June 21, 2006 - From the June, 2006 issue

San Diego's Madaffer Advocates Plan to Finance Workforce Housing

While all California cities are struggling with providing workforce and affordable housing, perhaps none has it as bad as San Diego, long considered one of the most expensive big cities in the country. But from this challenge, solutions are arising. San Diego City Councilmember Jim Madaffer has proposed an innovative funding mechanism to build the infrastructure and community amenities that would facilitate the construction of affordable housing. TPR was pleased to speak with Councilmember Madaffer about this plan and its potential application to jurisdictions throughout the state.

Jim Madaffer

You've been involved not only on the City Council of San Diego but also in the California League of Cities in promoting a housing fund concept. Can you elaborate on the purpose of that housing fund and how it would be structured?

The basic concept behind it is to create incentives for more housing and more affordable housing. As we know, over the next 30 years the state is going to grow quite a bit. Right now we have not seen local government provide enough incentives to accommodate this housing.

The concept behind these housing opportunity zones is much like creating a redevelopment area, which typically gets an additional amount of tax increment that comes in from property tax. This creates a an incentive to build more housing and more affordable housing, and in exchange for doing that you will receive back additional tax dollars over and above what the jurisdiction would normally receive. And those tax dollars can be used for services or infrastructure.

Throughout the state, everybody talks about the need to build more housing, until it gets down to the neighborhood level, and that's where the NIMBYs come in. They all say, "do it in somebody else's neighborhood. We already have our fair share." Or, "What about that road you never put in? Or what about that park you've been promising? Or what about all these other public facilities that they have been expecting for far too long?" Local government can't address it.

Typically the problem in California is that we've been putting in infrastructure after the housing. We need to come up with a system by which we actually put in amenities before the housing or as part of the housing. Afterward, people always get upset, and they don't want to accommodate it.

How will these housing opportunity zones ensure that that infrastructure will go in before the housing? What incentives will drive such investment?

In order to get that money, they're going to have to use that money. It's almost like a state grant to build a park or a library. It's going to have to be administered by the state, and in order to receive that money the local jurisdiction is going to have to build those projects, with state oversight.

From where will funds for such infrastructure investment come?

Funds would come from an additional percentage of property tax that would be collected in that area. Instead of the typical 17 cents that comes back on the dollar to San Diego, it might be one or two cents more in the housing opportunity zone area that would, like a tax increment, provide that cash flow. But in some areas it could be 20 or 30 cents more.

The idea is to provide the increment for a short amount of time to put in an adequate amount of infrastructure. So it's not like a redevelopment area, where it goes on for 30 years or longer. It's, say, five years – enough to build that promised infrastructure and fund those services that are promised, and the local jurisdiction would not get that state money without building the infrastructure they promised.

What you suggest might be opposed by the California Teachers Association, as they might not want property tax revenue presently feeding the general fund to be diverted to housing. As a California League of Cities official, can a political accommodation be found with them?


It's simple. We need to build affordable housing for teachers, and this program will do just that. It will create an incentive to build workforce housing that teachers and others can live in. One of the biggest problems in California right now is that our own teachers can't afford to live in this state.

A $2.8 billion housing bond is on the ballot in November as part of a package of critical infrastructure bonds. How much help will that bond provide for San Diego's pressing housing challenges?

It helps, but, considering the big picture, it's probably a drop in the bucket. We need a culture change in California to the point that it's not about bond measures for affordable housing but about the way we finance our projects and the way we collect property tax. Those taxes need to go towards incentives. If we can go to a developer or a city and create an incentive to build housing-like right now they've had an incentive to build big-box retail or car lots-only when we create incentives that actually reward jurisdictions that build that housing will we solve the housing crisis.

You're an active member of SANDAG's transportation committee. How might the transportation infrastructure bonds, regional transportation planning, and an increase in production of housing in San Diego County best be leveraged ?

One of the things we did at SANDAG that has not been done anywhere else in the state-in fact Sunne Wright McPeak has seen this and is calling it a model-is actually using transportation dollars as an incentive to those jurisdictions that build more affordable housing in their cities. With the transportation infrastructure bond, I hope councils of governments and other entities such as SCAG or SANDAG, to figure out ways to use transportation funds as incentives to put money into smart growth, village-type housing, clustered housing, and affordable housing. Only then will we see jurisdictions that are willing to step up will we solve the housing crisis.

In six years in public office you've no doubt experienced the disconnect between government agencies and programs. How will you break down these traditional silos to create healthy, holistically planned neighborhoods of the kind you're suggesting could result from these ‘opportunity zones'?

It's really about getting everybody in the room and talking. Once people realize that we all want a good quality of life, it's important to break away from this silo mentality where it's all been about one thing or another and realize that only when we start working together and using incentives can we produce the housing and quality of life that everyone in California deserves.

We have unlimited capacity in this state to do the right thing. From an environmental perspective, from a housing perspective, from a building perspective, from a tax perspective, from a CEQUA perspective, all of this can work in a symbiotic way. I believe that we're beginning to move in that direction. This bond package is a huge step towards getting people to think about infrastructure and start realizing that we need to do more to take care of California.

Will the November bonds create incentives for collaboration between the interest groups and agencies?

No, but it's a start. It asks voters if they are willing to invest in infrastructure, and if they're willing to do that, then I believe the next step for the Legislature to take is to actually offer incentives and programs – unlike those in place now which fiscalize land use and incent cities or counties to build big boxes or car lots – which reward jurisdictions for building housing. Giving everybody a place to live is the only way for us to have a sustainable economy.


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