San Diego Unveils Affordable Housing Plan

Mayor Faulkner announced changes to help address the lack of affordable housing for low income and middle-class families. We will speak with an economist about how effective some of the ideas might be, but first let's talk to at your bird to get a sense of what the proposals are. Thank you for joining us. By the way, these changes are only for the city of San Diego, housing and other cities defend does not depend on their local city councils. This could be setting a trend. The mayor announced a dozen initiatives, is there any extra money? In terms of new revenue not currently available, no. There are some measures that are meant to deploy the existing funds more quickly and efficiently, but raising more revenue for subsidized affordable housing would require a tax increase, a fee increase, and those will be difficult to pass. How about streamlining regulations for developers? That is one of the main themes. Overall they are aimed at building more housing and building it denser. There are incentives four -- for middle income housing and housing near public transport. How many of these ideas are new as opposed to initiatives already in the works? We have heard packages like this in the past. Correct. Most of the things on the list I was already aware of. A handful already have public hearings either at the planning commission or committee, but hadn't gotten the final approval. One was implementing a state law. That is kind of require by the city. Although, the city is doing it a little faster than what the state would require. A few were brand-new to me, if not new to people really plugged into this. I have gathered from speaking to some people who really know the inside of this from City Hall that the mayor has been contemplating this for a while. He has been seeking input, but some initiative to appear to be the first public announcement. Was to you think might make the most difference? The most intriguing to me was the middle income density bonus. This is building on the success of the affordable density bonus. When a developer agrees to include more subsidized affordable housing they get to bill more units on the existing plot of land. That is basically expanding on that to say if you agree to charge rent affordable to middle income people, people closer to the area, then you can build even more units. Another thing is changing parking requirements and projects located near public transit. Developers would have to include one unit for every -- I'm sorry, one parking space for every two units of housing. Otherwise, it might be one per one. The idea is when an apartment is near public transit residents are less likely to need a car, so why waste that car storage when it could be used for housing? But what about changes to the way planning commissions meet? They are the ones often blocking our higher density housing? That has something that has been brought up to councilmembers. I think that was not part of the mayor's announcement. It is something we could still see in the future, but it is going to be probably pretty controversial. Those community planning groups are pretty vested in the city. With supporting these proposals? Do developers like them? Absolutely. The main developer with at the press conference yesterday. Many of the issues have been on the developers wish list for years, but the port is not exclusive. There was the head of the housing, you matters coalition. That includes environmental groups. There is actually a broad consensus that the city needs more housing and the city should make it easier for developers to build. What needs to happen before any of these initiatives are implement it? Many of them would need city Council approval, at least review by the planning commission, the city will probably also go out to those stakeholder groups, community planning groups to get their input. The devil is in the details. We are going to be watching very closely at some of these proposals go forward. You get a sense that the mayor may be released the package because the county just released its ideas for how to increase affordable housing? Yes. I think this is something the mayor certainly promised with his state of the city address earlier this year. It is something that has been in the news a lot. We have all been reporting on housing affordability a lot. The timing is a little bit interesting because we just came out of this ex-pat between the mayor and the city Council over the budget and over his proposal to expand the commission center. This may be an opportunity for the mayor to extend the olive branch and say here is something that we can agree on, let us work together to solve this problem. Andrew, thank you so much. We are now joined by the chief economist at the point Loma Nazarene University of business and economics. Thank you for joining us. Thank you. You have looked over the mayor's ideas, which one strike you as especially promising? We are encouraged the efforts to streamline the whole process. The study that we did in 2013 showed in the city of San Diego about 47% of the cost of housing is due to regulation. A big part of that cost is just to the time required to get a project totally approved through the long process. The mayor's proposal does a lot to cut down that time dimension. Which specific puzzles to you think might be particularly helpful? I think the effort to give them an extended way to get through some of the environmental issues, to have a checklist to basically speed that through. The mayor also have a whole element of community plans, which can be a big part of the log jam. Another element besides the time gives builders and developers greater incentive to build housing for middle income households. That has been a group that has sort of become the forgotten part of our population. This is local initiatives, that the California equality act has rules that do make homes take longer to build and cause more money. Can local initiatives like the mayors do more to make housing more affordable? Is the state the main issue? Our study focused on the impact of local laws, restrictions, and fees. To the extent that local entities do not make restrictions even more aggressive than we do at the state level is constructed. We indicated that every 1% reduction in the cost of regulation could increase our housing supply by about 1%. Even at the margin there could be a very large impact. This is not the first time our elected politicians have tried to cut regulation in response to your conclusions that 47% of the cost of building a home in the city comes from regulation, is there evidence that development -- developers are passing the savings on to consumers? Competition with me that those savings will be passed on to households. It is hard to tell at this point because we are so far short of the demands that are now being exhibited. In the last three years 14,000 where people are leaving San Diego other than come again because of the cost of housing. These efforts are just a starting point, but they are important to tackle, a big element. Thank you so much for joining us. That is the chief economist at point lumen Nazarene University.