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Tentative Deal On Developer Fees Grudgingly Forwarded To San Diego City Council

An agreement between a business group and the San Diego Housing Commission on the controversial increase of a fee on commercial development to pay for affordable housing projects was grudgingly forwarded Wednesday to the full City Council.

The memorandum of understanding reached as a compromise between the commission and the Jobs Coalition was kicked upstairs on a 2-2 vote by the panel's Smart Growth and Land Use Committee.

Councilwoman Lorie Zapf subsequently invoked her powers as committee chairwoman to break the deadlock and forward the MOU for council consideration — likely in November.


The deal between the Jobs Coalition and the commission, which administers affordable housing programs for the city, stemmed from the council's decision earlier this year to rescind a previous action to restore the so-called "linkage fee" to its original levels.

The fee had been halved in 1996 as an economic stimulus and was supposed to be reviewed annually, but wasn't. Restoring the levy wasn't merely a doubling, however. City Independent Budget Analyst Andrea Tevlin estimated costs on developers would have jumped 400 percent to more than 700 percent, depending on the type of project.

The MOU would provide for a straight doubling of the fee, with some specified exemptions, but it also includes a new source of dispute — a provision in the MOU that would cause the fee increase to go away in 2017 if some business friendly reforms aren't instituted.

While the mayor's office said the city was on track to introduce such reforms, like streamlining permitting processes and completing long stalled updates to community zoning plans, Tevlin said she opposed the sunset provision.

Bruce Resnick, executive director of the San Diego Housing Federation, told committee members that the MOU is not a good deal for the city, which has a waiting list of 45,000 people looking for affordable housing.


"It is a short term mandate with long-term serious repercussions that can set affordable housing back in the region," Resnick said. "The exemptions in this proposal, as Ms. Tevlin pointed out, are permanent, while the increase is temporary."

He said the deal would be acceptable without the sunset provision.

According to Craig Benedetto of the Jobs Coalition, developers would pay the entire fee increase immediately — with no phase-in period — in exchange for making sure that the "modest" reforms are implemented.

"Everybody's focused on the sunset (provision) as if it's going to happen," Benedetto said. "That was not the intent of including that language in the MOU. The intent of including it there was to have some accountability that the reform items would be done."

Councilwomen Myrtle Cole and Sherri Lightner cast the dissenting votes, saying a report from the mayor's office on the status of the proposed reform measures was insufficient.

Often when a committee forwards an item to the full City Council for consideration, it recommends final passage. This time, the committee forwarded with no recommendation at all.

Zapf noted that it was ironic that so much time and attention was being given to an action that would provide only a small portion of the resources needed to address San Diego's affordable housing problem.

Tevlin estimated the increase under the MOU would provide for only 42 units over the first three years, a number that Benedetto called "a drop in the bucket."

The IBA staff is working on a report on potential alternative sources for funding affordable housing projects. Tevlin said the study should be released by mid or late October.