Building Industry Association
of San Diego

The County Board of Supervisors voted to streamline its general plan amendment process that project applicants have long complained was duplicative and overly bureaucratic.  The process – known as Policy I-63 – required applicants to seek county staff approval before being allowed to submit their plans for consideration.  Concerns were that the process was tantamount to an  ‘application for an application,’ which added unnecessary time and costs. Policy I-63 is set to expire in December and will be replaced with a more  streamlined approach.

The Supervisors decided to replace I-63 with a BIA supported preliminary review process that would allow staff to identify major issues the applicant would have to address but staff will no longer have the authority to deny projects for consideration.  The Supervisors agreed that property owners had a right to have their projects considered and should be allowed to proceed with the full knowledge that there was no guarantee that their general plan amendment request would be approved.  The Supervisors will vote on the final ordinance in early December.

Responding to a ruling by the state Court of Appeals and concerns raised by the Building Industry Association, the San Diego City Council voted 5 – 3 to change its inclusionary housing ordinance to a fee based program.  The move stems from a court ruling that declared that imposing inclusionary housing mandates on rental unit construction violated state laws governing rent control.  Instead of having to provide deed restricted units – up to 55 years – rental projects will now pay an affordable housing fee to the Housing Commission.

The BIA argued that the fee program still ran afoul of state law and that rental projects should be exempted from the program outright. Attorneys for the BIA argued that the nexus study used to determine the fee was flawed because its methodology was based on a premise that adding new homes to the housing stock contributes to the housing crisis.  The latest numbers released by HomeDex, a North County research firm that tracks  household affordability put  the affordability rate for San Diego at 59 percent, its highest level in years.

The proposal will pro-rate fees for projects of less than 10 units.  The result will be a fee increase of up to 80% for 9-unit projects while projects of 4-units or less will see a fee decrease.  Larger projects will continue to pay the current fee of  $4.98 per square foot.

Councilmembers David Alvarez, Marti Emerald, Todd Gloria, Sherri Lightner and Council President Tony Young voted in favor of the changes while councilmembers Carl DeMaio, Kevin Faulconer and Lorie Zapf voted against the proposal because of the issues raised by the BIA that the revised plan was still legally questionable and opened the city to potential litigation and their opposition to fee increase on smaller projects.

New Affordable Housing Fee Structure

Projects above 10 units pay $4.98 sq. ft.

On Tuesday, the San Diego City Council will consider changes to its Inclusionary Housing Ordinance that will eliminate the on site requirement and instead require all projects to pay a fee into the Affordable Housing Trust Fund.  The existing ordinance  requires residential construction projects to either deed restrict 10 percent of the units for 55 years or pay an in-lieu fee to the Housing Commission.

The changes are part of the city’s effort to comply with an appeals court that ruled that jurisdictions that require rental unit construction to provide deed restricted units violated the state’s Costa Hawkins Act that governs rent control.  The Housing Commission believes the ordinance revisions will allow them to collect fees from rental units without running afoul of the state law.  Attorneys for the BIA testified that the proposed revisions continue to violate the appeals court ruling because it still mandates a fee or deed restricted units from rental projects.

The amendments also include proposal to double the fee charged to smaller projects of 10 units or less.  Currently, those projects pay 50% of the fee because of its punitive economic impact.  The ordinance would reduce the fee paid by condo conversion projects.

Two hotly contested bills by Senator Juan Vargas fell victim to the veto pen as Governor  Jerry Brown rejected Senate Bill 469 which would have subjected Wal-Mart type retail projects to additional regulatory review and Senate Bill 833 which would have killed the Gregory Canyon Landfill project.

The union backed Wal-Mart bill came after the San Diego City Council reversed course on an ordinance that imposed similar regulatory conditions after a ballot initiative calling for the repeal of the new rules qualified for the ballot last year. Vargas took up the cause in Sacramento shortly thereafter with SB 833. The Governor vetoed the bill saying it would add yet another layer of review to an already cumbersome process.

As for the Landfill legislation,  the Governor conceded that the 20-year old proposal was a local matter that was twice approved by the voters.  The Vargas bill would have prohibited the construction of a landfill within 1,000 feet of a site considered sacred to a tribe or within 1,000 feet of the San Luis Rey River or an aquifer connected to it. The Governor declared that it was not appropriate for the Legislature to intervene and overturn a hard-fought local land-use decision.

The San Diego City Council will consider changes to its Inclusionary Zoning Ordinance that will eliminate the on site requirement and instead require all projects to pay a fee into the Affordable Housing Trust Fund.  The Inclusionary Zoning Ordinance requires residential construction projects to either deed restrict 10 percent of the units for 55 years or pay an in-lieu fee to the Housing Commission. Included in the proposed changes is language that would also double the fees paid by projects of 10 units or less.

The changes come as the city tries to comply with an appeals court that ruled that jurisdictions that require rental unit construction to provide deed restricted units violated the state’s Costa Hawkins Act that governs rent control.  The Housing Commission believes the ordinance revisions will allow them to collect fees from rental units without running afoul of the state law.  Attorneys for the BIA testified that the proposed revisions continue to violate the appeals court ruling because it still mandates a fee or deed restricted units from rental projects.  The city council is scheduled to consider the changes at an October 18th hearing.