Last September, San Diego Mayor Todd Gloria announced he was forming a "Middle-Income Housing Working Group" to advise him on policies to stimulate homebuilding for the region’s middle class.
Such households generally make too much money to qualify for subsidized housing but not enough to afford market-rate homes. Gloria noted San Diego built only 37 middle-income homes between 2010 and 2020 — a miniscule 0.2% of what was needed.
"That’s not close to good enough,” Gloria said at the time.
Some developers and housing advocates saw a golden opportunity in the Sports Arena, 48 acres of publicly owned real estate in the Midway District that the city wants to redevelop. But as the city debates which proposal to select, affordable housing for the middle class appears to again be falling by the wayside.
City staffers have ranked Midway Rising as the early favorite. That's because the proposal includes the most low-income apartments — about 2,000 — and the average rents of those low-income apartments would be cheapest. The project would also include 250 middle-income apartments.
But the proposal does not have the most homes overall, nor does it have the most middle-income housing.
Those distinctions belong to Neighborhood Next, which city staffers want to exclude from the shortlist of finalists. The team is proposing 5,700 homes total — 1,100 of them with restricted rents that are affordable to moderate-income households, defined as those making up to 120% of the county's median income. That would be $89,800 for a single person or $128,300 for a family of four. Neighborhood Next proposes 1,650 low-income apartments.
However, city staffers want to eliminate this proposal from consideration, saying the overall affordability does not match other proposals. The Neighborhood Next team also lacks experience in handling entertainment venues like the Sports Arena, staffers say.
Asked last week whether he would like to prioritize the most housing overall on the project, Gloria said his hands were tied by the California Department of Housing and Community Development (HCD). That department last year forced San Diego to restart the process of seeking redevelopment ideas because the city had not prioritized low-income affordable housing, which is required by a state law called the Surplus Land Act.
"We've been in regular communication with HCD to make sure that we're in alignment with their needs, and what we've received is nothing but favorable feedback," Gloria said. "They believe that on our current trajectory, we could be a best case example of how the Surplus Land Act should work now, and my aim is to stay on that track."
David Zisser, head of HCD's Housing Accountability Unit, largely agreed with the mayor's characterization, and said the Surplus Land Act "doesn't really contemplate moderate or middle-income or market-rate" housing.
But, Zisser added, that does not mean those factors are irrelevant. While the Surplus Land Act compels cities to prioritize low-income housing on their land, it also allows them to choose the proposal that would bring in the most money. So if a project with lots of low-income housing can't pay what the city thinks the land is worth, the city can drop it from consideration.
"After good-faith negotiations, if a city can't agree to the price and terms with a developer, the city can then choose to sell (or lease) to a different entity that can perhaps pay more," Zisser said.
The financial details of the five development proposals have not been made public, so it is still unclear how much each one is assuming it will pay the city to lease the property.
It is also unclear how many bedrooms each proposal would have, meaning a proposal with fewer affordable homes might actually house more people by making more of those homes two- and three-bedroom apartments. Nor is it clear how much public subsidy each proposal would require to actually build the affordable housing.
One proposal, Discover Midway, told the City Council's Land Use and Housing Committee that it would not seek local taxpayer dollars to build its affordable housing. Discover Midway was the other team city staffers are seeking to eliminate from the running.
"Our team can deliver affordable housing units far faster because our financing is not contingent on regional subsidies," said Jim Silverwood, president of Affirmed Housing, an affordable housing developer on the Discover Midway team.
The committee ultimately voted to recommend the city vet all five redevelopment proposals rather than narrow the pack to three as staff had requested. The full City Council is expected to take up that question in the coming weeks.
Zisser said if the city does not select the proposal with the most low-income affordable homes, it must offer a "strong rationale" to the state. He declined to say whether more middle-income affordable housing, or more family-sized apartments, or less of a need for public subsidy would suffice.
"I can't tell you right now whether we would approve that," Zisser said. "But those seem like explanations that a city could explore."
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