Fact Check: Affordable Housing Fee Alternatives

Fact Check: Affordable Housing Fee Alternatives

Photos by Jamie Scott Lytle and Sam Hodgson

Todd Gloria and Jerry Sanders

There’s been a lot of talk lately about whether business leaders did enough to find an alternative to the City Council’s decision this fall to raise the fee it charges commercial developers to help build subsidized housing.

Those leaders are now collecting signatures to try to overturn the increase, but what they did over the last two years to find another option keeps coming up.

Those in favor of the increase have said opponents didn’t offer any other solutions that would help build more low-cost housing for qualified residents. Opponents (who’ve banded together as the “Jobs Coalition”) say they offered plenty of alternatives.

The disagreement is persistent as the issue moves toward a possible place on the June ballot, so we decided to look into two recent statements.

Image: Mostly TrueStatement: “That is why over the last two years our coalition put forward more than 20 alternative ways to fund subsidized housing and make it more affordable to build. Unfortunately, those ideas were resoundingly rejected in favor of this politically expedient jobs tax, which will damage our economy and drive businesses and jobs to other cities.” Jerry Sanders, CEO of the San Diego Regional Chamber of Commerce, said at a Dec. 27 news conference.

Determination: Mostly True

Analysis: Chamber of Commerce CEO Jerry Sanders said at a press conference the coalition forwarded “over 20″ alternative ways “to fund subsidized housing and make it more affordable to build.”

A spokesman said Sanders was referring to a list created by an “affordable housing task force” created after a failed attempt to raise the fee in 2011.

At that time, the Council voted down a smaller increase than the one that recently passed. The Council created a task force of business and affordable housing advocates, and instructed it to deliver alternative options.

Some of the members of the current Jobs Coalition served on the task force.

In November 2011, the Housing Commission, which was in charge of staffing and organizing the task force, forwarded its 18 recommendations to the Council’s Land Use and Housing Committee. Then-committee Chairwoman Sherri Lightner announced the committee wouldn’t vote that day to send the recommendations to a full Council.

“The next step is for Councilmember (David) Alvarez and me to get together to take these recommendations and cast our proposal to the City Council,” Lightner said. She hoped to be back with something in the next couple months.

That never happened, and that was the end of those recommendations before the City Council.

“We were directed by the City Council to come back on Nov. 16 and that’s what we did,” said Housing Commission spokesperson Maria Velasquez. “It was up to the City Council, then, to put it on the agenda.”

Then, in April 2013, the task force, which continued to meet, discussed the alternatives again. This time it added three more suggestions on top of the 18 alternatives.

The list included a mix of options that included diverting money to subsidized housing, tax increases that would require voter approval and regulatory changes to make it cheaper and easier to build subsidized housing.

A few items have become null in the two years since they were put forward; two involved changing how redevelopment money was spent – that program no longer exists. Another has since been adopted by the City Council.

But the crucial element of whether the coalition truly offered “more than 20″ alternatives, as Sanders said, comes down to whether the coalition itself supported all of those things.

It’s reasonable to expect that if a group says it offered 20 alternatives, that it would be ready to support any of those alternatives.

Six of the task force’s recommendations include a tax increase.

Does that mean the coalition—which has opposed the fee hike by calling it “the jobs-killing tax”— actually supports six different tax increases to fund subsidized housing? That a coalition of business leaders that is generally opposed to tax increases, that includes the San Diego Taxpayers Association, in fact supports six different tax increases, each to pay for subsidized housing?

As it turns out, yes.

“A majority of the coalition supported every alternative,” said coalition spokesman Tony Manolatos.

That means the coalition supports: increasing transient occupancy taxes, assessing a property tax to be to fund a large infrastructure bond including affordable housing, increasing real estate transfer taxes, increasing document recording taxes, repealing the so-called People’s Ordinance to establish a trash collection fee and instituting a one-time tax on businesses’ net worth.

Initially, Manolatos wouldn’t say the coalition supported those tax increases. He said the coalition never got a chance to determine what it supported, because the City Council ignored the task force’s recommendations and refused to have a conversation.

He called back later and said a majority of the coalition did in fact support every item on the list.

“There was a good faith effort on our part to talk about having a tax increase, and we weren’t allowed to have that conversation,” he said.

That doesn’t mean Sanders’ statement is issue-free, though.

For one, those tax increases would require approval by a two-thirds majority of city residents. That’s a high bar to clear.

Also, two items on the list of recommendations include changes to how the city spends redevelopment money, a state program that ended two months after the committee meeting.

Another — increasing the fee the city charges developers when they submit a project to check consistency with the city’s general plan, and using it on affordable housing — has already been implemented.

