On Tuesday, October 21, 2014 after a lengthy and often contentious process, City of San Diego City Council gave final approval to a compromise on the Workforce Housing Offset.
The compromise passed will see the fee restored to original levels (in 1996 the fee was cut in half as a temporary measure but never brought back) and phased in over three years. It also includes certain exemptions.
San Diego Housing Federation played a critical role in addressing the main problem with the initial version of the proposal – namely, that the fee increase would sunset after three years – and supported the agreement despite concerns with some provisions.
The agreement was reached thanks to the leadership of Councilmember Myrtle Cole, who worked with both sides to reach an agreeable compromise, Councilmembers Sherri Lightner and Ed Harris who championed removal of the sunset provision, and Council President Todd Gloria who docketed the item to move quickly.
Parties were in agreement with the proposed doubling of the Offset, which represents a fee on current development projects that is used to create affordable homes for the lower-wage workers who will be employed at the projects built. These fees have not been increased in almost twenty years, and were, in fact, cut in half in 1996. But the initial proposal put forward to the City Council would have only maintained the increased fee for three years, while providing permanent exemptions for certain types of developments that house mostly higher-wage employees.
The combination of permanent exemptions with time-limited increases would have resulted, over time, in less revenue for affordable housing when compared to the current program. With the sunset provision removed, however, the City’s Housing Trust Fund will see an annual average increase from the current $2.2 million a year to around $3.8 million annually. Over 20 years, this means an additional $32 million for affordable housing in the City!
The proposal passed by the Council is very much a compromise, and includes provisions that SDHF did not favor, including: removing requirements for an annual fee increase based on construction cost (though this requirement has not been applied in two decades); including exemptions for manufacturing, warehouse and nonprofit hospitals, which reduces revenues by 15-18%; and phases in the fee increase over three years rather than all at once.
Despite concerns with these provisions, SDHF believes the removal of the sunset provision goes much further to reflect a true compromise than previous versions of the agreement, which is what garnered our support. San Diego Housing Federation is very appreciative of the San Diego City Council for recognizing the affordable housing community’s concerns and working with the parties involved to strike an agreement that would address top concerns while allowing the issue to move to resolution.
We are also appreciative of the support of our members and partners who worked to ensure a strong voice on this issue, as well as the San Diego Housing Commission and members of the ‘Jobs Coalition’ for working on this compromise.
To learn more about the compromise on the Workforce Housing Offset listen to this Midday Edition episode that aired on Wednesday, October 22 featuring Bruce Reznik.
You can also review chronological posts below that document SDHF’s work on the issue over from the spring/summer of 2013 to fall of 2014.
Posted September 25, 2014
SDHF Supports an Alternative Proposal for Workforce Housing Offset
At its hearing on Wednesday, September 24, City of San Diego’s Smart Growth and Land Use Committee determined to forward to full council a memorandum of understanding struck by the San Diego Housing Commission and a group calling itself the “Jobs Coalition,” detailing a compromise on the Workforce Housing Offset.
The decision to forward the MOU to full council — with no recommendation from the committee — was a split vote. Councilmember Lightner and Councilmember Cole were dissenting votes citing that a report from the Mayor’s office on reforms relevant to the conditions of the MOU provided insufficient time to assess the issue fully. Councilmember Sherman and Councilmember Zapf voted to move the MOU forward for full council consideration. According to Councilmember Zapf the council would likely take the issue up later in the fall. However it is possible that the council can take it up sooner.
The San Diego Housing Federation does not support the MOU in its current form.
SDHF supports an alternative proposal that will:
- Restore the City’s Housing Trust Fund by returning the Workforce Housing Offset to what it was before the fee was ‘temporarily’ reduced in 1996.
- Omit a sunset provision that causes legal and financial ambiguity for the city and business community alike.
- Require the fee be adjusted annually to ensure that those interests who contribute to the city’s affordable housing challenge contribute their fair share to the solution.
- Ensure that as our economy continues to rebound, the City of San Diego benefits from future opportunities to leverage and capture other sources of revenue and investment in San Diego.
