The Morning Report
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On March 3, voters will decide on Measure B – the referendum on the Newland Sierra development – and the primary argument supporters of the 2,135 homes the measure would greenlight is that it will provide housing at an affordable cost.
The San Diego County Board of Supervisors approved a general plan amendment allowing the project in 2018. More than 117,000 county residents signed a petition to force that decision to a countywide vote.
As they work to sell county voters on the project, supporters of the development have touted that it will not just provide badly needed housing, but that those homes will actually be affordable.
“The Better Choice Measure brings 2,135 new homes, 62 percent of which will be affordably-priced for local working families, including an exceptional commitment to designate 10 percent of the community for families making less than half of the county’s area median income,” the mayors of Oceanside, Escondido, Vista, San Marcos and Carlsbad wrote in a December letter. “This is a significant advancement in providing accessible housing for all San Diegans, including firefighters, police officers, veterans and teachers, helping those who work in San Diego County live in San Diego County.”
Three backers of the measure wrote in a Union-Tribune op-ed that it would “deliver desperately needed, affordably priced housing.”
Other proponents have made similar claims.
In addition to the 2,135 homes, the project includes a school site, retail and parks north of Escondido in the Merriam Mountains. Newland representatives are promising voters that more than 60 percent of the homes in the development will be affordably priced for working people like firefighters, police officers and teachers and their families.
But as the election nears, attorneys for Golden Door, an exclusive spa near the project and one of Measure B’s main opponents, are challenging that claim, arguing it is an unenforceable promise by the project’s backers.
The promise comes down to a commitment Newland’s developers have made to themselves and the unnamed firefighters, police officers, nurses, and teachers they plan to house.
It’s still not clear whether that promise is truly enforceable by law, and if it is, it would require that citizens sue to enforce it.
The Enforceability Question
The county’s general plan calls for developers to provide an affordable housing component when requesting a general plan amendment for a large-scale residential project when legally feasible – but does not actually require them to do so. Thus, Newland did not include affordable housing in its project.
“The county cannot require projects to provide affordable housing units unless the county has a generally applicable program such as an inclusionary housing ordinance or the county has documentation showing a nexus between a particular project and the need for affordable housing,” Michael Workman, a spokesman for the county, wrote in an email. “Neither was available at the time Newland Sierra was approved.”
Opponents have criticized Newland for not including any homes legally reserved for residents meeting certain income qualifications in the project. A county report on the project argues that it includes market-rate homes at a range of price levels, but acknowledges it does not include any legally mandated homes for low income people.
That report, from the county Planning Commission, says “the project does not include an affordable housing component as the County of San Diego does not have an inclusionary housing ordinance or other legal mechanism to require affordable units. This project consists of seven neighborhoods with a variety of housing types (townhomes, single-family clusters, small lots, family lots, large lots, age-targeted and age-qualified lots), with lot sizes (ranging from 3,000 to 7,500-square feet) for a broad range of age groups and income levels. Additionally, 325 of the project’s dwelling units are age-qualified and located in the Mesa neighborhood.”
That description of the project was approved by the Board of Supervisors.
Clifton Williams, an attorney for the Golden Door, argued that the only thing that matters is the project approved by the board does not include mandatory housing for low-income residents. Developers will only need to build what is explicitly described in the plan.
“There is absolutely no affordable housing voted on in Measure B, and that is not in dispute,” Williams said.
But Newland Communities, the developer of the project, insists it’s going to build affordable homes anyway.
It’s so committed to ensuring trust from voters, the company’s officials say, that it has signed a legally binding agreement recorded with the county that says it will keep their word and build affordable housing. The agreement reads “ten percent of the total residential units built for the Project set aside for households with incomes at or below 60 percent of the Area Median Income as published by the County at the time of sale or lease. (“Very Affordable Homes”) This section … shall not be amended or modified…”
It also says full-time first responders, veterans, EMTs, military personnel and teachers will have preference on 40 percent of the affordable homes. The contract is valid for 10 years. Kenneth Moore, a spokesman for Newland, said Newland chose 10 years because it follows the timeline for build-out of the project.
Williams said Newland’s efforts to include affordable housing are a “PR stunt.”
“Newland Sierra has entered into a covenant with itself,” Williams said. “The county can’t enforce it and the public can’t enforce it. So this is trust. We can’t trust them since during public approval, despite requests of affordable housing from the community, they refused to put affordable housing in the project.”
Newland’s attorney Mark Dillon rejected Golden Door’s characterization of the agreement.
“It is a legally binding commitment recorded as a deed restriction on the Newland Sierra property through the county of San Diego to deliver affordably priced homes for San Diego’s working families,” he said. “It requires any owner of that property to comply with the affordability terms in the covenant and amendment, which are enforceable, binding and cannot be amended.”
He said the agreement is enforceable and names working class residents – law enforcement officers, firefighters, public safety officers, emergency medical technicians, military personnel, veterans and teachers – as stakeholders who can hold Newland accountable. He said other groups such as affordable housing advocates can also hold Newland accountable.
