San Diego ready to jump-start stalled efforts to preserve vulnerable lower-rent housing
The city plans soon to adopt a long-awaited preservation law and create a special fund to extend rent restrictions and buy properties.
San Diego’s stalled efforts to preserve the city’s roughly 70,000 lower-rent apartments may get a jump start this spring with a new law and millions for buying or subsidizing vulnerable units.
City Council members directed the Housing Commission this month to draw up a long-awaited preservation ordinance that would require owners of subsidized, rent-restricted properties to give city officials ample warning if they decide to sell.
Council members are also lobbying Mayor Todd Gloria to include somewhere between $5 million and $10 million in the new city budget for preservation efforts. It would be the first time the city has devoted money to preservation.
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The city has made little progress in the past two-plus years toward achieving the goals of a lower-rent housing preservation action plan the council approved in September 2020.
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City officials say preserving existing lower-rent housing should be just as high a priority as building new rent-restricted units, because both help alleviate the local housing crisis and prevent homelessness.
“Preserving existing affordable homes is a 100 percent prevention strategy for homelessness,” Councilmember Joe LaCava said during a March 2 meeting of the council’s Land Use and Housing Committee. “It’s long overdue for us to take this on.”
An analysis in 2020 found San Diego had just over 22,000 subsidized units with rent restrictions and roughly 48,000 units that aren’t subsidized but have low rents because they are old or in unappealing areas.
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City officials call those units “naturally occurring” affordable housing, or NOAH. That type of housing is defined as having rents deemed affordable to families or individuals making less than 60 percent of the area median income. To be considered affordable, housing costs generally must not exceed one third of a household’s income.
The preservation ordinance, which is expected to be modeled at least partly on a similar law in San Francisco, would focus on the rent-restricted units.
The goal is giving the city a chance to extend expiring rent restrictions into the future, before a property can be sold and redeveloped for market-rate housing or its existing buildings renovated to command higher rents.
City officials say a sale to a different owner typically makes it less likely that rent restrictions will get extended.
Under the law, the city may also create a pool of qualified developers and property management companies that would be given first right of refusal to buy such properties when they become available.
Some local for-profit developers and property management companies raised concerns that the city might restrict the program to nonprofits, but council members said they wouldn’t exclude businesses.
“We need all the help we can get,” Councilmember Stephen Whitburn said.
Housing Commission officials say the rent restrictions on 6,657 units are scheduled to expire 10 years from now in 2033. The bulk of those units, 4,591 of them, are in council districts 3, 4 and 9.
The new money for preservation, which would come from revenue generated by the city’s former redevelopment agency, could help compensate the owners of cheaper, market-rate units for agreeing to rent restrictions.
It could also help the city create a public-private fund for preservation efforts, such as the acquisition and rehabilitation of vulnerable or rent-restricted properties.
LaCava said land is so scarce in San Diego that it might make sense in some cases to buy relatively low-density, lower-rent apartment complexes and tear them down so the city can subsidize high-rises with rent-restricted units on the site.
The city money would make San Diego eligible for matching preservation funds from the state and would likely attract philanthropy from the private sector, officials said.
If the city starts with $5 million this year, Housing Commission officials say there could be a total of $47 million available within five years. That’s because the preservation fund would get any increases in the $29.5 million the city’s redevelopment agency generates annually.
That amount, which city officials expect to rise roughly 4 percent every year, goes up as the city gets closer to paying off old debts accumulated by the redevelopment agency.
Councilmember Vivian Moreno said projected budget deficits the city is facing this year make $5 million a more realistic initial contribution than $10 million. But she said the city must start now.
“It’s important we get the ball rolling,” said Moreno, suggesting the city could adopt a plan to raise its contributions gradually and incrementally over a period of years.