A City Council committee declined to take action Thursday on a memorandum of understanding between business leaders and the San Diego Housing Commission on an affordable housing fee, and instead returned it to staff for further study.
The proposed compromise that was presented to the Smart Growth and Land Use Committee seeks to resolve a squabble over a fee levied on commercial construction projects.
The council last year tried to double the fee, back to its original 1.5 percent of building costs, but opponents collected enough petition signatures to get the hike repealed. The levy was halved in 1996 as an economic stimulus.
After the hike was rescinded, council members asked a business group called the Jobs Coalition to negotiate with the commission, which administers the city’s affordable housing programs. The two sides brokered the deal last month following eight meetings and numerous phone calls.
“Finding common ground, forging common goals, when you’re coming from different perspectives, is certainly not an easy thing to do,” committee Chairwoman Lorie Zapf said. “Your hard work is certainly very much appreciated. I think that just a few months ago, nobody would have thought we would be here today — so soon — on the same side of the table asking for support for a proposal.”
Under the proposed deal, the fee would double as originally intended, but there would not be even higher increases for certain types of development — the major source of controversy when the council tried to raise the levy. Manufacturing, warehouse and nonprofit hospital facilities would be exempted.
The increase would last only until Jan. 1, 2018, and could not be reconsidered by the City Council unless certain milestones were met.
Among the many other provisions in the MOU, the city’s independent budget analyst would be required to study other funding sources for affordable housing; city staff would be directed to find vacant or under-utilized city property that could be used for affordable housing; and assessments on development would be deferred until construction is completed.
Rick Gentry, the president and CEO of the Housing Commission, said he could find no record of city officials making a comprehensive study of funding sources for affordable housing projects.
The committee members voted 3-1 to have the MOU brought back in September. Approval of the agreement would lead to the mayor’s office initiating reform efforts and the City Council taking up amendments to the municipal code.
Gentry said he and Craig Benedetto of the Jobs Coalition had “some pretty frank and pointed and in-depth discussions” following the repeal of the increase.
The city’s Independent Budget Analyst’s Office, which opposed the nature of last year’s hike, issued an opinion that the compromise appears to be deficient, providing 14 units of affordable housing annually for three years. The production could be lessened by the exemptions and fee deferrals, according to its report.
The milestones the city would have to meet to continue the fee after three years are undefined and “create greater uncertainty” for the future of housing impact fees, according to the IBA.
The IBA said the council could remove the three-year sunset provision and add automatic fee adjustments, increase the sunset period from three to five years and clearly define the milestones, or increase the fees by 25 percent a year to reach the eventual doubling.
The MOU signatories defended the vague nature of the agreement in their presentation. Benedetto called the proposal an “opportunity for dialogue,” while Gentry said they want to avoid binding future city councils.
— City News Service
