San Diego Moves to Protect Deed-Restricted Affordable Housing
A new law aiming to preserve thousands of deed-restricted affordable housing units in San Diego is heading for final approval by the City Council.
The proposed legislation, known as the Deed-Restricted Affordable Housing Ordinance, would require the owners of apartment buildings with units that are deed-restricted for low-income and moderate-income residents to notify the city and affordable housing developers if the property goes on the market.
According to a posting by the San Diego Housing Commission (SDHC), these for-sale notices must be sent to the housing authority, the city and qualified nonprofit or for-profit affordable housing developers. The bill would give these qualified affordable housing developers “a right of first offer and a right of first refusal.”
The ordinance closes a loophole in state law, which already requires affordable housing owners to offer nonprofits, government agencies and other affordable housing organizations the first right of refusal when selling the properties. However, the state requirement doesn’t kick in until five years before the deed restriction expires, meaning owners can avoid giving notice by selling their properties in advance of the five-year time window.
The notice requirements in the new San Diego ordinance, which has been approved by the City Council’s Land Use and Housing Committee, will take effect as soon as the property owner intends to sell.
The goal of the new law is to potentially avoid a sale to a buyer planning to tear down deed-restricted apartments and replace them with market-rate housing when the restrictions, also known as covenants, expire, the San Diego Union-Tribune reported.
“Having an ordinance like this in place is an absolutely essential tool to ensure we continue to preserve existing units,” said Vivian Moreno, a council member. “This ordinance is reasonable, and, if enacted, will be an effective tool to allow the city to keep deed-restricted units in place across San Diego.”
Several council members have indicated support for the creation of a city housing preservation fund to provide up to $3M in seed money to help affordable housing developers make successful offers on apartments with expiring deed restrictions.
A 2020 survey by the SDHC reported that San Diego has 22,000 deed-restricted affordable housing units and another 48,000 units that are deemed “naturally occurring” affordable housing due to the age or location of the property. The 22,000 deed-restricted units amount to about 14% of the units in the city.
San Diego now has the fourth-highest percentage of renters in the nation as homeownership rates fall. About 48% of households in the San Diego metro are renters, according to a new Redfin study.
San Diego County built more housing in 2023 than it did in any of the past 17 years. The Construction Industry Research Board said permits were issued for 2,537 single-family homes and accessory dwelling units, and 9,100 multifamily units, including apartments, condos and townhouses.
Source: GlobeSt/ALM