San Diego’s City Council unanimously approved two Community Plan updates on July 30, 2024.  Each plan includes policies to encourage housing development.  The initiatives were part of a two-part plan to enhance housing in both the University City and Hillcrest neighborhoods.   KMA supported the City in analyzing the financial feasibility of the modified housing provisions.

The Hillcrest Focused Plan Amendment, also known as Plan Hillcrest, allows for up to 17,000 additional homes, some in buildings with 20+ stories.  The plan amends the existing Uptown Community Plan, which also includes University Heights, Mission Hills, and Bankers Hill.  The update is notable for the designation of a LGBTQ+ cultural district, acknowledging the neighborhood’s history and culture.  The population of Uptown could ultimately increase from about 40,000 to more than 100,000 by 2050.

To encourage the additional housing development to support this population growth, the City is allowing an increase of density in specific areas. The City engaged KMA to assess the financial feasibility for higher density multi-family and mixed-use residential development prototypes on representative sites in the Hillcrest area.  As part of this analysis, KMA estimated development costs, net operating income, and residual land value for each residential development prototype. The conclusions of the analysis provided tangible examples of residential development anticipated to be feasible in the near-term, as well as identifying prerequisites for financial feasibility of higher density projects in the mid- to long-term.

The University Community Plan Update covers the “University City” area east of the University of California, San Diego (UCSD). The City considered an increase to the Citywide inclusionary housing requirement on new residential development within the Community Plan Area.  This dynamic mixed-use neighborhood is located 13 miles north of Downtown San Diego, and commands some of the highest property values and multi-family market rents in San Diego.

The City requested that KMA analyze the feasibility of introducing additional inclusionary housing requirements.  KMA tested a range of inclusionary set-aside options as part of this analysis, and worked with the City to identify illustrative multi-family and mixed-use rental developments on five prototypical sites.  KMA prepared financial pro formas to measure the potential impact of the proposed requirements on project feasibility.

University City’s plan update seeks to capitalize on the new MTS Blue Line Trolley Extension, and could nearly double the number of residents, while the implementation of zoning changes could also allow significant commercial development resulting in about 72,000 new jobs.

Mayor Todd Gloria commented on both Community Plan Updates:

“These plan updates are critical steps forward in creating jobs, strengthening our economy, addressing our housing crisis and honoring the unique cultures and contributions of our communities,” Mayor Todd Gloria said. “We are creating vibrant, sustainable neighborhoods that support job growth, reduce greenhouse-gas emissions, and improve the quality of life for all San Diegans. Hillcrest and University City will remain thriving, inclusive areas for decades to come under these innovative, strategic frameworks.”