- Samantha Valencia
1. In the face of an increase in demand for new residential development, what are the key growth management issues a City should consider?
In the face of an increasing demand for new residential development, cities can look to a few infrastructure issues to be considerate of, as well as key revenue sources to help raise enough infrastructure funds to manage future growth.
Smart growth, which pertains to high-density development located in urban areas and near transit routes, is an approach cities can consider when attempting to mitigate impacts to infrastructure as the population increases, as well as providing new housing units that cities statewide are currently lacking. Smart growth will become more and more important for a city in order to manage the influx of cars, pedestrians and transit riders.
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However, they will need to be implemented in areas that make sense, such as high-density locations near transit routes and close to commercial areas and office parks. In the city of San Diego for example, there have been grand smart growth plans, particularly in Mission Valley and 4S Ranch. Although proponents have not yet been able to consider them successful smart growth plans. Several reasons for this include sprawling yet empty parking lots, large shopping centers with few shoppers and far distances to public transit.
Similar to smart growth, cities can also begin thinking more about zoning regulations and potential changes that need to be made to implement more mixed-use development, which combines residential and commercial spaces. This sort of development can either be “horizontal” (development on a large site with multiple buildings) or “vertical” (development in a single structure), and would benefit many cities with increasing populations, with demand for housing near bustling business centers. When implementing mixed-use development, not only are zoning and coding issues a concern, but coding may also need to be revised to include parking regulations, and noise and light restrictions to accommodate both residential and commercial tenants (Fulton, W., 2004).
In addition to smart growth and mixed-use development, California cities should look to resuming redevelopment as another key approach to managing growth. Since Governor Brown closed all redevelopment agencies statewide in 2011, the state has fallen short in its affordable housing offerings. During healthier economic times, redevelopment agencies were producing up to 200,000 new affordable housing units a year, while in 2014, the number of new units is not even half that number (Musiker, C., 2014) According to Susan Tinsky, former executive director of the San Diego Housing Federation, “redevelopment agencies have been the best local vehicles to fund affordable housing” (2011). With the constant budget and housing crises, redevelopment would serve as a solution for both. Redevelopment would not only provide much-needed affordable housing but would also stimulate the economy with job growth. Tinsky also notes that “for every 100 units of affordable housing built, 122 local jobs are generated during construction and 32 permanent jobs after completion” (2011).
To help fund these infrastructure costs for redevelopment and smart growth, cities would need to develop new revenue sources. The city of San Diego, for example, does not currently collect fees for refuse pick up at approximately 285,000 homes located on public streets. The city’s fiscal year 2015 budget allocates $47.3 million to costs associated with collection services for refuse, recycables and green waste (Modica, Jr. et al, 2014). A large portion of that amount is funded through the General Fund and is allocated towards refuse collection (approximately $31.3 million) (Modica, Jr. et al, 2014). If the city began to charge households a fee to help recover costs for collection services, it would result in a minimal fee of approximately $13.83 a month (Modica, Jr. et al, 2014). Once these monthly fees are in place, the $31.3 million currently used to subsidize costs for trash pick-up could be used for other services that are underfunded, including infrastructure projects or public services.
Two other areas of potential taxation include rental or purchase of goods and services, including parking lot fees, utility user taxes and parking occupancy fees, to name a few. Currently, California taxes just 21 services, compared to New Mexico, Hawaii, South Dakota and Washington, all of which tax more than 140 services (California Commission on the 21st Century Economy, n.d.). These new revenue streams could help fund housing infrastructure needs for cities as the population continues to grow.
Lastly, the California Environmental Quality Act (CEQA) is another item policymakers should be mindful of when attempting to build affordable housing and other residential developments at the local level. Many neighborhood councils, environmentalists and other organized groups protest residential building plans on the basis of CEQA, acting as an obstruction to the developers, for various reasons. Oftentimes, groups opposing a project, including affordable housing projects, file frivolous lawsuits in attempts to delay progress, only to add costs to the developers by engaging in lawsuits and delaying construction. This in turn has lead developers to focus less on affordable housing projects and more on luxury apartment buildings and other upscale projects, as the return on investment is higher and financial losses are perceived to be less if CEQA protests are encountered.
There are many issues cities should consider in order to successfully manage a growing population. Several of these approaches that were discussed have been in progress over the past years and there should be considerable effort to make serious progress in these areas in the near future.
2. What are the three most significant political reforms you would recommend to Governor Brown?
Three significant political reforms I would recommend to Governor Brown include modifications to Proposition 13, reforms to the California Environmental Quality Act and reforming the tax code. Reforms to these three areas may help solve the state’s imminent infrastructure crisis.
The current California Constitution requires a two-thirds supermajority in order for the state legislature to raise taxes. Part of the reason why efforts to repeal this supermajority, as mandated in Prop 13, have failed in the past is due to taxpayers’ perceptions. Proponents of the repeal argue that rather than looking at tax hikes as a punishment, it should be looked at as much-needed revenue increases for public services and programs, such as education, that have been slashed due to lack of funds. Implemented through Proposition 13, the high approval rate makes it hard for infrastructure and public service funding to pass.
