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Proposed Update To City’s Affordable Housing Policy Would Change Equation For Developers

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San Diego City Council members are set to vote next week on a new "inclusionary" housing policy that would make developers pay larger fees to avoid building affordable homes.

Speaker 1: 00:00 Next week. San Diego City Council members are scheduled to vote on a major change to the city's affordable housing policy. The goal is to push the private market to more heavily subsidized homes for the poor KPBS Metro reporter Andrew Bowen says some developers are warning of unintended consequences.

Speaker 2: 00:21 Okay.

Speaker 3: 00:21 The intersection of Kansas Street and Howard Avenue in North Park construction crews are putting up the framing of a new apartment

Speaker 2: 00:28 building.

Speaker 3: 00:32 Come next year, this project will add 24 new homes to one of San Diego's most walkable bikeable transit rich neighborhoods. Three of these homes will be affordable to very low income households in San Diego. That could mean a single parent with one child making about $43,000 a year. These are two story of living spaces and then the bedrooms off of the side and then they'll have a loft. You can see up the up there. Barry Virile is this building's architect and developer. His project made use of the city's density bonus program, which gives developers a pass on certain regulations if they set aside and subsidize a portion of their homes for low income renters. Varroa says incentives are the best way to fix the housing crisis. There's a lot of developers that want to do the right thing and provide affordable housing as well. We just need to create the right atmosphere to where that can be done.

Speaker 3: 01:26 But varroa is wary of a new affordable housing proposal going before the city council on Tuesday. Council President Georgette Gomez is asking her colleagues to update the city's inclusionary housing policy. Right now if a developer chooses not to include low income housing in their project, they have to pay a fee. The fees to support affordable housing elsewhere. Gomes wants to nearly double that fee. She says the policy is 16 years old and in need of an update a long time ago. The conditions have completely changed. The demand for affordable housing are completely different than what they were in 2003 so it was time. I think I should have been done earlier, but no one wanted to look at it. Gomez also wants to require developers to charge cheaper rents for the low income units when they do include them in their projects and she wants to give developers a few extra options for how to avoid paying the fees, like donating a piece of land for future affordable housing.

Speaker 3: 02:27 That's huge. That's actually one of the things that is getting that it's not getting more attention, but the developers love that. They think that was very creative because there's different ways in which we can meet the need. Right, and all of it will benefit. So I do believe right now that what I'm proposing is something that is not going to kill the market. A. And. B, it's it's responsive to the crisis. Gomez included some developers in a six month long outreach process. She commissioned a study that found most projects could absorb the costs of her stricter policy without major impacts. Still, she says she's not surprised to developers have lined up against her proposal. I think they would have opposed to anything I would have presented. I'm not saying that this is going to resolve the crisis at all, but when we get more funding, if developers choose to pay the fee, um, with that get us to supporting more housing. Yes,

Speaker 4: 03:26 there's a lot of good intentions, but sometimes those good intentions have negative outcomes.

Speaker 3: 03:32 Barry Varroa says there are things in the proposal he likes, but overall he fears it will make things worse. Homebuilding permits have gone down in the county for the past two years at a time when housing scarcity is already pushing up home prices and rents. He says the city can't make it more expensive to build while also asking for more housing.

Speaker 4: 03:53 Perhaps some of the bigger developers are going to choose to go elsewhere. I think that a carrot is far more effective than a stick. So yeah, I think we could be looking at waste to incentivize more development, more affordable development rather than penalizing someone for not doing the type of development that we need.

Speaker 3: 04:14 Mayor Kevin Faulkner has been silent on Gomez proposal. If it passes the council, he'll be under pressure from his supporters in the building industry to issue a veto. And that will be a test for the Councils, Democrats who have yet to override a veto with their new six vote. Super majority. Andrew Bowen KPBS news

Speaker 5: 04:35 [inaudible].

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Maureen Cavanaugh and Jade Hindmon host KPBS Midday Edition, a daily radio news magazine keeping San Diego in the know on everything from politics to the arts.