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In San Diego's quest for more housing, 'unlimited' height, density show results

Construction began this week at 901 West Washington St. in Mission Hills, where developer Soheil Nakhshab is building 54 studio apartments. He likens each unit's design to a Swiss Army knife, with built-in tables and beds that fold up into the walls.

The project would not have been possible without Complete Communities, San Diego's most aggressive attempt yet at encouraging high-density housing near public transit.

Approved by the City Council in November 2020, just one month before Mayor Kevin Faulconer and five councilmembers left office, Complete Communities allows developers to build apartments with unlimited density and height if they agree to set aside a much greater share of the homes as affordable housing than would otherwise be required.

The program is designed to withstand political and neighborhood opposition to individual projects, letting developers bypass the Planning Commission and City Council and get building permits directly from city staffers. The result has been swift approval of bigger projects with smaller, less-expensive homes.

Sites zoned for single-family homes are not eligible for Complete Communities, no matter how close they are to public transit.

RELATED: With 'Complete Communities,' Faulconer pushes one final affordable housing plan

Nakhshab said his project, which includes no off-street parking, would open up Mission Hills to more young professionals who don't want the expense of car ownership and can't afford the pricey single-family homes that dominate the neighborhood.

"What we’re trying to do is give them an opportunity to live in a prosperous, vibrant neighborhood with tons of public amenities at an affordable rate," Nakhshab said.

In San Diego's quest for more housing, 'unlimited' height, density show results

Four projects have been approved under Complete Communities, with another 10 pending approval and more popping up every month. And if the goal of the program was to get more housing built without the lengthy and expensive process of updating zoning laws, early results show that it's working.

All together, the 14 projects comprise 864 homes — 211 of them with restricted rents guaranteed to be affordable to very-low- or middle-income tenants. If the sites were built out according to their official zoning, they would allow for 286 homes.

Unlimited height may conjure images of skyscrapers, but most of the projects are eight stories or fewer. Taller projects trigger expensive building code requirements that would likely make most of them infeasible. Complete Communities also mandates a more cumbersome approval process for buildings above 95 feet.

Five of the sites, including Nakhshab's in Mission Hills, would likely not include any affordable housing without Complete Communities because they are zoned for fewer than 10 homes. That makes them exempt from the city's inclusionary affordable housing ordinance, which requires developers to set aside 10% of a project's homes as affordable for low-income renters or pay a fee to support affordable housing construction elsewhere.

Nakhshab said adhering to the site's low-density zoning would force him to target only the wealthiest of homebuyers.

"I (would) have to build super-high-end luxury just to recover my initial basis into the properties," Nakhshab said. "That doesn’t add value to our community. It doesn’t activate our community."

Soheil Nakhshab stands in front of the construction site of his 54-unit apartment building in Mission Hills, April 14, 2022.
Andrew Bowen
Soheil Nakhshab stands in front of the construction site of his 54-unit apartment building in Mission Hills, April 14, 2022.

And the program is proving to be attractive to not just market-rate developers, but affordable housing developers, too. ShoreLINE, a 126-unit affordable housing complex under construction next to the Grantville trolley station, is another Complete Communities project.

Marie Allen, project manager for the developer, Affirmed Housing, said it was not the offer of unlimited height or density that benefited the project. It was relief from development impact fees, which the city charges developers for each home they build. The funds help pay for neighborhood infrastructure projects.

Complete Communities exempts rent-restricted affordable homes, or any unit that is 500 square feet or smaller, from having to pay development impact fees. Instead, every project is charged a "neighborhood enhancement fee" based on lot size. Market-rate homes larger than 500 square feet are granted a sliding discount on development impact fees.

RELATED: Coming to Grantville: More affordable housing ... and wider roads?

Allen said the resulting savings of roughly $1 million helped immensely when applying for state tax credits and allowed the project to complete its financing and start construction much sooner.

"The savings that Complete Communities provided meant that we needed less subsidy from the state," Allen said. "And the less subsidy we ask for from the state, the more competitive we are. If we’re not competitive, we have to wait another six to nine months (to apply for tax credits) again."

Also among the Complete Communities projects are:

  • 3090 Polk Ave., the former site of MissionGathering church and The Irenic concert venue, where Streamline Development Group is planning 137 apartments that it says will offer "a brand-new work-from-home experience."
  • 4222 Georgia St., where a single-family home and backyard apartment would be replaced with 31 apartments on six stories with two parking spaces.
  • 1959 Harrison Ave. in Logan Heights, where a single-family home will be replaced with 32 apartments. The site is a three-minute walk to the 25th & Commercial trolley station.
Fencing surrounds a single-family home in North Park that is due to be replaced with a six-story apartment building, April 14, 2022.
Andrew Bowen
Fencing surrounds a single-family home in North Park that is due to be replaced with a six-story apartment building, April 14, 2022.

The program has also led to some counterintuitive policy impacts. The number of rent-restricted affordable homes a developer must include under Complete Communities is based on the site's official zoning. But the potential for unlimited density makes that zoning irrelevant, at least in terms of the total number of homes allowed.

This means, at least in theory, that lower-density zoning would be more attractive for developers looking to use Complete Communities because it would translate to fewer rent-restricted homes than higher-density zoning. In practice, it is still unclear whether the program is being used more on sites zoned for lower density.

RELATED: Coronado still waiting for California to crack down on housing plan

While Complete Communities is proving effective at getting more housing built, it is also sparking opposition among residents resistant to change and growth in their neighborhoods.

That resistance is playing out in Normal Heights, where developer Seamus Garland is planning to build a seven-story, 175-unit apartment building at the intersection of Adams Avenue and 35th Street. The Normal Heights Community Planning Group voted earlier this month to oppose the project.

Residents at the April 5 planning group meeting blasted the proposal as too tall, too dense and deficient in parking. Board member Frances Prichett asked, "What is the community getting out of this?"

Resident Adam Deutsch said, "This project simply doesn't fit the community plan."

A rendering shows the exterior of a seven-story, 175-unit apartment building proposed on Adams Avenue in Normal Heights.
INI Greenfield
A rendering shows the exterior of a seven-story, 175-unit apartment building proposed on Adams Avenue in Normal Heights.

Opposition grew with the realization that the project would pay a small fraction of the development-impact fees that would normally be charged because nearly all of the 175 apartments are 500 square feet or smaller. Garland estimates that the project will pay just under $326,000 in neighborhood enhancement fees and development-impact fees.

Garland said without the Complete Communities discount, an equivalent project would pay about $2 million in impact fees. But because zoning limits the site to only 26 homes, a project that adheres to that density limit would pay roughly $338,000. The fees would be substantially less for a purely commercial building, such as a convenience store or fast food restaurant, which Garland said was his only financially feasible alternative.

Garland's presentation to the planning group in March was what set off the neighborhood's opposition. The presentation was not required, but he said he thought neighbors deserved to know what was happening.

"I knew what I was getting into," Garland said. "It's a good forum to answer everyone's questions. At the very least I owe that to the community."

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