At the Smart Growth and Land Use Committee hearing, San Diego Housing Federation’s executive director, Bruce Reznik, along with several other speakers shared their concerns with the MOU. Community members cited significant concerns about the lack of community input into the compromise struck by the Commission and “Jobs Coalition”.
The City Independent Budget Analyst, Andrea Tevlin opposed a sunset provision in the deal and also stated that the MOU does not go far enough to address affordable housing.
Reznik spoke in detail about how the MOU has the potential for decreasing revenues from the Workforce Housing Offset over time and will ultimately contribute to a worsening affordable housing situation in San Diego.
“It is a short term mandate with long-term serious repercussions that can set affordable housing back in the region,” Reznik said. “The exemptions in this proposal, as Ms. Tevlin pointed out, are permanent, while the increase is temporary.”
The San Diego Housing Federation continues to monitor the issue very closely and will keep the SDHF community informed of developments. If you have any questions contact Laura Nunn.
POSTED: JULY 16, 2014
After several months of negotiations, this Thursday, July 17 at 10:00 a.m., at a special meeting of the Smart Growth and Land Use Committee of the City of San Diego, the San Diego Housing Commission (SDHC) and Jobs Coalition will present a Proposed Workforce Housing Plan that details their negotiated compromise on updates to San Diego’s Workforce Housing Offset.READ MORE…
The San Diego Housing Federation cannot support the proposal in its current form.
Based on a memorandum of understanding between SDHC and a group calling themselves the Jobs Coalition, the proposal to be submitted before the Smart Growth and Land Use Committee contains provisions that undermine both the intent of the Workforce Housing Offset program to ensure commercial developers pay their fair share in the creation of housing that is affordable to their workforce and the City’s ability to address its affordable housing crisis.
Permanent exemptions paired with a nominal increase that does not represent a full restoration of the Offset and would sunset in three years, among other provisions, are of serious concern to the San Diego Housing Federation.
San Diego Housing Federation encourages you to attend the committee hearing to demonstrate your support for affordable homes and the real and effective solutions that improve our ability to address the lack of workforce housing in San Diego.
Thursday, July 17, 2014, at 10:00 A.M.
City Administration Building
Committee Room – 12th Floor
202 “C” Street, San Diego, Ca 92101
Contact Laura Nunn with questions regarding the hearing
POSTED: JANUARY 15, 2014
One of the top victories celebrated by the affordable housing community in 2013, restoration of the Workforce Housing Offset, is under fire as we start off the new year.
On Wednesday, December 11, 2013, the Chamber of Commerce along with other opponents calling themselves the “Jobs Coalition” announced their intention to file a petition and begin collecting signatures to reverse the City Council’s decision to restore investment in homes for San Diego’s working families.READ MORE…
Since just after Christmas day, signature gatherers have been stationed outside of shopping malls and grocery stores throughout San Diego working to collect the 34,000 signatures required.
The San Diego Housing Federation believes that restoring the Workforce Housing Offset is vital to San Diego’s economy and the well-being of our workforce.
Our affordable housing crisis is critical and intensifying with 1 in 8 San Diego workers living below the poverty line and a shrinking supply of affordable places to live. The Offset not only helps construct homes that are within reach of San Diego working families, but also generates millions of dollars in outside investments, adds jobs to our economy and supports a sustainable environment.
The Workforce Housing Offset is a fee that commercial developers pay that:
- Helps to create homes for nearly 125,000 families on the brink of homelessness
- Generates millions of dollars in outside investment and the creation of jobs for our economy
- Ensures that those that create low-wage jobs contribute towards solutions to address our affordable housing crisis
YOU CAN ALSO HELP PROTECT THE WORKFORCE HOUSING OFFSET by simply taking the time to speak to your friends, family and neighbors about why NOT to sign the
petition. Use the following resources and links to help you talk about the issue:
- Setting the Record Straight on Workforce Housing Offset
- San Diego Housing Federation’s two recent statements reaffirming our position that the Workforce Housing Offset is integral to ensuring San Diego’s businesses remain viable and that the City can maintain its long-term economic prosperity.
