Coronado has a rule that anyone building housing on the island would need to set aside 20% of the units for affordable housing. If they didn’t set aside those units, they’d pay the affordable housing in-lieu fee. That fee has been the same since 1993: a flat rate of $7,000 per unit that is not dedicated to low income housing.
Now, let’s say they are building four units. Twenty percent of four units would be a fraction of a unit, which is not possible. So, the municipal code defines that if the “calculation of the number of housing units to be reserved results in a fraction of a whole number, the developer shall reserve one housing unit.”Â
A developer building any developments under five units would need to build one housing unit for affordability.Â
So, if they were to build a four unit residential subdivision, and they didn’t want to build another affordable unit, they’d pay $28,000.
That would be $7,000 for each of the units they are building.
The city found that every single developer that built on the island has paid that fee since its adoption in 1993, instead of setting aside the allocated units for low-to-moderate income residents.Â
On April 15, the Coronado City Council members finally changed its affordable housing in-lieu fee after more than three decades.
Money collected through this program is deposited into a dedicated affordable housing fund. These funds are only used on providing new affordable housing in the city, according to the staff report provided by city staff at the council meeting.
The money can be used for purchasing land, building affordable housing or funding inclusionary housing programs, among other uses depending on the council’s priorities, according to Richard Grunow, the community development director.
All five members favored raising the in-lieu fee from the previous flat rate of $7,000 per unit to $59 per square foot.Â
To understand that comparison better, that would be around $133,000 per unit. That number comes from a 2,254 square foot model which was based on actual, similar projects developed recently in Coronado. Grunow stated that there is no assumption that future developments would necessarily be that size.
There would also be an annual adjustment scale according to the Construction Cost Index, or CCI.
Unless the city had deemed an application fully complete at the time of the April 15 meeting, this fee increase will be imposed.
The fee increase comes at the recommendation of Keyser-Marston Associates, a company hired by the city. The consultants ultimately recommended the maximum fee be $59/square foot, which was the lowest amount calculated in their research.
Staff stated that high land costs make it economically challenging to develop affordable housing in Coronado, and that all affordable units currently on the island were produced and publicly subsidized by the municipal fund. The city has 18 deed-restricted housing properties with a total of 172 units.
The report said that the staff was not aware of any low-income dwellings developed without funding assistance from the city.
Earlier last year, Coronado was forced by the state to adopt a controversial plan for inclusionary housing – one that city leaders criticized even as they approved it.
Every housing cycle, which lasts around 8 years, the city is obliged to follow the new Regional Housing Needs Assessment set by the state. This cycle, the housing required to be built on Coronado jumped from 50 units to over 900 units.
In mid-2024, after more than three years of litigation and fighting with the state and San Diego Association of Governments, Coronado’s housing controversy was finally resolved.
The decision does not necessarily mean that many units will be built. Rather, the city identified locations that purportedly could accommodate that many residences. It would be up to property owners and developers to determine whether they choose to construct affordable dwellings.
