMI Households 21% Cap Rate 4.50%
93 Attachment 2
Notes:
a) The inclusionary requirement applies to new residential developments above 5,000 square feet and can be met through a combination of providing units and paying a prorated fee This proforma assumes developers will meet the full affordable housing requirement on-site. b) The distribution of affordable and market-rate units by bedroom size is as follows:
Affordable Market Market Rate AMIs
Studios 10 39 105%
1-Bedroom 5 15 120%
2-Bedroom 5 13 125%
3-Bedroom 10 170%
Total 20 77
c) The development program is based on plans submitted in 2024 and includes stacked flats with an at-grade podium garage. The project received a 50% density bonus and includes a mix of stacked flats on floors 2 through 6, and two-story townhouses on floors 7 and 8. d) The land cost per unit was based on entitled projects located on sites larger than 1/3 acre that were sold along major commercial corridors, including San Pablo Avenue, University Avenue, and Shattuck Avenue. e) Hard costs includes all direct expenses associated with construction, including materials, labor, and equipment, required to construct the structure, excluding site work and parking, which are calculated separately. This figure captures the costs associated with Berkeley's Hard Hat and Bird Safe Building policies.
f) Soft costs include indirect expenses like design, insurance, and city fees, based on the City of Berkeley’s fee calculator. The soft-to-hard cost ratio generally aligns with the assumptions in Strategic Economics’ April 2024 report, Berkeley In-Lieu Fee and Housing Policies Economic Feasibility Analysis.
g) The current impact fees that apply to residential projects are:
Berkeley Unified School District fee
1% Arts Fee
The Affordable Housing In-Lieu Fee is available if a developer chooses to partially satisfy the inclusionary requirement by paying a fee. h) Market-rate projects typically do not capitalize operating reserves, instead relying on lease-up reserves or projected cash flow to cover operating costs. Reserves are more common in affordable housing or when required by lenders. i) The developer fee was calculated using the CTCAC Developer Fee Calculator provided by the State Treasurer's Office, based on an eligible basis that includes hard and soft costs, and assuming financing through 4% tax credits. For projects deemed infeasible by the market, this reflects the fee that affordable housing developers would expect to undertake this type of project. Because the baseline presents a market-rate, inclusionary development, no non-profit developer fee was included in the development costs. j) Mixed income projects may qualify for a partial property tax exemption under California's Revenue and Taxation Code Section 214(g).
The exemption is prorated based on the percentage of units restricted to low-income households. Additional requirements include a regulatory agreement, an appropriate ownership structure, and compliance with other eligibility criteria. A community land that owns the land can also qualify for a property tax exemption with higher income limits. This proforma assumes the property tax exemption applies only to the units designated for low-income households or below. k) This represents the funding needed to cover the gap between project costs and supportable debt. Market-rate projects close this gap using private equity, including developer contributions, preferred equity, and other private sources seeking competitive returns.
Sources: The Housing Workshop; Urban Math, 2024.
94 Attachment 2
Appendix C7: New Construction Rental - Half & Half
This assumes 50% of units will be affordable, with 10% serving 50% AMI and 40% serving 80% AMI households. The remaining will be market-rate. All townhomes will be rented at market rents to cross-subsidize. This project could qualify for SB 35/SB 423 streamlining.
Development Program and Assumptions
Option A:
Half & Half Development Costs
Option A:
Half & Half
Site Size (sf) 23,527 Land 5,820,000$
Total Number of Units 97 Construction and Soft Costs Affordable Units Required (a) 50% 49 Site Work 588,175$ Number of Market Rate Units (b) 50% 48 Hard Costs - Residential 42,375,843$ Dwelling Units/Acre 180 Hard Costs - Parking 2,940,000$ Units (c) Soft Costs 10,098,884$
Studios 49 School Fee 421,205$
1-Bedroom 20 Art Fee 367,232$
2-Bedroom 18 Subtotal Const Costs Before Financing 56,791,339$ 3-Bedroom (Townhouses) 10 Financing Costs
Average Unit Size 615 Points 511,122$
Net Residential Space (sf) 59,655 Construction Period Interest 3,577,854$ Common Area 21,816 Subtotal Financing Costs 4,088,976$ Total Residential Space (sf) 81,471 Capitalized Reserves 1,541,554$ Total Open Space (sf) 4,292 Developer Fee 2,500,000$ Number of Parking Spaces 49 Total Development Costs 70,741,869$ Parking spaces per unit 0.51 Total Development Cost per Unit (inc. land) 729,298$ Development Costs Total Development Cost per Unit (exc. land) 669,298$ Land per Residential Unit (d) 60,000$
Land per Site sf 247$ Development Feasibility and Financing Construction Type Type 3 Net Operating Income (NOI) 2,523,058$ Site Work (per sq.ft. of site) 25$ Capitalized Value 56,067,949$ Hard Costs - Res (e) 518$ Less Total Development Cost (70,741,869)$ Hard Costs - Open Space 50$ Profit / (Loss) (14,673,920)$ Parking Costs (per podium space) 60,000$ Return on Cost -20.7% Soft Costs exc. Fees (as % of hard) (f) 22.0% Feasible for Market-Rate Project? (k) No Impact Fees (g) Sources of Financing
BUSD School Fee 5.17$ Supportable Loan 30,199,533$ 1% Arts Fee 0.8% Gap Financing (l) 40,542,335$
Financing Costs (Construction) Subsidy per Affordable Unit 827,395$ Loan to Cost Ratio 60.0% Traditional Capital Stack to Fill Gap Interest Rate 7.0% Tax Credit Equity 12,984,374$
Loan Fees 1.5% City HTF 9,800,000$
Construction Period (months) 30 Other 17,757,962$
Avg. Outstanding Bal During Construction 60.0%
Financing Costs (Permanent) Operations
Interest Rate 6.0% Stabilized Gross Income 3,591,792$
Debt Coverage Ratio (Perm) 1.15 Less: Vacancy (179,590)$ Capitalized Reserve (# of months) (h) 6 Less: Op Expenses excluding Property Taxes (582,000)$ Nonprofit Developer Fee (i) 2,500,000$ Less: Property Taxes (k) (307,145)$ Market Rents Net Operating Income (NOI) 2,523,058$
Studios 2,850$
1-Bedroom 3,500$ Affordability Metrics
2-Bedroom 4,400$ Average Project AMI 99%
3-Bedroom (Townhouses) 6,800$ % of Units Serving ELI Households 0% Operations % of Units Serving VLI Households 9%
Vacancy 5.0% % of Units Serving Low Households 41%
OpEx per market unit (exc. prop taxes) 6,000$ % of Units Serving Moderate Households 0% OpEx Adjustment for Affordable Units (j) 15.0% % of Units Serving Above Mod Households 49% Property Tax Rate (k) 1.20% % Units Serving <=80% AMI Households 51% Cap Rate 4.50%
95 Attachment 2
Notes:
a) The inclusionary requirement applies to new residential developments above 5,000 square feet and can be met through a combination of providing units and paying a prorated fee This proforma assumes developers will meet the full affordable housing requirement on-site. b) The distribution of affordable and market-rate units by bedroom size is as follows:
Affordable Market Market Rate AMIs
Studios 26 23 105%
1-Bedroom 12 8 120%
2-Bedroom 11 7 125%
3-Bedroom 10 170%
Total 49 48
c) The development program is based on plans submitted in 2024 and includes stacked flats with an at-grade podium garage. The project received a 50% density bonus and includes a mix of stacked flats on floors 2 through 6, and two-story townhouses on floors 7 and 8. d) The land cost per unit was based on entitled projects located on sites larger than 1/3 acre that were sold along major commercial corridors, including San Pablo Avenue, University Avenue, and Shattuck Avenue. e) Hard costs includes all direct expenses associated with construction, including materials, labor, and equipment, required to construct the structure, excluding site work and parking, which are calculated separately. This figure captures the costs associated with Berkeley's Hard Hat and Bird Safe Building policies. This also incorporates an adjustment from the baseline market-rate project to reflect added costs associated with affordable projects, including prevailing wages. f) Soft costs include indirect expenses like design, insurance, and city fees, based on the City of Berkeley’s fee calculator. The soft-to-hard cost ratio generally aligns with the assumptions in Strategic Economics’ April 2024 report, Berkeley In-Lieu Fee and Housing Policies Economic Feasibility Analysis.
g) The current impact fees that apply to residential projects are:
Berkeley Unified School District fee
1% Arts Fee
The Affordable Housing In-Lieu Fee is available if a developer chooses to partially satisfy the inclusionary requirement by paying a fee. h) Capitalized reserves for a rental project are funds set aside to cover unforeseen costs during lease-up and operations. A standard reserve amount is equivalent to 3 to 6 months of operating expenses, including debt service. i) The developer fee was calculated using the CTCAC Developer Fee Calculator provided by the State Treasurer's Office, based on an eligible basis that includes hard and soft costs, and assuming financing through 4% tax credits. For projects deemed infeasible by the market, this reflects the fee that affordable housing developers would expect to undertake this type of project. j) An adjustment is made to reflect the higher operating costs in affordable projects, such as expenses related to regulatory compliance and reserves. This adjustment is applied when affordable units comprise more than 50% of the units or when the average AMI is below 70% AMI. k) Mixed income projects may qualify for a partial property tax exemption under California's Revenue and Taxation Code Section 214(g).
