San Diego to apply for $7 million HUD PROHousing grant to boost small-scale homes and DIF relief

The City Council unanimously authorized the Planning Department to submit a competitive HUD ProHousing Round 2 application seeking the maximum award of $7 million to support the city's small-scale neighborhood homes initiative and a development-impact-fee (DIF) relief pilot.

Assistant Planner Angela Dang told the council the round allocates approximately $100 million nationally, with a maximum award of $7 million per jurisdiction. "The City Planning Department is proposing to apply for the maximum grant award of $7,000,000 to fund the small scale neighborhood homes initiative and the development impact fee or DIF relief for affordable homes program," Dang said. Staff said the grant requires at least one public hearing and a 15-day public comment period before submission; the application deadline is Oct. 15, 2024.

If awarded, staff said roughly $6 million would fund the DIF waiver pilot and $1 million would support the next phase of the small-scale homes program, including design guidelines, an economic viability study, public engagement, and zoning amendments to allow small townhomes, rowhomes and other compact housing near transit. Councilmember Joe LaCava and others stressed this is only an application step and that acceptance would not by itself change zoning or guarantee construction.

Public commenters voiced mixed views: some neighborhood advocates urged stronger objective design standards to ensure new small-scale homes fit existing blocks, while advocates and residents urged greater attention to extremely low-income and emergency shelter needs. Councilmembers said the proposal balances capacity-building study work with an implementation pilot and that the DIF relief is intended to reduce the cost barrier for affordable development. The motion passed unanimously 7'to'00.