Coronado Increases Housing In-Lieu Fee for Developers

Categories: Breaking NewsGovernment NewsNews

New housing projects in Coronado to address affordability issues.

News Summary

Coronado has implemented a new housing in-lieu fee for developers, raising it to $25 per square foot, the first increase since 1993. While ongoing projects are unaffected, projected increases to $35 in 2027 and $55 by 2029 aim to address the community’s affordable housing crisis. The fee change, passed by a narrow vote, raises concerns about potentially discouraging multi-unit developments in favor of single-family homes, as median home prices continue to soar in the area, creating challenges for dual-income families.

Coronado has officially set a new housing in-lieu fee for developers looking to create subdivisions, marking the first increase since 1993. The Coronado City Council approved the fee increase, which is now set at $25 per square foot and took effect immediately. This decision is aimed at addressing the growing need for affordable housing in the area, particularly as local housing prices have soared over the past few decades.

Developers with ongoing projects will not be affected by this fee change, as they will be grandfathered into the previous fee structure, which was a flat rate of $7,000 per unit. However, the city plans to gradually increase the fee over the coming years, with projected increases to $35 per square foot in July 2027, $45 in July 2028, and reaching $55 by July 2029. Post-2029, the fee will be adjusted annually based on the Construction Cost Index (CCI), which takes construction costs into account.

The Council is scheduled to review the impact of the fee increase on the local housing market in the spring of 2028, taking into consideration the potential effects it may have on development trends. Concerns were raised during discussions that the increased fees could dissuade developers from investing in multi-unit housing projects, pushing them instead towards building single-family homes, which typically do not meet the community’s affordable housing needs.

The decision to revise the fee structure was not without contention. The City Council passed the new fee schedule with a narrow 3-2 vote, where Mayor John Duncan and Councilmember Mark Fleming voted against it. They expressed concerns about the potential for inflated housing costs and the risk of discouraging future development in Coronado. In contrast, Councilmember Carrie Downey advocated for a phased approach, arguing that it is crucial to generate more revenue to support affordable housing initiatives.

Currently, Coronado’s affordable housing fund stands at approximately $1.7 million, but city officials deem this balance insufficient for the demands of future affordable housing projects in an increasingly high-cost environment. Earlier discussions among council members even proposed implementing an immediate fee of $59 per square foot, which would have positioned Coronado as having the highest affordable housing fee in the region. However, community pushback influenced a reconsideration of this drastic fee increase.

As the housing market becomes progressively unaffordable, many dual-income families are finding it increasingly difficult to secure residences in Coronado. The median home price in the area hovers around $2.6 million, with only a single one-bedroom condo currently listed for under $1 million. These figures highlight the substantial challenges faced by potential homebuyers in the community.

State regulations further complicate the situation, as mandated income thresholds determine who qualifies for affordable housing based on the area median income (AMI). Coronado has historically maintained one of the lowest housing in-lieu fees in the county, a rate that had remained unchanged for over two decades while costs of living and construction skyrocketed.

City officials and council members believe that appropriately set fees are essential for sustaining local housing affordability and ensuring socio-economic stability within the community. As Coronado outlines its path towards implementing these changes, it faces the critical task of balancing support for affordable housing with the needs and interests of developers and residents alike.