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Mayor Faulconer Vetoes Controversial Ordinance That Leading Economists Say Will Slow Affordable Housing Production

City Council Voted 5-4 Tuesday to Update the City’s Inclusionary Ordinance, Adding Expensive Government Regulation Amid a Housing Crisis

San Diego – With the goal of increasing the affordable housing production across the city, Mayor Kevin L. Faulconer issued a veto Thursday to stop the implementation of an ordinance that leading local economists say would increase housing costs and result in less affordable housing being built going forward.

“Working closely with City Council to create more affordable housing has been and will continue to be a top priority,” Mayor Faulconer said. “We have to remain focused on cutting red tape, increasing supply and removing the barriers to new housing. Unfortunately, this new ordinance does the exact opposite and I refuse to support any proposal that would make it more difficult to build the housing we so desperately need for San Diego’s working families.”

Many experts agree that the update to the inclusionary housing ordinance as approved by the City Council on Tuesday would have the unintended consequence of increasing prices instead of lowering them for renters and buyers. Adding an expensive government mandate to a housing market that is currently impacted with rising development costs would make it more difficult for developers to meet market demands and increase supply.

The statewide housing crisis has led to rising costs throughout the San Diego region, where more than 70 percent of residents can’t afford the average price for a home.

Under Mayor Faulconer’s leadership, the City of San Diego has taken aggressive action to address California’s housing affordability crisis on a local level. The following items from the Mayor’s “HousingSD” reforms aimed at increasing affordability have been approved so far:

  • Parking Reform: Eliminated outdated parking requirements for new housing developments in transit priority areas, reducing development costs while encouraging the usage of alternative forms of transportation.
  • No Fees for Low-Income and Homeless Housing: Permits Permanent Supportive Housing and Transitional Housing Facilities by-right in zones that allow multi-family housing, subject to requirements. Waives impact fees.
  • Housing in Commercial Zones: Flexibility to allow interim ground floor residential or office where commercial retail is typically required through a Neighborhood Use Permit.
  • Mixed-Use Zoning: Created six new land-use zones that allow projects to include a mix of residential and employment uses. The goal is to provide flexibility for builders to meet market demands and locate more housing near jobs.
  • Companion Units: Made it easier to and more affordable to permit “granny flats” and other companion units, resulting in a 375 percent spike in applications.
  • Housing for the “Missing Middle”: Establishes incentives for the first time to build housing affordable to San Diego’s middle class, which is in short supply. The reform follows up on the successful Affordable Housing Density Bonus program approved in 2016, and now the two programs can be coupled together. Once a project maximizes the existing affordable housing density bonus of 50 percent, it can then use the new moderate-income program to obtain an additional 25 percent density bonus as long as 10 percent of pre-density units are deed-restricted at 120 percent area median income or lower.
  • More Housing Near Transit and Jobs: Updated the Morena/Balboa Specific Plans to increase housing capacity by over 9,000 units near the planned Blue Line trolley extension. This month, the City Council also unanimously adopted the Mission Valley Community Plan update further increasing capacity in the region for approximately 28,000 homes to be built over the next few decades. This aligns with citywide goals to focus on new growth near transit.