Ocean View Hills Nestor San Diego
San Diego's Nestor neighborhood seen here on Dec. 12, 2021. / Photo by Adriana Heldiz

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One year into its state-required plan to build enough homes to satisfy its need by 2029, the city of San Diego is already way behind the pace it would need to fulfill the plan.

The city now needs to triple the number of housing permits it issues in each of the next seven years to meet the state target – a level it hasn’t come close to reaching anytime recently. 

But the city’s planning department doesn’t seem to be alarmed.

In a progress report headed before the City Council’s housing committee Thursday, city staff did not mention the city was far behind meeting its housing plan.

“This report is intended to provide information on the city’s progress in permitting new homes and the effectiveness of the City’s existing housing programs,” the staff report reads.

The city issued permits for 5,033 homes last year, short of the 13,505 the city needs to build each year to achieve the total assigned to it in a statewide housing program called the Regional Housing Needs Assessment.

Now, to reach that 108,036 home target, San Diego needs to find a way to nearly triple its annual production, to 14,715 new homes per year.

“I just don’t know how you do it,” said Gary London, senior advisor at London Moedor Advisors, a firm that provides analysis and market research to developers. “I don’t think it’s possible.”

The city’s 2021 total is typical for recent years. The city has, on average, issued permits for 5,174 homes since 2012. Those historical comparisons of annual housing production were also not included in the progress report. City staff did, however, provide data to show increased production from the two specific housing programs it praised – one to spur granny flat production, the other allowing developers to build more homes in a project if they include low-income housing.

“All of the City’s previous housing reports are posted online to provide historic information for those years and RHNA cycles,” said Tara Lewis, a city spokesperson, on the city’s decision to exclude from its report any historical data on annual housing production or context on the lack of progress the city made toward its housing goals.

The state housing program assigns housing needs to each region in the state for an eight-year period, and each region further allocates its need among the cities within it. When representatives from the region urged the San Diego Association of Governments to lobby state officials for a lower total, then-Mayor Kevin Faulconer boasted of the city’s willingness to lead the way on increasing housing production to meet the higher need.

“It’s never easy, but we have to support more housing,” Faulconer said. 

Failing to meet the housing target is nothing new, for San Diego or anyone else in the state. The program has been in place for over 50 years, and has failed to ever spur homebuilding, as the Los Angeles Times detailed in an investigation five years ago. In the last eight-year cycle, the state assigned San Diego 88,096 new homes; it ended up issuing permits for just 44,531, according to city reports.

In response to that shortcoming, state officials have begun strengthening the law. One of those laws, passed in 2017, could mean that the San Diego City Council soon loses its authority to reject housing projects that meet certain standards, if it continues to lag behind its housing target.

Louis Mirante, vice president of public policy at the Bay Area Council, who has worked to strengthen city housing plans statewide in recent years, said many of those efforts won’t materialize until a few years into the new cycle for the state program. San Diego, he said, has two more years to ensure its zoning is consistent with its elevated housing target.

“We’re optimistic, or hopeful, that housing element reform will produce meaningful change, but we don’t expect that change to happen immediately,” he said. “It’ll take three or four years.”

Mayor Todd Gloria and the city of San Diego, Mirante said, are regarded generally in the state as players who work to combat the state’s housing crisis. Nonetheless, he said he wasn’t shocked to see the low numbers in San Diego’s first year, or its reluctance to acknowledge them.

“Anyone with half a brain cell could say, ‘You’re eliding the point here – the city is not on track to meet its eight-year goals,’” he said. “It’s kind of par for the course unfortunately – the real challenge is for the state and public to hold cities to account.”

The city’s failure to measure up to the state requirements came in every income category. Developers pulled permits for 5 percent of the homes for very low income residents it needs, 12 percent of the low income homes it needs, less than one percent of the moderate income homes it needs, and 83 percent of the market rate homes that it needs.

Still, Mirante thinks recent changes could make the law beneficial for the first time.

