Developers who want to build in Oceanside may soon have to include even more affordable housing in their projects than they have in 40 years. This is thanks to a new ordinance headed to City Council. The change comes almost a year after the city decided to more than double the fee developers have to pay if they don’t want to build affordable units.
The Oceanside Planning Commission approved an increase to the city’s inclusionary housing requirement last week from 10 percent to 15 percent.
Inclusionary housing ordinances require developers to include a certain percentage of affordable units in new market-rate housing developments – it’s a way for cities and counties to encourage affordable housing production.
Oceanside’s inclusionary housing ordinance currently requires developers to set aside 10 percent of residential units for lower income households. The Planning Commission is recommending that the City Council bump that up to 15 percent.
According to a city staff report, 65 percent of renter households in Oceanside are lower income – 23 percent being low-income and 42 percent being very low-income. Very low-income households make $68,900 or less per year for a family of four.
If a developer decides not to include affordable units in their project, they can opt to pay an in-lieu fee instead. Last December, the City Council approved an increase to that fee, as well, raising it from $8.36 per square foot to $20 per square foot.
The City Council voted to phase in the in-lieu fee increase. It went up to $15 this year and it will be $20 starting Jan. 1.
Some background: Oceanside first established its inclusionary policy in 1983, and it applies to residential projects with three or more units.
The policy specifies that affordable units in rental projects have to be reserved for low-income households, while the affordable units in for-sale projects can be reserved for low-income or moderate-income households.
And those lower income units must remain affordable for 55 years.
What this means for affordable housing production: State law requires each city and county, including Oceanside, to make way for more housing to meet its population’s needs, and each jurisdiction has to show exactly how they plan to do that in what’s called a Housing Element.
The Housing Element process starts with the state determining how much housing at a variety of affordability levels is needed for each jurisdiction – that’s known as the Regional Housing Needs Allocation, or RHNA.
According to that allocation, Oceanside must accommodate for 5,443 new housing units for the 2021-2029 Housing Element cycle, and 1,986 of those units have to be set aside for very low-income and low-income households.
So far, Oceanside has only met 7 percent of its lower income housing goals.
Leilani Hines, housing and neighborhood services director, said at the Nov. 6 meeting that increasing the inclusionary housing requirement will help the city get closer to meetings its state-mandated affordable housing goals, as well as address the “demonstrated need” for affordable housing in the city.
What this means for developers: Any increase to inclusionary housing requirements or in-lieu fees comes with a risk of pushing developers away.
Oceanside Housing Commissioner Louise Balma said during the meeting that the increase was “harsh,” expressing concern that increasing fees and requirements could end up slowing down housing production.
Developers have to consider impact fees, rising construction fees, rising labor costs, insurance costs and more when embarking on a new project. Impact fees are typically payments required by local governments to help with the financial impacts a new development will have on public infrastructure.
Altogether, the developer fees can be as much as 20 percent of the cost of a project, Hines said during the meeting.
“If we ever tinker with this ordinance again beyond the 15 percent, we really need to do an economic analysis to ensure that we aren’t putting more and more barriers locally to housing production,” Hines added.
How other cities compare: In North County, Oceanside’s 10 percent inclusionary housing requirement is on the lower end compared to other cities. Increasing it to 15 percent would put it on the same level as its neighbors.
Carlsbad has a 15 percent inclusionary requirement; Encinitas has a 15 percent inclusionary policy for very low-income and 20 percent for low-income units; and Del Mar has a 20 percent inclusionary requirement. Vista has a 9 percent inclusionary housing requirement (4 percent for moderate-income units or lower and 5 percent for low-income units or lower).
In North County, Escondido is the only city that does not have an inclusionary housing requirement.
The Oceanside Planning Commission voted 5-2 Monday, with commissioners Balma and Michael Ogden opposed, to recommend the City Council approve the inclusionary housing changes.
In Other News
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- Potential plans to relocate a portion of the train tracks from the fragile Del Mar bluffs could clash with Del Mar’s plans to build affordable housing at the Del Mar Fairgrounds. One of SANDAG’s options for moving the tracks is to realign them on the Del Mar Fairgrounds property, which Fairgrounds CEO Carlene Moore said could impact plans for the housing project. (Coast News)
- ICYMI: The grueling life of temporary farmworkers in North County used to come with a high risk of homelessness. But a homeless shelter in Carlsbad promises shelter and safety for those seeking to provide for their families back home. (Voice of San Diego)
Correction: This post has been updated to correct that the city of Vista does have an inclusionary housing requirement.