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San Diego Changes Income Standards, Raises Builder Fees in Bid to Boost Affordable Housing

City Council Passes Compromise Measure Aiming to Avoid Mayoral Veto

San Diego City Council has approved changes aimed at spurring developers to build more affordable apartments for low- and middle-income renters, while avoiding the mayoral veto that met a tougher prior proposal, as the nation’s eighth-largest city tackles a chronic housing shortage.

By a 7-2 vote, the council on Dec. 10 passed changes to the city’s inclusionary housing laws, which require developers starting next year to make 10% of units in new apartment projects affordable to families earning 60% of the regional median income, a tougher standard than the current 65%.

The council also approved an increase in the city’s "in-lieu" fees paid by developers who opt not to include affordable units, gradually doubling the current fee of $12.73 per square foot over the next five years, until it reaches $25 per square foot.

"I do think that it’s moving the needle forward," said Council President Georgette Gomez, who proposed the measure, during the council meeting. "Is this the solution? No, it isn’t and we need to do much more to make sure we’re housing all San Diegans, and it is a crisis we have in front of us."

A measure passed earlier this year by council in a 5-4 vote – putting the household earnings standard at 50% of the regional median income of $86,300 and raising the in-lieu fee to $22 over a three-year period – was vetoed by Mayor Kevin Faulconer, who said it would raise the cost of housing and discourage new development. City Council failed to generate the six votes required by city law to override the veto.

The council now apparently has sufficient votes needed for a veto override. Faulconer has not formally responded to the compromise measure, but his representatives have said to local media that the measure appears to be more favorable than the prior one.

Also, the new compromise measure, unlike the prior council proposal, has garnered support from local developers and groups, including the San Diego Regional Chamber of Commerce, San Diego County Building Industry Association and the commercial real estate advocacy group known as NAIOP, formerly the National Association of Industrial and Office Properties. Those groups have joined organized labor organizations that supported the prior proposal.

Supporters, including Stephen Russell, executive director of the advocacy group San Diego Housing Federation, told council members that San Diego has 140,000 families in need of affordable housing. That includes households headed by full-time police officers, hotel workers, maintenance workers and those in other industries who can't afford to rent or buy local housing.

A group of janitorial workers employed at San Diego International Airport said many of them commute daily to their jobs from their homes in Tijuana, Mexico, because they can’t find affordable housing in San Diego.

The newly passed housing measure was opposed by council members Scott Sherman and Chris Cate. Sherman said a better solution would be to encourage developers with localized neighborhood incentives and zoning changes.

For instance, the Grantville neighborhood in Sherman’s district was able, through city-approved zoning, to clear the way for a total of 8,000 future new apartments near mass transit, and 320 affordable units have been completed in that enclave during the past two years, with no changes to developer fees or income standards.

"A slightly less painful compromise is still bad policy," Sherman said, explaining his opposition to the new citywide council measure.

The changes are separate from other measures previously discussed by San Diego officials – and those in many other California cities – to deal with rampant homelessness and other affordability problems caused by limited construction and skyrocketing rents and home prices.

San Diego, for instance, has recently moved to ease the building of accessory dwelling units, and the mayor’s office is currently formulating an incentive program, to be reviewed by city council, that would give developers perks like eased approvals in exchange for building higher proportions of affordable units and sustainable neighborhood amenities like public gyms and parks.

Article via CoStar: Lou Hirsch

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