An otherwise routine loan became a point of contention between a council member, Pacific Beach community members and two affordable housing developers.
That’s because the money, which will be handed over by the city of San Diego to the nonprofit developers of the proposed Rose Creek Village project, was the last thing standing in the way of a mid-rise residential building that promises to evade a voter-enacted law that keeps building heights at 30 feet or less in coastal neighborhoods.
On Tuesday, San Diego Councilman Joe LaCava, who represents the Pacific Beach community, sought to scrap the loan and, by association, the project. The developers, he said, were initially dishonest with community members about the project’s planned height. Also, he said, taxpayer funds should not be used to override the will of voters.
In the end, council members voted 6-2 to loan $4 million to the San Diego Community Housing Corporation and National California Renaissance Community (National CORE) to help finance their Rose Creek Village project at 2662 Garnet Ave. Council members, acting separately as the city’s Housing Authority, also voted 6-2 to approve a $2 million loan of the project from the San Diego Housing Commission.
The actions complete the financing puzzle for the Rose Creek project. They make possible a five-story, roughly 60-foot-tall building on a 0.4-acre lot, where 59 of the 60 units will be deed-restricted to very low- and extremely low-income families. The project includes 18 units for homeless veterans, a community room, nine parking spaces and private offices for support services.
With the loans approved, the developers hope to begin construction in February and open the height-exceeding project in late 2026.
“Having spent many years in affordable housing, I can say with confidence that opportunities like this are very rare. This is a transformative project. This will be the first 100 percent affordable project with low-income housing tax credits in a San Diego beach community,” Ted Miyahara, the executive director of the San Diego Community Housing Corporation, told council members. “And with this project moving forward, we would essentially double the affordable housing stock in PB.”
San Diego’s coastal zone, officially referred to as the Coastal Height Limit Zone, was established by a 1972 voter initiative, Proposition D, and prevents buildings taller than 30 feet west of Interstate 5. Local law includes exceptions for downtown, National City and parts of Mission Bay. The entire Midway-Pacific Highway Community Plan area is no longer within the protected zone thanks to a 2022 voter-approved ballot measure that survived legal challenges.
Local coastal law is distinct from the California Coastal Act of 1976, which protects lands along the California coast at the state level.
Just a few blocks west of Interstate 5, the Rose Creek Village project along Garnet sits within the city’s coastal zone but outside the state’s narrower boundaries.
In November 2021, the developers submitted an early version of their affordable housing project to the community planning group. At the time, they omitted details about the proposed building height. Shortly afterward, the development team sought permission from the California Department of Housing and Community Development, or HCD, to overcome the lot’s 30-foot height restriction.
In June 2022, the Rose Creek project received authorization from HCD. The agency said the local limitation, enacted by voters, is void because it conflicts with the state’s Density Bonus Law. The state law, established in 1979, exists as an incentive for developers to build affordable units on the site and requires cities to grant waivers and incentives for projects with deed-restricted units for low-income households.
The state Legislature preempts local initiatives, HCD said in its letter.
Community members pressured the council not to circumvent the local ordinance.
“Ted and John (Seymour with National CORE) think that the citizen initiative or a vote of the people doesn’t apply to them because they’re doing a good thing,” said Marcella Bothwell, chair of the Pacific Beach Community Planning Group, during the council meeting’s public comment period. “Council members, we have a process for a reason. If we don’t follow the process, we disenfranchise people and promote unnecessary division and anger. I implore you to do the right thing and…get a new vote of the people regarding breaking the 30-foot height limit.”
On Tuesday, council members were asked to approve a $4 million loan with a 55-year term and a 3 percent interest rate, not to weigh in on the merits of the project itself. The state’s opinion letter means the project can be approved at the staff level.
Late last year, city staff selected the project as one of several affordable housing projects to receive funding in the third wave of the city’s Puente a Casa program.
The developers will use the city loan for property acquisition costs and to bridge the gap between the total project cost of $36.1 million and other accumulated financing sources.
The Housing Commission, the city’s public housing agency, also selected the Rose Creek Village project to receive a $2 million loan for acquisition and construction costs. The Housing Commission loan has a 4 percent interest rate and a 55-year term.
Without the loans from public agencies, the project is not viable, the developers said.
“We have explored every funding opportunity out there, and we have gotten it. There are no other sources,” Miyahara told council members.
LaCava attempted to block the project with a failed motion to reject the city loan. He characterized the project as a “bait and switch” because he said community members were initially led to believe the project would be three stories.
“I cannot and will not support the use of taxpayer dollars to fund projects that are dishonest to communities, that are dishonest to public agencies, and projects that circumvent voter-adopted ballot measures,” he said.
The developers said their actions were misinterpreted by the council member and community members. They informed the planning group in November 2021 that they would seek to maximize density on the site, Miyahara said.
Councilman Raul Campillo sided with LaCava, but other council members voted to approve both loans from the city and the Housing Commission.
“I understand and appreciate the action taken by voters in the 1970s. And the action before us is the loan agreement,” said Council President Sean Elo-Rivera. “I see a loan agreement that will help build 59 affordable homes, 18 of which will be available to veterans and others at risk of experiencing homelessness.”
While Rose Creek Village appears to be the first project to lean on state authority to overcome the local coastal zone restriction, it likely won’t be the last. Last year, the state’s Density Bonus Act was updated to clarify that it trumps local voter initiatives.
Affordable housing project in Pacific Beach first to breach 30-foot coastal height limit