The exemption is prorated based on the percentage of units restricted to low-income households. A community land trust that owns the land can also qualify for a property tax exemption with higher income limits. l) This represents the funding needed to bridge the gap between the development cost and the supportable debt. Traditional market-rate projects rely on equity to close this gap, while affordable projects depend on tax-credit equity and other soft funding sources.
Sources: The Housing Workshop; Urban Math, 2025.
96 Attachment 2
Appendix C8: New Construction Rental - Predominantly Affordable This assumes an even distribution of units at 30% AMI, 50% AMI, 80% AMI, and market-rate rents. All townhomes will be rented at market rates to cross-subsidize the affordable units.
Development Program and Assumptions
Option B:
Predominantly
Affordable Development Costs
Option B:
Predominantly
Affordable
Site Size (sf) 23,527 Land 5,820,000$
Total Number of Units 97 Construction and Soft Costs Affordable Units Required (a) 80% 78 Site Work 588,175$ Number of Market Rate Units (b) 20% 19 Hard Costs - Residential 42,375,843$ Dwelling Units/Acre 180 Hard Costs - Parking 2,940,000$ Units (c) Soft Costs 10,098,884$
Studios 49 School Fee 421,205$
1-Bedroom 20 Art Fee 367,232$
2-Bedroom 18 Subtotal Const Costs Before Financing 56,791,339$ 3-Bedroom (Townhouses) 10 Financing Costs
Average Unit Size 615 Points 511,122$
Net Residential Space (sf) 59,655 Construction Period Interest 3,577,854$ Common Area 21,816 Subtotal Financing Costs 4,088,976$ Total Residential Space (sf) 81,471 Capitalized Reserves 1,131,392$ Total Open Space (sf) 4,292 Developer Fee 2,500,000$ Number of Parking Spaces 49 Total Development Costs 70,331,707$ Parking spaces per unit 0.51 Total Development Cost per Unit (inc. land) 725,069$ Development Costs Total Development Cost per Unit (exc. land) 665,069$ Land per Residential Unit (d) 60,000$
Land per Site sf 247$ Development Feasibility and Financing Construction Type Type 3 Net Operating Income (NOI) 1,712,357$ Site Work (per sq.ft. of site) 25$ Capitalized Value 38,052,371$ Hard Costs - Res (e) 518$ Less Total Development Cost (70,331,707)$ Hard Costs - Open Space 50$ Profit / (Loss) (32,279,336)$ Parking Costs (per podium space) 60,000$ Return on Cost -45.9% Soft Costs exc. Fees (as % of hard) (f) 22.0% Feasible for Market-Rate Project? (k) No Impact Fees (g) Sources of Financing
BUSD School Fee 5.17$ Supportable Loan 20,495,914$ 1% Arts Fee 0.8% Gap Financing (l) 49,835,793$
Financing Costs (Construction) Subsidy per Affordable Unit 638,920$ Loan to Cost Ratio 60.0% Traditional Capital Stack to Fill Gap Interest Rate 7.0% Tax Credit Equity 20,643,746$
Loan Fees 1.5% City HTF 15,600,000$
Construction Period (months) 30 Other 13,592,047$
Avg. Outstanding Bal During Construction 60.0%
Financing Costs (Permanent) Operations
Interest Rate 6.0% Stabilized Gross Income 2,616,984$
Debt Coverage Ratio (Perm) 1.15 Less: Vacancy (130,849)$ Capitalized Reserve (# of months) (h) 6 Less: Op Expenses excluding Property Taxes (652,200)$ Nonprofit Developer Fee (i) 2,500,000$ Less: Property Taxes (k) (121,578)$ Market Rents Net Operating Income (NOI) 1,712,357$
Studios 2,850$
1-Bedroom 3,500$ Affordability Metrics
2-Bedroom 4,400$ Average Project AMI 71%
3-Bedroom (Townhouses) 6,800$ % of Units Serving ELI Households 27% Operations % of Units Serving VLI Households 27%
Vacancy 5.0% % of Units Serving Low Households 27%
OpEx per unit (exc. prop taxes) 6,000$ % of Units Serving Moderate Households 0% OpEx Adjustment for Affordable Units (j) 15.0% % of Units Serving Above Mod Households 20% Property Tax Rate (k) 1.20% % Units Serving <=80% AMI Households 80% Cap Rate 4.50%
97 Attachment 2
Notes:
a) The inclusionary requirement applies to new residential developments above 5,000 square feet and can be met through a combination of providing units and paying a prorated fee This proforma assumes developers will meet the full affordable housing requirement on-site. b) The distribution of affordable and market-rate units by bedroom size is as follows:
Affordable Market Market Rate AMIs
Studios 42 7 105%
1-Bedroom 19 1 120%
2-Bedroom 17 1 125%
3-Bedroom 10 170%
Total 78 19
c) The development program is based on plans submitted in 2024 and includes stacked flats with an at-grade podium garage. The project received a 50% density bonus and includes a mix of stacked flats on floors 2 through 6, and two-story townhouses on floors 7 and 8. d) The land cost per unit was based on entitled projects located on sites larger than 1/3 acre that were sold along major commercial corridors, including San Pablo Avenue, University Avenue, and Shattuck Avenue. e) Hard costs includes all direct expenses associated with cosntruction, including materials, labor, and equipment, required to construct the structure, excluding site work and parking, which are calculated separately. This figure captures the costs associated with Berkeley's Hard Hat and Bird Safe Building policies. This also incorporates an adjustment from the baseline market-rate project to reflect added costs associated with affordable projects, including prevailing wages. f) Soft costs include indirect expenses like design, insurance, and city fees, based on the City of Berkeley’s fee calculator. The soft-to-hard cost ratio generally aligns with the assumptions in Strategic Economics’ April 2024 report, Berkeley In-Lieu Fee and Housing Policies Economic Feasibility Analysis.
g) The current impact fees that apply to residential projects are:
Berkeley Unified School District fee
1% Arts Fee
The Affordable Housing In-Lieu Fee is available if a developer chooses to partially satisfy the inclusionary requirement by paying a fee. h) Capitalized reserves for a rental project are funds set aside to cover unforeseen costs during lease-up and operations. A standard reserve amount is equivalent to 3 to 6 months of operating expenses, including debt service. i) The developer fee was calculated using the CTCAC Developer Fee Calculator provided by the State Treasurer's Office, based on an eligible basis that includes hard and soft costs, and assuming financing through 4% tax credits. For projects deemed infeasible by the market, this reflects the fee that affordable housing developers would expect to undertake this type of project. j) An adjustment is made to reflect the higher operating costs in affordable projects, such as expenses related to regulatory compliance and reserves. This adjustment is applied when affordable units comprise more than 50% of the units or when the average AMI is below 70% AMI. k) Mixed income projects may qualify for a partial property tax exemption under California's Revenue and Taxation Code Section 214(g).
The exemption is prorated based on the percentage of units restricted to low-income households. A community land trust that owns the land can also qualify for a property tax exemption with higher income limits. l) This represents the funding needed to bridge the gap between the development cost and the supportable debt. Traditional market-rate projects rely on equity to close this gap, while affordable projects depend on tax-credit equity and other soft funding sources.
Sources: The Housing Workshop; Urban Math, 2025.
98 Attachment 2
Appendix C9: New Construction Rental - 100% Affordable
This proforma models a 100% affordable housing project with an equal distribution of units at 30% AMI, 40% AMI, 50% AMI, and 60% AMI.
There are no market-rate units in this scenario.