“When you talk to anyone from the state’s Housing and Community Development office, they’ll say up until this cycle it was absolutely a Kabuki exercise,” he said. “It was a paper product and nothing else. They’re putting more work in now. So we have to wait to see what this cycle can produce – even still, I want to be as forthright with local governments as I can be, but I need to be honest that I don’t see this as the only thing.”

Lewis, the city spokeswoman, argued many of the factors driving housing production – land costs and availability, environmental protections, and economic factors like the costs of labor and materials – are out of the city’s control. 

But for the city to nearly triple the city’s annual production, as the state housing needs target suggests is needed, Lewis said developers need more time to acclimate themselves to housing-focused reforms that the city has already passed, like its Complete Communities program, which lets developers exceed local zoning if they reserve units to residents with low and moderate incomes, or changes made to implement a recent state law that allows fourplexes in areas zoned for single-family homes.

New reforms that could help triple local housing production, she said, could include the city’s implementation of a state law that lets developers build more homes near transit, or the city’s plan to make it faster to pass new sets of development restrictions in each neighborhood of the city.

“Additionally, RHNA numbers focus on the production of housing units, but ignore the number of people housed,” Lewis said. “A three-bedroom home, which could house four or more people, and a microunit home that houses two people, count the same in RHNA totals. While the City is committed to achieving its RHNA allocation, we also continue to focus on incentives and policies and will result in more homes for more people, rather than simply focusing on the total unit count.”

London, the real estate market analyst, said that last point is especially important – the city isn’t building enough homes that would let families stay in the city as they grow, in its haste to build as many homes as possible.

“That’s the crisis the city has to adjust for – we’ve significantly overlooked large households, principally families,” he said. “There is a severe shortage, there is, but at some point there will be a wakeup call that we’ve only been accommodating the people who can be accommodated by small units.”

London joked that he worked for nearly every “rancho” housing project in the region – the large, sprawling suburban projects in the northern part of the city. Now, lacking land to continue that type of growth, the city is grappling with the reality that most dense, urban projects include 200 units at a time, when their suburban predecessors included 2,000.

“You have to do so many incremental projects to make up for it, and you cant do it,” he said. “That’s why I’m not critical – their hands are tied.”

London said he pays little to no attention to the state RHNA goals.

“A lot of this is political pablum, it really is,” he said. “The point is that 15,000 units a year is a fantasy, I can’t disagree with that.”

Andrew Keatts

I'm Andrew Keatts, a managing editor for projects and investigations at Voice of San Diego. Please contact me if you'd like at andrew.keatts@voiceofsandiego.org...

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13 Comments

  1. Sad, but not surprising that Mayor Gloria’s staff is working furiously at putting lipstick on a pig, instead of acknowledging the breadth of the problem and engaging the City Council on ways to meaningfully address the problem. Is it surprising we have rampant homelessness when even those with jobs and reliable incomes struggle to find affordable housing?

  2. This is not a new problem, this issue has been going on for at least two decades now. On top of the lack of housing, you now have a lack of resources (electricity, water) and no long term solution for any of them. The state gets plenty of water each year, and each year it runs off into the ocean in Northern CA because we can’t find a way to capture it better. Now some parts of the state are requiring only electric appliances in new construction, and requiring all vehicles be electric, and we already have rolling blackouts in the summer. Wake up California, your current leaders on both sides of the aisle have no interest in solving these problems, they need issues to run on come the next election. Most of these politicians have been in office for the last 20 years and they have done nothing to solve these problems.

    1. Lakes Mead and Powell are at critical lows, that’s not from water running off in to the ocean. We’re in the second multi-year extreme drought in 12 years. I’ve made choices over past several years to lower my and my household’s water use: 1) I no longer consume animal products, animal agriculture uses 47% of CA’s water; and 2) I have greywater irrigation of organic fruit trees from our washing machine. The latter can also be done w/ showers.

      1. Martha, the bigger question is where do our animal products go?

        The answer is China.

