Behind Berkeley's Surge in Preliminary Applications for Housing Projects

Berkeley has experienced an unprecedented surge in building applications for housing projects in December, with at least 13 applications filed for apartment projects encompassing more than 1,660 new residential units.

That’s close to the equivalent of the total number of apartments delivered in the past five years in Berkeley, according to a report in the San Francisco Business Times.

Developers are rushing to file preliminary development applications this month, in a process enabled by a state law known as SB 330, to avoid a costly new requirement that has been mandated in a city law that will go into effect next week.

The Helping Achieve Responsible Development with Healthcare and Apprenticeship Training Standards Ordinance (that’s right, the acronym is HARD HATS) goes into effect on Jan. 1.

The new city law, championed by Berkeley Mayor Jess Arreguin, requires developers to pay for apprentice programs and health care for construction workers on projects larger than 50K SF.

Arreguin introduced and pushed through the HARD HATS law in 2022 as a means of addressing a shortage of construction workers that threatened to delay housing projects in a city with a severe shortage of apartment units.

Developers have estimated that the new law, particularly the requirement to pay for health care for construction workers, could increase building costs by as much as 20%.

Developers are taking refuge from HARD HATS by filing preliminary building applications that are permitted by SB 330, a state law designed to speed the building process for new housing projects in California.

Developers who file preliminary building applications under SB 330 effectively are exempted from the HARD HATS ordinance. The state law freezes existing zoning codes and land use rules in place while developers assemble their final applications.

The surge in SB 330 applications in Berkeley has grown as the January 1 enactment of the HARD HATS law approaches. The thirteen applications filed (as of December 22) is double the number of applications in November, the report said. One SB 330 application was filed in October.

Local developers told the Times that with high interest rates putting fully permitted projects on hold, penciling in an additional 20% in costs for new projects makes no sense.

When it approved HARD HATS, the City Council called for an analysis of the costs of the new health care and apprenticeship requirements, saying it would consider making adjustments to offset those costs based on the findings.

The analysis is not expected to be completed until the second quarter of 2024, the report said.