San Diego Business Journal

San Diego City Council Repeals Development Fee Increase

By Lou Hirsh Wednesday, March 5, 2014

The San Diego City Council has voted to repeal a planned increase in commercial developer “linkage” fees, rather than place it on the June 3 ballot.

The move came after the Jobs Coalition, consisting of local business groups opposed to the hike, gathered sufficient signatures to place the measure before voters if it was not repealed.

However, the City Council also called on opponents of the now-rescinded fee increase to work with its supporters, including the San Diego Housing Commission, to come up with an alternative funding mechanism to support development of affordable workforce housing within the next three months.

The Housing Commission put forward the now-rescinded measure, which was approved in December by the City Council and would have restored the fee for commercial projects, known officially as the workforce housing offset, to 1.5 percent of construction costs.

The percentage had been cut in half in 1996, and the restored percentage would have impacted projects receiving final city approvals after June 30. Opponents contended the measure, which would have hiked fees between 375 and 750 percent depending on project type, would seriously curtail local development and job creation.

“The City Council heard the voices of small businesses and job creators in San Diego and voted to rescind the jobs tax,” said Jerry Sanders, president and CEO of the San Diego Regional Chamber of Commerce, in a statement following the March 4 council decision.

“We believe housing affordability is a critical issue and we will work with the City Council and the mayor to find sustainable solutions that do not hurt our local economy in the process,” Sanders said.

The Jobs Coalition includes the chamber and several other economic development groups, real estate companies and local businesses.

The San Diego Housing Federation, a local advocacy group, said it was disappointed by the council vote, adding that the loss of funding represented a “significant hit” to low-income residents and the city’s economy.

“We remain ready and willing over the next three months to work with the City Council and the business community to address our city’s worsening affordable housing crisis,” the federation said in a statement.