City Council OKs Drastically Cut Fund for Housing
Following through on a vow to address the city’s dire shortage of affordable homes, a bare majority of the San Diego City Council approved a $12.9-million trust fund Monday to create low-cost housing and provide rental subsidies for the working poor.
But the funding, which establishes one of the key legislative initiatives of Councilman Wes Pratt and the council’s more progressive majority, is less than 25% of the $54 million earmarked when the program was first approved in December.
Faced with a looming budget crisis and strong opposition from four council members and some segments of the public, the five-member majority agreed Monday to raise funds from only two sources: $12 million from a fee on new commercial and industrial developments and $900,000 in hotel room taxes.
Nevertheless, Pratt called the 5-4 vote “one of the most important steps in the history of housing in San Diego.”
“I think, finally, this city can say in good conscience that we believe in housing our working poor and are making efforts to do that,” he said.
Pratt was joined by Council Members Abbe Wolfsheimer, John Hartley, Linda Bernhardt and Bob Filner--the same coalition that gave conceptual approval to the trust fund Dec. 11.
Mayor Maureen O’Connor and Council Members Ron Roberts, Bruce Henderson and Judy McCarty opposed the measure, saying the trust fund should be considered this spring along with other city programs that will be competing for money in the midst of the city’s budget crisis. City Manager John Lockwood has forecast an $60-million shortfall in the revenue needed to keep city services at current levels for the fiscal year that begins July 1.
“It is a tax,” Roberts said. “It’s one of the major taxes in the history of this city, and we’re doing that in the face of a major budget deficit that we have to resolve.”
But Pratt served notice that he wants the council to consider adding money to the trust fund when it reviews next year’s budget.
Henderson repeated his belief that most of the money will go to “income subsidies” rather than construction of new homes, an approach he condemned.
“How many new housing units will there be (built) in this city from the $13 million?” he asked. “I have the suspicion that the answer is zero.”
Under the plan, an 11-member board of trustees will distribute the money to a variety of programs, including nonprofit home builders, private developers willing to mix low-cost housing in with their developments, housing-rehabilitation projects, purchase of existing apartments and direct income subsidies.
The trustees could allocate as much as $500,000 per project. The council still must decide whether larger expenditures must go before the city’s Housing Commission for approval.
As envisioned by the Housing Commission, which sponsored the plan, 60% of the money would be spent on rental housing for families earning less than $18,250 annually; 20% would go for rental housing for families earning between $18,250 and $29,360; 10% would help families earning less than $36,700 buy their first homes, and 10% would pay for transitional housing for the homeless.
San Diego has been called the nation’s least-affordable rental market, based on the difference between the average income and the average rental price. According to the city’s Planning Department, 80,000 families need affordable housing, and the number will increase by 4,500 annually. Yet the city has constructed just 258 apartments in their price range during the past three years.
In addition, just 21% of San Diegans can afford to buy homes, according to one study.
With the tourism industry and other business sectors continuing to bring the city an influx of low-paid service workers, “our biggest need in this city is for good old, garden-variety rental housing,” said Evan Becker, the Housing Commission’s executive director.
The vast majority of the funding for the program will come from a new fee to be assessed on all non-residential construction, beginning with final passage of the ordinance, expected next month. The fee ranges from 50 cents per square foot of newly built warehouse space to $2 per square foot of new office space. Hotels, research and development facilities, retail stores and manufacturing plants also will pay the fee.
In addition to the $12.9 million approved Monday, the council will later determine whether to transfer to the trust fund $4.5 million set aside for housing by the city’s Redevelopment Agency. The transfer would direct the money to poorer residents and would allow its expenditure outside the downtown area.
