By Craig Adelman, Principal and Brendan Dentino, Associate

This month, the LDC Housing Policy team kicked off an exciting new project with the San Diego Housing Commission to design a pilot program to build middle-income housing. Authority to explore middle-income housing production was granted to three California communities by California Assembly Bill 1637.

Written by San Diego Assemblymember Todd Gloria, AB 1637 authorizes the San Diego Housing Commission to implement a pilot program to develop and finance a middle-income housing production program by January 1, 2022. According to the bill, middle-income housing projects must include at least 40 percent of units affordable to households earning no more than 80 percent area median income (AMI), as well as 10 percent of units affordable to families earning no more than 150 percent AMI. The results of the pilot program, if implemented, must be reported to the State legislature for each calendar year the program is in effect.

Middle-income housing is an important rung in the housing ladder. It provides middle class households, including civil servants like firefighters and teachers, decent and affordable housing. Unfortunately, with few available policy tools or financial resources for middle-income housing, production has fallen well short of State targets. In the City of San Diego, just 10 housing units affordable to households earning 80 to 120 percent AMI were constructed since 2013. This dearth of housing affordable to the middle class is often referred to the “missing middle.”

There are many negative effects of the “missing middle.” Most importantly, it results in families spending more on housing, which limits their ability to pay for food, healthcare, and other essentials. This is not a rare occurrence. According to the Census Bureau’s latest American Community Survey, a majority of renters in San Diego County (57%) are housing cost burdened, or spending more than 30 percent of their monthly income on housing. The search for more affordable housing pushes people geographically further from city centers and jobs, which exacerbates traffic congestion, results in more greenhouse gas emissions, and increases transportation costs.

On behalf of the San Diego Housing Commission, LDC will develop and propose a pilot program structure that would result in a middle-income housing project that proves the feasibility of middle-income housing production given the right policies and financing structures. To do so, we will look at domestic and international models for producing middle-income housing, factor in existing land use and housing policies in the region and city, survey what financial resources could be committed to constructing middle-income housing, and leverage our team’s deep expertise in housing policy, development, and finance. If you have workable models that you would like to share with us, please contact Brendan.

Filling the gap for the “missing middle” will take pressure off the existing affordable housing stock, allowing low- and moderate-income households to utilize those units. It will also afford community members the opportunity to live in the neighborhoods of their choice, unencumbered by concerns over housing costs. This project perfectly aligns with our firm’s mission of ending the homelessness and housing crises in California and we can’t wait to develop the final product for one of San Diego’s greatest innovators, the San Diego Housing Commission.