- Keyser Marston Jobs-Housing Nexus Study
You can also follow developments and join the conversation @SDHFtweets #YESonWHO
Posted: November 5, 2013
A Long Time Coming
San Diego’s low-income residents and communities experienced a significant and long-awaited victory on Monday, November 4, with the passing of proposed changes to the Workforce Housing Offset.After four hours of public comment, the City Council voted 5-4 to increase the linkage fee to 1.5% of construction costs, phased in over a 2 ½ year period.
Housing advocates have worked to restore the “linkage fee,” now the Workforce Housing Offset, since 1996 when it was cut in half. After years of efforts and unsuccessful attempts, the City Council’s historic decision represents a huge step forward for affordable housing residents, housing advocates, and the City of San Diego.
It Took a Village
The San Diego Housing Federation is especially grateful to the residents and community organizations that came together in this effort. Over 100 residents and community representatives from Environmental Health Coalition, ACCE, City Heights Community Development Corporation, San Diego Organizing Project, Interfaith Committee for Worker Justice, Community HousingWorks, MAAC Project, Center on Policy Initiatives, and labor groups attended the hearing and showed their support for affordable housing.
Dozens of speakers took to the podium to share their story and the many reasons why it was high time for San Diego to restore its investment in housing that is affordable to those who are the backbone of our economy.
San Diego Housing Federation members and partners alike also supported the effort well in advance of the hearing by writing letters, completing online endorsements and advocating in their respective networks for the proposed changes.
San Diego Housing Federation is also grateful to council members Todd Gloria, Marti Emerald, David Alvarez, Myrtle Cole and Sherri Lightner for their leadership and action in a time of crisis by voting to support affordable housing for San Diego’s workforce families.
All the Buzz
As a result of our community rally and the council hearing, San Diego media shone a strong spotlight on affordable housing on the day of the vote and the days leading up to it. Check out the coverage below.
In addition to media attention, social networks were buzzing with posts and conversations on the need and benefits of affordable housing and the Workforce Housing Offset. Thanks to all of our friends and followers who kept the conversation going with #YESonWHO.
This is an historic achievement, a win for residents and all who are working on behalf of low-income San Diegans.
Workforce Housing Offset in the News
- “San Diego Linkage-fee Redux” San Diego Citybeat (July 3, 2013)
- “The 9 Lives of the Linkage Fee” Voice of San Diego (September 27, 2013)”
- “Fletcher: Raise the Linkage Fee” Voice of San Diego (October 11, 2013)
- “Politically Speaking: Linkage Fees” NBC 7 video clip featuring Susan Riggs, San Diego Housing Federation Part 1 | Part 2 (October 13, 2013)
- “How the Affordable Housing Fee Works” Voice of San Diego (October 18, 2013)
- “Linkage Fee Debate: San Diego Needs Affordable Housing Options,” Interim Mayor Todd Gloria Editorial in Support, UT~ San Diego (November 1, 2013)
- “San Diego Council Considers Raising Fees On Developers” – KPBS Midday Edition featuring Susan Riggs, San Diego Housing Federation and Jerry Sanders, San Diego Chamber of Commerce (November 4, 2013)
- “Should Housing Fess Go Up” UT~TV, Roger Hedgecock Show with Murtaza Baxamusa, Ph.D, San Diego County Building Trades Family Housing Corporation and Felipe Monroig, President and CEO of the San Diego County Tax Payers Association (November 4, 2013)
- “Council Approves Developer Fee Hike” NBC San Diego 7/39 video news clip (November 4, 2013)
- “Victory for Supporters of Affordable Housing as Council Passes Fee Increase for Developers” San Diego 6 (November 4, 2013)
- “Council Votes to Increase ‘Linkage Fees’ for Developers” ABC 10 News (November 4, 2013)
- “Cabildo aprueba de manera tentativa una controversial propuesta” Univision San Diego video news clip at 1:30 minute mark (November 5, 2013)
- “City Council Passes Housing Impact Fee” San Diego Daily Transcript (November 4, 2013)
- “Council Raises Fess to Boost Low-Cost Housing” UT~San Diego (November 5, 2013)
- “San Diego City Council Votes To Increase Linkage Fees For Developers” KPBS (November 5, 2013)
- “City Council Gives Tentative Approval to Boost in Commercial Construction Fees” San Diego Business Journal (November 6, 2013)
- “San Diego Council Approves Increased Fees on Developers” SD Metro (November 5, 2013)
- “Council Gives Tentative OK to Hike in Developer Fees” Fox 5 San Diego
Since it was enacted in 1990, the Workforce Housing Offset has been the main source of the City’s Housing Trust Fund, yet it has never been updated and has only decreased.
