Tom Gade, who died in 2005, was a member of the San Diego City Council for four years in the late 1970s. He was an attorney, had a bachelor’s degree in civil engineering and was the first in his family to graduate from high school and college. Tom did not come from wealth.
When I met Tom, he was a member of the board of directors of Associated Builders and Contractors. Because of his experience in San Diego government, he had credibility with me and others who knew him. When he said, in almost a passing way, that the only real effect of inclusionary housing is to raise the cost of housing for everyone else he made a point that stuck.
Southern California is a costly place to live. Apartments and single-family homes in San Diego are expensive. Civic leaders say these costs, which can be prohibitive for lower-income people, should not be the reason those who don’t make a lot of money can’t or don’t choose to live in the city. Reasonable people might go along with that, but any agreement about what to do about it breaks down when funding methods are discussed.
In 1990 the San Diego City Council established the Housing Trust Fund, funded by a Workforce Housing Offset, generally referred to as a linkage fee. A summary distributed by the San Diego Housing Commission says the fund was created to “finance affordable housing for low-income workers whose jobs were created by commercial, industrial or retail development.” The commission suggests in that same summary that there is not enough money coming into the fund to build sufficient affordable housing to meet what they’ve identified as the need.
The Workforce Housing Offset is a development tax linked to various kinds of construction. According to the commission, the current offset for office buildings is $1.06 per square foot. For hotels, manufacturing and retail developments the charge is 64 cents, and for warehouse projects the offset is 27 cents.
The commission says more money is needed and is circulating a proposal to raise those add-on square foot costs by, in some cases, a multiple of five.
Some argue that an increase of that size isn’t overwhelming and won’t have a significant impact on development in the city. It’s hard to understand that claim. Every fee is included in the cost of construction.
The real question — if one supports the idea that housing needs to be subsidized — is who does the subsidizing. One suggestion, considered by the commission as it was reviewing data, was to ask the voters in San Diego to raise the money through a sales tax. That would give voters a chance to both weigh in on inclusionary housing and allow almost everyone to help to pay for it. Apparently the commission has discarded that idea.
The old sitcom “The Jeffersons” had another take. One can’t always have the luxury of living as one would like. In the case of the Jefferson family, it was a matter of creating enough income to afford a better lifestyle. That, after all, is the American Dream.
That probably sounds callous. I don’t think so. My first real lodging after I left the military was a three-room rental. Later I was able to buy a house built in the ’20s. I was in my 40s before I could afford what some would regard as a nice home.
In that regard, I had two choices. I could move to a better job or stay in lower-cost accommodations until my income improved. I did the latter.
The charge by supporters is that people who create these construction projects must contribute cash so the people who work in new work sites in San Diego can live in San Diego. It seems to me that if a business wants people to work downtown it will need to pay people enough to do so. While liberals might believe everyone has a right to live in a luxurious high-rise, that is impractical.
Jobs are tough to come by these days because of a lagging economy. Making work spaces more expensive to build isn’t likely to spur construction. Builders will go where they can afford to build. If it gets too expensive in San Diego because of linkage fees, contractors will build somewhere else and San Diego will lose out on the tax base construction growth brings. That is a lose-lose agenda.
Hawkins is retired after 35 years as a construction industry association manager. He was broadcast reporter and news anchor in Denver. As a Navy officer, he saw action in Vietnam in the River Assault Squadrons and is the recipient of a Silver Star and Purple Heart.