Our old friend Will Carless has completed an investigative report on building affordable housing in SD.
Click here for the full report, and an excerpt:
In Barrio Logan, in the shadow of the Coronado Bridge and under the watchful eyes of the Chicano Park murals, bright yellow backhoes busily cleave away the soil.
It’s here, in one of San Diego’s poorest neighborhoods, that the city will get its newest government-sponsored housing project: the Estrella del Mercado, a 92-unit apartment building that will sit above shops and restaurants and adjacent to a Latino-themed supermarket, all part of the Mercado del Barrio development.
The project has been a long time coming. The community waited for more than two decades while local government agencies put together one deal after another, only to watch those projects fall apart without a single hole being dug or nail being nailed.
The $44 million apartment project will cost an average of $477,743 per unit, 90 percent of which will be paid by taxpayers. That’s twice what private developers say they’re spending to develop high-end apartments in the city today.
A few miles away, in Mission Valley, a private developer said he’s building top-shelf apartments for $225 a square foot. Another developer currently building upscale apartments downtown said his total cost is $275 a square foot.
The Estrella del Mercado apartments will cost $542 a square foot.
Taxpayers have poured almost $600 million into two dozen housing projects in the city of San Diego since 2007. A three-month voiceofsandiego.org investigation showed that, again and again, these projects are wildly more expensive than private developments.
Today, many in the affordable housing industry describe their business simply as “The Game,” in which a core cadre of developers partner with government allies to build increasingly elaborate and expensive buildings in a lucrative, high-stakes competition funded by taxpayers.
“It’s just gotten out of hand,” said Tom Scott, former executive director of the San Diego Housing Federation, a coalition of affordable housing advocates and developers. “We need to re-evaluate where we’re headed with these public policy goals and recognize there’s a need to create as many units as we can, without just warehousing people.”
Far from the ugly concrete towers of the past, today’s affordable housing projects are often the best-designed, most beautiful buildings in their neighborhoods.
Developers and public agencies have been squeezed by increasingly restrictive regulations to construct buildings that aren’t just cheap to rent but also have exclusive features like solar panels, biodegradable carpets and free high-speed internet. They’ve been ordered to build in dense urban neighborhoods, where often the only scraps of land left are expensive-to-develop parcels already spurned by the private sector.
Add in the requirement to pay much higher wages than the market dictates, which can boost a project’s cost by as much as 25 percent, and the net effect of decades of government tinkering has been to add substantially to the cost of building affordable housing.
As local governments scrounge around for spare change to keep basic services like schools, libraries and public safety afloat, tens of millions of dollars remain locked down for the sole purpose of funding the affordable housing game.
Contractors on most government projects are required to pay their workers “prevailing wages,” which in California are set by the Department of Industrial Relations and typically reflect wage levels set by labor unions. On San Diego construction sites, where many workers are not unionized, the requirement to pay prevailing wages can make a big difference both to workers and to project costs.
Unskilled workers on the Mercado del Barrio project construction site, for example, will be paid between $35 and $44 an hour for performing basic tasks like sweeping and digging holes. That’s equivalent to $72,000 to $92,000 a year.
A survey of three local general contractors who do private development showed they pay unskilled workers or laborers more like $14 an hour.
“It’s just absurd to pay $400,000 for a studio. You could be buying every family a 5,000 square-foot house in Eastlake for that,” said Steve Huffman, a real estate broker who regularly sells local apartment buildings.
Wrong on so many levels. There’s just so many reasons why this is a stupid idea that it’s not even worth commenting on.
On the bright side at least I’m paying for the whole thing with my tax dollars. Although $600 million would fill a lot of potholes.
Community Redevelopment projects are nothing but conduits for fraud. You can’t even access their website.
Why can’t the public see what is being done with their money?
The City of San Diego has been taking “in-lieu” fees for affordable housing and they need to put it somewhere.
It’s beyond me why affordable housing should be brand new. I’d rather see some blighted REO’s fixed-up and sold back to cities for affordable housing.
However, I’m suspicious of this articles claims for prices and wages. Private developers notoriously brag about how low they build and the government sponsored jobs need to show high wages. The truth is probably in between the two.
To my mind, the greatest problems from public housing are:
2) Putting all the poor people in one place.
When I lived in Chicago, I remember passing public housing units and thinking they were prisons.
It would be easier if developers would dedicate a small percentage of every development, but this is rarely done voluntarily; and if fines are imposed to compel such a measure, developers will often rather pay the fine.
