The contentious debate over increasing a fee on developers moved one step closer to a deal Monday. City Council moved forward an agreement forged between the two feuding sides.
The housing impact fee is a one-time payment from developers of commercial projects that goes into a city fund to build homes low-income San Diegans can afford.
You’ve probably heard it called the “linkage fee” or “jobs tax.”
San Diego Municipal Code On Housing Impact Fees
"It is the policy of The City of San Diego that new office, retail, research and development, manufacturing, warehouse, and hotel development pay a fair share of the costs of subsidy necessary to house the low and very low income employees who will occupy the jobs new to the region related to such development."
Source: Article 8, Division 6
After the City Council’s attempt to raise the fee last year didn’t go so well — the council rescinded a 300 percent to 700 percent increase after a group of businesses gathered enough signatures to force it on the ballot — council members asked opponents and supporters of the increase to reach a compromise.
The City Council's 7-1 vote means the city attorney will draft the changes proposed by the San Diego Housing Commission and the Jobs Coalition, which opposed the original hike. Councilman Scott Sherman cast the dissenting vote while Councilwoman Marti Emerald was absent.
The housing impact fee was introduced in 1990 to help offset the cost of affordable housing for low-wage workers, according to a report from the council's independent budget analyst. The fee charged roughly 1.5 percent of the construction costs for new offices, hotels, retail spaces, research and development buildings, manufacturing facilities and warehouses. The fees were cut in half in 1996.
Under this new proposal, the impact fees would double, returning to the amount charged in 1990.
According to the budget analyst, current housing impact fees are $1.06 per square foot for new office construction and 64 cents per square foot for construction of hotels or retail space. Under the proposal, these fees would double to $2.12 and $1.28, respectively.
For construction of research and development facilities, the fee is 80 cents per square foot, which would not change under the agreement. For development of manufacturing facilities or warehouses, the fee is currently 64 cents and 27 cents per square foot, respectively. Developers of these facilities would pay no fee under the proposed agreement.
The compromise, outlined in a memorandum of understanding, also calls on city staff to identify additional funding sources for affordable housing.
San Diego Chamber of Commerce CEO Jerry Sanders praised the proposal.
"It is a balanced proposal that addresses our concerns about the impact a large fee increase would have on job creation so that we can focus attention on finding better ways to bring more affordable housing units to San Diego," the former San Diego mayor said in a statement.
The agreement originally included a "sunset" provision, meaning the housing impact fee would revert back to pre-increase levels if the city didn't meet certain goals. The agreement was modified after a split council committee on Smart Growth and Land Use forwarded it to the full council.
What Is Affordable Housing?
To be considered affordable, housing must cost no more than 30 percent of a household's income. Based on the median income in San Diego, that works out to $1,500 per month in rent or a home priced at $225,000 for a low-income family of four.
Source: City of San Diego
Although the committee voted 2-2 along party lines, Councilwoman Lorie Zapf, a Republican, moved the agreement ahead under her authority as chairwoman.
Councilwoman Myrtle Cole, vice chairwoman of the committee and a Democrat, then stepped in to negotiate a deal over the sunset provision, which affordable housing advocates didn't support.
The City Council has for some time declared the lack of affordable housing a crisis.
