St. Luke's Episcopal Church broke ground Friday on an eight-story affordable housing development next to its sanctuary on 30th St. in North Park.
The 78-unit complex will offer affordable rents to individuals and families earning between 30% and 70% of the county's median income, the church said, and will feature a ground floor courtyard and a community room on the eighth floor.
The project at St. Luke's is a partnership with affordable housing developer Trestle Build, which is paying the church $2.2 million for a 99-year ground lease.
More and more churches in San Diego are turning to housing development as a means of both relieving the region's affordability crisis and securing long-term revenue to continue their ministry. St. Luke's Episcopal Church said many of its parishioners can no longer afford to live in North Park.
"Seeing that challenge in our community, we've created our Mission Real Estate Initiative, which encourages the creative development of church properties for the community benefit," said Reverend Susan Brown Snook, bishop of the Episcopal Diocese of San Diego. "We hope that this project at St. Luke's inspires many others, both Episcopal churches and other churches, to address our community's urgent need for affordable housing and other services in our community."
Rob Morgan, principal of Trestle Build, said the project was making use of the city of San Diego's Complete Communities: Housing Solutions program, which offers relief from zoning restrictions in exchange for building affordable housing.
"We first looked at this site maybe six or seven years ago, but the zoning didn't allow enough scale for a project to actually be feasible," Morgan said. "Through the innovative Complete Communities policy, that changed, and there was enough density to now have a project be feasible on this site."
Trestle Build was founded in 2013, and more recently has begun making use of an emerging market of "off-site" affordable housing credits.
When market-rate developers use Complete Communities, they typically set aside a handful of units within their projects as affordable housing. But in late 2023, the City Council voted to allow the affordable housing to be built at a separate location.
The policy change effectively results in market-rate builders paying a third party to take on its affordable housing obligations. David Allen, also a principal at Trestle Build, said two market-rate projects in Banker's Hill and a third in Hillcrest had transferred their affordable units into the project going up next to St. Luke's Episcopal Church. All together, 41 of the 78 apartments are considered "off-sited" from other developments.
"We canβt share specific deal terms due to confidentiality provisions in our agreement, but it's worth noting that by using the (low-income housing) tax credit program along with Complete Communities Offsite, we delivered more affordable units than required, at deeper affordability levels, with supportive services," Allen said.
Developers wishing to transfer their affordable housing units into other projects must ensure the off-site development has similar amenities and is not in a high-poverty or segregated neighborhood. The development at St. Luke's is in a "highest resource" neighborhood, meaning it has the cleanest air and best access to good schools and jobs.
Stephen Russell, president and CEO of the nonprofit San Diego Housing Federation, said the off-site affordable policy change is resulting in more housing being built at all income levels.
"Because we are seeing a significant amount of market-rate development right now, this off-site provision has actually provided a really significant revenue stream for the production of 100% affordable buildings that can be built more efficiently, can actually leverage the dollars that are being contributed and ultimately have a really positive impact on the housing crisis," Russell said.
