Housing prices in San Diego

A housing impact fee, also known as a linkage fee, is a city fee assessed on commercial or industrial development.

Commercial and industrial development usually results in new jobs – and additional jobs often create the need for additional housing, including housing affordable to non-professionals. The fee is used to help produce that affordable housing.

Why should more homes, especially at affordable sales prices or rental rates, be built? Because for years, San Diego has faced a housing crisis, and it is worsening because housing development is not keeping up with job growth. More and more people who fill jobs that keep our economy strong – from new teachers to health clinicians, store clerks, and restaurant workers – are finding it difficult to afford to live here.

The housing impact fee is designed to help address the need for workforce housing. The fees go into the San Diego Housing Trust Fund.

Many cities and even states around America have housing trust funds – revenues from linkage fees and other sources that are used to subsidize housing so it can be affordable to lower and moderate-income families. The San Diego Municipal Code that created a Housing Trust Fund was enacted in 1990. Since inception, the Housing Trust Fund has assisted with the development, rehabilitation, or purchase of over 6,500 below-market rate units; and it supports approximately 455 transitional housing beds annually.

As housing impact fees are collected by the City, they are disbursed into the fund, which the San Diego Housing Commission manages. The Commission solicits proposals from private, public, and nonprofit developers for projects that will create new or preserve existing affordable housing, leveraging trust fund dollars against private investment dollars. Annually, the Commission reports on how much money was collected and how it was used.

The fund is used to build new affordable housing, goes to rehabilitate and preserve older housing, to support first-time homebuyer programs, and to provide transitional housing. By law, at least 60 percent of the fund is used to create housing for lower income households, most with incomes at 50% or less of the median income for San Diego. Other percentages go to those earning less and those earning more than 50% area median income. A portion of the fund is used for administration, and some is used to strengthen the capacity of nonprofit developers.

Housing trust funds are used to augment private investments and loans. This leverage allows the fund to serve more families.

Whether you’re building a 20-story hotel or enlarging a five-person laboratory, you are subject to housing impact fees, which are charged for all new commercial or industrial construction, additions, or interior remodeling that changes a structure’s use. The current fee schedule is:

The fee amounts above are supported by a nexus study prepared in 1989 that demonstrated the need for housing based on new jobs associated with commercial development, In December 2004, the nexus study was updated in anticipation of considering updated fee amounts. Click here to read the 2004 Housing Impact Fee Nexus Analysis prepared by Keyser Marston Associates, Inc. for the City of San Diego.