The San Diego City Council will soon consider an ordinance that would place new requirements on owners of affordable housing who wish to sell their properties.
Officials hope the proposal, which was crafted by the San Diego Housing Commission, can help prevent thousands of affordable housing units in San Diego from being flipped into more expensive housing once their rent restrictions expire.
When developers build affordable housing, the deed includes a restriction that guarantees rents will be affordable to certain income groups. But those deed restrictions — also called covenants — can expire, leaving tenants at risk of unaffordable rent hikes.
The proposed ordinance would close what supporters say is a loophole in state law. California already requires affordable housing owners to offer nonprofits, government agencies and other affordable housing organizations first right of refusal when selling their properties.
But this requirement doesn't kick in until five years before the deed restriction expires, meaning owners can avoid the noticing requirements by selling their properties in advance of the five-year time window.
The proposed ordinance would have the noticing requirements take effect as soon as the property owner intends to sell — regardless of how much time is left on the affordability covenant. The San Diego City Council's Land Use and Housing Committee voted Thursday to forward the ordinance to the full council.
"The construction of new homes is not keeping up with the need," said Councilmember Vivian Moreno. "This ordinance is reasonable, and if enacted, will be an effective tool to keep deed-restricted units in place across San Diego."
The ordinance would not apply to so-called "naturally occurring" affordable housing — a term that describes homes that have no deed restrictions but are still affordable to low-income households, often because of their old age, undesirable location or lack of amenities.
Several public commenters said while the ordinance would offer some additional protections for at-risk affordable housing, nonprofits and government agencies may still struggle to compete in the bidding wars that can take place when affordable housing properties go on the market.
Councilmember Kent Lee said while the city is projecting deep budget deficits for the next several years, it should still work to increase funding for affordable housing preservation.
"Having a policy and an ordinance in place is a significant first step," Lee said. "But having both the public and private opportunities for funding, so that there are entities who have the capacity and the ability to actually take advantage of those opportunities — that's a critical part of the bigger picture."
