San Diego’s low-income neighborhoods will get much-needed libraries, fire stations, bike lanes and other infrastructure projects much faster under a new policy the City Council approved by an 8-1 vote last Monday.
The new policy, called Build Better SD, creates a massive pool of money for such projects radically changing the way the city raises and spends money from private developers who build housing, commercial and industrial projects.
Instead of its decades-old practice of keeping promoters’ fees in 44 separate funds and requiring the money to be spent in the specific area where it was raised, the city will pool the money in a single reserve and spend it in neighborhoods that are most they need it.
Critics of the old system say it perpetuates — and even exacerbates — inequalities between rich and poor areas. Since development tends to take place in wealthy areas, developers’ infrastructure money has also gone to those communities.
“This is a change in the way of financing infrastructure,” said Councilor Raúl Campillo. “This is going to ensure that fire stations, libraries and parks are able to support a growing population and improve ways to travel within and between communities.”
Critics say the policy change is unfair to neighborhoods where many new high-rise and mid-rise homes are being built or will be built in the next few years.
Under the old policy, those communities would have been guaranteed the development rates needed to build infrastructure, libraries, and fire stations to support new growth. Under the new policy, those communities must expect city officials to decide their neighborhood is a priority.
Councilman Chris Cate said that concern is why he cast the single “no” vote Monday.
Tom Mullaney, leader of the group called Livable San Diego, which opposes dense housing projects, said Cate is right.
“How are you going to get citizens to accept large amounts of development when you’re taking away development fees and putting them in a citywide fund with no guarantee that any of it – or any specific amount – is going to come back?” he said. .
City officials say the policy places the highest priority on historically underserved neighborhoods. Planning Director Heidi Vonblum said Monday that the new policy will also prioritize areas with the highest population and the most recent growth.
Other criteria that will prioritize projects are that they have environmental benefits and that they are located in areas with deteriorating infrastructure, he said.
“Under the current system, the city is pretty good at collecting developer fees, but Build Better SD will take us to a system where we’ll be good at spending those amounts as well,” he said. “This change should have happened a long time ago.”
Developers’ money would also be spent more quickly and efficiently because it would be in a single pot instead of being divided among 44 individual accounts assigned to specific neighborhoods.
Under the current system, neighborhoods often have to wait years to get key projects done, because it takes time to accumulate enough impact fees from developers. More than $222 million is sitting in those individual accounts, waiting to be spent, the officials said.
“The city’s new approach ensures direct funding for necessary infrastructure, rather than funds being trapped in safe deposit boxes, as is the case now,” said Council Member Joe LaCava. “The alternative is to continue with the old program that is failing in our neighborhoods. I find it unacceptable.”
Some community leaders, including Mira Mesa Community Planning Group President Jeff Stevens, said Monday that it’s not correct to say that money sits too long in individual accounts. He said it is spent wisely when enough fees are collected.
San Diego typically collects about $60 million a year in development fees citywide, so the $222 million deposited in the 44 accounts isn’t a relatively high number.
Mayor Todd Gloria, who has spearheaded the new policy, celebrated the council’s approval Monday.
“For the past 40 years, we have used developer premiums to pay only for specifically indicated infrastructure in the communities where the premiums were generated,” he said. “There was a time when that made sense, but not anymore. Now that system only perpetuates historical inequalities and leads to millions of dollars of desperately needed infrastructure going unused.
A 2019 analysis by a consultant hired by the city found that Los Angeles, San Francisco and San Jose collect most of the amounts developers spend on infrastructure citywide, not by specific neighborhood.
In addition to pooling all developer money, the policy creates a uniform citywide development fee that replaces the fees in place today, which vary widely by neighborhood.
Current rates can be as low as $1,000 per unit and as high as $100,000 per unit. The new rate, if the developer builds a 900-square-foot apartment or condo, is estimated at about $19,000.
The new policy also encourages developers to build housing for low- and middle-income residents by basing developer rates on project square footage rather than number of units.
“Now it encourages the construction of smaller spaces and at a more affordable price for the middle class,” said Councilwoman Jennifer Campbell.
Councilmember Vivian Moreno said the new policy would help build fire stations in low-income areas that have slow response times in emergencies.
“The unfair development fee collection system perpetuates underinvestment in many of our older urban communities,” he said. “Some of the most needed fire stations in underserved communities have yet to be built due to lack of funding, and this is going to change that.”
The new policy for fire stations, libraries and infrastructure projects builds on a similar change the city council approved last fall for the parks’ developer money.
For more details, visit sandiego.gov/buildbettersd.
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