Development Program and Assumptions
Option C:
100% Affordable Development Costs
Option C:
100% Affordable
Site Size (sf) 23,527 Land 5,820,000$
Total Number of Units 97 Construction and Soft Costs Affordable Units Required (a) (b) 100% 97 Site Work 588,175$ Number of Market Rate Units 0% - Hard Costs - Residential 42,375,843$ Dwelling Units/Acre 180 Hard Costs - Parking 2,940,000$ Units (c) Soft Costs 10,098,884$
Studios 49 School Fee 421,205$
1-Bedroom 20 Art Fee 367,232$
2-Bedroom 18 Subtotal Const Costs Before Financing 56,791,339$ 3-Bedroom (Townhouses) 10 Financing Costs Average Unit Size 615 Points 511,122$ Net Residential Space (sf) 59,655 Construction Period Interest 3,577,854$ Common Area 21,816 Subtotal Financing Costs 4,088,976$ Total Residential Space (sf) 81,471 Capitalized Reserves 699,190$ Total Open Space (sf) 4,292 Developer Fee 2,500,000$ Number of Parking Spaces 49 Total Development Costs 69,899,505$ Parking spaces per unit 0.51 Total Development Cost per Unit (inc. land) 720,613$ Development Costs Total Development Cost per Unit (exc. land) 660,613$ Land per Residential Unit (d) 60,000$
Land per Site sf 247$ Development Feasibility and Financing Construction Type Type 3 Net Operating Income (NOI) 838,441$ Site Work (per sq.ft. of site) 25$ Capitalized Value 18,632,027$ Hard Costs - Res (e) 518$ Less Total Development Cost (69,899,505)$ Hard Costs - Open Space 50$ Profit / (Loss) (51,267,478)$ Parking Costs (per podium space) 60,000$ Return on Cost -73.3% Soft Costs exc. Fees (as % of hard) (f) 22.0% Feasible for Market-Rate Project? (k) No Impact Fees (g) Sources of Financing
BUSD School Fee 5.17$ Supportable Loan 10,035,654$ 1% Arts Fee 0.8% Gap Financing (l) 59,863,851$
Financing Costs (Construction) Subsidy per Affordable Unit 617,153$ Loan to Cost Ratio 60.0% Traditional Capital Stack to Fill Gap -$ Interest Rate 7.0% Tax Credit Equity 25,631,802$
Loan Fees 1.5% City HTF 19,400,000$
Construction Period (months) 30 Other 14,832,049$ Avg. Outstanding Bal During Construction 60.0%
Financing Costs (Permanent) Operations
Interest Rate 6.0% Stabilized Gross Income 1,587,096$
Debt Coverage Ratio (Perm) 1.15 Less: Vacancy (79,355)$ Capitalized Reserve (# of months) (h) 6 Less: Op Expenses (669,300)$ Nonprofit Developer Fee (i) 2,500,000$ Less: Property Taxes (k) -$ Market Rents Net Operating Income (NOI) 838,441$
Studios 2,850$
1-Bedroom 3,500$ Affordability Metrics
2-Bedroom 4,400$ Average Project AMI 45% 3-Bedroom (Townhouses) 6,800$ % of Units Serving ELI Households 26% Operations % of Units Serving VLI Households 49%
Vacancy 5.0% % of Units Serving Low Households 25%
OpEx per unit (exc. prop taxes) 6,000$ % of Units Serving Moderate Households 0% OpEx Adjustment for Affordable Units (j) 15.0% % of Units Serving Above Mod Households 0% Property Tax Rate (k) 1.20% % Units Serving <=80% AMI Households 100% Cap Rate 4.50%
99 Attachment 2
Notes:
a) This proforma models a 100% affordable housing project, with all units available to households earning 60% of AMI or less. b) The distribution of affordable units by bedroom size is as follows:
Affordable Market
Studios 49
1-Bedroom 20
2-Bedroom 18
3-Bedroom 10 -
Total 97 -
c) The development program is based on plans submitted in 2024 and includes stacked flats with an at-grade podium garage. The project received a 50% density bonus and includes a mix of stacked flats on floors 2 through 6, and two-story townhouses on floors 7 and 8. d) The land cost per unit was based on entitled projects located on sites larger than 1/3 acre that were sold along major commercial corridors, including San Pablo Avenue, University Avenue, and Shattuck Avenue. e) Hard costs includes all direct expenses associated with construction, including materials, labor, and equipment, required to construct the structure, excluding site work and parking, which are calculated separately. This figure captures the costs associated with Berkeley's Hard Hat and Bird Safe Building policies. This also incorporates an adjustment from the baseline market-rate project to reflect added costs associated with affordable projects, including prevailing wages. f) Soft costs include indirect expenses like design, insurance, and city fees, based on the City of Berkeley’s fee calculator. The soft-to-hard cost ratio generally aligns with the assumptions in Strategic Economics’ April 2024 report, Berkeley In-Lieu Fee and Housing Policies Economic Feasibility Analysis.
g) The current impact fees that apply to residential projects are:
Berkeley Unified School District fee
1% Arts Fee
The Affordable Housing In-Lieu Fee is available if a developer chooses to partially satisfy the inclusionary requirement by paying a fee. h) Capitalized reserves for a rental project are funds set aside to cover unforeseen costs during lease-up and operations. A standard reserve amount is equivalent to 3 to 6 months of operating expenses, including debt service. i) The developer fee was calculated using the CTCAC Developer Fee Calculator provided by the State Treasurer's Office, based on an eligible basis that includes hard and soft costs, and assuming financing through 4% tax credits. For projects deemed infeasible by the market, this reflects the fee that affordable housing developers would expect to undertake this type of project. j) An adjustment is made to reflect the higher operating costs in affordable projects, such as expenses related to regulatory compliance and reserves. This adjustment is applied when affordable units comprise more than 50% of the units or when the average AMI is below 70% AMI. k) This project qualifies for a 100% property tax exemption. l) This represents the funding needed to bridge the gap between the development cost and the supportable debt. Traditional market-rate projects rely on equity to close this gap, while affordable projects depend on tax-credit equity and other soft funding sources.
Sources: The Housing Workshop; Urban Math, 2025.
100
Attachment 2
Appendix C10: New Construction Rental - Half & Half (Enhanced) This assumes 50% of units will be affordable, with 10% serving 50% AMI and 40% serving 80% AMI households. The remaining will be market-rate. All townhomes will be rented at market rents to cross-subsidize. This project could qualify for SB 35/SB 423 streamlining.
This version assumes no land cost, lower construction costs, and a lower permanent financing rate compared to the original scenario.
Development Program and Assumptions
Option A:
Half & Half
with Lower Costs Development Costs
Option A:
Half & Half
with Lower Costs
Site Size (sf) 23,527 Land
Total Number of Units 97 Construction and Soft Costs Affordable Units Required (a) 50% 49 Site Work 588,175$ Number of Market Rate Units (b) 50% 48 Hard Costs - Residential 38,913,325$ Dwelling Units/Acre 180 Hard Costs - Parking 2,940,000$ Units (c) Soft Costs 9,337,130$
Studios 49 School Fee 421,205$
1-Bedroom 20 Art Fee 339,532$
2-Bedroom 18 Subtotal Const Costs Before Financing 52,539,367$ 3-Bedroom (Townhouses) 10 Financing Costs
Average Unit Size 615 Points 472,854$
Net Residential Space (sf) 59,655 Construction Period Interest 3,309,980$ Common Area 21,816 Subtotal Financing Costs 3,782,834$ Total Residential Space (sf) 81,471 Capitalized Reserves 1,541,554$ Total Open Space (sf) 4,292 Developer Fee 2,500,000$ Number of Parking Spaces 49 Total Development Costs 60,363,755$ Parking spaces per unit 0.51 Total Development Cost per Unit (inc. land) 622,307$ Development Costs Total Development Cost per Unit (exc. land) 622,307$ Land per Residential Unit (d)
Land per Site sf -$ Development Feasibility and Financing Construction Type Type 3 Net Operating Income (NOI) 2,523,058$ Site Work (per sq.ft. of site) 25$ Capitalized Value 56,067,949$ Hard Costs - Res (e) 475$ Less Total Development Cost (60,363,755)$ Hard Costs - Open Space 50$ Profit / (Loss) (4,295,806)$ Parking Costs (per podium space) 60,000$ Return on Cost -7.1% Soft Costs exc. Fees (as % of hard) (f) 22.0% Feasible for Market-Rate Project? (k) No Impact Fees (g) Sources of Financing
BUSD School Fee 5.17$ Supportable Loan 43,002,648$ 1% Arts Fee 0.8% Gap Financing (l) 17,361,108$
Financing Costs (Construction) Traditional Capital Stack to Fill Gap Loan to Cost Ratio 60.0% Tax Credit Equity 12,072,751$
Interest Rate 7.0% City HTF 5,288,357$
Loan Fees 1.5% Other -$
Construction Period (months) 30
Avg. Outstanding Bal During Construction 60.0% Operations Financing Costs (Permanent) Stabilized Gross Income 3,591,792$ Interest Rate 3.0% Less: Vacancy (179,590)$
Debt Coverage Ratio (Perm) 1.15 Less: Op Expenses excluding Property Taxes (582,000)$ Capitalized Reserve (# of months) (h) 6 Less: Property Taxes (k) (307,145)$ Nonprofit Developer Fee (i) 2,500,000$ Net Operating Income (NOI) 2,523,058$ Market Rents
Studios 2,850$ Affordability Metrics
1-Bedroom 3,500$ Average Project AMI 99%
2-Bedroom 4,400$ % of Units Serving ELI Households 0% 3-Bedroom (Townhouses) 6,800$ % of Units Serving VLI Households 9% Operations % of Units Serving Low Households 41%
Vacancy 5.0% % of Units Serving Moderate Households 0%
OpEx per market unit (exc. prop taxes) 6,000$ % of Units Serving Above Mod Households 49% OpEx Adjustment for Affordable Units (j) 15.0% % Units Serving <=80% AMI Households 51% Property Tax Rate (k) 1.20%
Cap Rate 4.50%
101
Attachment 2
Notes:
a) The inclusionary requirement applies to new residential developments above 5,000 square feet and can be met through a combination of providing units and paying a prorated fee This proforma assumes developers will meet the full affordable housing requirement on-site. b) The distribution of affordable and market-rate units by bedroom size is as follows:
Affordable Market Market Rate AMIs
Studios 26 23 105%
1-Bedroom 12 8 120%
2-Bedroom 11 7 125%
3-Bedroom 10 170%
Total 49 48
c) The development program is based on plans submitted in 2024 and includes stacked flats with an at-grade podium garage. The project received a 50% density bonus and includes a mix of stacked flats on floors 2 through 6, and two-story townhouses on floors 7 and 8. d) The land cost per unit was based on entitled projects located on sites larger than 1/3 acre that were sold along major commercial corridors, including San Pablo Avenue, University Avenue, and Shattuck Avenue. e) Hard costs includes all direct expenses associated with construction, including materials, labor, and equipment, required to construct the structure, excluding site work and parking, which are calculated separately. This figure captures the costs associated with Berkeley's Hard Hat and Bird Safe Building policies. This version includes a downward adjustment to account for cost-saving strategies such as smaller unit sizes, reduced parking, modular construction, and similar approaches. f) Soft costs include indirect expenses like design, insurance, and city fees, based on the City of Berkeley’s fee calculator. The soft-to-hard cost ratio generally aligns with the assumptions in Strategic Economics’ April 2024 report, Berkeley In-Lieu Fee and Housing Policies Economic Feasibility Analysis.