And the city attorney says a plan to re-institute a reduction of water and sewage fees for subsidized housing projects is illegal. (The recommendation list does say the city should find a way to do it so it isn’t illegal, so there’s that.)

Beyond that, many of the proposals lack detail and some aren’t so much alternative funding streams as they are tools the task force says the city should use to help meet the overall need for low-cost housing.

For instance, it says the city should pursue a list of sites owned by the San Diego Unified School District as places to build subsidized housing — before acknowledging the city doesn’t have control of that decision.

We call a statement “Mostly True” if it is accurate but there is important nuance to consider.

That’s the case here. The coalition — because it had members on the task force — over the last two years offered more than 20 other ways to fund affordable housing or lower the cost of building. The statement neglects to mention that a handful of those options are no longer viable.

And while it’s also true that most of these alternatives don’t offer near the level of funding provided by the affordable housing fee, Sanders qualified his statement by saying they offered “ways to fund subsidized housing and make it more affordable to build,” which is more narrow.

♦♦♦

Image: Huckster PropagandaStatement: “The people who are now vehemently opposed to it were given two years by the city to come up with another proposal. They brought forward nothing,” interim mayor Todd Gloria said in a Dec. 11 U-T San Diego story.

Determination: Huckster Propaganda

Analysis: On the other end of the issue, interim mayor Todd Gloria told U-T San Diego the Council raised the fee after opponents didn’t negotiate in good faith.

“The people who are now vehemently opposed to it were given two years by the city to come up with another proposal,” Gloria said. “They brought forward nothing.”

That’s just not true.

If opponents had only put forward the list of 18-odd recommendations to help fund subsidized housing, created by a task force including business and affordable housing advocates, Gloria would be on relatively solid footing.

In that case, you could surmise he meant alternatives that provided roughly the same funding as the failed fee hike from two years earlier.

But those 18 recommendations weren’t the only alternatives offered before the Council raised the fee.

In October, after the Housing Commission put forward its recommendation to increase the fee to 1.5 percent of current construction costs, members of the coalition, who were already threatening a court challenge, offered Gloria a written proposal to raise the fee by a smaller amount.

The proposal offered at the Oct. 4 meeting would have doubled the fee over the course of five years, along with 13 other qualifications. That’s much smaller than the increase the Council ultimately approved, but it was similar to the 2011 proposal, and would have brought the fee back to where it was before the Council cut the fee in half in 1996.

Coalition members brought that proposal to other Council offices over the next month. Without any takers, it upped its offer on Nov. 1.

Its final proposal would have doubled the fee beginning Jan. 1, 2014, while exempting certain types of projects.

That’s more aggressive than the 2011 proposal the Council voted down.

And it makes Gloria’s claim that “they brought forward nothing” problematic.

In a written statement, Gloria said opponents of the affordable housing fee have spent 17 years successfully convincing the City Council to ignore its own law, which requires adjustments to the fee based on changes in construction costs.

“In the past two years, sensing that the political winds were changing, the opponents came forward with alternatives that were often vague, unachievable or didn’t provide a permanent funding source for affordable housing,” he said.

That’s a fair description of the list of recommendations offered in 2011.

“Their final proposal, agreeing to re-instate pre-1996 fee levels, was simply inadequate, and had no chance of receiving support from a majority of Council members,” Gloria said.

That might be true. But offering a proposal that can’t pull five Council votes isn’t the same as not offering anything.

Gloria spokesman Alex Roth said Gloria’s statement should be understood as “they brought forward nothing realistic.”

“You make statements all the time,” Roth said. “Sometimes you mean them literally. Sometimes you make them figuratively. This is a reasonable way to talk. I don’t think it’s really a stretch to say people understand this is what he meant by it.”

But dismissing the coalition’s final offer as unrealistic is a stretch, given that it was the same scheme as one suggested by the city’s independent budget analyst.

The IBA report, released just before the Council’s vote, recommended scaling back the fee hike to something in line with the 2011 proposal.

The City Council’s Democratic bloc has no responsibility to take its policy cues from the IBA. If affordable housing is a top priority, Democrats have every right to fund the program more aggressively than what one analyst recommends.

But if the IBA recommends something, it clearly qualifies as “realistic.”

Roth said Gloria’s statement’s implied the coalition offered nothing “politically realistic.”

That means readers are now meant to surmise not only that “they brought forward nothing” was meant figuratively, but also to have basic knowledge of the individual political inclinations of each City Council member.

That is, to borrow a term, unrealistic.

Moreover, it’s plenty reasonable to expect a literal reading of Gloria’s statement. Plenty of readers surely thought Gloria was saying business leaders hadn’t offered any alternatives.

The harshest rating we give is “Huckster Propoganda,” which requires that a statement isn’t just wrong, but that the speaker knew it was wrong but said it anyway to gain an advantage.

