Opinion: Government Policies Control Affordable Housing

As the person dedicated to overseeing downtown San Diego’s affordable housing program for Centre City Development Corporation (CCDC) and someone who is passionate about providing housing options at all income levels, I appreciated Will Carless’ recent in-depth story on the costs of providing affordable housing, yet would like to broaden the discussion further to ensure appropriate context.

While Mr. Carless clarified the facts about affordable housing production costs, it is important to note that controlling policies are established at the federal and state levels. Local public agencies such as CCDC, the Redevelopment Agency of the City of San Diego, the Southeastern Economic Development Corporation (SEDC) and the San Diego Housing Commission strive to provide affordable housing as cost effectively as possible while complying with rules established by governing entities.

For example, Mr. Carless’ cost comparison between the production of an affordable unit in urban downtown San Diego versus a similar-sized unit in a more suburban location ignores the reality that California’s Community Redevelopment Law steers where affordable housing should be located. Redevelopment agencies are required to produce a minimum of 15 percent affordable housing units in or outside the redevelopment project area boundaries during the life of that project area (typically 30 years). Land alone is much more expensive in urban areas.

The San Diego Redevelopment Agency has helped finance/produce more than 3,300 affordable homes in downtown San Diego since 1975 and an additional 1,000 outside Centre City redevelopment area boundaries.

However, under state law, agencies receive only one-half of a credit for those units produced outside of the project area while receiving a full credit for those located within the project area. Therefore, investing affordable housing funds in areas where land and construction costs might be cheaper can cause an agency to not comply with state laws. Higher public subsidies are necessary to produce homes in downtown San Diego (where steel and concrete is the typical construction material and expensive underground parking is required), as opposed to neighborhoods such as Mission Valley, City Heights or Clairemont where parking can be provided on grade or above ground, and low-rise wood frame construction can be used. Downtown encourages higher density development

The consequences of this policy extend beyond cost considerations, and social implications should be part of the discussion.

First, studies have shown that urban areas with a balance of household incomes and diversity are more vibrant and sustainable, so affordable housing production is desirable within the redevelopment project area to ensure lower wage earners are not priced out of the market as local physical and economic conditions improve.

Second, the policy recognizes the environmental and economic value of locating affordable housing near public transit, including the reduction of greenhouse gas emissions, lessening of road and freeway congestion, and providing working families the option of not owning a car.

Third, those living in urban affordable homes tend to be closer to their workplaces, eliminating the need to commute from suburban areas where housing production costs may be lower but public transit is inaccessible.

Indeed, multiple missions may be achieved through a site’s development with affordable housing such as improvements to health and safety, inclusion of much needed public parking, neighborhood serving retail or grocers, or other uses that are catalysts in revitalizing neglected communities. Again, these policies are established at the state level, leaving local agencies with the task of implementation.

Local agencies are also required to abide by rules relating to wages. Most public funding sources trigger the payment of prevailing wages. This requirement can increase the construction for affordable housing from 5 to 25 percent. While social advocates can assert that the payment of prevailing wages reduces the need to construct more affordable housing by providing self-sustaining incomes to construction workers, the requirement can greatly increase the public subsidy needed to produce the housing.

One final point: a fair and accurate cost comparison between affordable housing and market rate projects must incorporate similar project parameters, such as type of construction, quantity and location of parking, number of units (economies of scale), contaminated soils, building height and seismic issues, among other factors.

Affordable housing remains an essential component of a successful, vibrant community. As we undertake a thoughtful dialogue about this complex issue — how best to balance the significant demand for affordable housing with cost realities and policy goals — we must consider the numerous federal, state and regional constraints and housing requirements that guide such development. Locally, we do our best to promote efficiency. Projects are competitively bid, developer fees are fixed to prevent the possibility of excess profits, and incentives are built in to reward those who complete projects under budget and on time.

Jeff Graham is Vice President of Redevelopment for the Centre City Development Corporation.