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Housing fee petitions go to City Council

Opponents of a recent rise in San Diego's affordable housing fee on Monday told the City Council they now have enough petitions to support a ballot referendum to overturn the increase, although they say they would rather work with council members to reach a compromise before that happens.

"Hundreds of hours were spent pulling together these signatures from throughout San Diego," lobbyist Craig Benedetto, whose clients include the Building Owners and Management Association and NAIOP commercial real estate group, told the City Council. "This was not limited to any neighborhood."

The most recent data available at City Clerk's office show that as of Dec. 31, the opponents — mostly from the real estate and construction industry — had already spent $75,000 directly related to the petition drive.

The City Council now has 10 business days to alter or quash the fee hike or to allow the issue to go to the voters June 3. If the measure advances, it would cost the city between $157,000 and $200,000 to add it to the ballot, said City Clerk Elizabeth Maland.

"Over the next two weeks, we stand ready to talk over this issue," Benedetto said. "It's not in anybody's intent to have an argument over housing for the homeless. Let's work collaboratively rather than through this process."

Mark Cafferty, CEO of the San Diego Regional Economic Development Corp., said he would be willing to help the council work with critics of the measure to come up with an alternative solution.

Nobody on the City Council responded, perhaps because they had already aired their comments in the debate over the fee hike in November, which resulted in a 5-4 split along party lines.

The fee's supporters, including Interim Mayor Todd Gloria, say they are willing to scrap the fee if the opponents come up with an alternative that would produce a similar amount of funding. The opponents, backed by Mayor-elect Kevin Faulconer, have made some suggestions, but not enough to match the money raising the fee would produce.

At issue is a 1990 fee — formally known as the "workforce housing offset" — requiring commercial developers to pay a percentage of the value of their projects to support affordable housing. The fee, based on a complex formula of how many low-income workers are expected to be employed in a development, was originally designed to represent 1.5 percent of the costs of the project.

But the percentage was chopped in half in 1996 and the estimated construction costs were never adjusted for inflation, so developers have been paying 0.75 percent of their 1990 costs instead of 1.5 percent of current costs. That would average around 60 to 75 cents per square foot on most projects except for offices, which would average $1.06.

When Democrats on the City Council voted to boost the fees last year, however, Republicans balked, citing complaints from developers that it would drive the costs of construction too high and force companies to leave the area. The critics complained that for some companies, the fee could swell to more than five times its current amount.

To fight the fee hike, the opponents last year launched the petition drive through an umbrella group called the Stop the Jobs Killing Tax Coalition. In its first two weeks of operation, ending Dec. 31, it had raised $215,000, including $150,000 from the local chapter of NAIOP; $55,000 from the San Diego Regional Chamber of Commerce; $10,000 from the National Association of Realtors; and $5,000 from the local chapter of the Associated General Contractors.

A quarter of that money — $50,000 —was used to pay Arno Petition Consultants in Carlsbad to assemble an army of petition distributors. The coalition spent $20,000 printing the petitions and nearly $5,000 on T-shirts and other gear for the signature gatherers.

The group gathered roughly 53,000 verified signatures, well above the 33,866 needed for a referendum.

It is the second time in several months that a business-backed group has gathered enough signatures to support a referendum to overturn a City Council action. A coalition backed by San Diego's shipyards gained enough support for two June 3 ballot measures to halt a proposed rezoning plan for Barrio Logan.

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