Issues: Affordable Housing

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Mid-income housing targeted

By Lori Weisberg
STAFF WRITER
April 16, 2006

Housing in San Diego County increasingly targets households either at the lower rung of the income ladder or those at the high end, leaving middle-income workers feeling like they have nowhere to turn.

Enter a new breed of developers and financiers who are hoping to fill a niche they say has long been neglected in pricey Southern California, where fewer and fewer people are able to afford homes.

“We felt there were a lot of resources directed to the lower end, and we also saw a lot of resources directed to the higher end, but what was missing was this middle range,” said Barry Schulz, chief executive officer of the San Diego Capital Collaborative, which has partnered with the Phoenix Realty Group to establish a $90 million San Diego Smart Growth Fund designed to encourage middle-income housing.

“We're trying to create opportunities for first-time buyers and move-up buyers, who can free up other units.”

Schultz, who participated in a work-force housing panel presented last week by the San Diego chapter of the Urban Land Institute, announced that the Smart Growth Fund has agreed to invest in two local projects that will bring affordable middle-income housing and new jobs to the area. The partnership also is in the process of reviewing several other infill developments in which it hopes to invest.

One of the projects, a Mediterranean-style, 75-unit condominium development planned for El Cajon Boulevard near San Diego State University, will offer one-, two-and three-bedroom units at an average price of $400,000. The condos will be built atop 3,000 square feet of retail space and will occupy a site where an abandoned motel now sits, Schultz said.

Developing the housing will be AMCAL Diversified Corp. of Agoura Hills, which has been building in California for nearly three decades, although never before in San Diego County.

AMCAL will receive an equity investment of $4.5 million for its $24 million project in exchange for a commitment that it will market its units during the first 90 days of sales to households earning between 80 percent and 200 percent of median income. That translates into yearly incomes of $55,200 to $129,800 for a family of four.

Also getting an infusion of equity will be the Eastlake Village West Office Condos, planned for Chula Vista. The $15.5 million project, which will get $3 million from the Smart Growth Fund, is being developed by Urban+West+Strategies of Santa Ana and will provide space for local businesses interested in investing in their community.

One of the challenges in developing more moderate-income housing in existing neighborhoods is finding suitable sites large enough to accommodate such development, Schultz noted. Also a problem, he said, is that many of the older neighborhoods are lacking in basic infrastructure and need more parking space, which is always a challenge for infill developers to provide on tight sites.

“We need political support to make these projects work,” Schultz said. “We need development regulations that work with work-force housing, and we need land zoned for multifamily housing. And we also need community support.”

Urban developer Anthony Pauker of the Olson Co. said that National City proved to be very flexible in helping his company develop a housing project within the Paradise Valley Hospital campus. The 96-unit townhome development is being marketed to hospital employees at discounted prices that are roughly $50,000 under market value.

Of the more than 30 people who have so far reserved units, 25 are hospital employees, Pauker said. He noted that his company was able to sell some of the units for less than market rate because the hospital sold its land at a reduced rate.

“I'm concerned that San Diego is going down a path where we're creating two classes – of high-wage jobs driven by the universities and low-wage service sector jobs, and our middle is being ignored,” said Pauker. “We have to address our middle so we don't lose our edge.”

Building Industry Association spokesman Paul Tryon, also on the panel, acknowledged that the development industry builds very few housing units affordable to the middle class. But that's mostly the fault of decision-makers over the last couple decades and not the development industry, he said.

“We've got regulations and conflicting public policies, and we have such a long entitlement window,” said Tryon, chief executive of the San Diego County BIA. “While we have a (San Diego) City Council that declared a housing state of emergency, there's a council hearing somewhere that increases the costs (of development).”

Lori Weisberg: (619) 293-2251
lori.weisberg@uniontrib.com

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