In the late summer of 2013 San Diego Housing Federation called on its members, community partners and residents concerned with the availability of affordable housing for the City of San Diego’s workforce families, to support the changes that had been proposed by the San Diego Housing Commission. Based on the findings of the Jobs-Housing Nexus Study, the San Diego Housing Commission’s recommendations included:
- Resetting the Workforce Housing Offset to a level that represents 1.5 percent of total current development costs for commercial development
- Requiring the Workforce Housing Offset be adjusted annually
In addition, the Commission also recommended a modification to the term used. The Workforce Housing Offset more accurately reflects the nature and purpose of that which was previously known as linkage fee.
ABOUT THE WORKFORCE HOUSING OFFSET
The need for a local source to promote the creation and preservation of affordable housing for our working families is critical and intensifying. Nearly 125,000 San Diegans live at or below the federal poverty level despite being employed. And while over years development of housing stock for middle to high-income earners has kept a steady pace, only 11% of residential development has generated units affordable to those earning low wages.
The Workforce Housing Offset restores investment in housing that is affordable to people who are important contributors to our region’s economic prosperity. While everyone’s cost of living and doing business steadily rises, San Diego continues to charge less than mid-1990s prices for a 2013 cost. The Workforce Housing Offset was cut in half in 1996 and has never been adjusted for current costs.
The Workforce Housing Offset generates millions of dollars of outside investments in San Diego and helps add jobs to our local economy. Every dollar spent from the Housing Trust Fund San Diego sees $30 come back in the form of outside and private investment. Each new affordable unit created generates 2.1 jobs San Diego’s economy.
The Workforce Housing Offset is a one-time payment made by developers who want to build commercial projects that increase the demand for workforce housing like hotels, retail stores and businesses, industrial, or office space. The City of San Diego established it in 1990 to address the severe shortage of affordable housing. It acknowledges that commercial development increases the demand for housing that is affordable to minimum wage and low-wage workers employed in these new buildings and developments. In other words, the Offset ensures that commercial developers pay their fair share and don’t leave cities and residents holding the bill for the impacts they have on the City’s housing needs.
The City of San Diego ordinance that established the Workforce Housing Offset was established in 1990 to address the affordable housing demand created by non‐residential development.
- In 1996, the fees were reduced by 50%
- Subsequently the City and the San Diego Housing Commission embarked on several efforts to update the nexus analysis and consider changes in the housing impact fees
- In 2002, the City Council declared a “State of Emergency Due to Severe Shortage of Affordable Housing in San Diego.”
- Despite several years of efforts and subsequent updated studies and analysis, the findings were never presented and/or actioned.
- In September 2009, the City Council’s Land Use and Housing Committee recommended that the impact fee program be reviewed and evaluated and in October 2009, the City Council approved the Committee’s recommendation. As a result, a new nexus analysis was commissioned.
- The study and the Commission’s recommendations for an increase to the Workforce Housing Offset were presented to the City Council in July 2011. The Council did not adopt SDHC’s proposal
- The present study was requested by SDHC in March 2013 and comprises a comprehensive update of the 2010 study.
- On Friday, October 11, The San Diego Housing Commission Board of Commissioners heard and considered staff’s proposed changes to Workforce Housing Offset and determined to forward the Jobs and Housing Nexus Study to the San Diego City Council with no further recommendation from the Board of Commissioners
- On November 4, 2013 at a City Council Hearing, the Workforce Housing Offset passed with a 5-4 vote with Todd Gloria, Marti Emerald, David Alvarez, Myrtle Cole and Sherri Lightner voting in favor of increasing the offset to 1.5 percent of current development costs, phased in over 2.5 years.