San Diego Council Approves Incentive Plan Geared to Boosting Affordable Housing

Developers Support Exemptions, Say Opt-In Threshold May Be Too High to Attract Projects


By Lou Hirsh CoStar News November 10, 2020 | 7:04 A.M.

San Diego City Council has approved a plan intended to increase the stock of affordable housing by exempting developers from certain fees and zoning requirements, as the nation’s eighth-most populous city tackles a serious statewide shortage of workforce-accessible residences.

The council voted 8-1 Monday to approve a “Complete Communities” plan put forward this year by Mayor Kevin Faulconer, exempting developers from some impact fees, height, density and other zoning requirements, provided they set aside 40% of units in a residential project as affordable under regional household income guidelines.

“It’s really addressing a crisis that we’ve been dealing with, which is not having enough housing that is affordable and accessible to our residents, while also addressing the climate crisis,” Council President Georgette Gomez said during Monday’s meeting. The opt-in plan is designed to boost the city’s production of affordable units and meet regional housing-allocation requirements established in prior state legislation.

The San Diego program also establishes an “in lieu” fee to be paid by developers in certain parts of the city in cases where they don’t designate at least 15% of units as affordable, with the money to go toward programs intended to make neighborhoods more public transit, pedestrian and bicycle friendly.

The in-lieu fee is intended to help the city follow through on its regional climate action plans, in line with previously established state standards for reducing greenhouse gas emissions. Other parts of “Complete Communities” are focused on getting parks and other civic amenities into communities where new housing is being added.

The affordable unit threshold was originally proposed by the mayor’s office last year at 20%, but city staff members told City Council that the number was revised after some community planning groups expressed concerns that number would let in too many high-density projects and create congestion and other problems.

“Even though it’s an opt-in program, still it’s creating a different narrative in how we are going to challenge ourselves as [elected officials] to really do things differently and try to create these tools that will address these challenges we are facing,” Gomez said. During the video-streamed meeting, several regional developers, architects and building industry groups called in with mixed reviews.

Craig Benedetto, spokesman for the San Diego chapter of commercial real estate trade organization NAIOP, formerly known as National Association of Industrial and Office Properties, said his group is " supportive of the concept of incentives, waivers and process reforms to stimulate housing production."

“We do have concerns about the opt-in requirement of 40% for inclusionary housing,” Benedetto told council members. “We believe that is extraordinarily high and we would encourage the staff to look back in the year ahead to make sure the program is operating as intended.”

Monday’s approval was opposed by Councilwoman Vivian Moreno, who said consideration of the incentive plan should be held off until the new year, when a new mayor and city council are sworn in. Faulconer and several council members are termed out at the end of this year.

Current state Assemblyman and former city Councilman Todd Gloria, who won last week’s San Diego mayoral election against Councilwoman Barbara Bry based on preliminary voting results, has said he generally supports the “Complete Communities” plan, though some incentive components, including those related to height restrictions, may need to be tweaked later.

Council approval came after a proposed $900 million city housing bond, intended to finance construction of at least 7,500 affordable housing units through an increase in property taxes, appears to have failed to obtain the required two-thirds approval from San Diego voters in last week’s elections.

As of midday Monday, with 64,000 mail and absentee ballots still to counted, the housing bond had garnered a 57.2% share of yes votes.

According to the San Diego Housing Federation, which was part of a coalition that backed the housing bond measure, the region faces a deficit of 140,000 housing units that are affordable to working families, due largely to severe imbalance of supply and demand over the past 20 years.


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