The Bad Math and Bad Faith Behind San Diego’s Housing Policies

by on August 9, 2022 · 25 comments

in San Diego

The Secoya Project in Banker’s Hill

A Deep Dive Into San Diego’s “Regional Housing Needs”

By Mat Wahlstrom

On July 13, there was an extraordinary story by Voice of San Diego on San Diego’s current Regional Housing Needs Allocation (RHNA, pronounced “ree-na”) cycle, which was implemented in 2021. This mandates the number of units that a city must have planned to be built by 2029, or else face having more of their oversight on land-use decisions transferred to Sacramento.

And what’s extraordinary about it is that, for once, the RHNA projections were called out as the farce that experts usually only privately admit they are. No less than *the* go-to guy on local land-use economics, Gary London, was quoted as saying, “I don’t think it’s possible” to meet the state’s RHNA goals, as “15,000 units a year is a fantasy.”

And when we ‘sharpen our pencils,’ as developers like to say, to drill down through the numbers, the situation is even worse.

Total RHNA counts are divided into four categories of percentages of the Area Median Income (AMI) for a region: very low, low, moderate, and above moderate. The AMI is determined by the Department of Housing and Urban Development (HUD) — but municipalities specify what percentages of which tier define a program or project as “affordable.”

In San Diego, for 2022, the AMI is $106,900 — with ‘very low’ defined as between 50-70%, ‘low’ as 80%, ‘moderate’ between 90-120%, and ‘above moderate’ everything more than 120% of that AMI. (Another term for more than 120% AMI is “market rate.”)

HUD also has a category for ‘extremely low,’ for those making below 50% AMI; but RHNA does not treat that as a separate concern. So the target number of new units for those making only 30% or $27,350 is lumped in for meeting the needs of those making 80% or $72,900.

Further, AMI is a regional assessment, that is, for all of San Diego County — an area nine-tenths the size of Connecticut. And it is not adjusted based on location, so neighborhoods in the City of San Diego such as Carmel Valley, with an actual AMI of $145,100 , are considered the same as San Ysidro, where the AMI is $46,562 .

(The County has its own RHNA targets for the unincorporated areas , but only distinguishes between ‘lower’ and ‘moderate’ incomes, with the dividing line being that same 80% AMI  .)

Even if we assumed other things being equal — which they aren’t — the reality on the ground isn’t remotely being faced.

Compounding the situation, Senate Bill 35  was passed in 2017 (with the approval of then-Assemblymember Todd Gloria), which implemented by-right approvals of multifamily housing projects in cities that don’t issue enough permits per income targets. But since it is developers who apply for permits to build housing not cities, its mandate that municipalities identify opportunities for and remove limits on new housing is one-sided.

Also, RHNA numbers aren’t determined in a vacuum but under the influence of lobbyists, which explains why the target of all units for Southern California was set from just over 409,000 in the previous eight-year cycle to almost 1.35 million now — an increase of 330%  — in a state with a net population loss. And shockingly, it still calls for 42% of that total go toward those making an ‘above moderate’ 120% of the $106,900 AMI, the “market rate” housing segment for which there’s already a glut.

Now for the really dirty open secret:

Although the RHNA numbers are divided into those four tiers based on income, there is no requirement that the targets per those income levels be met: the only thing that counts is the total number of units permitted for construction, regardless of income or whether those units are actually built.

And as noted earlier by Mr. London, it’s just not possible. But cities would still have to continue to loosen zoning across the board in meet arbitrary and unattainable goals.

Our situation is that those in the know realize cities are placed in a “heads I win, tails you lose” position with developers; yet our electeds continue to rig the game against community input and community benefit on land-use decisions rather than resist.

Three months before the Voice of San Diego story already cited, KPBS posted a rapturous report about the supposed success of Complete Communities . Passed in November 2020, under the previous mayor yet championed by our current one, it allows multifamily housing with unlimited height and density beyond the base zoning, if one in ten units are deeded “affordable” — again, as defined by the city — to meet its backstopped RHNA goals.

