San Diego Linkage-Fee Redux

Controversial development policy faces a friendlier City Council
By Kelly Davis, as it appeared in San Diego CityBeat, July 3, 2013

With the election of City Councilmember Myrtle Cole in April, it wasn’t a question of if San Diego’s housing-impact, or “linkage,” fee would be increased, but when.

Created in 1990 amid an affordable-housing shortage, the fee’s assessed on new commercial development based on the type of jobs a project creates. For the fee to be legal, the city needs to prove a nexus: New, low-wage jobs up the demand for affordable housing. Fee revenue, which goes into the city’s housing trust fund, helps subsidize that housing.

But the trust fund is shrinking. In 1996, the City Council, pressured by developers, halved the fee. Since then, attempts to increase it have failed. Despite the City Council declaring an affordable-housing state of emergency in 2002, studies in 2004 and 2008 that recommended raising the linkage fee were shelved. Only after a city auditor finding in 2009—that the fee was “outdated, substantially lower than comparable cities, and… not adjusted as required by the municipal code”—did raising it slowly make its way to the council.

In July 2011, then-City Council President Tony Young was the deciding vote against raising the fee, but he demanded that the fee’s opponents—the building industry and business interests who united as the Jobs Coalition—come up with better ideas to fund affordable housing or else he’d re-docket the item and change his vote. Before that could happen, Young left office. Cole, his replacement, has said publicly that she supports a fee increase.

On May 22, San Diego Housing Commission CEO Rick Gentry told the City Council’s Land Use and Housing committee that a study was underway to analyze increasing the fee. Housing Commission spokesperson Maria Velasquez said it should be done this month and will be presented to the City Council in September.

On June 6, Mike Niggli, chair of the San Diego Regional Chamber of Commerce’s Board of Directors, wrote to Gentry and City Council President Todd Gloria, concerned that the Housing Commission initiated the study without telling anyone. The letter asks that the study not go straight to the council but instead to a resurrected task force composed of representatives from the business and affordable-housing sectors and convened two years ago to study ways to boost the affordable-housing supply. After that, Niggli wrote, the study should go to the City Council’s Land Use & Housing Committee, and then to the full council.

Velasquez says there was nothing secretive about the study and the task force will get a crack at it in August, prior to it going to the full City Council.

Housing Federation CEO Susan Tinsky, who sat on the task force, questions whether a drawn-out review is necessary.

“When the issue was originally considered by the City Council in July of 2011, the opponents were explicitly told that the fee increase would come back to council if they weren’t able to secure a viable alternative,” she says. “If the Jobs Coalition hasn’t been able to identify a viable alternative in the last two years, I’m unclear what another bite at the apple will do.”