The Sad Facts About the Big Affordable Housing Fee Hike - Voice of San Diego

Affordable Housing Fee

The Sad Facts About the Big Affordable Housing Fee Hike

The money collected create only a few of the tens of thousands of housing units planners think San Diego needs in the next two decades and that’s an admission that the market will have to do the rest.

At our debate the other night, Nathan Fletcher, an executive at Qualcomm, said he supports an increase to the affordable housing fee, though smaller than what the City Council recently approved.

I asked him what that would mean for his employer.

Qualcomm has been considering a major expansion and, with this fee hike, the company may have to pay the city millions more than it would have under existing rules. Fletcher might not support that full hike — but he supports a hike.

“They can probably afford it,” Fletcher said.

That’s been typical of the debate about this increase. It has not been about where the money from the fee would go. It has been about how much of an increase is too much.

When the Housing Commission got City Council approval, its staff claimed a huge victory.

Unfortunately, the money collected will help only a few of the tens of thousands of people waiting for subsidized housing options. It will create only a few of the tens of thousands of housing units planners think San Diego needs in the next two decades.

The system is welfare by lottery, and the system has expanded. Worse is the question of whether it set back the effort to make living in San Diego more affordable.

It has widened the schism between people who otherwise agree that there aren’t enough homes in San Diego and that the rent is too damn high. An opposition effort to throw the law out is already getting organized and funded.

That’s a lot of time and energy spent fighting about very few homes — all at a time when we need a lot of homes.

Just look at the facts:

Tens of thousands of families are on a wait list for rental assistance.

A much smaller group is receiving it.

In 2013, the Housing Commission’s budget for rental assistance was $157,260,234. These are payments directly to landlords.

So it cost about $11,000 on average to serve each of those 13,986 fortunate families.

But this fee increase will not help serve more of the 45,692 families waiting.

The money from the affordable housing fee on building instead goes to the Housing Commission’s Affordable Housing Trust Fund. The commission invests it assisting affordable housing developers to construct or rehabilitate apartment buildings.

In other words, they build things like this:

Photo by Sam Hodgson
Photo by Sam Hodgson

Those units are given out more or less in a lottery organized by the developers. The Housing Commission oversees it to ensure the people who get the units need them.

It’s a drop in the bucket, though.

In its presentation to the City Council, the Housing Commission said San Diego needs 38,000 affordable housing units. That comes from this SANDAG study.

200years

Now, with the fee increase, the Housing Commission will be able to build 80-100 more units every year.

It’s not making much of a dent, or a dimple even, but it certainly will affect payers.

The fee is levied on builders of office space, hotels or restaurants — any non-residential building, with some exceptions.

Here’s how the change will look per square foot.

feetable

Here’s what Qualcomm is facing, for example.

qcommath

“Those numbers are correct and they’re scary,” said Monique Rodriguez, Qualcomm’s government affairs director.

Over the years, the fee has raised an average of $2 million per year for the Housing Commission.

The increase will quadruple the revenue for the Housing Commission to this fund. Up to $10 million more per year is expected to flow in.

It hurts more than it helps, said Jim Waring, a member of the Housing Commission.

“Why would somebody who volunteers on behalf of affordable housing encourage a vote of ‘no’ on this fee? It’s because when you’re in there, you see the magnitude of this problem. This problem is so big, it’s going to require a broad political consensus. This type of narrow fee, which is insignificant to our budget will not only not help in that, but it will hurt,” he said.

Opponents of the fee increase, however, have almost uniformly stopped short of actually questioning what the money is spent on.

Former Mayor Jerry Sanders, like Fletcher, said he was fine funding affordable housing and would maybe support a smaller increase.

Felipe Monroig, head of the Taxpayers Association, said on an NBC 7 segment with me that he too thought the effort to build affordable housing needed funding. Just not this way.

But when I pressed Republican mayoral candidate Kevin Faulconer on this point, he finally broke ranks. Here’s how our exchange went (you can watch it here):

Faulconer: A lot of the speakers came down and talked about exactly what you just said, which is a broad-based funding mechanism for affordable housing. As somebody who’s been a strong supporter of affordable housing particularly in the district I used to represent, where we built so many units and looking at some of the things that took away our resources, the end of redevelopment — the tax increment fee helped dramatically with affordable housing units.

But I was opposed to the fee yesterday and I said so strongly. It wasn’t just an increase of 100 percent, 200 percent. It was 500 percent.

I think that’s the wrong thing for San Diego particularly when we are coming out of a recession and we should be doing everything we can as a city that says we want you to grow jobs. We want you to bring your businesses here. We want existing businesses to expand.

And to say, we’re going to put a jobs tax — and that’s what I’ll call it — and say it again tonight, a jobs tax on our companies that want to expand by 500 percent, that’s wrong for our economy and it’s wrong  for San Diego.

(Interrupted by Fletcher stomping. The crowd was asked to do that if a candidate drones.)

Mr. Fletcher can support it and I look forward to seeing how many jobs he wants to give away to night.

Fletcher: I don’t want to give away a job. I want to get a job.

Lewis to Faulconer: So that fund, though, is something you want to fund. How would you fund it if not through a fee like this? You’re just saying a smaller increase?

Faulconer: No, Scott, the best way we can provide them affordable housing is to get them a good-paying job.

Lewis: But that fund. Do you want that fund to be funded at a higher level?

Faulconer: I do not.

OK then. That’s new.

Nobody pretends that building these subsidized affordable housing units will solve the big problem.

“It was not the answer to the affordable housing crisis in this city, just like it also isn’t true that it’s going to not allow for growth and economic development and job creation,” said Councilman David Alvarez, also running for mayor.

Council President Todd Gloria cited poverty numbers and the need for housing. And issued a statement:

“By updating the Workforce Housing Offset for the first time in 17 years the City Council has provided an appropriate funding stream for San Diegans who have jobs but struggle to afford to live here,” he said.

In the same statement, he noted it would only help maybe 100 more of the 125,000 San Diegans he said earn poverty wages.

To supporters, every little bit helps. But did we get closer to solving the problem of housing supply and affordability in San Diego or did we get further from it?

That’s the real debate we need to have right now.

The Housing Commission has effectively admitted that even a five-fold increase of a controversial fee on development won’t have even marginal impacts on the housing crisis.

It’s an admission that the market will have to build the tens of thousands of homes the Housing Commission staff said we need. I trust that means the Housing Commission and it supporters will rally just as hard to support the market in its daunting challenge as it did for this fee.

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