San Diego is giving developers new incentives to construct housing for middle-income residents like nurses and firefighters, just as a new report shows other efforts to address the citys housing crisis might be starting to pay off.

The City Council last week approved the long-awaited middle-income density bonus, which aims to help developers focus on San Diego residents who dont earn enough to afford luxury housing but who make too much to qualify for subsidized housing.

These are important people to the fabric of our city were talking about teachers, police officers, firefighters and nurses, Councilwoman Vivian Moreno said. We need to make sure we have housing opportunities in the communities where they live and work.

Meanwhile, the citys third annual housing inventory report shows an increase in the number of projects where construction began in 2019 and a spike in the number of subsidized low-income units built last year.

Despite that good news, the report shows San Diego is still far behind the number of units that need to be constructed annually to meet local demand for housing.

There also was a decrease in 2019 in the number of projects that got final approval for future construction and a drop in the number of subsidized housing units that were either preserved or rehabilitated.

The middle-income density bonus defines middle income as households making up to 120 percent of the areas median income, which rose to $92,700 this spring.

It also stacks the incentive on top of a separate program approved in 2016 to encourage developers to build housing for low-income residents.

Without the stacking, some developers might have opted for the middle-income incentive instead of the low-income one. Under the adopted policy, developers who want to use the middle-income incentive must use both incentives.

Once a project maximizes the low-income incentive, which allows for a 50 percent spike in the number of units a developer can build, the project can then use the new moderate-income incentive for an additional 25 percent increase in units.

This new program will spur more housing for working San Diegans who want to live near transit and job centers Mayor Kevin Faulconer said. As we continue to implement reforms, were making it easier to build and incentivizing the production of housing for those with low or moderate income.

Middle-income housing is arguably the citys most glaring need. The citys Regional Housing Needs Assessment called for 15,462 middle-income units to be built from 2010 to 2020, but only 34 had been constructed through 2019.

Thats bad news from 2019, but the citys third annual housing inventory also included some significant progress last year.

The number of housing projects that began construction last year was 5,221, significantly more than 3,895 in 2018 and slightly more than 5,020 in 2017.

The neighborhoods most responsible for the strong numbers are downtown, with 910 new units; Mission Valley, with 493, and Kearny Mesa, with 442.

The numbers were even more impressive for subsidized low-income projects, where 940 units were constructed in 2019. Thats more than double the subsidized units built in 2018 and about 50 percent more than 2017.

Faulconer said some of the credit should go to legislation he has promoted in recent years.

Now were starting to see promising progress with affordable housing production doubling in the city as builders take advantage of the new opportunities we created with our housing reforms, he said.

Those efforts have included eliminating parking requirements for new housing near transit, fee waivers, allowing ground-floor housing in commercial areas, looser rules for mixed-use projects and incentives for granny flats.

The new 15-page inventory report also has some bad news, particularly regarding the citys efforts to meet state housing goals and local demand.

City officials say the number of units built each year will need to triple for San Diego to meet a state-mandated goal of 108,000 new housing units by 2029.

Meeting the state-mandated target will require an average production of 13,500 units per year, which is much more than the 4,100 average units built in the city each year since 2010.

Additional bad news is that the number of housing projects approved during 2019 for future construction dropped to 3,835 last year. The number of units approved in 2018 was 5,914 in 2018 and 5,865 in 2017.

There also was a drop in 2019 in the number of subsidized low-income units that the city either rehabilitated or lengthened the number of years the units would remain subsidized.

The number of subsidized units preserved or rehabilitated last year was 707, down from nearly 1,200 in 2018 and just over 1,000 in 2017.

Scarcity of open land is a key hurdle San Diego faces in solving the citys housing crisis.

The citys second annual housing inventory report, released last year, said the number of housing units built in San Diego in the 1970s decade was more than 100,000, followed by about 90,000 in the 1980s.

But as the city ran out of large, empty tracts of land, that dipped sharply to about 50,000 in each of the next two decades, and has slowed even further since 2010.

Because of that long pattern of slowing construction, 80 percent of the citys housing stock was built more than 30 years ago, that report said.

Link:

San Diego OKs middle-income incentive as new analysis shows some progress on local housing crisis - The San Diego Union-Tribune