g) The current fees that apply to residential projects are:
Berkeley Unified School District fee
1% Arts Fee
The Affordable Housing In-Lieu Fee is available if a developer chooses to partially satisfy the inclusionary requirement by paying a fee. h) Capitalized reserves for a rental project are funds set aside to cover unforeseen costs during lease-up and operations. A standard reserve amount is equivalent to 3 to 6 months of operating expenses, including debt service. i) The developer fee was calculated using the CTCAC Developer Fee Calculator provided by the State Treasurer's Office, based on an eligible basis that includes hard and soft costs, and assuming financing through 4% tax credits. For projects deemed infeasible by the market, this reflects the fee that affordable housing developers would expect to undertake this type of project. j) An adjustment is made to reflect the higher operating costs in affordable projects, such as expenses related to regulatory compliance and reserves. This adjustment is applied when affordable units comprise more than 50% of the units or when the average AMI is below 70% AMI. k) Mixed income projects may qualify for a partial property tax exemption under California's Revenue and Taxation Code Section 214(g).
The exemption is prorated based on the percentage of units restricted to low-income households. A community land trust that owns the land can also qualify for a property tax exemption with higher income limits. The property taxes in this enhanced version are held constant and match the original scenario. This approach ensures that differences in outcomes reflect the impact of the other factors. l) This represents the funding needed to bridge the gap between the development cost and the supportable debt. Traditional market-rate projects rely on equity to close this gap, while affordable projects depend on tax-credit equity and other soft funding sources.
Sources: The Housing Workshop; Urban Math, 2025.
102
Attachment 2
Appendix C11: New Construction Rental - Predominantly Affordable (Enhanced) This assumes an even distribution of units at 30% AMI, 50% AMI, 80% AMI, and market-rate rents. All townhomes will be rented at market rates to cross-subsidize the affordable units. This enhanced version assumes no land cost, lower construction costs, and a lower permanent financing rate compared to the original scenario.
Development Program and Assumptions
Option B:
Predominantly
Affordable with
Lower Costs Development Costs
Option B:
Predominantly
Affordable with
Lower Costs
Site Size (sf) 23,527 Land -$
Total Number of Units 97 Construction and Soft Costs
Affordable Units Required (a) 80% 78 Site Work 588,175$ Number of Market Rate Units (b) 20% 19 Hard Costs - Residential 38,913,325$ Dwelling Units/Acre 180 Hard Costs - Parking 2,940,000$ Units (c) Soft Costs 9,337,130$
Studios 49 School Fee 421,205$
1-Bedroom 20 Art Fee 339,532$
2-Bedroom 18 Subtotal Const Costs Before Financing 52,539,367$ 3-Bedroom (Townhouses) 10 Financing Costs
Average Unit Size 615 Points 472,854$
Net Residential Space (sf) 59,655 Construction Period Interest 3,309,980$ Common Area 21,816 Subtotal Financing Costs 3,782,834$ Total Residential Space (sf) 81,471 Capitalized Reserves 1,131,392$ Total Open Space (sf) 4,292 Developer Fee 2,500,000$ Number of Parking Spaces 49 Total Development Costs 59,953,593$ Parking spaces per unit 0.51 Total Development Cost per Unit (inc. land) 618,078$ Development Costs Total Development Cost per Unit (exc. land) 618,078$ Land per Residential Unit (d)
Land per Site sf -$ Development Feasibility and Financing Construction Type Type 3 Net Operating Income (NOI) 1,712,357$ Site Work (per sq.ft. of site) 25$ Capitalized Value 38,052,371$ Hard Costs - Res (e) 475$ Less Total Development Cost (59,953,593)$ Hard Costs - Open Space 50$ Profit / (Loss) (21,901,222)$ Parking Costs (per podium space) 60,000$ Return on Cost -36.5% Soft Costs exc. Fees (as % of hard) (f) 22.0% Feasible for Market-Rate Project? (k) No Impact Fees (g) Sources of Financing
BUSD School Fee 5.17$ Supportable Loan 29,185,171$ 1% Arts Fee 0.8% Gap Financing (l) 30,768,422$
Financing Costs (Construction) Subsidy per Affordable Unit 394,467$ Loan to Cost Ratio 60.0% Traditional Capital Stack to Fill Gap Interest Rate 7.0% Tax Credit Equity 19,185,150$
Loan Fees 1.5% City HTF 11,583,272$
Construction Period (months) 30 Other -$
Avg. Outstanding Bal During Construction 60.0%
Financing Costs (Permanent) Operations
Interest Rate 3.0% Stabilized Gross Income 2,616,984$
Debt Coverage Ratio (Perm) 1.15 Less: Vacancy (130,849)$ Capitalized Reserve (# of months) (h) 6 Less: Op Expenses excluding Property Taxes (652,200)$ Nonprofit Developer Fee (i) 2,500,000$ Less: Property Taxes (k) (121,578)$ Market Rents Net Operating Income (NOI) 1,712,357$
Studios 2,850$
1-Bedroom 3,500$ Affordability Metrics
2-Bedroom 4,400$ Average Project AMI 71%
3-Bedroom (Townhouses) 6,800$ % of Units Serving ELI Households 27% Operations % of Units Serving VLI Households 27%
Vacancy 5.0% % of Units Serving Low Households 27%
OpEx per unit (exc. prop taxes) 6,000$ % of Units Serving Moderate Households 0% OpEx Adjustment for Affordable Units (j) 15.0% % of Units Serving Above Mod Households 20% Property Tax Rate (k) 1.20% % Units Serving <=80% AMI Households 80% Cap Rate 4.50%
103
Attachment 2
Notes:
a) The inclusionary requirement applies to new residential developments above 5,000 square feet and can be met through a combination of providing units and paying a prorated fee This proforma assumes developers will meet the full affordable housing requirement on-site. b) The distribution of affordable and market-rate units by bedroom size is as follows:
Affordable Market Market Rate AMIs
Studios 42 7 105%
1-Bedroom 19 1 120%
2-Bedroom 17 1 125%
3-Bedroom 10 170%
Total 78 19
c) The development program is based on plans submitted in 2024 and includes stacked flats with an at-grade podium garage. The project received a 50% density bonus and includes a mix of stacked flats on floors 2 through 6, and two-story townhouses on floors 7 and 8. d) The land cost per unit was based on entitled projects located on sites larger than 1/3 acre that were sold along major commercial corridors, including San Pablo Avenue, University Avenue, and Shattuck Avenue. e) Hard costs includes all direct expenses associated with construction, including materials, labor, and equipment, required to construct the structure, excluding site work and parking, which are calculated separately. This figure captures the costs associated with Berkeley's Hard Hat and Bird Safe Building policies. This version includes a downward adjustment to account for cost-saving strategies such as smaller unit sizes, reduced parking, modular construction, and similar approaches. f) Soft costs include indirect expenses like design, insurance, and city fees, based on the City of Berkeley’s fee calculator. The soft-to-hard cost ratio generally aligns with the assumptions in Strategic Economics’ April 2024 report, Berkeley In-Lieu Fee and Housing Policies Economic Feasibility Analysis.
