SAN DIEGO—Despite job growth and high innovation, low- and moderate-income workers still can't find affordable housing in San Diego County, and many are forced to live on the outskirts of the county and commute in, speakers at last week's 33^rd Annual San Diego Economic Roundtable told attendees.

During the second session of the roundtable (to read about Session 1, click here), Deborah Ruane, EVP and chief strategy officer for the San Diego Housing Commission, said there is an alarming lack of affordable housing in the region. “We're turning in [Section 8] vouchers at about 70 per month.” San Diego's median area income is $75,300, but housing is very expensive to build. Total development cost per unit is $300,000, and costs continue to rise.

The SDHC determined more than 60 reasons why affordable housing is more expensive to build than market-rate homes, according to Ruane. One of the reasons is that funding sources for these projects have constraints: a project has to have solar energy, be near a freeway entrance or look so beautiful that it doesn't look like affordable housing, for example. Also, local, state and federal governmental regulations cause the costs to build these projects to rise.

“We came up with eight action items on affordability to address the housing-affordability crisis,” said Ruane. They include:

setting an annual housing production goal
incentivizing more 80/20 market rate/affordable housing development
deferring developers' fees
reducing parking requirements
reducing community-space requirements
unlocking land and increasing ground leases
shortening the entitlement process
approving community plans with master EIRs

Ruane said $54 million on market-rate and $23 million on affordable-housing development would be saved if these action items were all implemented. “We have a lot of low-income workers here, and we need to house them. It's important to bring low-income housing [in closer to the] jobs.” She added that the loss of redevelopment agencies a few years ago impacted the state by $1 billion, but “we can get $60 million to $100 million through banks” and other sources to help alleviate the affordable-housing crisis.

Next, Gina Champion-Cain, CEO of American National Investments, gave her presentation on innovations in the real estate industry. She said the Millennial customer is the next phase for the industry, so we must reidentify our base. The largest generation in the US is between ages 19 and 36, and they make up 37% of the workforce—a number that will climb to 75% by 2025. They focus on live experiences rather than tangible assets, and their average annual household income is $65,000.

What drives Millennials to San Diego is affordable living as compared to Northern California, the lifestyle, the draw for specialized talent, the large number of tech companies here and a pet-friendly work environment. Millennials, she said, seek work/life integration. They value growth, purpose, culture, passion and perks.

Moreover, Champion-Cain said, Millennials have forced the workplace to up its game. Common perks include time off to pursue passions and time off to volunteer. Some of the real estate trends that have Millennials have sparked include shared places (the ability to gather in places they enjoy), amenity-rich buildings, health-conscious communities, smart buildings, mixed-use developments and transit-oriented developments. An example of this is the Village in Mission Valley, a community that includes such amenities as a business center, village market and demonstration kitchen. Other examples are corporate campuses with hospitality services such as Patio Marketplace, which Champion-Cain's company provides in office buildings including the Aventine in UTC. Urban-infill mixed-use developments have emerged from what Millennials want: places that incorporate residential with community uses and transit-oriented development like in Little Italy. “Owners know they need to attract companies with a creative class that has high demands,” said Champion-Cain.

When Millennials travel, they prefer unique experiences over cookie-cutter hotels, she added. The Pendry Hotel, which is due to open soon in Downtown San Diego, is a good example of this, featuring lots of amenities and interactive features, an art gallery and offering food options from high end to grab and go.

What the San Diego economic community needs to do now, Champion-Cain concluded, is to figure out who the next customer is going to be, work out the affordable-housing issue and maximize apprenticeship programs to attract and retain the best and the brightest to our region.

Last up was Matt Doyle, assistant superintendent for Vista Unified School District, who spoke of the innovative measures being instituted by his district to get students engaged in school, get the local community involved in the school and encourage student placement in the local workforce. To the first point, he said educators need to change their traditional stand-and-deliver approach to teaching and focus more on experiences. “Student engagement is the biggest education issue of our era.” The district is doing this with business partners in recognition that engagement decreases from the elementary-school level to the high-school level. “It's less about preparing kids for college and more about preparing kids for their [future careers].”

Encouraging students to assess their strengths is one way of getting them engaged. In the Vista district, each student creates a profile to guide them through school and help them establish and reach their goals. The district is 1:1 with technological devices, and teachers work with students on the sides, not in the front to drive independent thinking and self-motivation. More mobile environments and collaboration are also stressed. Students are able to move on with their learning when they're ready and can even hope to start college as a junior in high school if they are advance quickly enough.

This approach has resulted in a significant reduction in absenteeism and low grades, Doyle said.

The district is also being proactive by reaching out to businesses to find out what skills they need from workers coming out of the school system. College, rather than a goal, is viewed as a step along the way toward a career.

“We came up with eight action items on affordability to address the housing-affordability crisis,” said Ruane. They include:

setting an annual housing production goal
incentivizing more 80/20 market rate/affordable housing development
deferring developers' fees
reducing parking requirements
reducing community-space requirements
unlocking land and increasing ground leases
shortening the entitlement process
approving community plans with master EIRs

This approach has resulted in a significant reduction in absenteeism and low grades, Doyle said.

Instant Insights /

Housing Affordability a Top Concern for SD

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