Good Neighbors

 

October 24, 2003

 


For sale: First affordable housing in north city

Something exciting is happening in San Diego's North City Future Urbanizing Area. Santaluz, a luxury housing development adjacent to Fairbanks Ranch, has a new neighbor. It's called Sycamore Walk.

But where Santaluz is a community of million-dollar homes, Sycamore Walk, only a stone's throw away, is worlds apart in price. And that's the big news. For-sale housing that the work force can afford is being developed.

Santaluz property starts at $800,000 and tops $2.5 million. Sycamore Walk homes, developed by The Olson Co., will start in the $120,000 range and be restricted to buyers with incomes of about $35,000 for a single person to about $51,000 for a family of four. What that means for teachers, health care workers, and retail employees is that they will be able to live near where they work, in the fast-growing northern part of the city.

And Sycamore Walk is not alone.

Bella Rosa by Shea Homes and Cristamar at Santa Monica by Western Pacific Housing Inc. are two more affordable for-sale developments in the works.

This first for-sale affordable housing in this exclusive part of the city has its genesis in the 1985 ballot measure, Proposition A, the "Managed Growth Initiative," which empowered voters to decide when Future Urbanizing Areas would be rezoned for residential development. Later, in 1992, the San Diego City Council created an affordable housing policy for the northern part of the city by requiring builders to include 20 percent of the units they build at prices or rents affordable for low-income wage earners.

Sycamore Walk, Bella Rosa and Cristamar at Santa Monica will total 138 total units, bringing the number of such houses or apartments under way or completed in the North City Future Urbanizing Area (NCFUA) to 556. In all, about 2,145 affordable houses or apartments are slated to be built in the general area between Carmel Valley and Rancho Penasquitos.

This is exciting because it demonstrates how well a partnership between the private and public sector can work. And these units are by no means unattractive. Just like the city's first inclusionary housing apartment complex -- Seabreeze Apartments, which debuted in July 2001 -- involvement by the market-rate developers ensure that the first inclusionary for-sale housing will blend in nicely with its neighbors.

Tony Pauker, managing director for The Olson Co., told me it was the "can-do attitude" of the San Diego Housing Commission coupled with his company's creativity and persistence that made things work. I say it's a "win-win" all the way around -- for the city, Olson and, most importantly, for folks who ordinarily could not otherwise experience home ownership in such a high-priced market.

And with Fannie Mae (NYSE: FNM), we were able to bring these affordable homes to market without using public funds.

Partnership is the key to making inclusionary housing work so it can make a critical difference in San Diego. In February, such a partnership with nonprofit developer Bridge Housing Corporation and DR Horton (NYSE: DHI), the country's largest homebuilder, produced Torrey del Mar. This 112-unit apartment complex is part of the affordable housing component of a new master-planned community, Torrey Highlands.

Where homes in that area of Carmel Valley Road sell generally for $500,000 or more, rents at Torrey del Mar range from $325 for a one-bedroom to $820 for a three-bedroom apartment. Residents of those apartments, many of them employed nearby, are primarily young couples with children, the foundation of any community.

When a major market-rate developer can work effectively with a nonprofit and the government to produce homes affordable to families earning a variety of incomes, it adds to the quality of life for everyone.

What these apartments show is that affordability and quality are not mutually exclusive. Both can be blended effectively to create a vibrant residential community.

That was reflected in what California State Treasurer Phil Angelides had to say at the debut of the complex: "At Torrey del Mar, not only are we helping to build badly needed homes for the region, but we are also seeing a cutting edge effort at work that is bringing the public, private and nonprofit sectors together to reach new levels of innovation and creativity."

Seabreeze Apartments, adjacent to Pacific Highlands Ranch in Carmel Valley, is another example of a solid partnership. To meet set-aside requirements when they built 147 single-family homes in the $500,000 range, developers Chelsea Investment Corp. and Pacific Southwest Community Development Corp. built 38 two- and three-bedroom units with rents ranging from $494 to $860, making them affordable for a family of four with incomes of $26,000 to $37,000 a year. In this case, the developers actually went over the 20 percent requirement, building an extra affordable unit.

Chelsea, along with Greystone Homes, is also behind another 76 affordable units as part of the Torrey Highlands development and, with partners McMillan Cos. Inc., Barrett American Inc. and Pardee Homes, will bring 150 more affordable rental units on line before the end of the year. In addition, Shea and Western Pacific have 68 for-sale units in the pipeline for Black Mountain Ranch, also part of the North City Future Urbanizing Area.

Recently, the Center on Policy Initiatives released a report saying that a San Diego family of four needs two working adults making $11.95 per hour each -- or one earning almost $24 an hour -- to handle the basic costs of living, including housing. However, the largest occupational group in the city comprises service and retail workers; and the average wage earner in this segment of the work force makes between $6.75 to just over $11 an hour, below the basic wage needed to afford to live here. The city of San Diego was well aware of this situation last year when it voted to take the positive results of the North City program city-wide.

Moving the policy outside of the master-planned communities and into established neighborhoods means it must be more flexible. For that reason, the percentage of affordable housing was reduced from 20 percent to 10 percent, prices can be higher for for-sale housing, and developers can opt to pay a fee into an affordable housing development loan pool instead of building affordable housing in their more physically constrained developments.

Inclusionary housing programs are not the answer to the housing crisis; but in areas such as San Diego, where housing prices have skyrocketed, such a program is a key component.

An Affordable Housing Task Force comprises 20 members representing a variety of private business and community perspectives recently presented its report to the San Diego City Council's Committee on Land Use and Housing. Their recommendations for goal setting, financing, development regulations, renters' issues, accessibility and more will be publicly vetted over the next few months. These far-reaching discussions help the city add to its arsenal of tools to address the housing crisis. Until they are implemented, inclusionary housing will lead the production of new affordable housing for the city.


Morris is CEO of the San Diego Housing Commission


 

October 24, 2003