In a Compromise, Coronado Will Phase In Higher Affordable Housing Fees

When a developer builds a subdivision project with two or more units, there are two choices: Provide affordable housing, or pay a fee.

It’s known as a housing in-lieu fee, and Coronado’s is increasing for the first time since 1993. It will increase over the span of several years in effort to mitigate any potential shocks to the real estate market.

The approved schedule sets the new rate at $25 per square foot, effective now. Any current projects will be grandfathered into the former, flat rate of $7,000 per unit.

Then, starting in July 2027, the fee will increase to $35 per square foot. In July 2028, it will increase again to $45 per square foot, leveling out at $55 per square foot in July of 2029.

At that point, the fee will be adjusted annually for the Construction Cost Index (CCI). The city will also evaluate the change to the fee in the spring of 2028 to assess whether the higher fee impacted the market negatively. For example, some worried that assessing too high a fee would dissuade developers from building multi-unit projects and instead would simply build single-family homes, which are not subject to the fee.

The council approved this fee schedule in a 3-2 vote, with Mayor John Duncan and Councilmember Mark Fleming dissenting. Both preferred a lower fee, worrying that increasing it too much would discourage development, inflate housing costs, and ultimately hinder, rather than help, housing affordability.

Councilmember Carrie Downey pushed for a phased approach to the fee increase, saying it would give the community and developers time to adjust to and plan for the higher fee. However, she stressed that the city needs to generate more revenue for affordable housing projects.

“It will not get built if we keep doing what we’ve been doing,” Downey said. The city’s affordable housing fund currently has a $1.7 million balance, which is not enough for the city to undertake its own affordable housing project in a costly market.

Meanwhile, Councilmembers Kelly Purvis and Amy Steward preferred the immediate, $59 per square foot fee that the council approved at its April 15 meeting. After community pushback, the council decided to revisit the matter and ultimately decided to gradually increase the fee.

Although the decision was a compromise of opinions, the council agreed that Coronado is quickly becoming too expensive for families—even dual-income, higher-earning families—to remain in the community.

Steward recounted when she and her husband bought their Coronado home in 1978 for $78,000. She was a teacher; he was an officer in the US Navy. Their home was one of two in the city they could afford. Now, she said, with the dearth of affordable housing in Coronado, a similar family likely couldn’t afford anything in the city.

But that, Fleming argued, is the point: If the fees to build are higher, the cost of the home will be higher. Homeownership in Coronado will become even less attainable than it is today, he said.

Duncan agreed, saying too hefty an increase might not only discourage private development, but also, it could stifle fees collected for the city’s affordable housing fund, making it harder for the city to invest in its own affordable housing projects.

“Until now, (Coronado’s fee) has been the best deal in the county, and maybe even in the nation,” Purvis countered. “I was married to a developer, so I understand bottom lines and the importance of making money on projects, but projects adjust when fees go up.”

The median sold price of a home in Coronado is $2.6 million. At time of publication, the least expensive home for sale in Coronado—a one-bedroom, 587-square-foot condo—was listed for $945,000. It was the only property for sale at less than $1 million.

The income thresholds for affordable housing are dictated by the state and based on the area median income (AMI). In Coronado, the income ranges are as follows: