The smell from Mishele Stead’s coffee mingles with Pamela Peterson’s acidic wine as they chat on the back patio of their Golden Hill duplex. Peterson is smoking a cigarette, and each drag is punctuated by the women’s laughter. The two women started out as strangers, but they’ve been neighbors for 10 years and become incredibly close.
Both women have found stability here. Stead, 53, has been sober for 15 years. She hosts meetings and Christmas parties for people in recovery in her home. Peterson, 75, is on a very fixed income. She relies on Stead, who brings her rotisserie chickens from Costco and anything else she needs.
In housing jargon, both women live in what are called “naturally-occurring” affordable units. That means they pay below-market rent — which is priceless in San Diego’s current affordability crisis.
The two women have literally made it their business to keep people from falling into homelessness. Both have worked in social services, trying to help homeless people. But in a terrible twist of irony, both are being forced out of their beloved duplex. A developer recently bought the property, as well as the property next door. Using a city law that allows for density bonuses, he plans to build a 108-unit complex that will include some mandated affordable units.
That’s great for the city’s housing crisis. It’s bad for Peterson and Stead.
To Peterson and Stead, it appears they will be collateral damage in the city’s quest for more housing. But a whole set of evolving and untested laws actually offer them more protection than existed a few years ago.
A recently passed law called the tenant protection ordinance will qualify them both for some money since they are being forced out through no fault of their own. Stead will receive two months of rent and Peterson, because she is a senior, will receive three. But since they pay below-market rent, both fear it will not be enough to help them stay in their community — or perhaps anywhere in San Diego.
But there’s another important wrinkle to the story – one they hadn’t been informed of by the new property owners or city officials. A wrinkle, in fact, that few housing advocates or city leaders seemed to know about when asked by Voice of San Diego.
The same 2020 law that allows a developer to buy small properties and build dense developments on-site has two other important provisions. First, it requires the developer to build at least as many affordable units on the property as there were before, if not more. Second, it gives Peterson and Stead first right of refusal to the newly-built replacement units. Those units — which will be “deed-restricted” as affordable, rather than “naturally-occurring” — will be cheaper than what Peterson and Stead pay now.
The 2020 law was called Complete Communities, in part, because it was designed to protect tenants from being displaced.
Even that law, however, is in flux.
A proposed change to the law, set to come before the City Council on Monday, would mean that in the future people like Stead and Peterson no longer get first right of refusal to an affordable unit developed on the same site as their former home.
Mayor Todd Gloria is pushing a change that would allow developers to build the mandated affordable units off-site, in some cases in poorer neighborhoods than the original development site.
If the changes are approved, people like Stead and Peterson would still be entitled to the first right of refusal on the newly-built affordable units. But those units might be located miles away in a different part of the city.
“If you want to go for off-site housing, let’s change the name to incomplete communities,” said City Councilman Joe LaCava, at a council meeting in February, as Voice of San Diego previously reported.
When the former owners sold the 1940s-era Golden Hill duplex back in June 2021, Stead and Peterson hoped nothing would change.
First, they noticed maintenance issues going unaddressed. Landscaping needs weren’t being attended to, they said. They tried to get help with termite damage, a damaged refrigerator and cracks in the foundation. They couldn’t seem to get anything resolved with the new property managers, a company called Sunrise Management.
In February, things got much worse. Sunrise sent them a letter informing them that the building would be torn down in 2024. That meant they’d be forced out — but they didn’t know when.
Mishele Stead in her backyard in Golden Hill on July 17, 2023.
The idea of leaving a place they could afford, where they had created a supportive community crushed them.
Property records show the new owner is an LLC with George Champion of Champion Real Estate Investments listed as the company manager on state documents.
Champion, who recently developed Casa Verde, a dense apartment complex in North Park, said the economy has been holding up the Golden Hill project, but declined to answer further questions.
Landlords are allowed to evict people for any number of reasons from not paying rent to being a nuisance. In those cases, people being evicted don’t get any money as a result of the new tenant protection law. Stead and Peterson, however, are looking at the prospect of a “no-fault” eviction. That’s what happens when a landlord wants to develop or sell a property.
The letter about the upcoming demolition also included a questionnaire about Stead and Peterson’s income from a city housing agency. That questionnaire, it turns out, was actually tied to efforts to protect renters like Stead and Peterson.
City officials send out the questionnaire, so they can determine the income level of people living in the building that will be torn down. If a household qualifies as low income or very low income, based on median income in the area, the developer is required to build new affordable units that are the same size as the old ones.
The developer must build at least as many low or very-low income units, as previously existed on the site, or as many as will be required by the density bonus formula under Complete Communities — whichever number is higher.
In this case, Champion’s new development will be required to have roughly five low or very-low income units, as well as three moderate income units. The units will be deed-restricted at lower rates for years into the future.
Stead makes $45,000 as a housing navigator and works to help people at risk of becoming homeless find housing. Peterson, who is fully retired, makes even less. Both women would fall into the category of “very-low income” based on the San Diego County area median income. Very-low income is 50 percent or less of median income.
