December 10, 2000 - From the December, 2000 issue

Housing Crisis Has No Cure Without Prop. 13 Reforms

Senator Joseph Dunn, who heads the Senate Housing Committee, recently asked city managers across California for legislative suggestions to curb the statewide housing crisis. Azusa City Manager Rick Cole--a leading Smart Growth advocate among city managers--responded with a call for a long-overdue reform of local government finance that removes the disincentives to building housing in California's older communities. TPR is pleased to present Rick's impassioned plea to end the bickering and direct sales tax dollars where they will have the most positive effect.


Rick Cole

Smart Growth is gaining momentum as a potentially powerful movement in California, bringing together a broad range of often antagonistic interests to search for common ground. But to succeed, this effort must avoid the tendency for catchy terms to be diluted into meaningless buzzwords. It needs to show some tangible results for all the rhetoric.

At the state level, there is one single reform that all by itself can make a profound long-term difference. It would immediately remove the most powerful force behind continued "dumb growth" and its backlash rival, "no growth." It is as simple as it is profound: take all future growth in sales tax dollars and allocate that revenue on the basis of population, not point of sale.

Commission after well-meaning commission has recommended fixing the perverse sales tax incentives that lead cities and counties to prostitute good planning for retail revenue. Critic after caustic critic has savaged the stupid results of "sales tax canyons" that line our freeways with big boxes and auto malls. Controversy after vitriolic controversy has engulfed communities across California as residents have battled developers over mega-projects designed to capture regional retail dollars. But in Sacramento nothing changes.

Complicated proposals for reform don't get traction because they threaten the short-term advantage of the most brazen pirates. Incomprehensibly, the League of California Cities has been particularly shortsighted in opposing common sense reform out of a misguided delusion that "cash box zoning" is a right to be defended instead of a dependency to be discarded.

To break this deadlock, there are two big advantages to reallocate only the growth and not tamper with the current sales tax revenue base of cities and counties:

• It doesn't directly affect the current "winners"

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• It immediately removes the biggest incentive for subsidized stupid sprawl

Some cities would gain more than others from the shift. Those who are just about to open a big new (or expanded) sales tax generator would not get the windfall. Those cities that command a decisive advantage now would see that advantage diluted over time. But for the latter, they would do better than it appears on the surface. Under the current system, those that grab a bigger share of retail dollars have the most to lose from hungry competitors trying to raid their retailers.

The cities that would gain the most from the shift would be older cities and suburbs that sprawl has left behind, precisely those areas of California where redirected growth would be most economically and environmentally sustainable. Reinvestment and infill development would begin to flow back to brownfields and declining neighborhoods. Dying strip centers and shopping malls could be reclaimed for walkable mixed-use neighborhoods, providing housing and services for countless motorists condemned to long commutes between attractive jobs and affordable housing.

The proposal is no panacea. Removing the main incentive for stupidity will not automatically raise the intelligence quotient of politicians, planners, real estate professionals and "citizens against absolutely everything" activists. But that missionary work is already going on as all sides are worn down by the divisive harangues that caricature the world into two camps: greedy developers and environmental extremists. Millions of Californians look at the steady erosion of our quality of life and in their gut sense the long-term threat to our standard of living. They are looking for a way out, and in response, smart leaders like State Treasurer Phil Angelides are talking sense about smart growth. It's time for the Legislature and Governor, awash in surplus dollars, to start investing them in California's communities. The place to start is allocating them where they will do the most good and the least harm.

Like the ancient Gordian knot, gridlock in Sacramento has defied all attempts to untangle the local fiscal mess. It's time to take the sword to it, cutting through special interest double-talk and self-serving inertia. Reallocate sales tax growth. Now.

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© 2021 The Planning Report | David Abel, Publisher, ABL, Inc.