Gloria’s statement suggested the coalition hadn’t offered a single alternative to increasing the fee to 1.5 percent of construction costs; he now acknowledges that the group offered an increase comparable to one suggested by the IBA. Leaving that part out was rhetorically useful to his argument that opponents were acting as obstructionists. But it wasn’t true, and he knew it when he said it.

If you disagree with our determinations or analyses, please express your thoughts in the comments section. Explain your reasoning.

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Andrew Keatts

Andrew Keatts

I'm Andrew Keatts, a reporter for Voice of San Diego. Please contact me if you'd like at andrew.keatts@voiceofsandiego.org or 619.325.0529.

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18 comments
Grammie
Grammie

"If you build it, they will come."

Roberto Bigelow
Roberto Bigelow

Affordable housing laws are a scam. This is just enabling people not to work. Pay people not to work, collect section 8 vouchers, ebt, reduced or free bus passes, discounted utilities, free cell phones, free health care, free education for your kids. It never ends.

LocalBoy
LocalBoy

The issue of funding affordable housing in San Diego has been kicked down the road since the Trust Fund was established back around 1990. At that time, I believe it included 30+ sources. The City Council, at the persuasion of downtown suits and other pillars of San Diego, whittled away at the sources until it became completely gutted. The article concentrates on just the past couple of years when in fact the issue is decades old.

Bottom line, the suits and other pillars of San Diego are disingenuous about adding to the sources of the fee. They despise the fee and nonprofit oriented affordable housing as a rouse of the state.

Now they have every right to their opinion but they need to be honest with the public instead of continuing to do the bidding of the same ol' suits that have run San Diego since the Pete Wilson era (and perhaps before). Ex Mayor Sanders went to several grand openings of affordable housing developments and extolled the virtues of the housing and the great need. However, he never championed any alternatives when in power.

What needs to happen is the following:

The Feds and State need to increase the tax credits available to those developers that have a legitimate affordable housing proposal in multifamily zoned site - to the extent that no local funds are needed to subsidize of "write down the cost" of the housing. In other words, with the demise of Redevelopment Agency funding, completely fund these projects with private tax credit investors and mortgage debt. Sanders and his band of chamber boys and girls would probably fly the flag because it would be developed solely with private capital

Needed affordable housing for working families, seniors and those with special needs would flourish without the need for any local tax/fee or other source of funding. Yet, the problem is that Sanders and his fellow political friends have created such a teet sucking state, that such an amount of tax credits would be fought tooth and nail just like the fees they currently debate.

Jim Jones
Jim Jones subscriber

How about getting government completely out of housing? The affordable housing scam impacts only a minute fraction of the unskilled and welfare feeders, the rest find a way to exist here so it's pretty clear it exists for the sake of government, bureaucracy and politics rather than for the sake of the people.

Bill Bradshaw
Bill Bradshaw subscribermember

Since Sam Hodgson’s brilliant expose’ of the actual cost of “affordable units” destroyed the myth that affordable housing is actually that, it appears some out of the box thinking is in order. How about this proposal for discussion:

1. Get rid of the housing commission.

2. Sell off all housing units owned and operated by the city in an open bidding process, with the proviso that buyers agree to rent them to people who qualify for subsidized housing for up to 8 years.

3. Provide vouchers of equivalent value to the extent of the current subsidy for a limited time, perhaps up to 3 years, after which the subsidy decreases 20% a year until it is gone after an additional 5 years.

Anyone who can’t get their act together in 8 years or less is entitled to a one way ticket to a lower cost area, perhaps in the Imperial Valley or maybe Mississippi.

Veldt
Veldt

Ah. Well, your callousness isn't unique. Let's see. How about this? When you find yourself working for ten dollars an hour and can prove how good you are at paying all the bills, including some of the highest rents found anywhere, then come back and explain how everybody else is so rotten and irresponsible. Okay? Until then, who needs ya?

Veldt
Veldt

How 'bout you and everybody else stop applying your experience to everybody else's lives? What would you know about it, anyway? Opportunites for good jobs at good wages are very rare, and yet rents continue to rise, so much so that many, MANY people simply don't rent alone now- they live in packs and share the rent. I know scores of good people that have simply given up on having an apartment on their own. Do you really think that's a scam? Before you disparage everyone (which is typical of the dour and aloof here in this city), ASK THE PEOPLE THAT KNOW. Ask people that know about housing costs here, compared to wages here.

Or, better still, why don't you qualify your coldness by walking the walk? Live on a paltry wage, try and manage a decent life renting here, and then come back and tell everybody about your brilliant revelations. And don't forget there's a shortage of Velveeta cheese right now....

