Building Industry Association
of San Diego

The San Diego City Council will consider a proposal that will ultimately double the affordable housing linkage fee it charges commercial and retail construction projects.  The linkage fee is charged on a square foot basis and can amount to hundreds of thousands of dollars depending on the project size.

A broad coalition – including the BIA – strongly oppose the fee increase and consider it tantamount to a job tax because it penalizes job creating businesses and companies willing to expand operations in San Diego.  No other city in San Diego County charges this fee.   With home prices at historic lows and unemployment at record highs the logic behind the proposal by Councilman Todd Gloria escapes many in the business community.

As proposed, the fee increase would be phased in over 5 years beginning in 2014.  The hearing is scheduled for July 11th. The BIA is urging its members to contact the San Diego City Council to oppose the job tax.

Your Paper’s coverage of the Oceanside City Council June 22nd action on lowering affordable housing fees as a cost component of new home construction failed to mention a key fact. The article reads as if Council Members Kern, Feller and Felien slashed the $10,375 per home fee mainly as a stimulus measure to jump start construction. While welcome news to 45,000 unemployed members of our industry as a measure of hope, the City had no choice.

The City hired Keyser Marston Associates (“KMA”) to prepare the fee study which would set a legally justified cost factor on a square foot basis. KMA is used by many cities Statewide to set these so-called Inclusionary Housing In-Lieu fees which are paid by new home buyers to subsidize the construction of homes for low – to moderate income families. KMA is required by law to use actual economic data.

KMA’s low fee calculation is the result of a very bad real estate market, record low housing values and low interest rates. Because the fee is pegged to the real market, it goes up and down as the market changes. Opponents to this action can jump up and down all they want. Record high housing affordability in Oceanside means that record low subsidies are needed, especially coming from new home buyers. Affordable housing advocates who work primarily with tax payer subsidies need to wake up to the new reality. Government no longer has funding and new construction which used to pay these fees is at a standstill. A proposed Density Bonus Program which follows state enforced global warming mitigation mandates is the only smart solution on the table. It is ironic that Council Member Esther Sanchez, a global warming believer, has not caught on yet.

Governor Jerry Brown took little time to veto the state budget plan approved by the Democratic majority in the legislature just hours before.  In his veto message to Sacramento lawmakers the Governor declared the budget unbalanced and would continue big deficits for years to come adding billions in new debt.

Part of the budget included the elimination of redevelopment agencies with nearly $1.7 billion in revenues being transferred to the state’s general fund.  While the Governor vetoed the budget plan it is unclear if he will veto the two redevelopment bills that were part of the proposal.   Vetoed or not, local governments along with pro-redevelopment organizations vow to take the matter to court if necessary.

Stay tuned…

Redevelopment agencies are all but dead as a consequence of the new 2012 state budget adopted in Sacramento.  On a Democrat dominated vote, the State Assembly and Senate approved two bills as part of the budget package that will transfer millions in locally generated taxes to Sacramento to close a $10 billion budget deficit.

Tax increment revenues generated in redevelopment areas were required to be used locally for infrastructure improvements and affordable housing.  Now, those funds will be redirected to Sacramento’s general fund. The state expects to collect $1.7 billion statewide and  San Diego stands to lose $50 million alone if the Governor signs the bills.  Redevelopment areas could technically remain but only if they give up the money.  San Diego’s premier redevelopment agency, the Centre City Development Corporation, could remain intact provided it sends the money to the state but the financial drain may be too severe for CCDC to continue.  The Assembly and Senate delegation representing the San Diego region voted along party lines with Democrats supporting the money grab and Republicans standing in opposition.

A host of pro-redevelopment organizations including the League of Cites  and the California Redevelopment Association vowed to continue the fight against the legislative action declaring they are prepared to take the state to court.