Affordable housing construction fee compromise to be presented Thursday

SAN DIEGO (CNS) – A proposed compromise to a controversial increase of a commercial construction fee that pays for affordable housing projects in San Diego will be presented Thursday at a special meeting of the City Council’s Smart Growth and Land Use Committee.

The proposed deal was brokered last month by a business group and the San Diego Housing Commission, which administrates the city’s affordable housing programs.

Last year, the City Council on a pair of party-line 5-4 votes, agreed to return the so-called “linkage fee” to its original level of 1.5% of construction costs. It had been halved to 0.75% in 1996 as an economic stimulus and was supposed to be reviewed annually, but wasn’t.

Business groups fought the increase because the fee hike for some types of development were set to go up far more than just double – in some cases it would have been over 700%. They argued that the burden would prevent companies from moving to San Diego and keep businesses already in town from expanding.

The council repealed its action when presented with petition signatures that could have forced a public vote.

At the time, the council challenged business leaders to negotiate a deal with the Housing Commission. What’s being presented tomorrow is the result.

Under the proposed deal, the fee would double as originally intended, but there would not be even higher increases for certain types of development, said Craig Benedetto, who leads a group called the Jobs Coalition.

He said 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, according to a memorandum of understanding signed by Benedetto and Rick Gentry, president and CEO of the Housing Commission.

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.

A spokeswoman for City Council President Todd Gloria said that while he favors compromise on contentious issues, he hopes some aspects of the agreement will be clarified at the committee meeting. Gloria supported the original City Council actions.