Derek Hofmann
Derek Hofmann subscribermember

That might work if government would also get out of the way of developers and landlords who want to provide low cost housing.Streetsblog Capitol Hillhttp://dc.streetsblog.org/2013/09/16/apartment-blockers/Alan Durning is the executive director and founder of Sightline Institute, a think tank on sustainability issues in the Pacific Northwest. This article, originally posted on Sightline's blog, is #9 in their series, "Parking? Lots!" Have you ever watc...Is It Time to Bring Back the Boarding House?http://www.theatlanticcities.com/housing/2013/07/it-time-bring-back-boarding-house/6236/Around the turn of the last century, American cities were full of housing options that are largely nonexistent today: tenements, boarding houses, rooming houses, flop houses, single-room occupancy buildings or SROs - all variations on the idea of sma...

Richard Ross
Richard Ross subscribermember

In a Statistical Abstract of the United States with the national average of cost of living in cities being 100 the cost of living in San Diego is 132.8. In other parts of the country one lived in an apartment until they could save enough to make a down payment on a condo or home. What did we do here but permit developers to convert affordable apartment buildings into condos. How many people moved here that really couldn't afford to live here? How many scams of jobs are created here that don't pay wages that afford those workers to live here? Heaven forbid that we cause executives with multi million dollar salaries to pay their employees more or more taxes.

Veldt
Veldt

It's very simple, really. When wages do not in the slightest way relate to real costs and real economics, because of greed in management and corporate and landowner minds, we end up having these silly insoluble arguments. Rents here in San Diego are levied at a higher rate when compared to wages than almost anywhere. If business owners were a bit more responsible and paid workers even a MODEST or REALISTIC wage, rather than something insulting and vicious, something that is bound to guarantee a need for assistance, then we wouldn't be talking about this. There is no longer any resemblance between living costs and wages. I've never seen anything like it in my lifetime- it's like some sort of cannabalism.

Greed. Greed. It's tearing everything apart.

Randy Dotinga
Randy Dotinga memberauthor

Again, it's cruel to send people elsewhere, away from their family and roots, because they have mental or physical conditions that can't be cured. It's not only cruel to them it's cruel to their loved ones. Do you want your grandmother, your sister, your friend banished far away because they're ill or simply incapable at handling life?

It's also cruel to turn them into a burden on another region of the country. This might be a nice idea in theory, but it breaks down in reality. Not to mention that the Imperial Valley or Mississippi will just send them back.

As for a voucher system: The current wait for a Section Eight housing voucher is 8-10 years. Why do you all think that's some great idea?

Randy Dotinga
Randy Dotinga memberauthor

Do you count the disabled among those "who can’t get their act together in 8 years or less"?

Not every disabled person -- particularly the mentally disabled -- can hold down a job or improve in eight years or less. Will power does not fix schizophrenia, OCD or depression, and medication/therapy may do little to help. Yet these people are often not ill enough to be committed. So they need housing and they need advocates to help them navigate a system that's complicated enough for those who aren't mentally ill.

As for the idea of abandoning the disabled who have roots here to another region or state, well, that's just cruel.

Jim Jones
Jim Jones subscriber

If it's so tough here for menial wage earners, try a tall glass of live where you can afford to live, rather than leeching off others. Plenty of parts of the country with sub $100k housing.

Jim Jones
Jim Jones subscriber

Sure, if you want to discourage business even more, tax it more.

http://www.forbes.com/pictures/feji45fkee/san-diego/

San Diego - In Photos: Best and Worst U.S. Cities for Business 2013http://www.forbes.com/pictures/feji45fkee/san-diego/Survey grade: FWhy it's worst: Regulatory red tape and startup challenges both earned the sunny Southern California city an F grade from local owners. Best they had to say was that training and networking programs were OK, earning a C grade.Photo: Ge...

Jim Jones
Jim Jones subscriber

"It's also cruel to turn them into a burden on another region"

So it's not cruel to have them as a burden here?

Despite the pretend hand wringing and absolutely false charges of cruelty, people should live where they can afford to. I can't afford a house in LaJolla, should you be taxed to buy me one? No. Nor should I be taxed to subsidize people who want to live in SD at a higher standard than they can afford.

There are perfectly acceptable and not at all cruel places to live that are a fraction of what it costs to live here, and if that is what you can afford then that is what you can afford. You have no right to selfishly leech off of others simply to live where you want to but can't afford to.

Mark Giffin
Mark Giffin subscribermember

If it were just that group Randy. Its not.
The linkage fee is a shakedown and as Bill pointed out Affordable housing in this town is an oxymoron.
Bill is right. We as a city need to get out of this housing Slush fund and set up a voucher system

Derek Hofmann
Derek Hofmann subscribermember

San Diego is an expensive region. If it's cheaper to treat people somewhere else, why not send them there?