Even as officials say affordable housing is a top priority, San Diego County shed more subsidized rental housing over the past two decades than all but two other California counties.
That's according to a report released last week by the California Housing Partnership Corporation, which found the county lost 3,588 federal- and state-subsidized housing units between 1995 and 2016 — an average of more than three affordable rentals per week. That left 32,807 affordable housing units countywide, according to the San Francisco-based housing nonprofit.
Only Los Angeles and Sacramento counties lost more low-income homes, according to the group, created by the California Legislature in 1988.
Then there’s the units that could disappear in the future, as a wave of government-aided housing agreements expire, tempting property owners to opt out of low-income housing and wade into California’s lucrative, unsubsidized rental market
Report authors identified nearly 2,400 San Diego County rentals likely to experience a market-rate “conversion” by 2022, a 15 percent increase since last year’s survey. They said only Los Angeles and Orange counties stand to lose more low-income dwellings over that stretch.
Last year, the phenomenon of conversion became a reality for Marie Nito, one of around 200 low-income renters whose home could be demolished to make way for Pacific Village — a 564-unit high-end development proposed to replace the once-subsidized Peñasquitos Village, where the 54-year-old laboratory worker and his family have lived since 2011.
The village’s owners opted out of a longstanding federal rental assistance agreement, clearing the path for Lennar Homes’ as-yet unapproved re-imagining of the property.
If the plan goes through, Nito said he doesn’t know where he’ll go.
“We’ll stay until the last day,” Nito said. “We don’t have a choice. We can’t afford to buy a house.
“It’s not fair. … We’ve lived here six years already. We love this place. It’s quiet.”
The tally of homes like Nito’s, combined with the number of subsidized units that could lose affordability protections over the next five years, amounts to more than half the 10,000 dwellings the city-backed San Diego Housing Commission has opened since its inception in 1979.
Last week’s survey considered a home “at risk” if it operates under soon-to-expire affordability protections attached to government rental and home loan subsidies, or if it is a non-subsidized property that often provides affordable housing that might otherwise be unaffordable. Federal regulators define a home as affordable if it’s within reach for those making less than 80 percent of San Diego’s area median household income of $68,000.
Statewide, the report shows California lost 28,152 affordable homes, more than half of which stopped taking federal Section 8 housing vouchers after the property owner decided to opt out of a rental assistance contract with the U.S. Department of Housing and Urban Development.
It found another 31,988 dwellings likely to experience a similar conversion over the next five years, including at least 5,200 properties that do not receive direct rental assistance but often provide housing to low-income households.
San Diego County made up a disproportionate share of those “naturally affordable” homes threatened by market rate conversion. It also made up an outsized percentage of low-income units already removed from the California’s housing stock, accounting for roughly 12 percent, while making up only about 8 percent of the state’s population.
Planners say the city of San Diego — which accounted for the bulk of subsidized units already lost around the county, and most of those expected to become unaffordable in the future — needs some 64,000 more low-income housing units before 2020.
January’s State of the City address saw San Diego Mayor Faulconer promise a passel of new affordability-friendly development incentives — including fast-tracked low-income housing approvals, an expanded density bonus program and additional community plan updates — meant to “make housing affordable for the middle class.”
Spokeswoman Katie Keach wrote in a statement on Wednesday that Faulconer’s office is “currently working on a comprehensive housing initiative to increase housing affordability in the city.”
Keach said that proposal is expected to be released in the coming weeks. She did not elaborate on what measures, if any, have already been adopted to prevent the loss of San Diego’s affordable housing units.
San Diego’s ongoing evaporation of affordable units is driven, at least in part, by ever-rising rents, which offer landlords plenty of reason to convert apartments to market rate units.
Borre Winckel, president and CEO of the San Diego County Building Industry Association, said he “couldn’t be judgmental” about a property owner’s decision to opt out of an affordability contract — especially given rules he says are choking off the supply of much-needed new homes.