g) The current fees that apply to residential projects are:
Berkeley Unified School District fee
1% Arts Fee
The Affordable Housing In-Lieu Fee is available if a developer chooses to partially satisfy the inclusionary requirement by paying a fee. h) Capitalized reserves for a rental project are funds set aside to cover unforeseen costs during lease-up and operations. A standard reserve amount is equivalent to 3 to 6 months of operating expenses, including debt service. i) The developer fee was calculated using the CTCAC Developer Fee Calculator provided by the State Treasurer's Office, based on an eligible basis that includes hard and soft costs, and assuming financing through 4% tax credits. For projects deemed infeasible by the market, this reflects the fee that affordable housing developers would expect to undertake this type of project. j) An adjustment is made to reflect the higher operating costs in affordable projects, such as expenses related to regulatory compliance and reserves. This adjustment is applied when affordable units comprise more than 50% of the units or when the average AMI is below 70% AMI. k) Mixed income projects may qualify for a partial property tax exemption under California's Revenue and Taxation Code Section 214(g).
The exemption is prorated based on the percentage of units restricted to low-income households. A community land trust that owns the land can also qualify for a property tax exemption with higher income limits. The property taxes in this enhanced version are held constant and match the original scenario. This approach ensures that differences in outcomes reflect the impact of the other factors. l) This represents the funding needed to bridge the gap between the development cost and the supportable debt. Traditional market-rate projects rely on equity to close this gap, while affordable projects depend on tax-credit equity and other soft funding sources.
Sources: The Housing Workshop; Urban Math, 2025.
104
Attachment 2
Appendix C12: New Construction Rental - 100% Affordable (Enhanced) This proforma models a 100% affordable housing project with an equal distribution of units at 30% AMI, 40% AMI, 50% AMI, and 60% AMI.
There are no market-rate units in this scenario. This enhanced version assumes no land cost, lower construction costs, and a lower permanent financing rate compared to the original scenario.
Development Program and Assumptions
Option C:
100% Affordable with
Lower Costs Development Costs
Option C:
100% Affordable with
Lower Costs
Site Size (sf) 23,527 Land -$
Total Number of Units 97 Construction and Soft Costs Affordable Units Required (a) (b) 100% 97 Site Work 588,175$ Number of Market Rate Units 0% - Hard Costs - Residential 38,913,325$ Dwelling Units/Acre 180 Hard Costs - Parking 2,940,000$ Units (c) Soft Costs 9,337,130$
Studios 49 School Fee 421,205$ 1-Bedroom 20 Art Fee 339,532$ 2-Bedroom 18 Subtotal Const Costs Before Financing 52,539,367$ 3-Bedroom (Townhouses) 10 Financing Costs Average Unit Size 615 Points 472,854$ Net Residential Space (sf) 59,655 Construction Period Interest 3,309,980$ Common Area 21,816 Subtotal Financing Costs 3,782,834$ Total Residential Space (sf) 81,471 Capitalized Reserves 699,190$ Total Open Space (sf) 4,292 Developer Fee 2,500,000$ Number of Parking Spaces 49 Total Development Costs 59,521,391$ Parking spaces per unit 0.51 Total Development Cost per Unit (inc. land) 613,623$ Development Costs Total Development Cost per Unit (exc. land) 613,623$ Land per Residential Unit (d)
Land per Site sf -$ Development Feasibility and Financing Construction Type Type 3 Net Operating Income (NOI) 838,441$ Site Work (per sq.ft. of site) 25$ Capitalized Value 18,632,027$ Hard Costs - Res (e) 475$ Less Total Development Cost (59,521,391)$ Hard Costs - Open Space 50$ Profit / (Loss) (40,889,364)$ Parking Costs (per podium space) 60,000$ Return on Cost -68.7% Soft Costs exc. Fees (as % of hard) (f) 22.0% Feasible for Market-Rate Project? (k) No Impact Fees (g) Sources of Financing
BUSD School Fee 5.17$ Supportable Loan 14,290,276$ 1% Arts Fee 0.8% Gap Financing (l) 45,231,115$
Financing Costs (Construction) Subsidy per Affordable Unit 466,300$ Loan to Cost Ratio 60.0% Traditional Capital Stack to Fill Gap -$ Interest Rate 7.0% Tax Credit Equity 23,808,556$
Loan Fees 1.5% City HTF 19,400,000$
Construction Period (months) 30 Other 2,022,559$ Avg. Outstanding Bal During Construction 60.0%
Financing Costs (Permanent) Operations
Interest Rate 3.0% Stabilized Gross Income 1,587,096$
Debt Coverage Ratio (Perm) 1.15 Less: Vacancy (79,355)$ Capitalized Reserve (# of months) (h) 6 Less: Op Expenses (669,300)$ Nonprofit Developer Fee (i) 2,500,000$ Less: Property Taxes (k) -$ Market Rents Net Operating Income (NOI) 838,441$
Studios 2,850$
1-Bedroom 3,500$ Affordability Metrics 2-Bedroom 4,400$ Average Project AMI 45% 3-Bedroom (Townhouses) 6,800$ % of Units Serving ELI Households 26% Operations % of Units Serving VLI Households 49%
Vacancy 5.0% % of Units Serving Low Households 25%
OpEx per unit (exc. prop taxes) 6,000$ % of Units Serving Moderate Households 0% OpEx Adjustment for Affordable Units (j) 15.0% % of Units Serving Above Mod Households 0% Property Tax Rate (k) 1.20% % Units Serving <=80% AMI Households 100% Cap Rate 4.50%
105
Attachment 2
Notes:
a) This proforma models a 100% affordable housing project, with all units available to households earning 60% of AMI or less. b) The distribution of affordable units by bedroom size is as follows:
Affordable Market
Studios 49
1-Bedroom 20
2-Bedroom 18
3-Bedroom 10 -
Total 97 -
c) The development program is based on plans submitted in 2024 and includes stacked flats with an at-grade podium garage. The project received a 50% density bonus and includes a mix of stacked flats on floors 2 through 6, and two-story townhouses on floors 7 and 8. d) The land cost per unit was based on entitled projects located on sites larger than 1/3 acre that were sold along major commercial corridors, including San Pablo Avenue, University Avenue, and Shattuck Avenue. e) Hard costs includes all direct expenses associated with construction, including materials, labor, and equipment, required to construct the structure, excluding site work and parking, which are calculated separately. This figure captures the costs associated with Berkeley's Hard Hat and Bird Safe Building policies. This version includes a downward adjustment to account for cost-saving strategies such as smaller unit sizes, reduced parking, modular construction, and similar approaches. f) Soft costs include indirect expenses like design, insurance, and city fees, based on the City of Berkeley’s fee calculator. The soft-to-hard cost ratio generally aligns with the assumptions in Strategic Economics’ April 2024 report, Berkeley In-Lieu Fee and Housing Policies Economic Feasibility Analysis.
g) The current fees that apply to residential projects are:
Berkeley Unified School District fee
1% Arts Fee
The Affordable Housing In-Lieu Fee is available if a developer chooses to partially satisfy the inclusionary requirement by paying a fee. h) Capitalized reserves for a rental project are funds set aside to cover unforeseen costs during lease-up and operations. A standard reserve amount is equivalent to 3 to 6 months of operating expenses, including debt service. i) The developer fee was calculated using the CTCAC Developer Fee Calculator provided by the State Treasurer's Office, based on an eligible basis that includes hard and soft costs, and assuming financing through 4% tax credits. For projects deemed infeasible by the market, this reflects the fee that affordable housing developers would expect to undertake this type of project. j) An adjustment is made to reflect the higher operating costs in affordable projects, such as expenses related to regulatory compliance and reserves. This adjustment is applied when affordable units comprise more than 50% of the units or when the average AMI is below 70% AMI. k) This project qualifies for a 100% property tax exemption. l) This represents the funding needed to bridge the gap between the development cost and the supportable debt. Traditional market-rate projects rely on equity to close this gap, while affordable projects depend on tax-credit equity and other soft funding sources.