That would qualify each of them for a two-bedroom apartment in the ballpark of $1,550 per month in the new development, according to 2023 figures from the San Diego Housing Commission.
But even that is cold comfort for two women, who have built their homes here – and who have no idea when they’ll be forced to leave or when they could come back.
“Two months is barely going to get me into something – and then I have to sustain that,” Stead said. “Most of the people making these decisions aren’t in my financial situation. I’d like them to try living on my salary for a year and tell me what their options are. They are unrealistic and don’t ask people in the community what they need.”
City Council President Sean Elo-Rivera said he understands that for Stead and Peterson, the situation is tragic.
“There are certain protections in place and certain compensation that they are now able to receive that they weren’t previously,” Sean Elo-Rivera said. “We want to make sure that they get that. That being said, I also want to recognize that for these folks, that’s not going to be sufficient to account for the impact on their lives.”
Peterson, the senior, hasn’t been the same since the letter came, said Stead. She’s been down and more reclusive.
“I have no idea,” Peterson said of where she will go next. “This is very frightening to me. I’m 75, where would I go?”
Seniors make up 29 percent of the homeless population in San Diego with roughly half of that population experiencing homelessness for the first time, according to the latest Regional Task Force on Homelessness point-in-time census.
Stead also feels powerless. The lack of communication from developers and city officials only makes it worse.
Based on their current rent, the tenant protection ordinance will guarantee Stead $3,800 and Peterson $5,700.
That money is a lot better than nothing but it is also unclear if it will be enough to allow the women to keep renting in San Diego – or enough for them to find a temporary place to stay, should they decide they want to come back to the new guaranteed-affordable units they’d be entitled to.
Both women currently have two-bedroom apartments. It will be virtually impossible for them to find new two-bedroom units at the same price they currently pay. They may or may not be able to find smaller units at the same price.
The average rent for a studio apartment in San Diego is $2,363, according to rent.com.
Even then, some landlords now essentially require three months’ rent upon move-in – first and last month’s rent, plus a deposit. Then there are also moving costs.
Some cities require more money to be paid out to people going through a no-fault eviction, like Stead and Peterson.
Chula Vista requires at least two months of market-rate rent for the evictee to help ensure they can get a place in the current rental market.
In Los Angeles, no-fault evictees are entitled to as much as $22,000, depending on their circumstances, said Gilberto Vera, an attorney with Legal Aid Society, who specializes in housing.
Rents have exploded so much in recent years in San Diego that people who pay below-market rent are virtually locked into their apartments. Should they move, they will find themselves paying much higher rates. Stead and Peterson have no choice.
Elo-Rivera said he fought hard to get market-rate rent payouts included in the current ordinance but after negotiations let that detail go in order to get other protections passed.
“If I had it exactly the way I wanted it and I got to pass policy on my own, to be very frank, it would be more than two months and it would be at market rate,” Elo-Rivera said.
At the time Complete Communities was passed in 2020, offering evictees first right of refusal to affordable units on the same site as their previous home was considered a gold standard of affordable housing policy.
On Tuesday, San Diego’s City Council will consider watering down that provision, by allowing developers to build affordable replacement units off-site – in some cases in poorer neighborhoods.
LaCava, the councilmember, previously said he would “vehemently” vote against any such change.
Stead would rather have more money – enough to allow her to rent a similarly-sized place in Golden Hill – than rights to move back into an affordable unit on the same site.
“It makes no sense to me,” Stead said. “What if I am locked into another lease when the developer decides it is time for me to move back in? It makes sense to offer enough compensation when people are evicted so they realistically have a chance to find a similar place in the same neighborhood.”
That amount of compensation, however, over a person’s lifetime could easily add up to tens of thousands of dollars, if not more.
Stead currently rents a two-bedroom in Golden Hill for $1,900 a month. A new two-bedroom could easily cost $2,900 a month. Over 10 years, that’s a difference of $120,000 in rent.
If Stead and Peterson decide they want to live in the new guaranteed-affordable units, the challenge will be finding a temporary situation that will allow them to get by during the months or years it takes to build them.
Stead, for her part, is ready to hustle. She helps people find housing for a living. She knows it may be impossible to find a comparable place at a similar price in Golden Hill. She’s ready to get a second job if that’s what it takes, she said.
“Sometimes I do have moments when I’ll go into my room and cry,” Stead said. “Then I think about how I lost everything before I got sober and how blessed I am now.”
Peterson, on her fixed senior’s income, lives closer to the edge. It is neither obvious nor certain there is a place for her in the new San Diego.
Stead has a particular dream she’s been living on in recent months. She wants to find a little cottage with a granny flat in the back. That will give her enough room to keep her dogs and it would allow Peterson to move into the granny flat – assuming it’s affordable that is.
Correction: This post has been updated to correct that the City Council meeting is on Monday.