By Paul Coogan
The Flawed Housing Action Package 2.0
The City of San Diego, like many U.S. cities, is attempting to build its way out of homelessness and spiraling rents. This simple supply and demand approach to real estate economics is an oversimplification that does not take into account the market manipulations of large corporate interests.
The builders want “free dirt” and there are two ways to drive down the cost of land, depreciation of the parcel or increasing the revenue potential of what is built. The former only happens in California when half the lot falls into the ocean.
The most common method of maximizing parcel cost is to build as big as possible to the highest paying market.
Thus we see San Diego building 140% of market demand for above average median income (luxury units), while middle income homes built account for less than 1% of need. Developers need high revenue to cover high land cost, high material cost, and high labor cost, so they have asked for tax incentives reserved for affordable housing to be applied to building luxury units.
How would that work?
If you buy a nice lot with an ocean view, put a bunch of luxury condos on it and then build a few crappy apartments in the cheap part of town, the cost average of the project is lower. The developer gets higher profits, the city meets its state mandated low income housing goals, the rich get a nice ocean view, and the middle class worker gets… well you know.
The HAP 2.0 states “The City of San Diego remains committed to providing Homes for All of Us. […] This initiative will also incentivize and promote new home opportunities in all communities that San Diegans of all income levels can afford.”[1] and yet the first section of the related staff report concedes failure even before the starting pistol. “While the HAP 2.0 proposal described below does not include a Missing Middle Homes / SB 10 proposal, the City Planning Department will continue to work with the public on a revised proposal for consideration in the future.”[2] Obvious newspeak for never.
Putting poor people in another part of town sure sounds like redlining to me. The intentions of our politicians may be to create affordable housing with a bit of horse trading, and admittedly, there are some constraints on the proposed implementation, though upon closer inspection of part 2, section 8, subsection E of the HAP 2.0 package [2] you will see the provisions are weak. Note, FAR is Floor Area Ratio and the higher the allowed ratio, the taller the building can be.
Part 2: Fair Housing for All
8. Complete Communities: Housing Solutions (CCHS) Amendments
CCHS is a City housing incentive program that provides a building FAR bonus to developments that provide affordable homes and neighborhood amenities.
E. Off-Site Affordable Option
The proposed amendments provide the option to develop CCHS required affordable homes off-site. Allowing for off-site development of affordable housing can provide greater flexibility for the development of affordable homes and overall total homes, therefore making it easier to develop more homes for all income levels.
HAP 2.0 allows for affordable off-site homes under CCHS with the following additional requirements:
1. Locational:
Within a Sustainable Development Area, and
Within an area identified as a Moderate, High or Highest Resource Opportunity Area as determined by the California Tax Allocation Committee at the time of application is deemed complete, and
2. Neighborhood Enhancement Fund:
Required for both the market-rate and affordable sites, with the fee applied to the receiver site capped at the size of the subject development site.
3. Deed Restriction:
Required to record a deed restriction prior to the first building permit that documents the number of affordable units to be provided, and
Assigns foreclosure rights of the development to the San Diego Housing Commission.
First let’s address where the affordable housing would be located. The Sustainable Development Area (SDA) is unique to San Diego and sets the reasonable distance to high quality public transit at 1 mile. Every city in the US and globally uses a ½ mile distance as the walkshed radius from transit. This is why bus stops are typically spaced no more than one mile apart. Every study has shown that people will not walk beyond that distance. But using this measure allows for less investment in transportation infrastructure including more buses.
Screenshot by the author of the San Diego Sustainable Development Area interactive map
Sustainable Development Area Map showing only small pockets of the city that are not included as “walking distance” to transit.
The second restriction on location is determined by whether the location has resources that allow for a decent quality defined by the California Tax Allocation Committee as “shown by research to be associated with positive economic, educational, and health outcomes for low-income families — particularly long-term outcomes for children.” and published on this interactive map.
Screenshot of the California Tax Allocation Committee neighborhood resource map by author.
The areas in light green on the map depicted would be off limits for the building of off-site affordable housing, but that still leaves plenty of choices for cheaper land.
Application of the Neighborhood Enhancement Fund to both properties means that the collected fees would be used for the neighborhood the property is located in. It is not clear how fees collected for both sites would be distributed. Last year, the city approved using Developer Impact Fees city-wide rather than spending the funds on capital improvement projects near the site where the impact is occurring.
Current municipal code 143.1015 (a) (1–3) states “rental dwelling units in the development” [3] meaning on site.
§143.1015
Required Provision of Affordable Dwelling Units
(a) In accordance with Section 143.1002(a)(1), an applicant requesting application of the regulations in this Division shall provide a written agreement to provide affordable dwelling units, entered into by the applicant and the President and Chief Executive Officer of the San Diego Housing Commission and secured by a deed of trust, that meets the following requirements:
(1) Provides at least 15 percent of rental dwelling units in the development, excluding any additional dwelling units allowed under a floor area ratio bonus, for rent by very low income households at a cost, including an allowance for utilities, that does not exceed 30 percent of 50 percent of the area median income, as adjusted for household size.
(2) Provides at least 15 percent of the rental dwelling units in the development, excluding any additional dwelling units allowed under the floor area ratio bonus, for rent by moderate income households, including an allowance for utilities, that does not exceed 30 percent of 120 percent of the area median income, as adjusted for household size.
(3) Provides at least 10 percent of the rental dwelling units in the development, excluding any additional dwelling units allowed under the floor area ratio bonus, for rent by low income households, including an allowance for utilities, that does not exceed 30 percent of 60 percent of the area median income, as adjusted for household size.
The proposed update is “Off-site affordable dwelling units shall be located in the same community planning area and City Council District, or within one mile of the premises of the development.” This would eliminate proximity from an already inequitable law.
If this section of the Housing Action Package 2.0 is approved, the city will have essentially approved economic segregation not unlike the Robert Taylor Homes of Chicago’s South Side in the 1960s. If you feel as strongly as I do, you can provide a comment to the city on this web form.
Update 12/5/2023: Mayor Gloria and Council President Elo-Rivera have announced the HAP 2.0 will be brought back to council chambers on December 12th, after it failed to pass at the last session. Details have not been published as of this writing.
Citations
1. San Diego City Planning. (n.d.). Housing Action Package. Retrieved fromhttps://www.sandiego.gov/planning/work/housing-action-package
2. City of San Diego. (2023, November). Staff Report [PDF]. Retrieved fromhttps://www.sandiego.gov/sites/default/files/2023-11/Staff%20Report_1.pdf
3. San Diego Municipal Code Chapter 14, Article 03, Division 10. Retrieved from Chap 14 Art 03 Div 10, Complete Communities Housing Solutions Regulations.
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