Sources: The Housing Workshop; Urban Math, 2025.
106
Attachment 2
107
Appendix D: Additional Resources
Aiken, C., Murphy, M., & Raetz, H. (2024, October). The Emerging Spectrum of Government- Led and Publicly-Owned Housing Development Models. Retrieved from NYU Furman Center: https://furmancenter.org/files/The_Emerging_Spectrum_of_Government- Led_and_Publicly-Owned_Housing_Development_Models_V5_(2).pdf Aiken, C., Raetz, H., Murphy, M., & Bodulovic, T. (2024, October). Publicly Driven Development and Ownership of Housing: A Feasibility Study for Rhode Island. Retrieved from NYU Furman Center:
https://furmancenter.org/files/NYUFumanCenter_PublicDevelopment_FinalDraft_8-22- 24_(1).pdf
Alliance for Housing Justice. (2024). Series of White Papers on Social Housing. Retrieved from Social Housing: https://www.allianceforhousingjustice.org/social-housing California Housing Corporation. (2021). The Case for a Public Sector Housing Developer.
Retrieved from East Bay for Everyone - Social Housing:
https://eastbayforeveryone.org/socialhousing/
Carlson, H. J., & Baiocchi, G. (2023, June 30). Social Housing: How a New Generation of Activists are Reinventing Housing. Retrieved from Shelterforce:
https://shelterforce.org/2023/06/30/social-housing-how-a-new-generation-of-activists- are-reinventing-housing/
Center for American Progress. (2024, September 19). A New Vision for Social Housing in America. Retrieved from Center for American Progress:
https://www.americanprogress.org/article/a-new-vision-for-social-housing-in-america/ Dwell. (2024, August 7). A New Bill Would Reimagine Public Housing in Los Angeles. Retrieved from Dwell: https://www.dwell.com/article/a-new-bill-would-reimagine-public-housing-in- los-angeles-7eb3a19f
People's Action. (2019). A National Homes Guarantee: Briefing Book. Retrieved from People's Action: https://homesguarantee.com/wp-content/uploads/Homes-Guarantee-_-Briefing- Book.pdf
PolicyLink, Local Progress Impact Lab, PowerSwitch Action. (2025, January). Housing the People: How Local Governments are Building Social Housing Solutions for Public Good.
Retrieved from Social Housing Toolkit:
https://policylink.widen.net/s/wlphxh7qmf/social_housing_toolkit_jan2025 Right to the City. (2018). Communities Over Commoditites. Retrieved from Homes for All Campaign:
https://drive.google.com/file/d/1chGXRKcJBo8pGQfGZ0fqUvxGIFp0ewgm/view San Francisco Budget and Legislative Analyst Office. (2024, December 14). Policy Analysis Report: Financial Feasibility of Social Housing in San Francisco. Retrieved from SF Attachment 2
108
Board of Supervisors:
https://image.bos.sfgov.org/lib/fe3f15707564077d741374/m/1/6855a2a8-14ce-4fb3- ab29-19f13b43c88e.pdf
The Center for Public Democracy & Partners, Alliance for Housing Justice. (2024). Building Our Future: Grassroots Reflections on Social Housing. Retrieved from Alliance for Housing Justice: https://www.allianceforhousingjustice.org/social-housing/building-our-future- report
The Othering and Belonging Institute of UC Berkeley. (2024). Social Housing in California:
Reinvigorating Housing Investment for the Social Good. Retrieved from https://belonging.berkeley.edu/social-housing-california Von Hoffman, A. (2024, October 24). Can Public Housing Play a Role in a New American Social Housing System? Retrieved from Joint Center for Housing Studies of Harvard University:
https://www.jchs.harvard.edu/blog/can-public-housing-play-role-new-american-social- housing-system
Attachment 2
Attachment 3
Attachment 3
Office of the City Manager
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-[XXXX] ● TDD: (510) 981-6903 ● Fax: (510) 981-[XXXX] E-Mail: [[email protected]]
INFORMATION CALENDAR
June 30, 2026
To: Honorable Mayor and Members of the City Council
From: Paul Buddenhagen, City Manager
Submitted by: Janelle Rodrigues, Director of Human Resources Subject: 2026 Health Plan Changes
INTRODUCTION
The following are rate changes for the Kaiser Health Maintenance Organization (HMO) health plans:
(a) 0.28% increase for Kaiser S1 Group #60 (Active Group); (b) 5.31% increase for the HSA-Qualified Deductible HMO Plan (Active Group) (c) 16.53% increase for Pre-Medicare Eligible Retirees (Retiree Group); and (d) 5.56% increase for Post-65 Senior Advantage (Retiree Group) The following are rate changes for the Sutter Health Plus health plan:
(a) 12.42% increase for the Active HMO ML 26 group; and (b) 12.37% increase for the Pre-Medicare retiree group.
The health plan premium rates are effective for the period of January 1, 2026 through December 31, 2026.
FINANCIAL IMPLICATIONS
Health care premiums are quoted on a calendar year based on standard industry practices. However, when the City adopts its budget, which is on a fiscal year basis, half of the premium cost is known at the time the budget is adopted and the remainder is estimated based on assumptions and trends in medical premium costs.
Funding for the health plan premium increases are included in the Fiscal Year (FY) 2026 adopted budget. Premiums are paid one (1) month in advance; e.g., the January 2026 premium is paid in December 2025. Sutter Health Plus increased its rates higher than expected, which resulted in a higher monthly premium for both the employees enrolled in the plan and the City.
Active Employees: As outlined in the table below, in FY 2026, actual health insurance premium costs totaled $33,803,050.83 ($29,922,207.37 for Kaiser and $3,880,843.46 for Sutter Health Plus).
2026 Health Plan Changes INFORMATION CALENDAR
June 30, 2026
Fiscal Year 2026
First Half (July 1,
2025 to December
31, 2025)
Fiscal Year 2026
Second Half
(January 1, 2026 to
June 30, 2026)
Fiscal Year
2026 Total
Kaiser $14,687,699.99* $15,234,507.38 $29,922,207.37
Sutter Health Plus $1,885,676.00* $1,995,167.46 $3,880,843.46 Totals $16,573,375.99* $17,229,674.84 $33,803,050.83
Funding for the health premium increases for Active Employees from January 1 to June 30, 2026, was included as part of the Council authorized expenditures included in the FY 2026 adopted budget.
The estimated cost for the first half of fiscal year 2026 (July 1 to December 31, 2025) total approximately $16,573,375.99 ($14,687,699.99 for Kaiser and $1,885,676.00 for Sutter Health Plus). The total for the second half of fiscal year 2026 (January 1, 2026 to June 30, 2026), is $17,229,674.84 ($15,234,507.38 for Kaiser and $1,995,167.46 for Sutter Health Plus).
The Payroll Deduction Trust Fund, budget code 013-99-900-900-0000-000-000- 201501- , provides for these premiums.
Retired Employees: The City’s Retiree Health Premium Assistance Plan benefit contribution is capped at an annual increase of 4.5% for Miscellaneous and Berkeley Fire Fighters Association retirees, and 6% for Berkeley Police Association (BPA) retirees. Any premium increase above the City’s premium assistance cap is borne by the retirees as an out-of-pocket expense.
Retirees represented by the Berkeley Police Association who retired prior to September 19, 2012 and have a minimum of 10 years of City service (up to a maximum of 20 years of City service) are paid a pro-rated amount equal to the Active two-party Kaiser Plan rate (Police Cash Pay Plan). Currently there are 142 participants receiving this benefit at a cost to the City of $272,082.72 per month, or $3,264,992.64 per year. The rate increase of 0.28% for the Kaiser Health Plan Active Employee group will result in an increase of approximately $2,225.20 per month, or $3,274,157.28 per year. The Berkeley Police Supplemental Retirement Plan is a closed group; members retiring on or after September 19, 2012 are eligible for the Retiree Health Premium Assistance Plan as noted above.
Funding for retiree health premium assistance plan benefits comes from trust funds established for this purpose. The City has established separate retiree health premium
2026 Health Plan Changes INFORMATION CALENDAR
June 30, 2026
assistance plans and trust agreements for the various Unions and unrepresented employees. The City has established a practice to pre-fund each of these trust funds for the purpose of having assets available to pay for the benefit.
The City has contracts with Kaiser and Sutter Health Plus to provide health benefits for all benefited employees. As of January 1, 2026, there are 1,251 employees in the Kaiser HMO plan and 126 employees in the Sutter Health Plus plan and there are 101 employees receiving cash in lieu benefits.
