San Diego officials endorsed a plan Nov. 16 that would preserve the city’s estimated 23,000 affordable rental units for lower-income residents.
During the meeting of the city’s Land Use and Housing Committee, councilmembers unanimously approved a motion that would direct the city’s housing commission to draft an ordinance to that end, to be presented in early 2025 for approval.
The ordinance would require owners of multifamily properties with five or more units to notify the city, affordable housing developers, or tenant groups when they intend to sell.
The requirement aims to ensure any such housing units aren’t sold and replaced by market rate housing, giving affordable developers and the city right of first refusal for the properties.
“If we are losing existing affordable housing units at the same time we are adding affordable housing, then we are spinning our wheels,” Councilman Stephen Whitburn said during the meeting.
A San Diego Housing Commission study from 2020, which sparked the discussion at the time, revealed that the city was on track to lose 210 rent-restricted units each year until 2040.
Mr. Whitburn said that if the trend continued, the city’s homeless situation would worsen.
“The lack of affordable housing is a real bottleneck in addressing our homelessness crisis,“ he said. ”We are moving eight people a day out of homelessness and into housing. But if unaffordable rents are forcing people out of housing and into homelessness, then again, we’re spinning our wheels.”
Councilwoman Vivian Moreno said that construction of new homes isn’t keeping up with demand and that the deed restrictions on some homes—which prevent rent increases—are set to expire, meaning the issue needs to be addressed urgently.
“As we speak, there are over 6,600 deed-restricted units set to expire by 2033. I don’t think we could afford to lose any of them if we want a chance at providing enough housing to meet the needs of San Diegans of all income levels,” she said.
Even at full speed, the earliest the city could adopt the ordinance wouldn’t be until 2025.
“Unfortunately, this is the pace of government,” Councilman Joe LaCava said during the meeting.
Under current California law, owners of properties subject to rent restrictions are required to notify tenants and local agencies three years before those restrictions expire. One year before they expire, owners must also notify those interested in keeping the affordability requirements, such as nonprofit or for-profit affordable housing developers.
Under the proposed ordinance, owners of such properties would instead first notify interested parties that would keep the affordability for at least another 30 years, giving them a chance at making first offers. Owners would be allowed to counteroffer. The ordinance would give the city first dibs on properties.
To help incentivize and finance the acquisition of such properties, councilmembers have also asked Mayor Todd Gloria for an additional $3.3 million in next year’s budget for an affordable housing preservation fund, which could double with state matching funds.
One speaker during the meeting said the ordinance would help protect against real estate investors looking to make a quick profit from purchasing such properties, as it would give those interested in keeping rents affordable first priority.
“The city needs to make the effort to preserve existing affordable units whenever possible. Expiring covenants should not be an opportunity for any entity to engage in real estate arbitrage at the public expense,” said Satomi Rash-Zeigler, managing director of the San Diego-Imperial Counties Labor Council. The council represents working families in the counties and advocates affordable housing and higher wages.
Some during the meeting advocated penalties for those who don’t follow the proposed ordinance, if it’s ultimately enacted.
But others, such as the director of public affairs for the San Diego County Apartment Association, Molly Kirkland, said the city should just focus on rewarding good actors.
“Instead of assuming that there’s going to be noncompliance and a need for penalties, we should start with focusing on training and mentoring until data shifts otherwise,” she said.
She additionally said councilmembers’ including the funding in budget priorities would be a “vital part” of the incentive-based approach.
But others said the ordinance could be more restrictive.
“It could go further, but this is a wonderful place to start,” said AJ Estrada, political director for the San Diego Building & Construction Trades Council, which represents 30,000 workers from more than 20 unions.
Many others raised concerns that focusing on owners of rent-restricted properties wasn’t enough, since most current low-cost rentals in the city wouldn’t have the same requirements under the proposed new ordinance.
According to the housing commission’s 2020 report, only 14 percent of the city’s multifamily housing is rent-restricted, while 64 percent would be exempt from the ordinance.
“For this reason, I and others strongly recommend that the framework extend its coverage to encompass all multifamily residential buildings,” one speaker said during public comment.
Several other speakers agreed.
Mr. LaCava said the city should prioritize getting the ordinance passed before possibly beefing it up.
“I’m certainly not opposed to that,“ he said. ”However, it’s a pretty big lift just to get this initial ordinance on the books, and to make sure that we’re getting it right.”
