The Housing Crisis in San Diego Came From Bad Policy Favored by Developers


Analysis by Reporting San Diego

Nov 28, 2017 (San Diego) if you are like most San Diegans, affording the rent, or to buy is increasingly out of reach. The reasons for this are structural and were created by policy at the highest levels of city government over the last generation. In some ways, the city government was captured by developers who benefited from the policies passed, short term. However, that has the city in a bind.

We are short of anywhere from 150,000 to 220,000 units. This shortfall has created a very tight housing market. One where there is no room to negotiate. This is also one structural reason for our sharp increase in homelessness.

The city lacks affordable housing for the working class. Literally, one hundred percent of those at the lower scale of the earning scale cannot afford to buy a home. It gets worst, at least 50 percent cannot afford to pay rents that are increasingly out of reach. With tight housing markets, renters are quickly running out of options and are getting pushed out of urban cores, to either the periphery or other areas of the County. The City of El Cajon is a current destination, with Lemon Grove not far behind. This pattern is well understood by experts, and it is called an urban inversion.

However, this is not just affecting those at the lower end of the spectrum. 70 percent of those making middle-class incomes cannot afford home ownership either, and 30 percent are having trouble affording rents.

All this is addressed in the Addressing the Housing Affordability Crisis in San Diego and Beyond report from the San Diego Housing Commission. This report is very thorough in pointing to some of the policy failures of the last generation that have caused this crisis, and suggest some solutions. If implemented, over the next generation this will address some urgent needs, including building affordable housing, and middle-class housing.

The report is very cognizant of a few trends. Auto ownership is down, and among millennial new homeowners or renters car ownership is not a high priority. In fact, this generation prefers to rely on mass transit and live in small apartments in places like downtown, or gentrified areas such as Hillcrest, City Heights and Northpark, that have access to mass transit and are walkable neighborhoods. Ergo the report recommends raising the density of housing units along transit heavy corridors. It also recommends that these units be more affordable, and in some cases smaller.

It does create conditions in which developers will have an easier time making a profit by building smaller units, by how the increased service infrastructure will be paid. It also contemplates in filling with empty lots and even building granny units in places like Rancho Bernardo, where people have large lots.

One thing that the policy contemplates is reducing the number of parking spaces required. And it would change planning to floor area ratio planning, meaning this will allow developers to plan not for units but floor area and pay accordingly. This will lower the cost of units, encouraging smaller units.

It also contemplates the hastening key environmental reports in middle-income units. With the conversion of impact fees, used to pay for roads, sewage and schools to pay per square foot of built-up space, this will also lower the fees and initial cost.

It also recommends that the funding process for affordable housing be put under one roof, essentially following the model used in Los Angeles. This would make it less cumbersome for developers to do this, given the variance of fund sources and deadlines at levels of government. Under consideration there is also a bond, that would help get the necessary funding for this essential housing.

They also want to make the Affordable Housing Bonus Program universal. This program has reduced the number of developers preferring to pay a fine, versus developing those units. This has happened in areas as disparate as Logan Heights and La Jolla.

The report has some good ideas and it is coming at a time when San Diego is one of the fastest growing urban areas in the country. One reason for that is our growing innovation economy. However, with housing costs that are steep, attracting, or keeping talent is becoming difficult.

There is another problem. Our urban core has a decent public transportation system. Both the MTS rapid system and the trolley have those areas well connected. But when people have to rent in El Cajon, but work in the Golden Triangle, getting from one place to the other is a long, circuitous commute. Forget about it if you live in Alpine or Ramona, where housing stock is more affordable.

This current plan forecasts building anywhere from 17,000 to 24,000 units per year for the next ten years. However, this report did not touch on something else that is essential. This is rent control. City rents are growing behind inflation. This is increasingly making the rent not just difficult, but mostly impossible. This may even reverse growth rates in San Diego and is also pushing older populations away from a city where at times generations have lived.

A different policy path will reverse these trends. It will take years, perhaps over a decade. However, city and county leaders need to consider what every developer in this area opposes. This is rent control. Why? We are in danger of losing a workforce, a creative workforce, just as we are moving the economy into the technology and biotech field.



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