In October 2025, Kaiser and Sutter Health Plus provided the City with insurance premium rate quotes for calendar year 2026. Kaiser quoted an increase of 0.28% for the Kaiser S1 Group. The increase was primarily due to high utilization of medical services by plan members. The City is required to pay up to the Kaiser S1 Group plan for all active benefitted City employees.
The final rates for all the Kaiser plans are as follows:
(a) 0.28% increase for Kaiser S1 Group #60 (Active Group); (b) 5.31% increase for the HSA-Qualified Deductible HMO Plan (Active Group) (c) 16.53% increase for Pre-Medicare Eligible Retirees (Retiree Group); and (d) 5.56% increase for Post-65 Senior Advantage (Retiree Group) The final rates for the Sutter Health Plus plans are as follows:
(a) 12.42% increase for the Active HMO ML 26 group; and (b) 12.37% increase for the Pre-Medicare retiree group.
The health plan rates are based primarily on service utilization and claims experience.
So, these factors, along with rising medical costs and demographic changes, are the reasons given for the premium increases.
The 2026 rates for Active Employees will be:
Active
Employees
Coverage
Level
2025
Monthly
Premium Rate
2026
Monthly
Premium Rate
City Pays Employee
Pays
Single $1,109.47 $1,112.60 $1,112.60 $0
Two Party $2,218.94 $2,225.20 $2,225.20 $0
Kaiser HMO
S1 Group
Family $2,951.18 $2,959.52 $2,959.52 $0
Single $1,209.00 $1,359.10 $1,112.60 $246.50Sutter
Health Plus Two Party $2,418.00 $2,718.40 $2,225.20 $493.20
2026 Health Plan Changes INFORMATION CALENDAR
June 30, 2026
Active
Employees
Coverage
Level
2025
Monthly
Premium Rate
2026
Monthly
Premium Rate
City Pays Employee
Pays
Family $3,217.00 $3,617.30 $2,959.52 $657.78
Employees enrolled in a health plan with premiums higher than Kaiser's rates must pay the difference in premium costs. Due to the increase in Sutter’s monthly premiums, employees enrolled with Sutter Health Plus will have to pay the difference of the costs.
The Affordable Care Act (ACA) requires employers to offer health insurance that is affordable and provides minimum essential coverage to at least 95% of eligible employees. An eligible employee is anyone who works an average of 30 hours per week within a 12-month period (the City of Berkeley’s 12-month period is November 1 through October 31). Employers are required to offer health coverage, regardless of whether the employee would normally not be eligible for health insurance benefits under the employer’s own rules. These employees are considered full-time equivalent for the purpose of the ACA.
Although the ACA only requires employers to offer health coverage to 95% of eligible employees, the City offers health coverage to 100% of all ACA eligible employees. This ensures that all ACA eligible employees have the opportunity to receive health insurance coverage.
The plan offered by the City that meets the requirements under the ACA (affordable and provides minimum essential coverage) is the Kaiser HSA-Qualified Deductible HMO Plan.
The 2026 monthly premium rates for this plan will be:
ACA Qualified Plan – Active
Employees Coverage Level
2026
Monthly Premium Rate
Single $761.14
Two Party $1,522.27Kaiser HSA-Qualified Deductible HMO
Plan
Family $2,154.02
The City is required to pay 50% of the employee single monthly premium and the difference is paid by the employee. Per the Affordable Care Act (ACA), part-time employee benefits are determined by hours worked between November 1st through October 31st of the previous year (for example, November 1, 2024-October 31, 2025).
City staff completed a census on October 31, 2025 to determine which part-time employees are eligible for benefits based on ACA regulations for the 2026 calendar year.
2026 Health Plan Changes INFORMATION CALENDAR
June 30, 2026
Retiree Group Plans 2026 Rates:
Pre-Medicare Retirees Coverage Level
2025 Monthly
Premium Rate
2026 Monthly
Premium Rate
Single $1,701.26 $2,067.50
Two Party $3,402.53 $4,135.00Kaiser HMO
Family $4,814.58 $5,851.02
Single $1,486.70 $1,827.00
Two Party $2,973.40 $3,654.20Sutter Health Plus HMO
Family $3,956.10 $4,862.50
Post 65 Retirees Coverage Level
2025 Monthly
Premium Rate
2026 Monthly
Premium Rate
Single $406.62 $429.22
Kaiser Senior Advantage
Two Party $813.24 $858.44
Currently, Sutter Health Plus does not offer a Medicare coordinated plan. Retirees bear most of the health plan rate increases as an out-of-pocket expense because the benefits from the City’s Retiree Health Premium Assistance Plan Trust is capped at a
4.5% annual increase (6% for BPA retirees).
BACKGROUND
The City has two (2) group health plans for employees: 1) a Kaiser HMO plan and 2) a Sutter Health Plus HMO plan. The City has a contractual obligation to pay the equivalent of the basic Kaiser rates, including eligible dependents, for all benefited employees. Employees enrolled in a health plan with premiums higher than Kaiser's rates must pay the difference in cost of the premium. Therefore, employees who enroll in the Sutter Health Plus HMO plan will be responsible for the difference.
Separately, the City offers two (2) group health plans for retirees: 1) a Kaiser HMO plan and 2) a Sutter Health Plus HMO plan. Employees who retired prior to July 1, 1998, pay the full cost of the health insurance premium. Employees who retired after July 1, 1998, who meet certain eligibility criteria, are eligible for benefits under the City’s Retiree Health Premium Assistance Plan.
Under the City’s Retiree Health Premium Assistance Plan, the City pays a portion of the employee’s health insurance premiums. The amount is prorated based on the employee’s
2026 Health Plan Changes INFORMATION CALENDAR
June 30, 2026
years of service. The City’s annual contribution increase is capped at 4.5% (6% for BPA retirees). The retiree pays the difference between the City’s monthly contribution and the actual monthly insurance premium charged by the health plan he or she has elected for retiree medical coverage.
ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
There are no identifiable environmental effects or opportunities associated with the subject of this report.
CONTACT PERSON
Janelle Rodrigues, Director of Human Resources, Human Resources, (510) 981-6807.
2180 Milvia Street, Berkeley, CA 94704 ● Tel: (510) 981-6750 ● TDD: (510) 981-6903 E-Mail: [email protected] Website: https://berkeleyca.gov/your-government/city-audits
INFORMATION CALENDAR
June 30, 2026
To: Honorable Mayor and Members of the City Council
From: Jenny Wong, City Auditor
Subject: City Auditor Fiscal Year 2027 Audit Plan
INTRODUCTION
The Berkeley City Charter requires the City Auditor to provide the City Council with a planned audit schedule by the beginning of each fiscal year (FY) and to notify the Council when audits are added. In deciding what to audit, our office considers suggestions from the City Manager, staff, the City Council, the Rent Stabilization Board, commissioners, and other community members. We examine risks that might prevent the City from reaching its goals, including strategic, financial, regulatory, operational, and reputational risks.
CURRENT SITUATION AND ITS EFFECTS
As required by the City Charter, we are notifying the Council of our annual audit plan. The following plan assumes being fully staffed to conduct these audits.
For FY 2027, we have identified areas we aim to address in the upcoming year:
• Business License Taxes (audit in progress)
• Rent Stabilization Board (audit in progress)
• Public Health
• Measure FF
• Follow-up on prior audit recommendations
• Short-term projects
• Whistleblower Program
BACKGROUND
The mission of the Berkeley City Auditor is to promote transparency and accountability in Berkeley government. This is achieved through independent evaluations of city programs and activities. The FY 2027 Audit Plan reflects our office’s commitment to continuous improvement by enhancing the overall impact of the Berkeley City Auditor’s Office on behalf of Berkeley residents, businesses, and visitors.
ENVIRONMENTAL SUSTAINABILITY AND CLIMATE IMPACTS
This report is not associated with identifiable environmental effects or opportunities.
POSSIBLE FUTURE ACTION
Our future audit recommendations will address the risks that could prevent the City from providing efficient, effective, and equitable service delivery. We will be asking the Council to accept those
City Auditor Fiscal Year 2027 Audit Plan
INFORMATION CALENDAR
June 30, 2026
recommendations and request that the City Manager report on their actions to implement them.
We may also make recommendations requiring Council action.
FISCAL IMPACTS OF POSSIBLE FUTURE ACTION
Audit work can lead to new or enhanced revenue, cost recovery, and increased efficiency, with economic impact well beyond the audit costs. Long-range financial benefits of our audits include significant improvements to internal controls and service delivery.
