One year into its state-required plan to build enough homes to satisfy its need by 2029, the city of San Diego is already way behind the pace it would need to fulfill the plan.

The city now needs to triple the number of housing permits it issues in each of the next seven years to meet the state target – a level it hasn’t come close to reaching anytime recently. 

But the city’s planning department doesn’t seem to be alarmed.

In a progress report headed before the City Council’s housing committee Thursday, city staff did not mention the city was far behind meeting its housing plan.

“This report is intended to provide information on the city’s progress in permitting new homes and the effectiveness of the City’s existing housing programs,” the staff report reads.

The city issued permits for 5,033 homes last year, short of the 13,505 the city needs to build each year to achieve the total assigned to it in a statewide housing program called the Regional Housing Needs Assessment.

Now, to reach that 108,036 home target, San Diego needs to find a way to nearly triple its annual production, to 14,715 new homes per year.

“I just don’t know how you do it,” said Gary London, senior advisor at London Moedor Advisors, a firm that provides analysis and market research to developers. “I don’t think it’s possible.”

The city’s 2021 total is typical for recent years. The city has, on average, issued permits for 5,174 homes since 2012. Those historical comparisons of annual housing production were also not included in the progress report. City staff did, however, provide data to show increased production from the two specific housing programs it praised – one to spur granny flat production, the other allowing developers to build more homes in a project if they include low-income housing.

“All of the City’s previous housing reports are posted online to provide historic information for those years and RHNA cycles,” said Tara Lewis, a city spokesperson, on the city’s decision to exclude from its report any historical data on annual housing production or context on the lack of progress the city made toward its housing goals.

The state housing program assigns housing needs to each region in the state for an eight-year period, and each region further allocates its need among the cities within it. When representatives from the region urged the San Diego Association of Governments to lobby state officials for a lower total, then-Mayor Kevin Faulconer boasted of the city’s willingness to lead the way on increasing housing production to meet the higher need.

“It’s never easy, but we have to support more housing,” Faulconer said. 

Failing to meet the housing target is nothing new, for San Diego or anyone else in the state. The program has been in place for over 50 years, and has failed to ever spur homebuilding, as the Los Angeles Times detailed in an investigation five years ago. In the last eight-year cycle, the state assigned San Diego 88,096 new homes; it ended up issuing permits for just 44,531, according to city reports.

In response to that shortcoming, state officials have begun strengthening the law. One of those laws, passed in 2017, could mean that the San Diego City Council soon loses its authority to reject housing projects that meet certain standards, if it continues to lag behind its housing target.

Louis Mirante, vice president of public policy at the Bay Area Council, who has worked to strengthen city housing plans statewide in recent years, said many of those efforts won’t materialize until a few years into the new cycle for the state program. San Diego, he said, has two more years to ensure its zoning is consistent with its elevated housing target.

“We’re optimistic, or hopeful, that housing element reform will produce meaningful change, but we don’t expect that change to happen immediately,” he said. “It’ll take three or four years.”

Mayor Todd Gloria and the city of San Diego, Mirante said, are regarded generally in the state as players who work to combat the state’s housing crisis. Nonetheless, he said he wasn’t shocked to see the low numbers in San Diego’s first year, or its reluctance to acknowledge them.

“Anyone with half a brain cell could say, ‘You’re eliding the point here – the city is not on track to meet its eight-year goals,’” he said. “It’s kind of par for the course unfortunately – the real challenge is for the state and public to hold cities to account.”

The city’s failure to measure up to the state requirements came in every income category. Developers pulled permits for 5 percent of the homes for very low income residents it needs, 12 percent of the low income homes it needs, less than one percent of the moderate income homes it needs, and 83 percent of the market rate homes that it needs.

Still, Mirante thinks recent changes could make the law beneficial for the first time.

“When you talk to anyone from the state’s Housing and Community Development office, they’ll say up until this cycle it was absolutely a Kabuki exercise,” he said. “It was a paper product and nothing else. They’re putting more work in now. So we have to wait to see what this cycle can produce – even still, I want to be as forthright with local governments as I can be, but I need to be honest that I don’t see this as the only thing.”

Lewis, the city spokeswoman, argued many of the factors driving housing production – land costs and availability, environmental protections, and economic factors like the costs of labor and materials – are out of the city’s control. 

But for the city to nearly triple the city’s annual production, as the state housing needs target suggests is needed, Lewis said developers need more time to acclimate themselves to housing-focused reforms that the city has already passed, like its Complete Communities program, which lets developers exceed local zoning if they reserve units to residents with low and moderate incomes, or changes made to implement a recent state law that allows fourplexes in areas zoned for single-family homes.

New reforms that could help triple local housing production, she said, could include the city’s implementation of a state law that lets developers build more homes near transit, or the city’s plan to make it faster to pass new sets of development restrictions in each neighborhood of the city.

“Additionally, RHNA numbers focus on the production of housing units, but ignore the number of people housed,” Lewis said. “A three-bedroom home, which could house four or more people, and a microunit home that houses two people, count the same in RHNA totals. While the City is committed to achieving its RHNA allocation, we also continue to focus on incentives and policies and will result in more homes for more people, rather than simply focusing on the total unit count.”

London, the real estate market analyst, said that last point is especially important – the city isn’t building enough homes that would let families stay in the city as they grow, in its haste to build as many homes as possible.

“That’s the crisis the city has to adjust for – we’ve significantly overlooked large households, principally families,” he said. “There is a severe shortage, there is, but at some point there will be a wakeup call that we’ve only been accommodating the people who can be accommodated by small units.”

London joked that he worked for nearly every “rancho” housing project in the region – the large, sprawling suburban projects in the northern part of the city. Now, lacking land to continue that type of growth, the city is grappling with the reality that most dense, urban projects include 200 units at a time, when their suburban predecessors included 2,000.

“You have to do so many incremental projects to make up for it, and you cant do it,” he said. “That’s why I’m not critical – their hands are tied.”

London said he pays little to no attention to the state RHNA goals.

“A lot of this is political pablum, it really is,” he said. “The point is that 15,000 units a year is a fantasy, I can’t disagree with that.”