Panel Suggests Business Tax to House Poor

Seeking a partial solution to the city’s acute shortage of low-cost housing, a San Diego Housing Commission task force Monday proposed creation of a $54-million housing “trust fund” to be financed primarily by new fees and taxes on business and commercial developments.

The money would be used in a variety of ways to build and preserve apartments for poor and middle-income wage earners, for transitional housing for the homeless and for homes for middle-income, first-time home buyers in a city that now has the least-affordable housing in the United States, according to some studies.

“We cannot allow San Diego to become another San Francisco or Marin County, where most families can’t even consider living in that area,” said Councilman Wes Pratt, chairman of the Housing Commission. “We cannot allow San Diego to become another Minneapolis, where (convention center) workers are bused in from other areas.”

Councilman Bob Filner, another Housing Commission member, said he has not decided which of the proposed taxes and fees he supports, but endorsed the trust fund proposal because it puts the need for low-income housing “at the top of our agenda.”

Uncertain Future

Nevertheless, the proposal faces an uncertain future before the San Diego City Council, which already is studying increases in development fees and business taxes to pay for other projects, including more than $1 billion in capital needs such as the construction of parks and streets in older city neighborhoods.

The trust fund concept will not be considered by the council until late this year and may have gained a supporter with the election last month of Democrat John Hartley over Republican Gloria McColl, a Housing Commission consultant said Monday.

In the upcoming general election, the selection of candidate Linda Bernhardt over incumbent Ed Struiksma in the 5th District and the reelection of incumbent Abbe Wolfsheimer in the 1st District also would help the proposal, said the consultant, David Paul Rosen.

The program also will face opposition from middle-class neighborhoods, which traditionally have fought the development of low-income housing because of its perceived impact on property values, task force members conceded.

The plan was developed by the San Diego Housing Trust Fund Task Force, a 17-member panel that included representatives from the development industry, housing agencies, labor, business and nonprofit organizations.

Goal for Year 2000

After a six-month study, the group concluded that 40% of the city’s residents cannot afford decent housing, a situation that is hindering economic growth by restricting the supply of workers and contributing to social problems such as crime, drug abuse and vandalism.

The task force set a goal of meeting the city’s low-income housing needs by the year 2000, acknowledging that the city, through the trust fund, could tackle just one-third of the problem.

Under the task force plan, an agency would be created to funnel the funds to private and nonprofit organizations that would build low-cost apartments or purchase existing apartments, single-room occupancy hotels and mobile home parks for preservation as low-income housing. Some of the money would be spent on rent subsidies, and other funds would be used for “land banking”--the purchase of land that would be held for construction of affordable housing.

The plan calls for 10% of the money to be spent on transitional housing for the homeless, 60% on apartments for families of four earning less than $18,250 annually, 20% for rental housing for families earning between $18,250 and $29,360 yearly, and 10% to help families earning no more than the median income of $36,700 purchase their first homes.

The need for such assistance is staggering. According to the city’s Planning Department, the city already faces a need of 80,000 apartments for its poorer residents and would have to build 4,500 yearly just to keep pace with population growth. Yet the city has added just 258 such apartments in the past three years, including federally financed apartments.

Figures Tell Tale

A study has shown that there is a $250 difference between the average rent for a two-bedroom apartment in central San Diego and the sum that a family earning $18,250 annually can afford, giving San Diego the nation’s least-affordable rental housing.

Just 21% of San Diegans can afford to buy homes, according to the report. A family earning the median income of $36,700 annually can afford a home loan of $105,166, but the median price of a home in San Diego County is $170,000, the report shows.

To fill the gap, the task force would impose a $280 average annual tax on business, generating $17 million annually in 1990 and more in subsequent years; levy fees on commercial, industrial, hotel and retail space to generate $12 million; create a $43 annual landscaping, lighting and park maintenance fee on commercial and residential property that would free $15 million in the city’s General Fund for housing; impose a $12.1-million utility users’ tax and dedicate $5.36 million in hotel tax revenue to housing.

The total of $61.46 million is higher than the task force’s goal of $54 million in revenue for the trust fund’s 1990 operation, but it would allow the council some flexibility in deciding how to levy the taxes, according to the task force.

Financing Other Needs

Paul Devermann, senior vice president of the San Diego Economic Development Corp. and a member of the task force, said his agency wants the city to determine how it will finance other needs such as infrastructure, a new library and more police before it levies higher taxes on business and real estate.

Acknowledging that housing prices are making it difficult for San Diego businesses to attract unskilled workers, Devermann said new fees also could prevent companies from locating here.

“What the city needs to do is sit down and look at what its priorities are before it starts implementing a relatively large tax on business,” he said.

Tom Vincent, vice president of the San Diego Hotel-Motel Assn., said that, if “transient occupancy tax” funds are spent on housing, the money would soon be dedicated to other needs as well. Hotel guests now pay a 9% tax that pays for tourism-related needs.

“The arts groups want a piece of it,” Vincent said. “The street and sewer people are saying we need better streets, (more) police for our tourists. You can rationalize anything to the point of saying it deals with tourism.”