San Diegans who make too much to qualify for traditional affordable housing but not enough to rent in many places will get some help next year through a new pilot program.

Gov. Jerry Brown has signed a bill introduced by Assemblyman Todd Gloria, D-San Diego, that authorizes the San Diego Housing Commission to work with developers and property owners to include middle-income earners in projects that also include low-income housing.

The new program, which also will be introduced in Santa Clara County, will allow housing authorities to make loans to finance the construction of projects that include units specifically for middle-income households. It will not divert money from low-income housing or reduce the number of units set aside for low-income families.

Participating projects will have 40 percent of units for low-income people with housing vouchers and 10 percent for middle-income earners who will pay less than the market rate.


Gloria said it’s hard to say how many units will be created for middle-income renters in the program.

“This really is exploring an area that hasn’t been explored before,” he said. “Just the idea of legalizing housing authorities to work in this space could be a modest effort, or it could be transformative.”

Assembly Bill 1637, also known as the Missing Middle Housing Act, was signed by the governor Oct. 14 and will create a four-year pilot program in the city of San Diego and Santa Clara County beginning in 2018. Gloria said he originally wanted the program to go into effect throughout the state, but it was scaled back to just two areas that had similar markets.

Under a program already in place, developers and property owners receive federal tax credits for projects that include units for low-income people. In one example, projects set aside 20 percent of units reserved for people who earn 50 percent or less of the area’s median gross income, which in the city of San Diego is $55,000 for a single person, according to the San Diego Housing Commission. The tax credits also are available for projects where 40 percent of the units are reserved for people who earn 60 percent or less of the area median gross income.


Under the new program, projects with 40 percent of units for low-income renters also will set aside 10 percent of the units for people who earn up to 150 percent of the area’s median gross income, which in San Diego calculates to $82,500.

“A lot of the conversation about housing affordability is low-income, as it should be,” Gloria said. “I think what is missed is, when you look at the amount of people who are housing insecure but have jobs and make money, it’s a pretty large number.”

The San Diego Housing Commission has reported that about 70 percent of San Diegans are priced out of the housing market, and the county’s average rent hit a record high of $1,875 a month in September. MarketPointe Realty Advisors reported rent has increased 7.59 percent this year.

Debbie Ruane, executive vice president and chief strategy officer for the San Diego Housing Commission, said the program creates opportunities for more affordable housing, including low-income people who qualify for housing vouchers.


With a 10-year waiting list of 84,000 people for 15,500 vouchers, Ruane said there is a pressing need for more low-income units. The pilot program will create a new funding mechanism because qualifying projects can use a combination of bond money used for low-income housing and conventional debt used for market-rate housing.

The commission cannot use existing funds for middle-income housing so it is seeking new investors for the program, Ruane said.

Although focused on rental units, Gloria said the program has the potential to allow housing authorities to create affordable housing that can be purchased.

More directly, he said the program could lead to home ownership for middle-income people who can afford monthly mortgage payments but can’t afford a down payment on a house. The break in rent will help them save for the big initial cost, he said.


“My constituents talk to me all the time, and it’s very common for me to hear from someone I represent, ‘Hey, my spouse and myself both work, and we can’t foresee a day when we can afford to buy a home,” he said.

Gloria said the pilot program to help middle-income earners complements the city’s efforts to create more affordable housing.

In July, the San Diego City Council approved a change in the municipal code to make it easier to build granny flats and revised a program meant to encourage construction of affordable housing by speeding up the permitting process.

Gloria said the pilot program can include acquisitions by the Housing Commission such as the Hotel Churchill, which was converted into affordable housing for veterans and others who would be homeless.


He also said he expects construction of new projects will be market-driven, with developers and investors participating because of the demand for more middle-income housing.


Homeless Playlist × On Now San Diego hepatitis outbreak continues to grow: 481 cases On Now Homeless entrenched in booming tent city along Santa Ana River On Now San Diego mayor agreed to homeless hub, then delayed, advocates say On Now Homeless outreach in San Diego On Now Video: Street Art: Portraits of San Diego's Homeless #8 On Now In poverty himself, 'Water Man Dave,' is the fearless saint of San Diego's homeless 5:41 On Now Video: Homeless living in cars find safe havens 2:21 On Now Street Art: Portraits of San Diego's Homeless #7 On Now Pitching a tent plan for San Diego's homeless On Now Homeless efforts get $80M boost for various services

gary.warth@sduniontribune.com

Twitter: @GaryWarthUT


760-529-4939