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SOHO President's Message
By David W. Goldberg
May/June 2024
 Photo by Sandé Lollis |
One of the great strengths of the preservation movement is its ability to adapt to changing times. As I’ve noted in previous columns, SOHO is very different today than it was when founded in 1969. Moreover, preservation offers important perspectives on what makes good public policy, which is why the current push to increase housing production under the guise of affordability raises so many red flags.
The argument we most frequently hear is that increasing housing supply will result in greater housing affordability. All things being equal this should be true. The rub, however, is that all things aren’t equal—the type of housing being greenlighted is market rate housing, not affordable housing. Further compounding the problem is that the demolition of historic and older housing to make way for new construction reduces the supply of affordable housing. Replacement housing is almost always more expensive than what was there before.
If the goal truly is to make housing more affordable, then we urgently need policies that directly promote affordable housing creation while leaving existing housing in place, not the other way around.
Another concern: In the rush to create more housing, costs associated with increased development haven’t been factored into the equation. Older and historic neighborhoods have aging infrastructure that wasn’t designed for high density. As things stand, the City of San Diego is years behind in addressing deferred maintenance issues. Adding more infrastructure upgrades and repairs without an adequate funding mechanism in place would be disastrous. It’s pay now or pay later, and later is invariably much costlier.
Proposed updates to the highly successful Mills Act program that prioritize “multi-family properties and conversion of commercial/industrial properties to housing for property tax benefits” also merit close scrutiny. Using Mills Act tax benefits to preserve historic apartment buildings and bungalow courts, and converting historic commercial/industrial properties into housing, makes good sense. If, however, this is done at the expense of the current program benefiting individual homeowners, the change amounts to taking from one hand and giving to another.
What makes more sense is expanding the Mills Act program to include multi-family properties and commercial/industrial properties converted into housing through adaptive reuse. Yes, Mills Act contracts decrease property tax revenue, but that’s only part of the story. As research from at least one economic study suggests, “the loss in property tax revenue is more than compensated for by a general increase in the property value of other houses in the neighborhood.”
Currently, there are no other City of San Diego programs that directly reduce the cost of home ownership. If keeping housing costs in check is what’s important, then keeping Mills Act property tax relief in place for homeowners—especially new homeowners who receive the greatest benefit—is the better course of action.
As a recovering accountant, I believe data analysis can provide useful insights, so when I got a copy of the Certified Local Government Program—2022-2023 Annual Report I crunched some numbers. Without getting too far into the weeds, this is what I found:
For the twelve-month reporting period ending September 30, 2023, the City historically designated 39 properties and completed 3,704 project reviews, for a designation rate of a mere 1.05%. Also, there were 19,254 properties in the historic resources inventory and as of 2020 (the most recent figure I could find) housing stock of approximately 530,000 homes in the San Diego region. This means that roughly only 3.6% of the homes in San Diego are deemed historic.
Considering that just one in 100 potentially historic properties is being designated; that the entire historic resources inventory represents only a tiny percentage of total housing stock; and, according to the city’s recent Independent Budget Analyst Report, that historical resource reviews don’t hold up permits, it’s hard to understand all the anti-preservation criticism.
Maybe historical resource review and designation aren’t impediments to new housing production after all.
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