Urban Land Institute Studies Smart Growth Trends, Recommends a California Smart Growth Initiative

To accommodate population growth without severely impacting California's resources, more concentrated development is needed. However, the most rapidly growing regions of the state are becoming less, rather than more dense. While highly urbanized areas such as the San Francisco Bay Area, Los Angeles and San Diego continue to add large numbers of residents, the fastest growing areas, by percentage of population growth, are largely suburban counties such as Bakersfield, Fresno, Sacramento, and Merced. These areas have traditionally been characterized by a pattern of low-density development that continues today.

California's basic growth and development trends include: rapid population growth, urban areas expanding into undeveloped areas, low-density and automobile dependent development, and decentralized employment clusters. These trends pose a number of problems for the state's residents, economy, and environment, including:

Housing Availability and Affordability-California consistently underproduces housing by at least 25 percent annually. As a result, housing prices, particularly in major urban areas such as San Diego, Los Angeles, and the San Francisco Bay Area, are at near all-time highs, and are out of reach of many potential homebuyers. For most residents throughout the state, housing costs are rising much faster than incomes-seven of the ten most expensive housing markets in the nation are in California, and only 30-32 percent of current residents can afford to buy a home in the state. Housing shortages also raise equity concerns. Rapidly rising housing costs particularly impact lower-income residents, who are often restricted in their residential options. While many residents at various income levels are increasingly less able to afford conveniently located housing, a growing number of lower-income residents cannot afford any housing at all.

Mobility-While the number of licensed drivers increased only 9 percent between 1988 and 1998, the total number of vehicle miles traveled increased 21 percent. A key cause of increasing congestion is regional imbalance between jobs and housing. As regions throughout California continue to see employment centers build farther from housing, this imbalance will increase.

Farmland-Agriculture is California's leading industry, generating at least half a million jobs and some $26 billion in sales and related economic activity each year. Currently, the state is losing thousands of acres of farmland to residential and commercial development annually: between 1996 and 1998, 52,408 acres were urbanized. The Central Valley, identified by the American Farmland Trust as the farming region in the United States most threatened by development, is projected to lose 1 million farm acres by 2040.

Environmental Quality-Waterways, bays, and coastal waters throughout the state are at risk from pollution, urban development related runoff, and other pollution sources exacerbated by sprawl. These areas are also a key economic asset, with recreation, tourism and maritime activities producing billions of dollars each year.

Economic Competitiveness-While California has natural competitive advantages that attract businesses and industries, including a large, educated workforce and a high standard of living, development patterns that create pollution and congestion, increase transportation and housing costs, and strain infrastructure have the potential to significantly impact the state's attractiveness to both workers and industry.

BARRIERS TO SMART GROWTH IN CA

While possibilities of smart growth offer opportunities for California to develop in ways that are equitable, efficient, and economically sound, there are many structural, political, and fiscal barriers at all scales that impeded the adoption of smart growth practices. Key among these barriers are:

• Fiscalization of Land Use-Since the passage of Proposition 13 in 1978 set limits on property tax increases, local governments have increasingly come to rely on commercial sales tax to supplement shrinking property tax revenues. California's tax system rewards local governments for making unbalanced development decisions, or what has come to be called "fiscal zoning"-the approval of developments whose tax revenues are anticipated to exceed local government costs, and the denial of developments whose tax revenues are anticipated to be less than those costs, such as the prioritization of sales-tax generating commercial development over residential development.

• Public Opposition to New Development-Smart growth projects that are sited on undeveloped land within already urbanized areas, or are adjacent to urbanized areas, often encounter opposition from neighboring residents and businesses. Concerns expressed include increased building and population density, higher levels of traffic and congestion, loss of open space, incompatibility with existing urban design, and other issues. The public may not perceive that well-designed developments can make communities more attractive and livable, provide significant landscaping, and facilitate the preservation of open space.

• Fragmented Decision-making-While cities, counties, and other jurisdictions fiercely-and understandably-guard their authority over regulation of land use within their boundaries, the impacts of land use decisions are often felt beyond the local jurisdiction. Under current state planning law, there is no requirement or incentive for local land use plans to be coordinated with the plans of neighboring communities. Finally, there is no incentive for local or special district activities to be consistent with regional policies.

• Insufficient Infrastructure Funds-The Department of Finance recently estimated the state's unmet capital outlay needs at $40.4 billion over the next ten years, exclusive of transportation. Estimates of unmet transportation needs, exclusive of maintenance, range from a minimum of $15 to $25 billion to more than $75 billion.

• Limited Funding for Planning-Local land use strategies in California are guided by local general plans. However, no state law mandates or provides funding for, general plan updates. As a result, many localities with budgetary challenges have not funded the integration of smart and livable community strategies in their general plans.

• Lack of a Coordinated and Consistent State Growth Strategy-California lacks a coordinated system or strategy for making decisions about growth. The state's planning and development process, largely established in the 1960s and 1970s, relies on five elements-state conservation and development policies, state and regional growth and infrastructure plans, environmental disclosure laws, single-purpose regional agencies, and local general plans.

State policies for development and conservation are unclear, imprecise, or sometimes in conflict (such as the tension between the policy to provide affordable housing and the policy to protect open space and natural resources). When conflicts emerge, there is little guidance on how best to resolve them.

The opportunity to strategically invest state funds to reinforce regional and statewide goals is largely unrealized. State and regional growth and infrastructure plans are narrowly focused, and sometimes work at cross-purposes (such as plans to build freeways and plans to clean the air, or plans to conserve open space and plans to accommodate housing demand), and do not provide enough funding to meet growing needs.

Local general plans to guide development of individual communities do not provide long-term certainty for either development or conservation and lack the scope and scale to cope with issues such as transportation, air quality, jobs/housing balance and water.

• CEQA Redundancies-The California Environmental Quality Act (CEQA) requires localities to evaluate the potential impacts of proposed plans and projects. However, there are multiple redundancies among stages of the evaluation and approval process; projects are often evaluated on the same criteria multiple times, even if the projects have been previously found to meet general plan requirements, environmental standards, and other CEQA requirements. In addition, individuals and organizations often use CEQA to delay action on proposed development projects, despite the fact that in many cases, opposed projects are entirely consistent with adopted community plans and policies. CEQA also does not place a priority on smart growth, and the CEQA review process is inconsistent both between and within localities. These barriers create uncertainty, delays, and additional costs in the development process.

• Brownfields Liability Issues-Brownfields are sites that are abandoned, unused or idled, often due to contamination from previous or neighboring uses. By some estimates, there are up to 600,000 acres of brownfields in California, many within cities, making brownfields a valuable potential resource for the creation of more compact and efficient development in existing urbanized areas. However, the fact that brownfields are subject to multiple, often unclear federal, state and local regulations, are under the authority of multiple separate agencies, and the fact that purchasers and developers of brownfield sites are liable in perpetuity for any environmental hazards arising from the sites, regardless of the cause of the hazard, creates uncertainty and delay in the development process and discourages developers, lenders, and insurers from investing in redevelopment of these sites.

• Limitations on Workforce Housing due to Construction Defect Litigation-Compact attached residential development, such as condominium or townhouse development, can be a significant source of affordable and land-efficient housing. However, the proliferation of construction defect lawsuits brought against builders and developers by homeowner's associations has become a serious disincentive to the development of these projects.