DEL MAR — Theoretical discussions about where to build over 100 affordable housing units in the land-scarce city of Del Mar took firmer shape this month, as city officials considered specific scenarios for large-scale housing at the Fairgrounds and two smaller city-owned lots.
The city is scrambling to identify feasible options for affordable housing construction to comply with state requirements outlined in its 6th Cycle Housing Element. By 2029, Del Mar is obligated to build 101 units for households earning between 30% and 80% of the area median income, along with a 12-unit requirement that went unmet during the previous housing cycle.
City officials aim to build at least 61 of these units on public land, specifically the state-owned Del Mar Fairgrounds and two city-owned empty lots at the Civic Center on 10th Street and another on 28th Street.
Consultant teams Stephen Dalton Architects (SDA) and Keyser Marston Associates (KMA) on June 13 outlined how these units might be built and funded to the Del Mar City Council. The main takeaway was that affordable housing projects are anything but cheap to construct, with individual units coming with a price tag up to $500,000 or more.
“This is the first time we’ve been able to roll the sleeves up and grapple with the nitty-gritty on what it’s gonna cost to do this. It’s sobering and scary, but it’s not impossible,” Mayor Dwight Worden said.
The current target for a housing project on the Fairgrounds lies within a 10-acre site used primarily for parking on the corner of Via de la Valle and Jimmy Durante Boulevard. SDA and KMA presented options for projects ranging from one to 1.5 acres, including an 80-unit family housing project and a 78-unit senior housing project limited to those ages 62 and older.
To achieve at least 61 units, consultants said the city could aim to develop all of them in a standalone project at the Fairgrounds or in a scattered project that includes units at one of the city-owned sites, which could contain between three and eight units spread between up to three stories.
“The major thing we’ve got to consider is how to put as much on the Fairgrounds as possible,” said Councilman Dave Druker.
Many jurisdictions compete for state and county funding in the form of tax credits at either 4% or 9% of a project’s eligible cost to significantly lower the price for local jurisdictions.
While a crucial funding source, tax credits from the county are highly competitive, with over half of applications rejected each cycle, Linnie Gavino of KMA explained. Various factors, such as the diversity of other funding sources or a project’s proximity to schools and other public amenities, make a project more likely to be selected.
“Oftentimes, a project will apply two or three times for a 9% tax credit, and if it just doesn’t seem feasible they’ll apply for 4% tax credits,” Gavino said. “Sometimes it comes down to a tiebreaker. If you have a project that has more funds from other sources, it’s gonna score higher than a project that doesn’t.”
Even if Del Mar were awarded tax credits for a project — allowing them to essentially sell them to outside investors in exchange for an equity financing contribution — the city would still need to contribute between 20% and 25% of the project cost, or between $7 million and $13 million, to bridge the leftover funding gap without land costs, KMA estimated.
To help, the city will likely require additional monies from the county and the state, with discussions occurring with Supervisor Terra Lawson-Remer and state senators.
“Whatever that final contribution is from the city, we don’t have that kind of money readily available, so we’re going to have to look at what are our options for coming up with that financing gap amount that is ultimately going to be needed to develop affordable housing,” said City Manager Ashley Jones.
Part of the reason affordable housing is so expensive is due to the resistance these projects often face from local communities, consultants said.
“Most affordable housing is almost over-beautified to receive community acceptance,” said Paul Marra of KMA. “Developers can’t throw out a vanilla stucco box, they gotta have foresighted architecture and something that’s highly acceptable in the community. All of that contributes to making these costs higher than a private market apartment complex.”
For this reason, Councilwoman Terry Gaasterland noted the importance of having the designs of the projects at 28th and 10th streets be harmonious with the surrounding neighborhoods.
The majority of council members agreed to prioritize 100% affordable housing projects rather than mixed-income housing, to knock out the requirements in the housing element.
“I think we need to go big or not go,” Druker said. “I am looking to us providing as much affordable housing as possible, and I believe that if we do it correctly, we will make up that funding from the county and the state.”
Looking ahead, city officials will seek out a consultant with expertise in affordable housing to develop a plan of action for obtaining funding and making these projects a reality, according to Jones.
There are also more in-depth conversations to be had with Fairgrounds officials about the project basics, intending to bring back a more detailed strategic plan in the fall, hopefully, followed by a formal agreement to develop housing at the Fairgrounds.
“A big, important part of this process is working with the Fairgrounds, having meetings with them, following up with them and being sensitive to their current uses. They also have planned uses for their property,” Jones said.
Jones, along with various council members, said the public would be very involved in the process.