The results so far? Fourteen projects of 864 individual units, where only 286 would be permitted. With just 211 of them, or 24% — many as small as 200 square feet, renting for no less than $1,400 a month  — meeting the ‘very low’ 50% AMI of $45,550 for a single person.

Given San Diego’s RHNA target of 21,977 new ‘very low’ income units, at this rate, nearly 88,000 total units would need to be built to reach it.

Oh, and given that all units less than 500 square feet are exempt from paying *any* development impact fees for their added strain on infrastructure and amenities — and only a sliding scale if larger — Complete Communities projects do not offset their impacts on existing energy and water supplies, sewers and roads, or parks and public safety.

A prime example is the Secoya project  in Bankers Hill — the first in the city permitted under Complete Communities. Built without community review on land with a base zoning of 25 units, the project is 103 micro-units — with a generous 11 termed ‘rent restricted’ — which the builder claimed to be free from subsidy.

But in order to meet the electrical requirements, it required a new feeder being run from a quarter a mile away to handle the density, depleting its neighbors. And since these projects get the expenses for this and for undergrounding waived as par for the course, the true costs are buried in the community’s ledger.

(Mark your calendars: within a year, I predict at least one brownout and/or water main burst related to these fourteen projects, that city and utility officials will unite in describing as the fault of deferred maintenance under the prior mayoralty.)

And adding insult to injury, Secoya’s developers have the audacity to term those few deed-restricted units as “naturally occurring affordable housing” (NOAH) — an Orwellian arrogation of the definition for long-standing habitations that too many of these projects demolish to replace — and which the San Diego Housing Commission in May 2020 issued an urgent report as needing protection

In sum, we find ourselves in a bezzle. Coined by the economist John Kenneth Galbraith in his book, The Great Crash of 1929 , it is the term for the window of time “between the commission of a crime and its discovery. (This is a period, incidentally, when the embezzler has his gain and the man who has been embezzled, oddly enough, feels no loss. There is a net increase in psychic wealth.)”

It is the result of policies that punch endless loopholes in constraints to speculation on land use under the pretense that this will negate the consequences of speculation on land use — so long as token commitments to provide affordable housing yield token amounts of it.

It’s the equivalent of spending $100 to get a coupon for $10 off and thinking that is a net increase in actual wealth.

(Because the data for the fallout from doubling down on the same flawed premises as Complete Communities is not yet available, I can’t provide the same level of detail on our current mayor’s “Homes for All of Us,” “Blueprint San Diego,” and “Build Better SD” initiatives that were similarly rolled out in the name of ‘equity.’ But suffice to say, they look to be throwing more good public money after bad.)

Circling back to Gary London: “That’s the crisis the city has to adjust for – we’ve significantly overlooked large households, principally families,” he said. “There is a severe shortage, there is, but at some point there will be a wakeup call that we’ve only been accommodating the people who can be accommodated by small units.”

Until then, don’t expect any relief from our electeds to our affordable housing crisis.

{ 25 comments… read them below or add one }

Frank Gormlie August 9, 2022 at 10:23 am

This is a great piece by Mat in trying to decipher all the numbers and “plans” thrown at us. Very much needed.


Mat Wahlstrom August 9, 2022 at 11:11 am

I really appreciate that, Editordude — and all the extra work you put in on the links!

The San Diego City Council is also the city’s Housing Authority. It has the power to institute rent controls and vacancy taxes. It can change regulations to not just allow but incentivize commercial properties converted to residential uses. It can build its own housing — or lease public land instead of selling it — to ensure 100% affordability. It can exercise eminent domain to build neighborhoods just as it has in the past to demolish them. And above all, it can quit promoting quantity over quality.

Our electeds can break the cycle of dependence on the market and deliver real results that meet our actual regional housing needs. All that is lacking is the political will to buck their developer donors.


Paul Krueger August 9, 2022 at 11:01 am

Thanks so much for this excellent, insightful reporting. We really appreciate you continuing effort to highlight the contradictions of the state and city’s push for increased density.