Ensuring timely implementation of audit recommendations could result in additional savings and risk reduction, including fraud risk. Reducing fraud risk more than protects money; it builds trust in government. Maintaining a strong audit function and fiscal management will reduce future costs and enhance public trust.
CONTACT PERSON
Jenny Wong, City Auditor, 510-981-6750
Attachment:
1. Audit Plan Fiscal Year 2027
Audit Plan
Fiscal Year 2027
Inside
Letter from the Auditor
Planned Engagements
Audit Plan and Selection Process
Auditor’s Authority
Audit Plan Fiscal Year 2027
1 Letter from the Auditor
As the Berkeley City Auditor, I am pleased to present to you the audit plan for fiscal year (FY) 2027. This plan outlines the key areas of focus for the City Auditor's Office, including ongoing work and new initiatives to ensure transparency, accountability, and effective governance.
Our office conducts performance audits of city functions, where we evaluate city programs to determine their effectiveness and compliance with local laws and regulations. We aim to initiate the engagements identified in the audit plan during the fiscal year, but our ability to do so will depend on available resources.
To contribute to the City’s efforts to address the structural budget deficit, the Auditor’s Office reduced our baseline budget. As a result, we will pause the expansion of the Whistleblower Program to the public and have limited resources for staff training. While these reductions will impact audit work, my office is committed to fulfilling our charter-mandated responsibilities.
In the past fiscal year, my office released three audits on the Homeless Response Team, non- competitive city contracts, and Berkeley’s financial condition. Our contracts audit has already led to a Councilmember proposal to amend the Berkeley Municipal Code to require competition for service contracts greater than $100,000. We also released our first public investigation report since the launch of the Whistleblower Program. Additionally, we published a special report on performance metrics to provide best practices for management consideration.
We have developed the FY 2027 audit plan with consideration to the risks facing the City and stakeholder input. In FY 2027, we will continue our ongoing audits of the Rent Stabilization Board and business license tax. We also plan to initiate new audits related to public health and Measure FF. We will continue to follow up on audit recommendations to determine if the City has properly implemented them.
During this uncertain time, I look forward to working with City leadership, staff and the public to provide transparent, rigorous analysis to inform the tough decisions ahead on the issues that matter most to Berkeley residents.
Respectfully,
JENNY WONG
City Auditor
2 Planned Engagements FY 2027
Public Health
The Auditor’s Office will conduct an audit of the Public Health Division. The audit will examine the division’s finances or operations.
Measure FF
The Auditor’s Office will conduct an audit of Measure FF (sidewalk and streets). The City Auditor is required to conduct an independent performance audit of Measure FF at least every three years. The audit will examine tax expenditures and progress towards the goals set forth in the measure.
Follow-Up
The Auditor’s Office will continue to follow up on all audit recommendations to determine if they are properly implemented. We will issue follow-up audit reports to City Council on the status of our recommendations. We will also update our online public dashboard to increase transparency and accountability of the status of open audit recommendations.1 See page three for more details. This process may lead to follow-up audits in areas where risks identified in the original audit have not been mitigated.
Short-Term Projects
To be responsive to the needs of the City and the public, we may engage in short-term projects to provide timely and relevant information and analysis to the City and community.
Ongoing Engagements
The Auditor’s Office will continue our audits of the Rent Stabilization Board and business license tax.
Whistleblower Program
The Auditor’s Office is continuing implementation of the Whistleblower Program, which provides a confidential way for employees to report fraud, waste, or abuse by city departments, employees, or contractors. This fiscal year, we will continue reviewing and investigating whistleblower reports, strengthening program procedures and case tracking, increasing employee awareness of the hotline, and issuing public reports when substantiated matters warrant public disclosure. See page four for more details.
1 City Auditor’s Recommendation Dashboard
3 Audit Follow-Up Program
The Auditor’s Office conducts the annual follow-up program to assess whether city personnel implemented the audit recommendations for every audit. Our expectation is that the City should take no more than two years to implement our audit recommendations, unless otherwise specified.
In fiscal year 2027, the Auditor’s Office will follow up on 56 open recommendations from 7 audits. We will use the following statuses to report on the implementation of audit recommendations:
• Implemented: Auditee has addressed the audit risk by completely implementing the recommendation.
• Partly implemented: Auditee has implemented 50 percent or more of the recommendation.
• Started: Auditee has started to address the recommendation but has not reached the 50 percent threshold.
• Not started: Auditee has not yet taken action to implement the recommendation. • Dropped: Auditee has accepted the risk to the City that the recommendation is meant to address and is unable or unwilling to implement the recommendation. Additionally, all open recommendations will be reported as dropped if they are not implemented within five years of audit issuance.
Figure 1. In FY 2027, the Auditor’s Office will follow up on 56 open recommendations across 6 departments, as well as the Mayor and City Council.
1 1
6 1
11 2
1 1
1 2
7 2
5 4
11 0 5 10 15 20 25
City Attorney
Mayor and Council
Human Resources
Finance
Health, Housing and Community Services
City Manager
Public Works
Number of Recommendations
Not Started
Started
Partly Implemented
Note: The graph shows open recommendations our office will follow up on in FY 2027. We will follow up on the Financial Condition audit in FY 2028 prior to the next budget cycle. The Not Started category includes 19 recommendations from the recently released Homeless Response Team audit and contracts audit, which we will follow up on for the first time in FY 2027. Implemented and dropped recommendations are considered closed. The status for all recommendations is on our dashboard.
Source: Berkeley City Auditor
4 Whistleblower Program
The Whistleblower Program includes a confidential hotline for reporting fraud, waste, and abuse in city government 24/7, 365 days of the year. The hotline is currently available to all city employees. Due to limited resources, we have paused plans to expand the program to the broader Berkeley community. To support safe reporting, City policy protects City employees from retaliation for reporting fraud, waste, or abuse.
Authority and Independence
State legislation encourages cities to specifically focus on fraud, waste, and/or misuse of city resources through whistleblower programs led by city auditors. In 2009, California Government Code Section 53087.6 enabled local government auditors to establish whistleblower programs and to provide whistleblower protections. Local auditors are authorized under Section 53087.6 to create whistleblower programs with the approval of their respective legislative bodies and have discretion in how to operate their programs. In June 2024, City Council adopted Ordinance No. 7,922 formally establishing the City Auditor’s authority to receive and investigate whistleblower reports.
The Berkeley City Auditor maintains a level of structural independence well-suited for a whistleblower program, as the City Auditor is elected by the public and does not report to the City Manager or Council. The City Auditor is well-positioned due to their role in providing objective information on the operations of government programs and helping ensure full accountability to the public.
Accomplishments
In FY 2026, the Auditor’s Office continued strengthening the foundation of the Whistleblower Program by refining intake, review, and investigation procedures; improving internal case tracking; and working with departments to address allegations of fraud, waste, and abuse.
During the year, the office received whistleblower complaints, referred matters outside the program’s scope to appropriate departments, and issued the first public investigation report since the launch of the Whistleblower Program. This public report increased visibility into the program’s impact and demonstrated how whistleblower reports can help identify control weaknesses, improve accountability, and reduce the risk of similar issues in the future.
5 Audit Plan and Selection Process
What is an Annual Audit Plan?
The City Charter establishes the City Auditor’s duty to present a planned audit schedule to City Council at the beginning of each fiscal year. The FY 2027 Audit Plan fulfills this duty and ensures broad audit coverage throughout the City while also addressing specific performance, financial, contractual, and system risks. Audit resources are limited, thus prohibiting one hundred percent coverage each year. This limiting factor is inherent in the concept of using risk assessment to help prioritize audits. According to the City Charter, the ultimate decision to perform any audit shall be at the sole discretion of the Auditor. Our approach to scheduling audits is flexible and subject to change throughout the year based on newly identified risks.
Audit Selection Process
In developing a list of potential audits, ideas come from a variety of sources:
• Input from the community, elected officials, department staff, and City management; • Assessment of operations and controls in previous audit reports; • Assessment of citywide risks;
• Consideration of current local events, financial conditions, capital improvement projects, and public policy issues; and
• Consideration of risks identified in other government audits that could emerge in Berkeley.
Our office prioritizes potential audits using a risk-based approach that examines a variety of factors that may expose the City to fraud, misuse of funds, waste, liability, or reputational harm.
The following risk factors are used to determine audits included in the audit plan:
• Perception of risk from management, City Council, the community, and audit staff; • Economic factors such as financial impact, volume of transactions, number of personnel, and revenue generated;
• Changes in organization, management, key personnel, and information systems; and • Time since last audit.
After the plan is finalized, new information may come to light; events, initiatives, priorities, and risks within the City may change. The flexible nature of the Audit Plan as a living document provides the ability to change course when it is in the best interest of the City.