San Diego City Council chambers. Credit: Wikimedia Commons.

Updated 5:40 p.m. Oct. 21, 2014

The San Diego City Council on Tuesday gave final approval to a compromise plan for a fee increase on commercial construction to fund the city’s affordable housing projects.

The deal, approved on an 8-1 vote, should end a struggle between housing advocates and business leaders over the future of the fee, which was instituted in 1990. Six years later, the levy was halved as an economic stimulus.

Last year, the City Council approved restoring the charge to its original level — but as the city’s independent budget analyst pointed out, the hike would have ranged from over 300 percent to more than 700 percent on certain types of building projects.

Opponents collected enough petition signatures to get the council to rescind the increase, which led to the compromise passed Tuesday.

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 in earlier versions of the compromise — 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 — are no longer being considered by the City Council.

The deal was hammered out by the San Diego Housing Commission, which runs the city’s affordable housing programs, and the Jobs Coalition, a business group. Final details were ironed out by Councilwoman Myrtle Cole.

“At the end of the day, this ordinance will provide greater certainty for both our affordable housing advocates and developers,” Cole said. “It will create a supply of affordable housing. It will improve business and development.”

City officials concede that the amount of money to be raised by the fee is a drop in the bucket compared to the need in a city which has 47,000 families on waiting lists for housing assistance.

Cole and other participants in the negotiations said they hope work will now begin on more meaningful action to resolve the affordable housing problem.

Councilman Scott Sherman, who said the panel should wait one year from the time the petition signatures were validated to address the issue again, cast the dissenting vote.

The council members also patched some loopholes in campaign financing laws.

According to the city’s Ethics Commission, candidates in recent election cycles have made their campaign materials available via the Internet to outside committees to distribute on their behalf, which circumvents contribution limits. Also, committees have been making expenditures on credit, which allows them to avoid disclosing the identities of major donors until advertising has been disseminated.

Amendments that the council approved unanimously will clarify the types of committees that would have to report receiving campaign materials, and the manner in which credit could be extended.

— City News Service

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