Mat Wahlstrom August 9, 2022 at 11:22 am

As I do yours as well, Paul.

If people take nothing else from this, I hope it’s that our current land-use policies are not about population but about speculation.


kh August 9, 2022 at 11:25 am

Most know the RHNA numbers come from a magic 8-ball, though many don’t want to admit it.

The city needs to better encourage adding deed-restrictions to existing units. This idea of knocking down older NOAH units, displacing families, to build new micro units at 120% AMI is insane. A micro unit at market rate won’t even fetch 120% AMI rent in most neighborhoods. 120% AMI rent on a studio or 1 bedroom is $2,245 and $2,566 respectively.

Also often overlooked, is affordable housing requirements are calculated on base zoning density. Let’s say a property is zoned for 8 units, but 40 can be crammed in there under Complete Communities. 25% have to be affordable, that’s great right? Nope. 25% of 8 means only 2 of those 40 units have to be affordable (50%-60% AMI). The other 38 units at market rate (unaffordable rate?). (Also 15%, or 1 unit would be restricted to 120% AMI, but I’m not considering that as affordable.)


Mat Wahlstrom August 9, 2022 at 11:40 am

Thanks for the extra context, kh. Shows how much more worse this all is.


Greg August 9, 2022 at 11:38 am

“It is the result of policies that punch endless loopholes in constraints to speculation on land use under the pretense that this will negate the consequences of speculation on land use”

Excellent quote really capturing my overall distaste with the current response to our “housing crisis”. It seems we are in more of a “unit crisis” since there are no restrictions or policies being passed to restrict usage of newly built units solely to housing people.


Mat Wahlstrom August 9, 2022 at 11:42 am

Thanks, Greg, and exactly. We can’t get out of a hole we keep digging.


Jaybird August 9, 2022 at 12:26 pm

Thank You Mat!
Your outstanding reportage of this is stunning…
It is really clear that the current city administration has an agenda to eliminate whatever “affordable” housing is in place.


Mat Wahlstrom August 9, 2022 at 12:38 pm

Thanks, Jaybird. As I asked before on here, why does the current Democratic mayor — which ran for office opposing the Republican incumbent’s policies — not only continued but put more in place just like his?

(Spoiler Alert: Because the same people paid for both to get elected.)


kh August 9, 2022 at 1:40 pm

I don’t necessarily believe in conspiracies, or that all these politicians are all secretly indebted to developers over $10K here or there in campaign funding.

I believe it’s more that certain developer interests lobby our city officials full time for a living, it’s part of their 9-5. Yet the residents that are victimized by some of these developments, have no lobbyist, no representative at the table. When a mayor or councilmember spends all day in a pig farm, it’s inevitable they’ll come home smelling like one.


Paul Webb August 9, 2022 at 4:47 pm

I’ve worked over the years with any number of “lawyers” who in actuality do not really practice law. They are lobbyists who spend their full time influencing land use decisions at all levels of government. Rarely, if ever, do they see the inside of a courtroom or create actual legal documents.


Kate Callen August 9, 2022 at 12:35 pm

Mat, a million thanks for keeping the heat on. I think the pile-up of flagrant malfeasance at City Hall — high-rises engulfing older neighborhoods, ADU saturation, autocratic removal of street parking for bike lanes that are not reducing rush-hour pollution because they are primarily used for recreation — oh, and let’s not forget 101 Ash! — will reach a tipping point just as San Diegans start looking toward the 2024 elections.


Mat Wahlstrom August 9, 2022 at 12:40 pm

From your lips to G-d’s ears!


Shar°n August 11, 2022 at 11:05 pm

Kate, you know it ?! Succinctly 100% accurate.


Jaybird August 9, 2022 at 1:30 pm

Mat Wahlstrom- would you consider taking the mantle of Mayor of San Diego? I think that notion is pretty effing great. Something to think about…
No pressure…


Paul Webb August 9, 2022 at 4:52 pm


I want to join the others who are thanking you for taking the deep dive into the actual data regarding housing and presenting it in a clear and concise manner. I’ve said in this and other forums that the real need for housing has not been, is not being and never will be met through the marketplace. No one is building anything like the number of units for the lower income segments, and no private concern ever will.

