Coronado City Council members voted to increase the city’s affordable housing in-lieu fee beginning at $25 per square foot this year and in 2026, followed by $10 per square foot increases every year through 2029.
Developers are required to pay a fee when they build in Coronado without setting aside 20% of the units for affordable housing. The amount had remained at a flat rate of $7,000 per unit not dedicated to low-income housing since 1993.
For more than three decades, all subdivision applicants have paid that longstanding fee, leaving the city with $1.7 million in a dedicated affordable housing fund to buy land or property for that purpose. Coronado officials said that the sum is so small that the city can do little to support projects for low-income residents.
In 2021, the city hired Keyser-Marston and Associates to review the in-lieu fee and make recommendations on new rates.
In April, after the study was completed, council members voted to increase the surcharge to $59 per square foot for all residential subdivision applications that had not yet been deemed complete.
This meant a fee of around $133,000 per unit for a 2,254-square-foot dwelling.
The following month, the council voted to delay implementation of the increase and reconsider it at a future meeting.
“If we didn’t have the in-lieu fee,” Richard Grunow, the community development director, said during a City Council meeting presentation on July 15, “the result would be that developers would have to build the affordable units as part of their project or acquire an off-site piece of property and build the affordable unit there. So the fee just gives them an option rather than building the units.”
The majority of council members expressed an interest in increasing the fund to generate additional money for the city’s affordable housing programs.
Residents, however, pushed back with concerns about the steep fee increase.
“While we support the city’s goals of securing a sustainable funding mechanism for affordable housing, we urge the council to adopt a more measured and incremental approach that promotes market stability,” said Coronado resident Debbie Giometti, a realtor and president of the Coronado Real Estate Association.
Coronado resident Brad Gerbel suggested that developers will merely pass the cost on to consumers like working families living in multifamily housing, and asked the council to consider the people who would really be bearing the load of the new proposal.
“What is the goal of this fee?” part-time Coronado resident Bryce Nurding asked, echoing other speakers. “Will it subsidize the rent of those below a certain income threshold? How is it possible to do that fairly?
“Isn’t it more fair to allow people to work hard, to earn more money if they want to live in a wealthy enclave in Southern California? Why set the fee so high relative to other communities? … If our goal is to reduce or increase housing supply, let’s do it through zoning, not what could be perceived as a government cash grab.”
This new fee is less than half, or 42%, of the $59 per square foot amount that the City Council previously adopted and promptly rescinded after pushback from the community.
In coastal communities like Encinitas, Del Mar and Solana Beach, the in-lieu fee, as of 2024, is $24.08 per square foot, $27,350 per unit and $27.22 per square foot, respectively.
The new fee in Coronado will be double or more of what’s charged in those communities by 2030.
Councilmember Mark Fleming said he felt the city should not make any change to the fee at all.
“I don’t feel like we’re going to accomplish what we’re setting out to accomplish,” he said. “I think instead we’re going to make it more difficult for people that work here in the island … to ever have a dream of living in Coronado.”
Meanwhile council members Kelly Purvis and Amy Steward supported changing the fee to $59 per square foot.
“We haven’t built affordable housing by anybody in the city of Coronado in decades so it will not get built if we keep doing what we’ve been doing,” said Councilmember Carrie Downey who proposed a shortened phased increase. “The whole idea of an in-lieu fee is, if you will not build some affordable housing … then we need you to give us the money so we can pull it all together and find ways to build it ourselves. … Yes, there is a plan: to get something that’s affordable in this town.”
Mayor John Duncan also agreed with a phased increase, beginning at $20 per square foot in 2025 and eventually reaching $50 per square foot in 2030.
“The real plan is to comply with state housing law and maintain as much local control as we can with our housing, so that we don’t have a plan that cannot get certified by the state,” said Duncan.
Council discussion led to a vote on Downey’s proposed $25 per-square-foot fee beginning this year, with phased increases as follows:
- 2025: $25 per square foot
- July 2026: $25 per square foot
- July 2027: $35 per square foot
- July 2028: $45 per square foot
- July 2029: $55 per square foot
- July 2030: adjusted at the rate of the Construction Cost Index published by the Engineering News-Record.
This plan for increasing the in-lieu fee was passed in 3-2 vote with Duncan and Fleming not in favor.
“We’re dealing with the ramifications of our elected leaders in Sacramento,” said Fleming. “That’s what we’re dealing with here that turns around and impacts this entire community.”
In spring 2028, city staff plans to present a report assessing the new fee structure and possible amendments.
