Building Industry Association
of San Diego

The City of San Diego Land Use and Housing Committee spent the afternoon reviewing changes to its Inclusionary Zoning Ordinance that require builders to provide a portion of their housing units to low income households or pay an ‘in-lieu fee’ to the Housing Commission.  The changes were developed in response to a Los Angeles court case that successfully argued that requiring Inclusionary Zoning mandates on rental units violated state law.

Housing Commission staff testified that in order to get around the court ruling the city should no longer offer an ‘in-lieu fee” and instead require everyone to pay an ‘Affordable Housing Fee.” Any applicant who wishes to voluntarily provide 10% of their units to low income families would be granted a waiver from the fee.

The BIA expressed serious concern over the apparent fast-tracking of the ordinance and the 20% fee increase if the changes were adopted. The BIA also urged committee members to require the Housing Commission to meet with industry representatives to review the draft changes in more detail.

The committee took no action on the proposed changes and decided to forward it to the Planning Commission without recommendation.  They also directed the Commission to meet with the BIA and other interested stakeholders prior to any council action.

Councilman Todd Gloria proposes to double fee paid by commercial & industrial development

The City of San Diego Land Use and Housing Committee voted to approve a plan that will ultimately lead to the doubling of the housing linkage fee paid by commercial and industrial projects.  The fee is calculated on a square foot basis and can add tens of thousands, if not hundreds of thousands of dollars in construction costs on non-residential development.  Under the plan, the fee increases would be phased starting in two years and would essentially double after five years.  Thereafter, an automatic escalator based on the Engineering News Record  would be used annually to adjust the fee.

A broad business coalition turned out in mass to oppose the linkage fee increase calling it  nothing more than a stealth ‘Jobs Tax’ since it targets job creating businesses.  The committee voted 3-1  on a motion by Councilmember Todd Gloria to forward the plan to the full council for consideration.

In an effort to address business concerns over the fee increase, Councilmember David Alvarez added an amendment that could lead to the reduction or elimination of the linkage fee altogether if a broad based funding source can be identified.  However, there appeared to be little appetite from councilmembers on asking the voters for new taxes to go toward affordable housing.

The committee directed a Task Force led by the BIA and Housing Federation to return in 120 days with a menu of incentives and regulatory reforms that could led to the creation of more affordable housing.

The San Diego City Council will consider changes to its downtown development rules that, if adopted, would increase leverage for unions to get Project Labor Agreements and union operated hotels.

The labor group, Unite Here, wants hotel construction projects that have been approved by the city’s downtown development agency,  the Center City Development Corporation, to go back to the city council for another economic impact review.  Union leaders believe they will have a more receptive audience to their demands for project labor agreements and union operated hotels since six of the eight city councilmembers were back by organized labor.

Business groups strongly oppose this union push for more control saying the loss of regulatory certainty that has resulted in a downtown renaissance would be lost because of the uncertainty resulting from union interference and delay tactics.

Unite Here has made a name for itself in San Francisco for its relentless attempts to discourage business of coming to San Francisco due to an ongoing labor dispute.  The San Franciso Sentinel reports that the city has lost 10 conventions and meetings due to labor issues at a loss of $8 million to the city.