As reports evincing the state's housing shortage pile up and cities fight over regional housing allocation plans, few can doubt the need to reform how California provides its residents with housing. David Booher helps to direct reform efforts through this concise and reasoned account of the larger factors inhibiting the creation of housing in California. TPR is pleased to present this article fleshing out the current imbalance.
David Booher
By David E. Booher, AICP
The Southern California region is in the midst of a controversy over allocations for future housing growth. But the controversy is more than just a debate about how many housing units each city and county in the region should plan to accommodate. In fact many policy observers recognize that the fundamental issue for California is a phenomenal growth rate in the face of a planning system that is completely incapable of dealing with it. Based upon focus group research the larger public recognizes this conundrum as well.
The current housing controversy arises out of a state law enacted in the early 1980's that established a system of planning for housing needs. Local governments were given the primary authority but they were required to plan for their fair share of the regional housing units need. The law also set up a process by which the state provides regional housing units needs to each of California's regional councils of governments. In turn the COG's are to allocate the housing need among local governments based upon a range of planning factors such as jobs, land availability and environmental factors. The entire process is repeated in updates every five years. This is not the first time this process has created controversy. But the growing economy and the significant deficit in housing production compared to demand has intensified the debate. Southern California isn't alone either. The Bay Area is close behind in the schedule of updates, followed by the Sacramento region, Monterey region, San Diego and the remainder of the state. In the San Francisco Bay Area a similar fight is already beginning to ferment over housing allocation plans.
The numbers are daunting for sure. By 2020 California will grow by 12.5 million people. This translates into a growth of 5 million households. Low -income households needing some kind of housing assistance will grow by 1.3 million. To accommodate this growth the state needs to produce conservatively 220,000 new units of housing annually. Every year we don't produce 220,000 units the deficit for future years grows. In 1999, a boom year in housing production nationally, California local governments issued permits for only 140,000 units. Between 1995 and 1997 housing production fell 145,000 units short of demand.
Some argue that California simply does not have enough developable land to accommodate this growth. But the facts don't support this argument. A recent study by Professor John Landis of the Institute of Urban and Regional Development at U. C. Berkeley for the state Department of Housing and Community Development documented the state's land supply. Professor Landis and his colleagues analyzed the land supply in the 35 metropolitan counties for which data existed. After eliminating land too far from urban services, land encumbered by steep slopes, wetlands and floodplains, prime and unique farmlands, and habitat for endangered species, they documented urban raw land of over 8 millions acres. According to Professor Landis: "Statewide, this amount of land would be sufficient to accommodate projected household growth through the year 2020 more than three times over." There is also the availability of infill land that can be reused at higher densities. Although the Landis study found that average densities have been increasing over the past decade, there was insufficient data to document how much urban infill land could be available. So what's the problem?
Many observers believe the problem is that local government priorities are driven by short term concerns that tend to ignore long term issues such as an adequate supply of affordable housing. And the local planning process manifests these short- term concerns. Again to quote from Professor Landis in the most recent statewide housing plan "Raising the Roof":
"In theory, the development approvals process in California is supposed to be plan-driven. In fact, the over-riding importance of the California Environmental Quality Act (CEQA), the ease with which general plans may be amended, and the widespread adoption of various growth management programs and alternative planning structures have all increased the discretion local governments-and thus indirectly, citizens and neighborhood groups-can exercise over private development proposals. The effect of these supplemental measures has been to elevate the importance of short term fiscal, traffic, and environmental issues in the development approval process and to reduce the importance of long term planning. None of these changes has favored housing."
The consequences for the state of failing to accommodate the housing need, also documented in "Raising the Roof," are significant: Continued escalation of housing prices and rents, continued increases in commute times (with the attendant traffic congestion, air quality decline, stress and sprawl), and continued increases in housing over-crowding.
Most ominously the lack of affordable housing could threaten the future of the economy, as the lack of affordable housing prevents creation of job opportunities. Already we are beginning to see some warning signs from Silicon Valley.
What can be done? There's evidence that state political leaders are already beginning to take the problem seriously. Last year the State Infrastructure Bank guidelines incorporated housing element law compliance into the eligibility requirements for local infrastructure funding. The recent state budget included the largest commitment of general fund revenues for housing in history, $570 million dollars. A bill signed by Governor Davis, AB 2864, allocated $100 million for a new program to provide incentive infrastructure funds for local governments meeting the housing element law and producing new housing units based upon their housing plan. And of course there is the matter of the state holding firm on the regional housing allocation process. To do otherwise would be pure folly. But clearly more needs to be done.
Most observers agree that the local fiscal system is a significant obstacle to local housing approvals because the fiscal consequences of new housing compared to retail are frequently negative. The Speaker's Commission on State and Local Finance developed some thoughtful recommendations in this regard but so far they haven't gone anywhere in the Legislature. The budget included $200 million in local fiscal relief to give a boost to local fiscal reform, but so far the Conference Committee working on how to design this reform isn't making much progress.
A significant problem may be the squabbling by local government representatives in Sacramento among themselves. They usually can't agree among themselves on how to reform the local fiscal system because they are more concerned about short term impacts of reform proposals on their respective budgets than they are about the long term benefits of fiscal reform, much less the state's housing needs.
In the meantime, local governments, COG's, the State, nonprofits, businesses, and builders are going to have to figure out how to work together to produce a lot more housing. This is going to require collaboration, out of the box creativity about how to plan and design housing, outreach to local neighborhood groups, reform of local planning processes, regional approaches, and most of all a lot of hard work and patience. Failure is likely to invite even more active intervention from a state anxious to protect the future sustainability of the state's economy and environment.
Author's Note: The statewide housing plan, "Raising the Roof", is available at the Web site of the Department of Housing and Community Development:
http://www.hcd.ca.gov/hpd/hrc/rtr/
General information regarding the 2000-2001 State Budget housing legislation may be found at:
http://www.governor.ca.gov/briefing/pressreleases/jul00/l0003876.html
Detailed information regarding AB 2864 and other legislation may be accessed at:
http://info.sen.ca.gov/
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