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For much of the past year, San Diego progressives have been determined to force developers to include affordable housing in their projects rather than pay to avoid delivering it.
City Council President Georgette Gómez responded to the labor-driven rallying cry last fall, promising that she and a new Democratic supermajority on the City Council could deliver a bold update to the city’s so-called inclusionary housing policy.
But what Gómez proposed – and a Council committee approved Wednesday – was far less radical than expected. Gómez said a series of meetings and analyses convinced her that the policy she and left-leaning advocates wanted could actually hamper affordable housing production.
“I refuse to create a policy that could read as a progressive policy but yet we’re not getting the units,” Gómez told Voice of San Diego this week. “That to me is my biggest fear.”
In the end, an amended policy prescription that passed a City Council committee on Wednesday made only a minor tweak to mandated on-site affordable units but nearly doubled the charge for developers who choose to pay up instead.
Neither builders nor Gómez’s allies on the left are thrilled with where she’s landed – albeit for different reasons.
Like the current policy, the new proposal gives builders a choice: incorporate affordable housing into their projects, or pay a fee to bankroll low-income housing projects elsewhere.
Gómez’s modest adjustments to the percentages of affordable housing that developers could opt to incorporate into their apartment or condo buildings are far shy of what progressives had hoped. Her pitch largely maintains what’s already on the books.
“I think it’s fair to say that there’s a lot of disappointment,” La Jolla activist Cody Petterson said. “Not with (Gómez). She’s doing the best that she can under conditions that are pretty trying.”
Months ago, the inclusionary proposal had been progressives’ foremost policy push to address the region’s housing crisis. On Wednesday, progressives and labor groups came out in support of Gómez’s pitch, but emphasized the need to take other steps too.
A Wednesday statement from the Build Better San Diego, a coalition of labor and left-leaning groups that mobilized behind the inclusionary policy update, underscored the left’s shifting views on the policy.
“(Gómez’s proposal) is a step in the right direction however in order to substantially increase the production of quality housing for families with very low and low Income, bigger and bolder ideas are needed,” the group wrote.
Many developers took a harsher view of Gómez’s proposal, particularly Gómez’s push to increase the fee for builders to avoid adding those units to their own projects from the current $10.82 a square foot to $25 a square foot over three years.
In response to those concerns and some others from the left, the City Council’s rules committee ultimately forwarded a smaller $22 fee proposal to the full City Council.
The change came after complaints from both market-rate developers who often pay the fee and affordable-housing developers who have long relied on those fees to bankroll projects. They said the fee increase could chill an already tight housing market and stifle production of affordable and middle-income units.
“If the in-lieu fee is too high, it is going to curtail the main source of gap financing for affordable housing,” said affordable housing developer John Seymour of National Community Renaissance.
And Ashley Gosal, an attorney for condo developer Bosa, estimated Gómez’s initial proposal would have added $6 million to the cost of Bosa’s latest downtown project.
Historically, two-thirds of the thousands of affordable units produced in the last 15 years have been subsidized by those fees.
Matthew Adams of the Building Industry Association noted that the city has already seen a 73 percent drop in housing permit applications the first quarter of this year compared with the same period last year, which he said speaks to the challenge developers are already having even without the new policy.
“Excessive regulations got us in this mess and more regulations will not get us out of this mess,” Adams said.
Yet at least two developers and one policy expert told VOSD that using the city’s density bonus – which allow developers to build more units than zoning plans permit in exchange for building more affordable homes – make Gómez’s inclusionary proposal less draconian for at least some builders.
David Allen of Trestle Development, who has focused on micro-unit projects, said he believed the proposal would give developers yet another reason to pursue the affordable housing incentive. As a result, he saw Gómez’s proposal as flexible for developers who can seek that option – one not all developers are willing to try.
“It’s not punitive,” Allen said. “It creates incentives.”
Colin Parent of Circulate San Diego, a transportation and housing advocacy group, agreed.
“Probably one of the biggest impacts of the fee increase is that more developers are going to move their projects into the density bonus program,” said Parent, whose organization has not taken a stance on the inclusionary proposal.
Gómez said her office also viewed the density bonus program – which allows developers to more units than permitted by zoning, if they include affordable units in the project – as a carrot. Her office has also proposed waiving development impact fees for affordable units that are built on site to try to encourage more affordable units in market-rate projects.
In the end, her proposal aims to push developers to take that approach but doesn’t force them, as many of Gómez’s allies had hoped.
Gómez acknowledged her perspective had changed.
Gómez told VOSD she urged her staff to change direction when the city consultant’s analyses showed the more aggressive mandate she initially sought wouldn’t achieve what she had hoped. Analyses showed many projects wouldn’t financially be financially feasible with the on-site requirements Gómez sought.
“My proposal is based on economic analysis and I want to make sure that I’m proposing a new update that is not gonna halt (low-income housing) productivity because that doesn’t help the folks that are needing the units,” Gómez said. “If we’re stopping, then who does that help?”
The full City Council is expected to weigh in on Gómez’s proposed inclusionary policy this summer.