“If at any time we don’t provide housing, we say they can enforce that in court,” Dillion said. “It’s a public document. It’s enforceable by those groups, their union representatives and other stakeholder groups that support them,” Dillon said.
I asked the county for its opinion on the enforceability of the document. Workman, the county spokesman, responded in an email that the county wasn’t even aware of the declaration and therefore can’t comment on whether it’s enforceable.
Everett Delano, a land use attorney in Escondido, said the agreement doesn’t change what voters will decide on in March and that there is nothing enforceable about it in context of the measure that’s before voters.
“The project was approved as the project was approved,” Delano said. “They can say all kinds of things and stand up with a Boy Scout pledge and say, ‘I promise,’ but there’s no bearing.”
Delano pointed out that there aren’t any specifics clarifying what “preference” means in the section of the covenant pledging priority for law enforcement officers, teachers and others.
Delano called it a vague commitment.
“There is nothing about this that gives voters any additional rights,” Delano said.
The Affordability Question
Key to the entire dispute is what Newland even means when it says its homes will be “affordable.”
There are two different types of affordable housing: there’s housing that is legally reserved for people who make below a certain income threshold, and there’s regular market-rate housing that happens to be affordably priced. Newland Sierra says 210 homes will be of the former, and argues it provides a lot of the latter.
There are some differences in Newland Sierra’s affordability projections compared to state and national standards. It also assumes a higher percentage of money down on homes than the national average for first-time buyers and creates estimates on additional fees.
Newland Sierra bases its projects on the San Diego County’s area median income for a family of four, which is $107,000.
Newland says 1,331 homes, or 62 percent of all homes in the project, will be affordable for working class families of four who make an income range between 50 and 120 percent of the area median income. On top of that, Newland designates another 706 homes in the project that will be affordable for “working class” families of four who make an income range of 121-150 percent of the area median income.
Newland claims 210 of the homes in the project, or 10 percent, will be restricted affordable housing for seniors and families who are “very low income,” which the developer defines as a working family of four that earns less than 60 percent of the area median income, or between $53,500 to $64,200. Newland uses a family of four as a projection but says these homes are for families of all sizes earning $51,780 or less by today’s area median income.
Rita Brandin, a senior vice president of operations at Newland Communities, said Newland Sierra is in talks with affordable housing developer Wakeland to build the 210 affordable homes on the site together if it is approved by voters, and that they will be affordable for at least 55 years.
Those homes will be for rent. The rental price for a two-bedroom unit would begin at $1,444 per month in today’s dollars, said Natalie Kessler, a senior account executive at Southwest Strategies and representative for Newland Sierra.
“I’m working with them to do it and we’re going to make it happen. They understand it’s going to cost them some money. They understand that,” said Ken Sauder, Wakeland’s CEO. “This is going to get done. I think there’s a real commitment on their part.”
A document laying out the different types of housing in the project provided to VOSD by Newland Sierra shows an additional 346 homes will be built for “low-income” working families that bring in 61 percent to 80 percent area median income, or between $65,270 and $85,600 per year.
Homes in this range will be between 1,100 and 1,400 square feet and are projected to cost between $343,000 and $408,000 by today’s housing prices and current area median income, according to the document.
Moore said price ranges of homes in the project could change when the homes are built and sold, but the range will stay consistent with area and remain affordable for working families.
The document also shows Newland will designate another 1,481 homes for “working families” ranging in three tiers between 81 and 150 percent of area median income, or household incomes of $86,760 to $160,500. Those homes – ranging from 1,200 square feet to 4,200 square feet – are projected to cost between $408,000 and $753,000 in today’s dollars and current area median income, according to the document.
Kessler wrote in an email that although typically working families are considered those who make between 61 percent and 120 percent of area median income, Newland classifies the group of homes for those making between 120 percent and 150 percent of area median income as “working class.”
“If you look at the incomes for a family of four in the 121-150% of income ($129,470 – $160,500), those incomes are still considered ‘middle income’ and achievable with a two person working household – think of a teacher and fire-fighter; a nurse and police officer; etc.,” Kessler wrote in an email.
An additional 98 homes ranging from 2,500 to 4,200 square feet will be built for families who bring in more than 151 percent of area median income and are projected to cost between $816,000 and $927,000 by today’s housing prices and current area median income, according to the document.
Newland does include additional costs to homeowners in its projections, such as annual Mello Roos fees, which it estimates at $900 per year, annual fire fees required by the fire district of $201.72 plus fire suppression fees paid through real estate taxes at $.0156 per square foot of the home, average insurance costs of $.04 per square foot of the home and monthly HOA dues of $125, Kessler wrote in an email.
In Newland’s housing affordability component, it uses 35 percent of a household’s income as a threshold, Kessler wrote. According to the U.S. Department of Housing and Urban Development, housing is affordable if the expense accounts for less than 30 percent of a household’s income.
Newland projects homebuyers will put down a 10 percent down payment when buying a home in the property, Kessler wrote. The national median down payment for first-time homebuyers is 6 percent and the median down payment was 12 percent for all buyers, according to a 2019 report from the National Association of Realtors.