Builders will pay less for inclusionary housing fees

OCEANSIDE — The introduction of an ordinance to reduce inclusionary housing in-lieu fees from $10,275 per unit to $1,779 per unit was approved in a 3-2 vote June 22, in which Mayor Jim Wood and Councilwoman Esther Sanchez voted no.
The reduced fee was calculated by determining 10 percent of the cost difference between the medium sale price of a home at $300,000 and the price of an affordable home at $282,215 in the past year. Builders will soon pay the reduced inclusionary housing in-lieu fee of $1,779 per unit or $1.15 per square foot of new house built. This amount will be reviewed yearly.
For some the method of calculating the fee did not make sense. “In-lieu fees usually have some relationship to the cost of providing housing,” Susan Riggs Tinsky, executive director of the San Diego Housing Federation, said. “This has no relationship in cost of housing.”
The amended fee will not be a significant funding source for providing affordable housing units. Other programs will be looked into to assure the city continues to provide affordable housing such as expanding the density bonus.
In the meantime supporters of the amendment are seeing the reduced fee as a catalyst for more construction and therefore more jobs.
“Affordability is not your problem, jobs creation is your problem,” Matthew Adams, vice president of the Building Industry Association of San Diego County, said. “We have a market rate that is struggling right now. Business as usual it’s not.”
Chris Hall, vice president of acquisitions of Hallmark Communities, said the reduced fee will help get pending projects back on track. “We’d like to get back to work,” Hall said.
Providing inclusionary housing is not mandated by state law, but is a part of city action goals and objectives. Failure to make efforts to provide affordable housing can affect several sources of funding that the city receives.
There is ongoing debate over whether charging builders affordable housing in-lieu fees is warranted. Some see the fee as passing the buck to the purchaser.
“I don’t want to buy a house and pay a fee for someone else’s house,” Councilman Jack Feller said. “I’d rather see no in-lieu fee.”
Others see the fee as the responsibility of the building industry and object to the fee reduction. “It’s not possible at all to build with this in-lieu program,” Councilwoman Esther Sanchez said. “You’re going to foot the bill and subsidize an industry.”