San Diego Council Approves Increased Fees on Developers

November 5, 2013

The San Diego City Council voted 5-4 Monday to approve a controversial measure to increase fees on developers to help fund affordable housing. The measure, submitted by the San Diego Housing Commission, is known as a "linkage fee" -- it links the gap between low-incomes and the cost of housing in San Diego.

The measure would raise the fee to 1.5 percent of current construction costs -- an approximate 500 percent increase. It's the same level set when the fee was first initiated in 1990, but six years later, it was halved and has remained at that level since.

The business community argues that increasing the fee would amount to another tax that would kill jobs and encourage builders to take their projects to other regions in the county. The San Diego County Taxpayers Association lobbied against the measure.

Councilman Scott Sherman, who voted against the measure, said it puts San Diego at a serious disadvantage "as we are the only jurisdiction in the county that charges this 'jobs tax.'" It is estimated the action taken will raise this fee on commercial developments by 377 percent -744 percent, said Sherman.

Interim Mayor Todd Gloria hailed passage of the measure, officially called the Workforce Housing Offset. "By updating the Workforce Housing Offset for the first time in 17 years, the City Council has provided an appropriate funding stream for San Diegans who have jobs but struggle to afford to live here," said Gloria.

The Workforce Housing Offset requires that commercial developers who build in San Diego help cover the cost of providing affordable housing for low-wage workers through a one-time payment, assessed as a percentage of development costs, which is deposited into the city's Housing Trust Fund.