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San Diego City Council Narrowly Approves Policy Update To Spur More Affordable Housing

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Speaker 1: 00:00 San Diego City Council members voted on Tuesday to approve a change in the city's housing policy to make developers pay a larger share of the cost of providing affordable housing in San Diego. The proposal by council member Georgette Gomez nearly doubles the fees developers pay to avoid including low income homes in their projects and mandates. The developers who build affordable units reserve them for lower income households and charge lower rents. Joining me is Metro reporter Andrew Bowen. Andrew, welcome. Thanks jade. So tell us about the new rules for developers. What's the change?

Speaker 2: 00:36 Well, you kind of gave a brief overview of it already. The city already does have an inclusionary housing policy. This is again called inclusionary housing because you're including, or you're aiming to include low income housing with a market rate housing. So right now most developers have two options. They can either set aside 10% of the units in their project for low income households or they can pay a fee and that that fee subsidizes affordable housing elsewhere in the city. The change, as you mentioned, is to raise the fees. So it's currently a little over $12, and this would be phased up over three years to $22. And also the 10% set aside for affordable units, targets, uh, lower income groups. So that would mean that developers would have to charge those families or households, slightly cheaper rents making less back in revenue. And thus that the developers are putting in a greater subsidy for affordable housing. It also introduces some new options for developers to comply with this rule. So you could donate land to be dedicated for affordable housing elsewhere or sometime in the future you could rehab, Rehab, existing housing and, and make it a rent restricted for affordable units. So there are several things in this proposal. Um, some were, uh, kind of, uh, developers were okay with other things. They weren't.

Speaker 1: 01:53 Um, this bill is from council woman, Georgette Gomez. Here's what she told you about her bill. But I do believe right now that what I'm proposing is something that aid's not going to kill the market. Uh, and B, it's, it's responsive to the crisis. So, so Andrew, what is she saying in terms of her, the response that she's received from developers?

Speaker 2: 02:15 So there was a coalition of groups, the including the Building Industry Association, the Regional Chamber of Commerce that did engage with uh, Gomez through a six month outreach process. She held meetings, uh, trying to get some feedback on our proposal and some of their suggestions were actually incorporated into her final proposal. Ultimately, some of them were saying that at the council meeting said this is simply the wrong approach and they would not, uh, you know, they didn't like it at all. Others said that they could live with maybe some changes, uh, to the inclusionary policy. But Gomez proposal went too far. Gomez, his response was effectively, we've already moved to this proposal much closer to the center. We've made compromises with developers and this is my final offer and you can take it or leave it. And you talked with architect, developer, Barry Varo about the plan. Here's what he had to say.

Speaker 3: 03:04 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 ways to incentivize more development, more affordable development rather than penalizing someone for not doing the type of development that we need.

Speaker 2: 03:26 And what do housing advocates say about this? Bill Progressive's, uh, say that it's reasonable. It doesn't, uh, unduly burden a market rate developers and that it simply won't kill the housing market. They point to a study that a consultant provided, or was that was hired by Gomez office completed. And that study found that most projects in the city could absorb the added costs of this new policy without getting totally derailed. A council member, Chris Ward, as spoke during the meeting, he acknowledged that this policy is not free. We're not just getting, you know, unlimited amounts of money from a developers. The city is asking them to pay more, but he said that the market has already been asking low income households to pay far more than they can afford. And that that has to change. It's time for the city to step up and say, well, this is what we're going to prioritize.

Speaker 2: 04:18 And to developers you're just going to have to pay a little bit more. And how did the vote go? Any surprises? Passionate speeches. There were not a whole lot of surprises. Ultimately it was a five four vote. I would say the biggest surprise or not necessarily surprise, but um, the most noteworthy vote on the council was Vivian Moreno. So she represents district eight which includes Barrio Logan, Logan heights, Sherman Heights, and she a was the only Democrat to vote no, she basically was sympathetic to the concerns from developers that adding extra costs to building will do more harm than good. It would chill the market and the cost of complying with a stricter policy will ultimately be passed onto to renters and home buyers in the middle income households that the market is also not serving right now. Um, her vote, her, her no vote is extremely significant because mayor Kevin Faulconer is under pressure already from supporters in the building industry and his allies on the city council to veto this proposal and the council, if they want to override that veto would need six votes.

Speaker 2: 05:18 So someone is going to have to change their mind if that veto does actually happen. Gomez will have to offer some kind of amendment to convince either a Vivian Moreno or someone else on the council to get onboard. And from what you know, is this rule change likely to result in more affordable housing? Uh, Gosh, if I knew that I would be making a lot more money than I do now. The, the, the bottom line is I don't think anyone knows for certain, um, other cities have changed their inclusionary housing requirements and they have seen very negative outcomes. San Francisco is an example that a lot of developers point to. Um, you know, if you, if you add so much to the building of market rate housing, then that market rate housing simply won't get built. And when market rate housing doesn't get built, then you also lose affordable housing dollars that then support, you know, the, the construction of below market rate or affordable housing.

Speaker 2: 06:13 So will this higher fee make up for, for those, you know, any chilling of the market? Um, some very smart people disagree and they have a evidence to point to their side that supports their conclusions. So I think that ultimately, if this proposal does become law in the city, we'll have to wait and see. So what do you think the mayor will do? Yeah. You know, he, he's been pretty quiet on this proposal. He's been part of the negotiations from the beginning, essentially, or his office has. So if, if he vetoes it, I would expect we would hear about that in the next couple of days. Um, hard to predict. I've been speaking with KPBS Metro reporter Andrew Bowen. Andrew, thank you so much. Thank you, jade.

Speaker 4: 06:56 Okay.

The change to the city's "inclusionary housing" policy requires developers to pay a larger share of the costs to build homes for low-income people. The measure passed 5-4, meaning it might not withstand a potential veto from Mayor Kevin Faulconer.

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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.