Building Industry Association
of San Diego

The City of San Diego’s Land Use and Housing Committee will consider an extension of the city’s fee deferral policy for Facilities Benefit Assessment (FBA) areas on Wednesday, September 14th at 2:00 p.m.  The deferral allows builders to pay fees at the time of final inspection rather than having to pay at the time they are issued a building permit which is months earlier.

First established in 2009, the deferral is considered a necessary incentive to make projects more financially feasible at a time of scarce construction financing and building permits at historic lows.

The committee was scheduled to consider the extension back in July but a last minute memo by the City Attorneys Office questioned the appropriateness of the policy governing FBA fee increases.  Those questions caused the committee to delay action until the City Attorneys Office had more time to review.

Since the program was established 82 projects used the deferral program totaling more than $33 million in fees with over $23 million already paid to the city. The average length of the deferral has been only 4 months.  The BIA strongly supports the program and will testify at the hearing.

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 City of San Diego Land Use and Housing Committee will consider a proposal to double its Linkage Fee that is paid by Commercial/Industrial projects in San Diego.  Money from the Linkage Fee is given the the Housing Commission to be used for affordable housing projects.  Opponents dub the fee a ‘Jobs Tax’  because it targets employment centers and question the logic of doubling fees at a time of 10% unemployment and the worst  housing market in generations.  The proposal would also create an automatic escalator that would negate the need for future council votes on linkage fee increases.

A large business coalition including the BIA issued a detailed opposition letter to the head of the city’s Housing Commission urging him to abandon the fee increase proposal and to work with stakeholders to identify and implement a broad based funding strategy rather than target new jobs.  The Housing Commission plans to move forward with its recommendations at a Wednesday, March 30th, hearing of the Land Use and Housing Committee.