Last year, developers built just 19 middle-income units in the city of San Diego.

The lackluster production number comes on the heels of the city introducing a middle-income density bonus program in 2020 designed to boost construction of the needed units.

Middle-income units are defined as those reserved for families making between 80 percent and 150 percent of the region’s median income.

Now a 23-member panel of experts has recommended a number of actions to spur more local production. The recommendations include encouraging building on top of existing public facilities, streamlining the city’s historical review process, and imposing a tax on vacant land or units.

Q. Is San Diego doing enough to create middle-income housing?

Caroline Freund, UC San Diego School of Global Policy and Strategy

NO: Tax policy in California is inequitable and discourages building and mobility. Prop 13, which taxes properties based on original purchase price as opposed to appraised value, discourages turnover. Retirees remain in large, low-tax housing and undertaxed vacant lots sit empty while new homeowners foot the bill. Taxing undeveloped land and promoting construction with incentives can help combat the unintended consequences of Prop 13 — though ideally the whole property tax system should be redesigned.

Haney Hong, San Diego County Taxpayers Assoc.

Kelly Cunningham, San Diego Institute for Economic Research

NO: That’s obviously evident in the amount of housing produced and elevated prices simply resulting from demand overwhelming supply. Penalizing builders, owners and landlords causes costs, prices and rents to increase. Mandating subsidized, low-income housing has the perverse effect of limiting production and increasing costs on all other housing built. Adding taxes, fees or other requirements, such as a vacancy tax, will further increase costs and lower affordability. The industry already faces stiff headwinds from escalating costs.

NO: The city clearly is not doing enough to promote middle-income housing with only 19 units in 2021, but it’s starting to be more aggressive. The review process needs to be streamlined, as do water abatement procedures. Density bonuses for middle-income housing, started in 2020, should be increased. Surplus property owned by the city could be more heavily directed to middle-income housing. Overall housing policy has focused on low-income housing. Now it’s time to focus on middle-income units.

NO: With all of the attention on affordable, low-income and homeless housing our middle-class housing — or workforce housing, as I call it — has been forgotten. Action needs to be taken on the recommendations of experts to free up zoning regulations. Ramshackle areas along Rosecrans as you enter Point Loma need to be made available for moderately priced condos and apartments. The same is true for areas around trolley and bus stops, government fallow land and freeways.

Gary London, London Moeder Advisors

NO: Although it is crucial that they make the attempt, the city can’t solve the problem alone. Proceed with reforms to expedite production, remove obstacles, identify and incentivize land availability. Eliminate archaic rules on so-called “historic” restrictions. But none of these efforts can add up to sufficient housing counts. I urge a region-wide approach to housing, one which targets the vast, unincorporated county lands. That’s where we can put a dent in solving middle-income housing needs.

Alan Gin, University of San Diego

YES: The city has already adopted policies to boost middle-income housing and will likely adopt many of the proposals by the mayor’s housing panel. The problem is that market forces favor the construction of high-income housing because it is more profitable. Compounding the problem is the continued desirability of San Diego as a place to live. Production of housing at any level to try to make it more affordable will attract more people to the region, which will drive prices up again.

Bob Rauch, R.A. Rauch & Associates

NO: The 23-member experts panel tasked with figuring out how to improve middle-income housing says we should build on top of existing public facilities, such as fire stations and libraries. They want to add a vacancy tax for vacant land and buildings. These are bad ideas. The good ideas brought forward to date include changing the municipal code to let developers use new construction materials and technology and reducing developer fees.

James Hamilton, UC San Diego

NO: The variable that really matters for the cost of housing for the average San Diego family is the total number of new residential units that get constructed each year. When the city tries to micromanage the details, the result is overregulation that raises costs, increases delays in construction and sets us back from that goal. A case in point is the recent proposal to issue stop-work orders whenever some employment paperwork is incomplete.

NO: We need more middle-income housing. The short-term ideas coming out of the recent housing panel make sense. These recommendations should be approved and implemented swiftly: reduce the burden of redeveloping decrepit “historical” buildings, tax owners of empty lots or vacant units, allow modern building methods like pre-fab components, et cetera. Essentially, strive to remove artificial blockers and identify under-utilized assets to spur much-needed development.

Chris Van Gorder, Scripps Health

NO: I think there are some creative ideas being put forward by the housing panel, but some of the proposals might lead to issues, such as using or adding privately owned and funded residences to taxpayer-funded and -owned buildings. It seems to me we are not addressing a fundamental philosophy of imposing penalties — like raising taxes — rather than using carrots such as improvements in the process and costs of building within the city.

Norm Miller, University of San Diego

NO: While I applaud and support all the recent citizen committee recommendations, except for the vacancy tax, we need to do more. We need to raise the height limit of developments such that garages can be built under two-story homes without going underground. We need to eliminate time-consuming California Coastal Commission oversight. We also need to change how development fees are charged such that smaller units pay lower fees, and we need to encourage flexible building codes so that more modular housing can be built.

NO: Not until we see significant reform. Several things would need to change to increase housing production. These include reductions in labor and material costs, less red tape (fees/taxes/regulations), a stronger political will and community support. Some things that could be done to help create middle-income housing include deferring development fees, streamlining regulations, supporting CEQA reform, reducing parking and commercial space requirements, and obtaining inventory of underutilized land for more housing.

David Ely, San Diego State University

NO: Based on the S&P CoreLogic Case-Shiller Indices, home prices in San Diego are up over 25 percent in the past year and over 78 percent in the past five years. Housing has become unaffordable because construction has not kept pace with population growth. Without more housing for households earning around the median income level, local employers will find it increasingly difficult to hire and retain workers. The recommendations by the panel should receive serious consideration.

NO: The San Diego region has not produced enough housing to meet demand in 20 years. For example, last year, the city of San Diego built 19 middle-income units. That number needs to dramatically increase to help meet the needs of the region. With pent-up demand for more than 100,000 units county-wide, local government agencies need to rethink how they solve this problem, and how they can reduce regulations to increase housing stock.

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