koi and swan, sepia

Saturday, January 4, 2014

Leave of their senses

San Diego is an expensive place to live. While much of the country is ensconced in igloo like sub zero weather this week, our thermometers have been hovering around 80ยบ.

Many people would like to live here but unfortunately can't afford to. Housing is expensive and water is scarce. But we have the weather, the ocean and a burgeoning biotech sector and everybody seemingly wants to live in paradise. This drives costs up.

During Bob Filner's ill fated reign, San Diego voted in a new affordable housing tax. I have been following the affordable housing debate from a distance and this particular tax seems at first and second glance both usurious and a really bad idea. Talk about killing the golden goose and alienating business and job providers. For some background read this piece in the U.T. by Roger Showley 12/26/13 Housing fee referendum drive starting.
The council voted Nov. 22 with its five Democrats in favor and four Republicans opposed to increase the affordable housing linkage fee. Also known as the "workforce housing offset" fee, it would increase to $5.32 per square foot, up from $1.06 for office buildings, with other rates applying to retail, hotel and other nonresidential development. The annual fee collection is projected to rise from less than $1 million raised this year to as much as $12 million -- enough to produce at least 100 new housing units, according to the San Diego Housing Commission.
Susan Tinsky, executive director of the San Diego Housing Federation, defended the fee increase, especially at holiday time when 125,000 San Diego workers living "at or below the federal poverty line."
"It is unfortunate that yet again we see in San Diego, special interests abusing the political process to overturn a democratic decision," Tinsky said in a statement.
She was referring to three referendum measures relating to the Barrio Logan community plan that will appear on the June 3 ballot as a result of a petition drive backed by shipyards and their suppliers. The council acted on that referendum drive earlier this month.
Tinsky said in an interview that the new housing fees represent a "very small percentage" of the cost of a new building.
I guess significance is all nested in the wallet of the beholder. It sounds to me that it is maybe Ms. Tinsky who is out of touch here.
Greg Stein, senior director of strategic and community affairs at Millennium Laboratories, a biotech firm in Rancho Bernardo, said his company faces a $270,000 housing charge for reconfiguring a 70,000-square-foot office building into a warehouse , and perhaps additional charges if the use changes to meet company needs. The company employs 750 people locally and 500 elsewhere.
"If Millennium assumes that tax will cost us about 10 jobs, then we're one company affecting one-tenth of the outcome the Housing Commission expects to get out of this tax," he said. "The bang for the buck isn't there." 
He disputed Tinsky's claim that the fee is a small portion of the budget for its new space: "It's not insignificant. We can't finance it -- it's bottom-line cash."He said his company and others might search for quarters beyond San Diego's city borders as a result, although he had not compared all development charges in neighboring Escondido and Poway."Millennium has a long history of supporting community needs," he said, "and we feel our most effective way of helping support and provide for those in need is to provide good jobs."
$270,000 fee for reconfiguring a warehouse? Hello? I have been a developer and believe me, these fees are absolute death. Qualcomm, one of our most important businesses and employers, is being hit with a similar brick; their planned expansion of 1.2 million square feet would have required a $960,000.00 permit fee under the old rates, now they are facing a nearly 5 million dollar hit. All this to provide a measly 100 new affordable housing units. We are going to drive these good companies out of California faster than you can say Sriracha.

I am all for working class rhetoric but Tinsky made a statement that cuts to the heart of things; "The question is what is the voter sentiment for June," she said. "With the Barrio Logan (measures), there's a really strong narrative around having two different referendums pitting the business community against working San Diegans."

Last I checked, Susan, the business community were working San Diegans too. Let's keep them working here. Time to get real.


Anonymous said...

Thanks for the article. I had read about the fee but was unaware of the significant cost to business. Does social engineering ever work to improve society ?


Anonymous said...

I think the poor at least deserve small palaces in Fairbanks Ranch.