Development Fee Plan Draws Sharp Protest in Otay Mesa

A new fee to be levied on real estate development as a means of funding low-cost housing in San Diego has drawn sharp protests from Otay Mesa manufacturers and developers, who say the tax could end up inhibiting business expansion in the area.

Alan Foster, vice president of Sanyo North America, which operates a huge refrigerator factory in Otay Mesa, said the tax would add about $400,000 to the cost of a $10-million-plus, 400,000-square-foot addition planned at the facility.

Although Sanyo has made no definite decision on whether or when to build the addition, Foster said, the tax would be an inhibiting factor. He said Sanyo, which employs 400 workers at its 330,000-square-foot plant in Otay Mesa, moved there from the Kearny Mesa area so it would have room for expansion.

The San Diego City Council passed the tax measure by a 5-4 margin March 26. If the measure passes a second time at the council’s second reading April 16, it will take effect within 60 days. The rule would impose a fee of from 50 cents to $2 per square foot on all new industrial warehouse, office and retail construction.

The 200-member Otay Mesa Chamber of Commerce is campaigning against the tax, whose monies would go into a city-administered housing trust fund. By adding 30% to the fees already being paid by developers of industrial buildings on Otay Mesa, a cost that eventually will be passed along to tenants, the tax will make Otay Mesa a less desirable place for businesses, the chamber says.

“The development industry is holding the load instead of these costs being spread out,” said Andrea Korogi, the chamber’s executive vice president. Bob Filner, the city councilman whose district includes Otay Mesa, voted with the majority to approve the tax, she said.

City officials say the $12-million tax is a key element in helping balance a $60-million shortfall projected for the fiscal year that begins July 1.