City Council approves compromise for housing fee hike

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SAN DIEGO – A long-running debate over a controversial fee on developers that helps pay for affordable housing projects neared an end Monday.

The San Diego City Council approved a compromise that would provide additional funds for the development of affordable housing in San Diego.

On a 7-1 vote, the City Attorney’s Office was directed to return in two weeks with an ordinance that can be considered by the council members.

“[Monday’s] bold move by the City Council caps a years long contentious debate between affordable housing advocates and members of the business community with a reasonable, collaborative result,” said Council President Todd Gloria.

The issue involves updating the “”workforce housing offset fee,” commonly known as the “linkage fee,” where developers of commercial structures pay a certain amount, depending on the size of their projects, with the funds earmarked for construction of affordable housing units.

For the first time in 18 years, the fees would be reverted to its original 1990 levels, which were halved by the City Council six years later as an economic stimulus.

Last year, the council — on a pair of 5-4 party-line votes – returned the fee to the prior level.  However the business community subsequently gathered enough petition signatures to force the City Council to rescind the fee increase.

When that happened, Craig Benedetto of a business group called the JOBS Coalition, and Richard Gentry, president of the San Diego Housing Commission, which runs the city’s affordable housing programs, agreed to negotiate a deal.

Their memorandum of understanding, with adjustments proposed by Councilwoman Myrtle Cole, was what the council approved Monday.

The City Council directed the City Attorney to draft the Municipal code updates with provisions that include:

  • Returning the fee to its 1990 level, phased in over three years beginning on January 1, 2015
  • Exempting developers of manufacturing, warehouse and nonprofit hospital projects from paying the fee as an economic development incentive
  • Maintaining current fee levels for research and development construction for the same reason

Two controversial points of the MOU include a sunset provision that would put the levy back to its 1996 level in three years if certain reform measures weren’t implemented and a requirement for annual fee adjustments based on a construction cost index, were removed by Cole.

“It’s time to put this issue to rest, and collaborate on more permanent, long-term solutions for not only our affordable housing crisis, but our $2 billion infrastructure crisis, as well,” Cole said. “This compromise provides greater certainty, something that both our affordable housing advocates and developers wanted.”

The San Diego Regional Chamber and the JOBS Coalition applauded the City Council for taking action on the plan.

“The compromise is a significant step forward in moving beyond the contentious battle of the last 20 years,” said Jerry Sanders, San Diego Regional Chamber of Commerce President & CEO. “It is a balanced proposal that addresses our concerns about the impact a large fee increase would have on job creation so that we can focus attention on finding better ways to bring more affordable housing units to San Diego.”

Both Gentry, who called it a “compromise within the compromise,” and Benedetto, who said it sets the city on a course of “meaningful reform,” also spoke out in support of the deal.

The mayor’s office said it is studying several possible reforms that would benefit the construction industry.

A major policy decision would be whether to offer residential developers higher densities in exchange for inclusion of affordable housing in their projects, a mayor’s representative said.

Others would be much simpler, like a move to keep the city’s Development Services Office open late on night each week and on occasional Saturdays.

1 Comment

  • wes

    If you cannot afford San Diego move out. Business will be forced to pay more if they want to survive. Don’t make the developer pay for low income housing. Let the capital system work it out. California’s complaines that people need help, but if businesses don’t pay well they will lose customers by having crappy customer service. It takes a little while but it will work its way through the system.

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