Midway Rising goes before the city’s Land Use and Housing Committee in October and the City Council later this fall. It’s billed as a major affordable housing win for San Diego with 4,254 homes, including 2,000 deed-restricted ones for households at or below 80% of area median income.
But the developer’s pledge to build those affordable units is not enough. The city must require an enforceable contract that guarantees the affordable units are built within a specified timeframe, to ensure the project complies with state housing incentives.
As presented to the Planning Commission in September 2025, the proposed agreement includes a waiver letting the developer delay the affordable units, if subsidy funding cannot be secured. Without a firm deadline and meaningful consequences, nothing ensures the affordable units will be built. Because the project relies on California’s Surplus Land Act and Density Bonus Law, the city must hold the developer — not San Diego taxpayers — responsible for constructing them.
The Surplus Land Act requires that at least 25% of units be deed-restricted. California’s Density Bonus Law allows extra market-rate units and zoning concessions in exchange for affordable housing. That is how 4,254 homes will be allowed on a parcel zoned for 3,545 units and how San Diego’s 30-foot coastal height limit can be exceeded. The Density Bonus Law requires that at least 354 units on that parcel be deed-restricted at or below 60% area median income — an obligation the agreement does not yet publicly spell out.
Controversial Senate Bill 344, which passed the state Legislature and awaits the governor’s signature, cites the 2,000 affordable units as justification for deeming a city-approved Environmental Impact Report legally sufficient under the California Environmental Quality Act, in order to limit further public challenges. But some readings of SB 344 would suggest that it requires delivery of all 2,000 affordable units.
The timeline for those affordable units remains unclear. The proposal commits to 425 deed-restricted units in Phase 1 and 10% of units built in later phases (about 225 units), leaving 1,350 promised affordable units with no schedule. Worse, the waiver presented to the Planning Commission allows all affordable units to be delayed if subsidies not secured. Because the waiver includes Phase 1 and every later phase, it’s possible all 2,000 affordable units will be delayed indefinitely.
Typically, incentive programs require all affordable units be built before general occupancy is granted to ensure the rent-restricted units are built. The waiver however allows the developer to complete all market-rate housing and commercial space first. If affordable units can be delayed waiting for subsidies, the agreement should specify what compels timely delivery of the affordable units and what happens if funding never materializes.
But it does neither: no firm deadline and no clear consequences. The developer could keep applying for financing indefinitely while the units remain unbuilt.
This conflicts with SB 344’s urgency language, which justified immediate action “to promote the swift and deliberate development of affordable housing in the city of San Diego.” With no enforceable deadline for the 2,000 deed-restricted units, that urgency premise weakens and the city’s litigation risk rises.
The financing risk is significant. The project calls for eight- to ten-story buildings on silt and fill, in a high-liquefaction zone near a fault and a coastal estuary. Deep pilings, corrosion-protection measures, and long-term groundwater management for the high-water table will increase construction and operating costs.
Higher costs also weaken the project’s competitiveness for subsidized funding sources such as Low-Income Housing Tax Credits, where a lower per unit cost is favored. In California, low-income housing can cost up to $1 million per unit. If all 2000 affordable units require subsidies, Midway Rising could consume an outsized share of regional and statewide affordable-housing resources.
If the city grants valuable development rights up front while affordable units remain contingent upon financing, San Diego may be accepting responsibility for a promise it cannot compel. Because Midway Rising uses the Surplus Land Act and Density Bonus Law, failure to deliver the affordable units could expose the city — as landowner and party to the agreement, not just the developer — to lawsuits from affordable-housing advocates and the state Department of Housing and Community Development.
The City Council should not approve Midway Rising unless the agreement includes enforceable safeguards: clear deadlines for all affordable units, objective standards for subsidy applications, penalties or clawbacks if affordable housing is not built on time, and a requirement that market-rate development not substantially outpace deed-restricted units.
Further, given the site’s geological challenges, engineering and construction overruns and any future pumping costs should be the developer’s responsibility, not the city’s. Without those protections, the project could shift major financial and legal risk onto taxpayers while the developer locks in the most profitable parts first.
San Diego has a history of poor real-estate deals; Midway Rising should not become another one.
Christine Smith is a Point Loma resident and member of the Peninsula Community Planning Board. The views expressed in this column are her own.
