Housing Dream May Require Laxer Standards
With the American dream of an affordable home out of reach for most San Diegans, the city is considering a radical plan to force developers to set aside some homes in each new construction project for low- and moderate-income residents.
The Housing Commission’s “Realizing the American Dream” ordinance would mandate that builders allocate 15% of their new homes for low- and middle-income people, abandoning the free market approach to housing distribution that some say has failed to provide adequate shelter for all but the wealthiest San Diegans.
But the plan carries a steep price tag: Developers say they cannot comply with the plan without relief from large water, sewer, park, road and other fees that sap profits. They also may need other incentives, such as the relaxation of construction standards and a streamlined approval process for new housing.
“We are for affordable housing. We are trying to produce some,” said Frank Panarisi, president of the local Construction Industry Federation. “But we can’t do it with all these restrictions.”
Known as “inclusionary housing” or “inclusionary zoning,” the Housing Commission’s proposal would force developers to set aside 15% of all single-family homes, condominiums and rental apartments for lower- and middle-income people. The proposal would apply to developments of five units or more and would have to be approved by the San Diego City Council before it could become law.
With state government pressuring municipalities to rectify the imbalance in housing prices, cities such as Oceanside, Carlsbad and 50 others statewide already have embraced the idea.
Builders expressed outrage at the proposal when it was released in March, and at being excluded from deliberations. In May, the Housing Commission’s own consultant, Keyser Marston Associates, reported that the price of land and huge regulatory fees imposed in many parts of the city would prevent developers from sharply lowering prices on even 15% of their homes without adding prohibitive increases to the rest.
“The bottom line, based on Keyser Marston’s own research, is that, without any (regulatory) relief at all, it wasn’t do-able,” said Steven Mikelman, director of program and policy development for the Housing Commission.
Planners now want to refer the proposal to a task force of builders, housing advocates and city staff members that the Housing Commission is scheduled to appoint July 1. To make inclusionary housing work, that panel will examine the possibility of reducing fees, relaxing construction standards, streamlining the lengthy housing approval process, allowing more homes per acre and helping developers with public funds, Mikelman said.
According to Panarisi, builders wait about six years after acquiring land for a project before they can begin to build. Unless they own the parcel outright, they pay interest on huge loans throughout that period.
When approvals are granted, builders can expect to pay an average of $18,500 in water, sewer, road, park and other fees for each single-family home they build, according to Construction Industry Federation figures.
“We need to give serious consideration to our land-use provisions and how they adversely affect the provision of housing,” said Councilman Wes Pratt, who is also a Housing Commission member.
According to Pratt, easing land-use regulations or relaxing criteria on such elements as parking and street widths for parking requirements might be worth the trade-off if it would spur builders to construct reasonably priced houses and apartments.
No one denies that lower-cost houses are in short supply in San Diego, which each year ranks among the nation’s least-affordable housing markets when median incomes are contrasted with median housing prices. In 1990, the median price of new homes and condominiums in the county reached $242,500, according to statistics from the Construction Industry Research Board.
The median price of a resale home is $180,000 in the city and some of its closer suburbs, according to the San Diego Assn. of Realtors. Fewer than 20% of city residents can afford a median-priced home, according to the Housing Commission.
According to the federal Department of Housing and Urban Development, the median income of a San Diego County family of four is just $41,300. A “low-income” family earns $33,050 and a “very low-income” family earns just $20,650. More than 40% of city residents fall into the low- and very low-income categories, according to the Housing Commission.
Under HUD guidelines, a median-income family could afford to pay $158,600 for a three-bedroom, single-family home or townhouse, $143,100 for a three-bedroom condominium, or $970 monthly for a three-bedroom apartment.
That leaves about 80,000 city families in need of affordable housing. By the year 2000, 120,000 families will need housing assistance in the city, according to the Housing Commission.
Steep housing prices, particularly in the city’s northern tier, divide San Diego into a city of haves and have-nots, roughly divided by Interstate 8, according to the Housing Commission consultant. The situation frustrates fulfillment of the city’s 1972 policy of balancing communities among groups of varying incomes.
Moreover, that development pattern forces poorer workers to commute long distances from areas where they can afford housing, contributing to traffic and air pollution.
The Housing Commission ordinance would require developers to set aside 15% of the units within each project for affordable housing, or in some cases build others off-site. Rental apartments would be reserved for families earning 80% of median income or less. For-sale units would go to median- and below-median income families.
Planners in the city of Carlsbad, which has adopted a similar resolution, and developers building there are grappling with how to enforce that concept. Should the developer of the $1 billion Aviara resort project be required to blend in a section of low- or moderate-income housing with the $500,000 homes that will dot the landscape over Batiquitos Lagoon? Or will he be allowed to build the homes nearby? What about paying large fees in lieu of actually building homes?
The Keyser Marston study, commissioned by the Housing Commission, says that forcing San Diego developers to build affordable homes without price breaks will not work.
“For single-family homes of any size, the land and fee package is so costly there is limited ability to bring the cost down to moderate and median-income levels without severe reductions in profitability,” the study shows. The situation with rental apartments is only slightly better, the report showed.
“In our judgement, the total fee package in San Diego is so high that, if affordable housing is to be pursued, some concessions will have to be made for affordable units,” the study concluded.
The bottom line, Pratt said, is “are we going to promote affordable housing--safe, decent affordable housing for people to live in? At what cost?”
