Earlier this month a collective sigh of relief echoed throughout San Diego County. The San Diego Association of Governments voted down all potential future implementation of a proposal that would have added a road usage charge of approximately four cents for every mile driven.
With soaring gasoline prices contributing to already out-of-reach living costs for many, further fees for residents would have only deepened the affordability crisis. Unfortunately, the SANDAG plan was not the only “vehicle miles traveled” proposal and, by many accounts, not the most likely to impact you.
If VMT is unfamiliar, here’s a quick explanation. It’s an estimate of the total number of miles traveled to a destination. It’s calculated on a 1:1 ratio, so if one travels two miles to take their kids to school and additional 10 miles to drive to work, their total VMT would be 12.
Generally, VMT isn’t used for individual analysis because it does not factor in how many riders are in the car. For example, a vehicle with five passengers and a vehicle with one passenger each traveling 8,000 miles a year both have VMT of 8,000.
When officials measure the VMT of an area such as a neighborhood, city or state, they are measuring the total amount of miles traveled by all vehicles. This data can help understand how busy an area is or will be. In real estate, VMT can help illustrate the impact of new developments on traffic, infrastructure and the environment.
With the adoption of Senate Bill 743 in 2013, California changed the method of traffic analysis required under the California Environmental Quality Act for publicly and privately initiated projects. Beginning in 2020, all projects in San Diego County were required to analyze transportation impacts from new projects and identify mitigation measures to reduce those impacts.
Under these new VMT guidelines, developers must compare VMT for their project against the average for the entire region — placing urban areas, rich in public transit options, against the same requirements as rural areas. To get approval for a project, developers must show that their project will generate fewer vehicle miles traveled than the area’s average, demonstrate how they will mitigate the traffic impact or complete an Environmental Impact Report to request an exemption.
The result leads to rural areas that contain prime land for affordable development having a higher VMT than something closer to a downtown area and therefore potentially facing massive fees. For example, an apartment building in a downtown neighborhood close to jobs would face little, if any, fees. A similar project in a suburban area would face higher costs to support transit development.
Under the VMT proposal, housing developers will pay an additional $10,000 to $22,000 per mile over the average. The longer the average drive of tenants in the development, the higher the regulatory fees.
These costs directly impact the development costs and, in many cases, will be the breaking point that can destroy the feasibility of a project. In urban fringe areas with low land costs that are prime for development, the VMT regulations alone can completely negate the potential for affordable housing.
The key to “fixing” affordability involves more than just throwing money at housing; the answer lies in increasing development opportunities. One thing is certain, we cannot stifle development unnecessarily when the options of where to build are increasingly dwindling. Especially in an age of remote work with a looming commercial real estate crisis and residents fearful of how they will make rent, do we need to continue pursuing strategies that increase the cost of development in areas that are prime for affordable growth?
This argument over VMT is one of the most important issues in development — and has been on the docket for city and county officials for years. It has the potential of adding crippling costs to an already battered economy, making housing affordability ever more elusive.
Although the SANDAG mileage tax defeat was a good victory, the real battle is still being fought, and it’s important that residents of San Diego don’t stop following the bouncing ball — especially as we go into the 2024 election cycle.
Mike Shenkman is a licensed broker, member of the board of directors for the Greater San Diego Association of Realtors, and a lecturer in urban studies and planning at UC San Diego.
