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Lawsuit seeks to block San Diego plan to shift infrastructure money from wealthy to poor areas

An apartment complex under construction, with a large sign that says "Blue Water, 80 affordable apartment homes"
A lawsuit seeks to stop a new city policy that would allow developer fees from projects like this 80-unit apartment complex in Grantville to be shifted away from Grantville and spent in the city’s low-income areas.
(Howard Lipin/The San Diego Union-Tribune)

The plaintiffs argue that allowing developer money to be spent in neighborhoods far from the site of the development is unconstitutional and violates state laws.

A new lawsuit seeks to block San Diego from using developer money generated in wealthy neighborhoods to build libraries, fire stations and other infrastructure in low-income areas.

In the lawsuit, the Livable San Diego residents’ group, which opposes dense housing developments, says a new city policy that would shift developer money toward low-income and historically underserved areas is unconstitutional and violates state law.

The policy ends the city’s decades-long practice of keeping developer fees in 44 separate pots of money and requiring the money be spent in the specific neighborhood where it was collected. Instead, the city will pool the money into one pile and spend it in neighborhoods that most need it.

New policy pools developer fees citywide instead of restricting them to specific neighborhoods

The criticisms in the suit echo complaints made by many residents before the City Council approved the new policy, called Build Better SD, in September.

Critics say the policy shift is unfair to neighborhoods where lots of new high-rise and mid-rise housing is being built or will be built in coming years, because those areas are no longer guaranteed money for supporting infrastructure.

Under the old policy, those communities were guaranteed developer money for libraries and fire stations to support new growth. Under the new policy, those communities must hope city officials decide their neighborhood is a priority.

“There is no nexus between the payment of developer impact fees and the public impact of the proposed development,” the lawsuit says. “A development may be required to pay developer impact fees associated with a project that can be 40 miles from where the improvements paid by the developer impact fees are located.”

The suit uses 40 miles because some of San Diego’s neighborhoods are that far away from each other, such as Rancho Bernardo and San Ysidro or Carmel Valley and Otay Mesa.

Following an earlier commitment to shifting some infrastructure spending toward low-income areas, the city’s new scoring system prioritizes areas with weak economic opportunity.

The plaintiffs want the court to block city officials from following through on the new policy.

The litigation comes just before the City Council is scheduled to approve a new formula next month for prioritizing which areas get developer money under the new policy.

“We want to reverse this plan because it is harmful in so many ways,” said Tom Mullaney, executive director of Livable San Diego. “It’s against California laws and the U.S. Constitution.”

The lawsuit does not specify which articles of the Constitution the plan allegedly violates.

San Diego officials say critics are oversimplifying how the new policy will work, stressing that it prioritizes more than historically underserved neighborhoods.

City planning director Heidi Vonblum told the council last month that the new policy also prioritizes areas with the largest populations and the most recent growth.

It also prioritizes projects with environmental benefits and those located where other infrastructure is crumbling, she said.

Mayor Todd Gloria, who has spearheaded the new policy, praised the council for approving it.

“For the past 40 years, we’ve used developer fees to pay only for specifically listed infrastructure in the communities where the fees were generated,” he said. “Once upon a time, that made sense — but not anymore. Now, that system only perpetuates historic inequities and leads to millions of desperately needed infrastructure dollars sitting unused.”

Mullaney said the new policy would create unfairness while trying to solve it.

“The city tried to get around the unfairness by saying ‘We’re one big happy family and everyone uses everything all across the city,’” he said. “The city is trying something to see if it sticks, and it’s not going to stick.”

Already, Los Angeles, San Francisco and San Jose all collect most of their developer fees for infrastructure on a citywide basis, not by specific neighborhood.

The lawsuit argues such policies violate the state Mitigation Fee Act, which says fees charged to support development must match with the impact that development will have.

By allowing money to be spent so far away from the project creating the impact, the plaintiffs argue the city “can’t show there is a reasonable relationship between the use of the developer impact fees, the type of development and the need for the public facility.”

The suit says the new policy also violates state environmental law because the policy shifts how the city will mitigate the environmental impacts of projects.

A spokesperson for City Attorney Mara Elliott declined to comment Wednesday other than to say her office will review the complaint.

For details on the city policy, visit sandiego.gov/buildbettersd


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