Jonathan Segal is fuming.
The architect and developer tried to build the city’s first low-rent micro-unit project – a building in Little Italy in which the apartments would be less than 400 square feet and rent for notably less than nearby apartments.
Segal is still building the project, but city regulations and fees have made it more expensive, and he says he’ll now have to charge more than he wanted.
He and his son Matthew Segal designed the project that will include Matthew Segal’s single-family home, plus 40 micro-units.
Micro-units are an attempt to create a hip cousin of SROs, or single-room-occupancy buildings, which have historically served as the last rung on the housing ladder for people who might otherwise be homeless. The rent is cheap because the units are small and amenity-free. Most SROs fit barely more than a bed, and bathrooms or kitchens are shared by multiple tenants.
Most new micro-units, by comparison, are smaller than standard studio apartments, but a little bigger than an SRO room – anywhere from 200 to 400 square feet – and most include bathrooms and kitchens.
Faced with housing crunches, cities like Seattle, New York, Denver and Los Angeles have seen an uptick in new micro apartments. San Diego, though, has been slow to catch the trend. Developers like Segal and others say that’s mostly because of outdated city policies and regulations.
Segal originally submitted a plan to the city that didn’t include any parking, even though city code requires it.
Building below-ground parking in a project is expensive, increasing project costs significantly – costs that are then passed off to future tenants as steeper rents. Segal hoped his no-parking project could have served as a proof-of-concept for micro-units in San Diego. He wanted to prove there are people who don’t own cars and are interested in renting smaller, cheaper apartments in walkable neighborhoods.
“I wanted to do this in Little Italy because I wanted to prove that we could do this efficiently and people could live in these cool units at a price point they could afford,” Jonathan Segal said.
But the property owner who sold the Segals the land didn’t like the no-parking plan. He appealed the project several times, eventually forcing Segal to add 11 parking spots. That’s less parking than is normally required because the project includes five units reserved for low-income residents. That allowed the Segals to use the state density bonus law , which lets developers sidestep certain building requirements in exchange for low-income units.
“And now we’re staring down a project that will be very expensive, specifically because of the stupid parking,” Jonathan Segal said.
Developers are building other micro apartments in San Diego, but they’re 100 percent affordable housing projects available only to renters who meet certain income requirements.
Talmadge Gateway, for example, is a micro-unit project for formerly homeless seniors with ongoing medical needs. Opened this summer, the micro-units there average just a few hundred square feet, but tenants like Bruce Carron say it’s more than enough.
“When I got this place, I sat in that chair and I cried for about an hour,” Carron said. “Because I was homeless for two years before I got here.”
Carron pays $322 a month for the apartment. San Diego architecture firm Studio E Architects, which has found a niche creating affordable micro-units in San Diego and the Bay Area, designed the project.
Studio E architect Maxine Ward said for affordable housing projects like Gateway, it makes sense to build small units to increase density.
“Most of this type of permanent supportive housing should be studios of this size,” she said, referring to a type of housing preferred by homelessness advocates in which people are offered a permanent place to live, as opposed to a transitional space. “People are coming off the street or off awful situations. They really just need a roof over their heads.”
She said large windows and other design tricks can make small spaces feel much bigger.
The Nook, at the corner of 15th and K streets in the East Village, is a 35,000 square foot micro-unit project currently under construction. It includes eight units set aside for homeless veterans, and the rest of the units are only available to people who make 80 percent of the city’s median income –about $50,000 a year.
Because The Nook is affordable and located near transit, its developers were required to include just seven parking spots for its 91 units, which average about 250 square feet each.
David Allen, president of the San Diego-based Trestle development company behind The Nook and other micro apartments in Oakland and Seattle, said San Diego needs to follow other cities’ lead and do away with parking requirements if it wants more micro-units.
“San Diego is a hard place to do micro-units,” he said. “There are many hoops that you have to jump through from a zoning and parking standpoint that don’t exist in some of the more progressive urban markets.”
Parking requirements are just one of the things keeping developers from building micro-units.
The city also charges developers fees intended to mitigate their projects’ impact by funding things likes parks, fire stations and street repairs. Most of those fees are currently based on the number of units in a project, not the overall square footage. That means a developer would be charged more to build lots of cheap, little units than to build fewer large luxury units.
In other words, the city’s fee structure currently encourages developers to build expensive housing.
“If the city got wise on this stuff, they’d open the flood gates to micro-units,” Allen said.
The city is aware of some of the issues standing in the way of micro-units. Mayor Kevin Faulconer has made increasing housing a priority. Councilwoman Georgette Gomez’s proposed a housing plan that would make micro-units more workable, and there is some movement to include changes in the next iteration of the city’s land development code that will make it cheaper to build smaller units. The changes are expected to be proposed early next year.
Andrew Malick, a developer and urban designer who has micro-units planned as part of a project in National City, said the changes in the city code are necessary, not because developers want to jam as many people into a building as they can, but because smaller units are more affordable and offer one solution to the region’s housing crunch.
“Micro-housing is a component of the total solution, but it’s an important enough component that we should be paying attention to it,” he said.
But Malick said city regulations aren’t the only thing holding micro-units back in San Diego. He said finding investors and companies willing to fund micro-unit projects is also difficult.
It’s a chicken and egg issue: Many investors won’t fund a micro-apartment project in San Diego until there are successful examples to point to.
“The reason we’re not building them is that we just haven’t built them yet,” he said. “It takes a long time to steer this cruise ship around. People are living in much, much smaller units in other parts of the world – it’s possible here. But it’s about getting the industry and other people on board.”