        Big industrial agriculture (which is most of California’s farmland thanks to Sacramento) uses 80% of all water in the state. Big-ag then exports over half of everything that is grown or raised in California, mostly to China which has a voracious appetite for meat.

        If we limited exports of meat and agricultural products in general, our water problem would be solved for generations to come. Not to mention it would promote small family farms, higher quality food, and a healthier environment.

  3. The City Planning Dept reported 85% of New Residential Construction was for Above Moderate Income in the last RHNA 8-yr cycle, as well. This is a SYSTEMIC failure of relying upon the market to supply the housing needed. Compound this with “city officials agreed to remove 10,000 affordable dwellings from the rolls over the past six years — the same number the San Diego Housing Commission has opened since its inception in 1979”, and our booming houseless population is no mystery. It’s the Housing, stupid. https://www.sandiegouniontribune.com/news/data-watch/sd-me-affordable-housing-20161115-htmlstory.html#:~:text=According%20to%20the%20review%20of,since%20its%20inception%20in%201979

  4. Is it any surprise that “Market Rate” housing is nearly on target while everything affordable is suppressed?
    Leadership offers plenty of noise, but when it comes down to reality the public is not served.
    I’m sick of hearing developers’ complain that projects with significant affordability don’t “pencil out”. That’s fine … go ruin someone else’s city!

    The mayor/council hold all of the cards, in a game where taxpayers should not be at risk. Would-be investors should have two choices: “take it or leave it!”
    At best, those politicians are being duped by better poker players.
    At worst … they purposely throw-in a winning hand.

    1. “Go ruin someone else’s city ” ???

      Then why did you ruin the city by moving in there. Repeal prop 13 and see how suddenly these NIMBYs fall in line.

      More homes are coming. Don’t like it? Sell and don’t come back to our city.

      We will allow supply to catch up to demand by building dense and building tall.

      Stick to your land .

      1. There are less than 9% of properties under Prop 13 in San Diego county. We’ve owned a 12 unit building for 50 years and is taxed under Prop 13 rates. This allows us to offer rents under market without compromising quality. Now if Prop 13 is eliminated, property tax increases will require that we increase rents $525 per month per unit. Since there is rent control, we will have to sell the building and the new owner will throw all the tenants out and remodel the building and it will become upscale at rents that will probably be 3 times our current rates. So be very careful what you wish for.

  5. Why isn’t the State and City leading the way? There is a lot of land controlled by government that can and should be used for housing. Why not redevelop the DMV in Hillcresst? That DMV office can be revamped at street level and homes built above. Same with older libraries or the CHP sub-station on Pacific Highway. Time to get to work.

  6. This one sentence says it all: “Developers pulled permits for 5 percent of the homes for very low income residents it needs, 12 percent of the low income homes it needs, less than one percent of the moderate income homes it needs, and 83 percent of the market rate homes that it needs.” The real problem is that market rate housing is out of reach for much, if not the majority, of our population. Building ADUs, allowing two duplexes on single family lots or other gimmicks are not going to solve the fundamental problem, which is affordability. The private sector is simply not willing to build housing that people can afford.

  7. I think a huge issue is also obtaining permits. We are dealing with HUGE issues on getting any type of feedback. Permits that use to take days are now taking months to just getting a reply on.

  8. The city continues to allow developers to remove affordable housing by paying In-lieu fees equal to less than 10% of construction value. Knives were out for Georgette Gomez when she implemented a minor increase in In-Lieu fees. Developers should pay full freight for any affordable housing they removed from their projects not less than 10% of construction costs. This will put all developers on equal footing. It appears to me developers have entered into a de-facto memorandum of understanding with city planning to make sure that: if you’re not wealthy you’re not welcome in San Diego.

  9. Great comments and many good ideas are expressed here, especially Martha and Paul. In my University City community there is strong opposition to density and the density plan that the survey supported was withdrawn. It is a hard sell to get people who see density as hurting either their property values or their comfort level. While we all may have to give up something to help solve the housing problem, it doesn’t mean we won’t all gain something. Government messaging could be vastly improved. Probably some of the decision making could, too.

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