Tackling San Diego’s Affordable Housing Crunch

San Diego is struggling with an ongoing affordability issue. At 4.1 percent year-over-year as of April, rent growth continues to heavily outperform the U.S. rate, according to Yardi Matrix data. In 2010, city officials estimated that the metro needed to build 38,680 affordable units before 2020 to meet the area’s need. The San Diego Union-Tribune reports that as of 2017, only 11 percent of those projected rentals had been built.  

In an effort to fill the gap, the city recently allocated $50 million to building affordable housing projects. San Diego Housing Federation’s $900 million housing bond was postponed for the 2020 election, even though it was initially planned for a vote in next month’s ballot. A November ballot topic on everyone’s lips these days is California’s Proposition 10, a measure that would repeal the Costa-Hawkins Rental Housing Act and allow local communities to adopt rent control.

James Silverwood, president & CEO, Affirmed Housing (Image courtesy of Affirmed Housing)

With more than three decades of experience in real estate development as a general contractor and developer across California, Jim Silverwood, president & CEO of Affirmed Housing, admits that the situation is critical. “Very serious, as bad as I have seen in over 25 years,” he told Multi-Housing News. Silverwood notes that the outside edges of East County and South County are currently the most affordable areas of the San Diego MSA, but several local legislation changes—zoning, lower parking requirements or higher densities near transit nodes—would encourage the construction or preservation of more affordable housing units.

Affirmed Housing frequently partners with SVA Architects in developing affordable housing projects in San Diego. SVA Partner & CEO Ernesto Vasquez joins Silverwood in an interview with MHN on the evolution of the affordable housing crisis in the metro and the possible solutions.

What contributed to this affordable housing crisis?

Silverwood: Nimby positions by local community planning groups that had grown too powerful over the years, lack of will by city council members, restrictions on density, restrictions on height, too much parking and expensive impact fees due, in large part, to the tax rules imposed under Proposition 13 many years ago.

What do you think about the Affordable Housing Act initiative? How would rent control restrictions on new buildings affect the affordable housing market in the area?

Silverwood: We are opposed to rent control as it may impact even affordable housing since there is no exemption for affordable housing. I also have concerns that politicians may believe that this would solve the affordable housing crisis when, in fact, it will simply exacerbate the current situation as there will be reduced production of rental housing.

What should the metro’s affordable housing strategy for the next five years include?

Silverwood: Increased funding for affordable housing. There are plans underway for a significant $900 million dollar affordable housing bond measure for the City of San Diego. This would help make up for the tremendous loss of funds caused by the termination of RDAs back in 2012.

Tell us more about your most recent affordable housing projects.

Silverwood: We currently have 14 transactions in our development pipeline. These include everything from family housing to seniors, to veteran and housing for the homeless. We are especially proud of the work we have done in the PSH (Permanent Supportive Housing) area. We now have three of these communities in operations, two more currently under construction and expect to break ground on five more within the next 12 months. We develop up and down the state of California with a focus on Los Angeles, the Bay Area and, of course, our home base here in San Diego.

Ernesto Vasquez, partner & CEO, SVA Architects (Image courtesy of SVA Architects)

How did affordable housing projects evolve over the past decade in terms of services and amenities?

Vasquez: Previously, the focus was on shelter with land restraints. Housing was built where land was less expensive and typically on the outskirts of communities. Today, we are looking at transportation, such as light rail and dedicated bus lanes, as an essential component to all housing, including affordable and mixed-income housing. Goals of health and wellness are also driving a change in thinking. Rightly so, cities feel that just gentrification will not solve the issues they’re experiencing. Health, wellness, walkability, a connection to the community fabric are now powerful influencers to creating more housing and solving larger issues.

Today we see developers not just solving housing issues, but generating opportunities for communities through new market tax credits that are available to challenged communities. We are prioritizing mixed-use and mixed-income communities, family units with wraparound supportive services such as a computer center, childcare, library, clinics, layers of retail on the ground floor, etc. This model is more conducive to families.

What can you tell us about changes in the design of affordable communities?

Vasquez: Related to design, social zones and urban gardens are becoming more commonplace. That was the idea behind Celadon in downtown San Diego. Celadon is an affordable, senior housing community that serves youth, families and seniors with tremendous social space, learning labs and an extremely popular rooftop garden—all provided with sustainability in mind.

Sustainability is another piece of the puzzle that we see differently today due to the reduced energy costs. Non-profits must hold the buildings for decades so the sustainable features are important to the long-term functionality of the community. Selecting finishes, appliances etc. that are sustainable in terms of energy use and longevity of wear are also key.   

Please give us some details about the projects you are currently working on in the San Diego area.

Vasquez: Comm 22 is a great example of what can be done along the transit corridors. Comm 22 has a county clinic on the ground floor and youth education—all offered on light rail transit. Additionally, if offers multifamily and senior housing situated together.

El Monte Gateway in Los Angeles is another mixed-use, mixed-income community along a transportation corridor. El Monte Gateway provides rapid bus for students right into the University of Southern California campus, allowing quick accessibility from a more suburban community. El Monte Gateway includes affordable and market-rate housing.

A new trend we see are public-private partnerships, some with churches. If a church has land and they can partner with cities and developers, that can form a win-win situation. Churches have the desire to serve their populations, especially the seniors that have been worshipping in their community. The ground lease can provide churches a stream of revenue, while allowing their parishioners to age in place. Some might even add the ability to create skilled nursing. Churches can be an extremely important component in serving communities.