The Santee City Council held a special Jan. 7 meeting to decide whether to utilize an inclusionary housing model in the sixth housing cycle plan.
However, after listening to two hours of expert and stakeholder opinions they ended the meeting in agreement that an inclusionary housing approach, which requires developers to sell or rent a percentage of new units to lower-income residents at a lower cost would be the wrong approach.
Instead, council members ended the meeting without a granular plan, but apparently resolved to seek information on ways to entice developers to reduce the cost of housing through the use of fee reductions and waivers.
Building Industry Association of San Diego County Senior Public Policy Advisor Michael McSweeney said California has gone from a population of 20 million people to 40 million people while building permits approvals have dropped to 55% of what they were before 1970.
“So you doubled the population while building two thirds of the housing you used to build” and added additional regulations along the way— “the problem is we don’t build enough housing,” McSweeney said.
However, he added, any plan to coerce builders into absorbing the cost of affordable housing units is the wrong way to proceed.
“At the end of the day, the developer does not pay, they just pass on the cost. The people who buy homes will pay more; the people who rent will pay higher rents and the costs are spread over the entire development. The new residents pay,” McSweeney said.
Rather than asking developers to absorb the build cost of units to then get rented or sold for less than neighboring units, McSweeney said the city could negotiate with developers and allow for some items that would reduce cost along the way such additional height allowances, loosened setbacks, narrower driveways or increased density.
Pacific Southwest Association of Realtors President Ditas Yamane concurred with McSweeney and also suggested Santee’s leaders look at modifying policies to reduce the cost of building housing as a way to make units more affordable.
“We recommend the council look at fee waivers, density bonuses, fast track processing, tax abatement, secondary financing, down payment assistance programs and transfer of development rights,” Yamane said.
Although San Diego Housing Federation Chief of Policy and Education Laura Nunn said the organization “supports inclusionary housing as one of many tools municipal governments can use to increase affordable housing in their community,” she also said it is complicated to pull from state funding to match local funds.
City Ventures Managing Director Michelle Thrakulchavee said the development company built the Mission Trails townhome community and, from experience, elaborated on the costs involved with new homes such as insurance fees, permit fees, school fees. When added up, “the developer would be losing money,” Thrakulchavee said.
After hearing stakeholder opinions, Mayor Minto said he is not in favor of inclusionary housing because “we’re not going to attract buyers if they’re going to be buying other people’s homes” but would really like to see developers at the table to ask how they’re making it happen.
Santee City Council member Rob McNelis agreed but clarified it would need to be a conversation about how to make things in “today’s world” realistically work out to everyone’s benefit.
“Making housing less affordable for the masses to subsidize the few isn’t going to work. There’s no win here for us, our partners in the community or future community members trying to own a home or rent an apartment.
Anything we can do to incentivize developers on their own is good but to mandate anything is a bad decision and I don’t want to be a part of that,” McNelis said.
McSweeny suggested the council “come up with a stakeholder group” and try to meet those low and very low numbers” by engaging with developers.
“Well,” said Minto, “someone in this industry has been able to figure out affordable housing funding.”