A long-running debate over a controversial fee on developers that helps pay for affordable housing projects neared an end Monday, as the City Council approved a compromise between housing advocates and the business community.
On a 7-1 vote, the City Attorney’s Office was directed to return in two weeks with an ordinance that can be considered by the council members.
The issue involves the “Linkage Fee,” in which developers of commercial structures pay a certain amount, depending on the size of their projects, with the funds earmarked for construction of affordable housing units.
The levy, instituted in 1990, was halved by the City Council six years later as an economic stimulus.
Last year, the council — on a pair of 5-4 party-line votes — returned the fee to the prior level. However, as the city’s independent budget analyst pointed out, the hike really ended up being more than 300 percent to over 700 percent on certain types of projects.
The business community subsequently gathered enough petition signatures to force the City Council to rescind the fee increase. When that happened, Craig Benedetto of a business group called the Jobs Coalition, and Richard Gentry, president of the San Diego Housing Commission, which runs the city’s affordable housing programs, agreed to negotiate a deal.
Their memorandum of understanding, with adjustments proposed last week by Councilwoman Myrtle Cole, was what the council approved today.
Provisions include returning the fee to its 1990 level, phased in over three years beginning on Jan. 1; exempting developers of manufacturing, warehouse and nonprofit hospital projects from paying the fee as an economic development incentive; and maintaining current fee levels for research and development construction for the same reason.
Two controversial points of the MOU, a sunset provision that would put the levy back to its 1996 level in three years if certain reform measures weren’t implemented and a requirement for annual fee adjustments based on a construction cost index, were removed by Cole.
“It’s time to put this issue to rest, and collaborate on more permanent, long-term solutions for not only our affordable housing crisis, but our $2 billion infrastructure crisis, as well,” Cole said. “This compromise provides greater certainty, something that both our affordable housing advocates and developers wanted.”
Both Gentry, who called it “a compromise within the compromise,” and Benedetto, who said it sets the city on a course of “meaningful reform,” spoke out in support of the deal — including Cole’s modifications.
The mayor’s office said it is studying several possible reforms that would benefit the construction industry.
A major policy decision would be whether to offer residential developers higher densities in exchange for inclusion of affordable housing in their projects, a mayor’s representative said. Others would be much simpler, like a move last week to keep the city’s Development Services Office open late on night each week and on occasional Saturdays.
Councilman Scott Sherman cast the dissenting vote, saying the people who signed the petitions to stop the fee increase were entitled to a one-year wait before it was approved again. Councilwoman Marti Emerald, who has been undergoing treatment for breast cancer, was absent.
— City News Service
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