I will say that, at least, the projects I’m familiar with that were constructed by the Murfeys have been relatively high quality development (although I cannot speak to their Bankers Hill project). I have also found them to be receptive to community input, as in the Famosa development in Point Loma where they revised their site plan to address community concerns. That’s pretty rare in San Diego.


Mat Wahlstrom August 9, 2022 at 6:30 pm

We usually agree, Paul — which I do completely on your first paragraph (and appreciate your thanks). But I can’t on your second.

Murfeys may be a ‘good’ developer, and they may have addressed community concerns on Famosa. But on this project they partnered with Bishop Ventures, who on their corporate site (that I link to in my article) made the claims I draw on in my article.

Bishop also touted how affordable this project would be beyond the rent-restricted units, telling SDBJ in February 2021, that their studios would start at $1,495, as “Secoya is meant to meet in the middle”

But if you look at their rental site for this project, you’ll see the least expensive, market-rate studio of 320 sq ft rents for $1,995 — $500 more than they told SDBJ, and 105% of the AMI per the chart kh shared. Which is likely why 19 of the 103 units are currently vacant.

Finally, the project takes its name from the Secoya, an indigenous people of the upper Amazon, who are “now in the process of being culturally assimilated to the rest of Ecuatorian society due to the presence of oil companies, missionary activity, and colonists from other parts of Ecuador.”

I can think of no more appallingly appropriate metaphor for what developers are doing to our neighborhoods.


Paul Webb August 10, 2022 at 9:38 am

Well, I stand by what I said. The Secoya sounds like a terrible project, but, as I said I didn’t know much about it. Knowing more, it sounds like a terrible project, like so many others that have recently been constructed or are in the planning/construction phase.

I’ve been dealing with developers in southern California and San Diego in particular since the late 70’s. In my experience, the Murfeys are far from the worst I have ever dealt with. I could tell you some stories, but not in print as I don’t want to place myself in any legal jeopardy. I’ve dealt with some litigious people in the course of my career, and some that were beyond litigious.

When the Murfeys came before the PCPB for the Famosa project, they originally planned a property-wide curb cut on Voltaire street with a “Huffman six pack” style parking arrangement taking up the entire front yard setback. After comments by the PCPB, they completely redid the plan to what you see today. Not an ideal development, but they listened to the community and made changes. That’s all I was trying to say.

That doesn’t mean that everything they do will be good.


Mat Wahlstrom August 10, 2022 at 10:00 am

I understand where you’re coming from. I didn’t mean that all developers are ‘bad’ or make any personal criticisms of these two in particular. I was just trying to clarify the differences between the two projects as far I can tell, nothing else.


Geoff Page August 10, 2022 at 10:56 am

Paul, which one is the Famosa project? Is it the one on the corner of Catalina and Voltaire?


Geoff Page August 9, 2022 at 8:49 pm

I accidentally posted this comment on another story this morning. What I wrote was, “I think everyone has already said it, but I will too, excellent piece, Mat. It made the Google news list too. Keep it up man, really good stuff.”

Some good discussion in the comments as well.


Mat Wahlstrom August 9, 2022 at 9:01 pm

Gracias, amigo!


Judy August 12, 2022 at 12:55 pm

Hello Matt,

I can you tell me what “termed” affordable units are? Are they affordable for a limited time and if so for how long


Mat Wahlstrom August 12, 2022 at 1:48 pm

“Termed” affordable just means which tiers of AMI are being counted as affordable. (Convoluted, I know.) An example is the city’s Tailgate Park giveaway: it terms 15% of the units as affordable, but only 10% are set at 60% AMI. The remaining 5% would actually be rented at 150% AMI, which is above market rate.

And the typical deed restriction for affordability is 55 years. But then, the ADU affordability ‘compromise’ approved in “Homes for All of Us” only requires 80% AMI for ten years.

All of which is to say, both need to be examined for each project or program on a case-by-case basis.


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