My point here is that if the very poor were spread out more evenly, local communities could provide charity more effectively. Instead, we tend to pack all the poverty into one dark corner, and no one wants to go there. These areas become centers of crime and other societal illness.
Affordable housing doesn’t have to be brand new: clean, safe and functional will do. (But I think ALL housing should be attractive.) Mozart’s excellent idea about fixing up REOs would help to prop up the housing market and cut down on the waste/fraud.
I read the first sentence of that article and my mind immediately thought of tacos from Las Cuatro Milpas!!! Sorry, I know this is a RE blog, but yummy! It’s only reason I’m ever in that neighborhood.
There is an affordable housing section in Bressi Ranch (right next to trader joes). Not sure how it will do in the long run but it seems very safe and clean so far.
What is the effect on property values in upscale neighborhoods when a low income housing project is located in the immediate area? Since most of these condos/apartments look like any other residential development and don’t have signs on the street saying “Section 8 Welcome” or something to signify they are low income housing, is a seller required to disclose to the buyer the proximity of one of these complexes? Do the condo and apartment managers of low income housing projects screen prospective tenants with criminal background checks and references? I wonder if crime reports from the the complex are available to the public? I have no problems with law abiding upstanding low income people, but too often you read about racial tension and crime in and associated with low income housing projects, perhaps because of poor background checks?
I ask these questions because one will be erected on Sierra Ave in Solana Beach and there will probably be more units throughout SB and other NCC cities to meet the state low income housing unit requirements. If cities wish to use existing land they own for these projects, many could be in desirable parts and it would be nice to know the real estate impact of these units on surrounding properties.
My question about affordable housing is how does it really solve the problem of poverty? Does it encourage people to improve their situation? For example, if you get a raise and make more than $20k, you get asked to leave the unit. This is using taxpayer money to incentivize having a low income for a lucky few who win the lottery, who get this symptom treated, but we don’t treat the *cause* of the poverty.
Let’s rather use the same money to match real earnings for those in the 30% bracket, as a multiplier to getting them out of poverty. Encourage education, and raising individuals value to society, not poverty.
If you or a family member are committing any type of criminal activity you will be evicted and your section 8 will be canceled. The program will bring in officers to testify to the criminal activity, so the judge does have some discretion in the case.
Wrong(!) Wrong(!) Wrong(!),
First of all I stayed in 2 low-income apartments,
I went back to school and got my high school diploma and college education, eventually getting a very good job.
One of these units was in Linda Vista, did they check the references, and background check well,
no, no, no, and it ended up being the worse places to live or send your children to school.
The second place was on Juniper in MidCity, is that what they call it now, everyone with a pitbull dog lived on the street, drive-bys, Hollywood Park became dangerous and all the old residents moved. Both places were ran by “gansters”, now racially both changed but the same type of people inhabit, not live in these areas.
During this time all the black businesses dried up on Imperial, Commercial and so on…We had a trucking company, their were many on Commercial Avenue. Interesting enough two major players in San Diego did’nt hire any black people even in the 1970’s, and usually some religious organization steps in and harbors, or should I say try to manage poverty. They usually pit races against each other because of the predominate culture in in other countries where they seem to dominate. Hence, many people from southern states, mentally imbalanced from all over, ex military personnel suffering from PST, or whatever, and a large, extremely large social security disabilty population below 50years old.
This is not including all the people who do absolutely nothing from start naming all the states, Missouri, Mississippi, Alabama, Georgia, Oklahoma, Ohio, Tennesee, Illinois, Texas, the east and midwest who think they can get more money out of cali’.
Those other game playing developers have moved on…California will sleep with a rabit dog…Hollywood is Hollywhore, San Francisco is San Frau-cisco, I really hope the military get the —- out of San Diego!!!!
The main problem is the people living in the Low income apartments now are illegals, they check the ID’s when they first move in but with the yearly inspections. the id’s expire,managers are not required to check because they know that it’s expired and they. move in the rest of the families that are illegals. So its not benefitting America its benefitting mexico to give them a place illegally to move to when they come here. Please continue to check ID’s yearly
Section 42 Tax Credit Housing has nothing to do with “Public Housing.” This is money obtained from investors that is used for credits for a certain amount of time. “Affordable” housing is simply that, “Affordable.” If your income is too low, you may not afford a $1200 rent payment. A lot of companies require that people that move into affordable communities have social security cards… so the housing is not for the “illegals.” AND section 42 housing does NOT penalize resident for improving their financial life. In fact, it encourages. Management cannot kick someone out because they make more money the following year. People need to understand that this type of housing is made to improve the quality of life for those families that do need it. Often, it allows them to prosper.