“I don’t think the problem is what happens 30 or 50 years from now, but what’s happening in Sacramento today,” Winckel said, referring to the often decades-long affordability covenants usually attached to federal housing subsidies. “We have too few units being built for lease or sale. As long as Sacramento keeps regulating these (building) costs upward, it’s a problem that’s going to persist.”
Murtaza Baxamusa, director of planning and development for the San Diego Building & Construction Trades Council's Family Housing Corp., said cities and counties may be able to talk property owners back into an affordable housing agreement, but not often without help from the state or the feds.
“Absent redevelopment, cities have a very limited role, since these conversions are a function of the underlying financing and regulatory requirements,” he wrote in an email on Tuesday. “Nonetheless, local revenue sources can be used to proactively acquire stock with expiring covenants, or used as a gap financing mechanism that can extend the life of the covenant.”
San Diego's redevelopment agency, like 400 others around the state, shut down in February 2012, at the end of a months-long legal fight over agency-killing legislation signed in 2011 by Gov. Jerry Brown.
Stephen Russell, executive director of the nonprofit San Diego Housing Federation, said Assembly Bill 1521, legislation co-sponsored by the state housing partnership, could bring relief by adding teeth to existing statutes requiring property owners to notify tenants and local governments before pulling affordable housing off the market.
The bill, introduced last month by Assemblyman Richard Bloom, D-Santa Monica, and David Chiu, D-San Francisco, would keep the notification requirement and add a provision that gives “qualified preservation purchasers” the first shot at buying properties, with an eye toward keeping them affordable.
It’s a change Russell and the federation’s board — made up of developers, lenders, architects and others involved in the housing trade — say is sorely needed.
“There’s a huge profit incentive for (property owners) to go out into the open market,” he said. “There has to be an incentive to bring affordable housing developers in.
“I think the (bill) is there to make sure they’re offered the first right of refusal. I think that’s going to be key.”
The Union-Tribune last month reported a similar law — meant to force cities and counties to tell other local agencies and interested housing developers when it plans to sell a property — has not resulted in a single for-profit developer being notified about a sale of land by San Diego city officials.
That did not sit well with affordable housing advocates who say the city, long plagued by housing affordability woes, needs to do more to encourage low-income development.
Many of the same critics in January joined City Council members to slam the city over $68.6 million that would previously have been reserved for improving blighted city blocks, but has instead been made available for police, pensions, potholes and other general city purposes.
In November, critics also spoke out about 10,000 affordable units the city OK’d to be demolished, converted or otherwise removed from the housing stock since 2010, despite ordinances that generally require those units to be replaced.
Matt Schwartz, the state housing partnerships president, sounded confident legislation backed by his group can avoid similar pitfalls.
“One thing I can tell you is that a qualified preservation purchaser will have to agree either to extend existing rent and income protections for a minimum of 30 years or to place a new regulatory agreement with those same protections,” Schwartz wrote in an email Tuesday. “Additionally, I would predict that (the California Department of Housing and Community Development) will require that (purchasers) have a minimum number of similar affordable rental properties under ownership and management with satisfactory ratings from any federal and/or state and/or local agencies inspecting the physical and financial condition of their properties.”
Spokeswoman Keach said San Diego hasn’t taken a position on AB 1521 or any other housing affordability bill introduced this year in Sacramento, though she said the city does plan to take “an active role” in evaluating such legislation.
Two high-profile measures hope to outbuild ongoing losses in affordable inventory. The first, also introduced by Chiu, would raise revenue for new construction efforts by abolishing state income tax deductions for vacation homes.
The second, carried by Sen. Toni Atkins, D-San Diego, would tack a filing fee on property transfers, excluding home sales. If passed, proponents say the pair could generate up to $500 million annually. That’s enough to replace a quarter of the homes at risk of falling out of reach for low-income Californians, given the state’s current average $332,000 cost to build an affordable unit.