Since Prop 13 has passed, local municipalities have been strained ever since with limited funding as a result of limited revenues collected from property taxes. With decreased funding, cities and counties in turn reduce public services. Even though the state spent almost three-quarters of state revenue on local governments, in an effort to help alleviate the loss of funding from property taxes, “local administrators no longer have much incentive to spend it efficiently” (Kluth, A., 2011). Local cities now look for other ways to raise revenue, even if those means are not perceivably beneficial to the residents, including the fiscalization of land use.
Now that cities are left to rely increasingly on sales taxes to supplement lower revenue sources, they are more likely to zone land for commercial areas in order to collect more sales tax. California sales tax rates are some of the highest nationwide, and coupled with land use decisions, sales tax can be an effective way to raise lost revenue. Two most ways to do this are through “big-box” retail stores, such as Wal-Mart and Target, and through car dealerships. Cities “choose to encourage these types of development over residential development, which generates sales tax only to the extent that the new residents shop in the same city in which they live” (Chapman, 1998). Furthermore, cities have encouraged development of shopping malls, upscale homes and new hotels. Luxury homes would lead to higher property tax rates, leaving a current deficiency in the market for affordable housing. Reforms to Prop 13 and property tax restrictions could help cities and local governments raise enough funds to continue providing crucial public services and updating aging infrastructure.
Another area for reform, which hinders infrastructure and residential development, is the California Environmental Quality Act (CEQA). Protecting the environment and natural resources, while still promoting economic growth is a constant goal for the state. However some argue that CEQA is a huge deterrent to this goal, which leads to the need to update the law with simpler language and clear requirements, eliminating duplicative processes and restricting last-minute challenges (Editorial Board, 2014). CEQA is often used as a way to disrupt projects “for reasons that have nothing to do with protecting the environment” (Villaraigosa, A. & Reed, C., 2013). There is a need to overhaul the CEQA process to simplify and streamline the requirements.
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Many lawsuits are brought forth, on the basis of CEQA, in an effort to stop growth projects. Lawsuits against infill development projects, including “expansion and improvement of public transit and bicycle facilities, affordable housing, schools, hospitals, and all manner of public works”, submitted to appellate or California Supreme Court between 1997 and 2012, included nearly 60% of suits filed against these types of projects, and nearly 40% were filed against public works projects, including schools, universities and roads (Villaraigosa, A. & Reed, C., 2013).
CEQA may be a culprit in delaying economic growth for the state as well. The recent discussions to build a Tesla Motors factory in the Bay Area were unsuccessful, leading the company to build the factory in Nevada instead. The factory will cost $5 billion to build and will produce 6,500 jobs; something the state could have benefitted from (Editorial Board, 2014). Although there were discussions to limit pre-build environmental requirements and allowing Tesla to build the factory first then discuss environmental mitigations after, the company decided to build elsewhere (Editorial Board, 2014).
Lastly, tax code reform is needed to ensure the future economic health of the state. According to the Think Long Committee for California, “nearly $1 trillion – that is, roughly half – of the state’s economic output is not taxed” (Think Long Committee for California, 2011). This output includes primarily services and information activities (Think Long Committee for California, 2011), and leaves a major gap in the state’s budget. Professional services, such as “legal, consulting, accounting or architectural services” are all opportunities for future revenue streams. The Think Long Committee suggests bringing in new revenue flows through a tax rate of 5 to 5.5% on services, while also reducing personal income taxes, in order to reduce the state’s budgetary debt. Revenues collected from these new taxes would bring in much-needed funding for the future growth of the state.
Editorial Board. (2014, September 5). Loss of Tesla factory should put a charge in CEQA reform: Editorial. Los Angeles Daily News. Retrieved from http://www.dailynews.com/opinion/20140905/loss-of-tesla-factory-should-put-a-charge-in-ceqa-reform-editorial
Fulton, W. (2004, February 1). Mixed-Use Projects Require Planners To Rethink Zoning Standards. California Planning and Development Report. Retrieved from http://www.cp-dr.com/node/651.
Kluth, A. (2011, April 20). The People’s Will. The Economist. Retrieved from http://www.economist.com/node/18563638.
Modica, Jr., C. E., Kawar, J., & Tevlin A. (2014). Revenue Options to Address Critical Infrastructure and Affordable Housing Needs. San Diego, CA: Office of the Independent Budget Analyst.
Musiker, C. (2014, February 26). Did the end of California’s redevelopment agencies hurt affordable housing? KQED. Retrieved from http://ww2.kqed.org/news/2014/02/24/redevelopment-hurt-affordable-housing/
Public Policy Institute of California. (1998). Proposition 13: Some Unintended Consequences. San Francisco, CA: Jeffrey I. Chapman.
Think Long Committee for California. (2011). A Blueprint to Renew California. Santa Monica, CA: Nicolas Berggruen.
Tinsky, S. (2011, February 27). Redevelopment critical to affordable housing. UT San Diego. Retrieved from http://www.utsandiego.com/news/2011/feb/27/redevelopment-critical-to-affordable-housing/.
Villaraigosa, A. & Reed, C. (2013, April 24). Antonio Villaraigosa and Chuck Reed: Fix the California Environmental Quality Act now. Los Angeles Daily News. Retrieved from http://www.dailynews.com/general-news/20130425/antonio-villaraigosa-and-chuck-reed-fix-the-california-environmental-quality-act-now.
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