Think Twice About Limiting Growth

Throughout San Diego County, local politicians have embraced the populist clamor for growth restrictions. Building slowdowns and moratoriums, enacted through ordinance and initiative, have become the rule rather than the exception.

Eleven of the region’s 18 cities and the county currently enforce some form of growth restriction. Oceanside has placed an annual limit on the number of homes that can be built. The city councils in the new cities of Encinitas and Solana Beach approved sweeping moratoriums as their first acts upon incorporating. Vista imposed strict community holding capacities to limit new development.

The county Board of Supervisors stopped processing new zoning and general plan amendments. Last month, the San Diego City Council adopted the Interim Development Ordinance, which will cut in half the number of new homes that can be built. This restriction is on top of temporary construction bans the city had previously imposed in a half-dozen of its communities.

With widespread use of moratoriums, it is worthwhile to consider why these measures are popular and what the impacts--intended or otherwise--will be.

At the heart of the cry for growth restrictions is the rapid population expansion we have experienced here and the attendant overburdening of facilities. Annual housing production has jumped from 9,000 new homes to more than 43,000 during the past five years. Often, public facilities have failed to keep pace with the new housing.

Though the homebuilder has been blamed for this failure, studies clearly demonstrate that new growth more than pays its own way and, in fact, generates surplus revenues. Facility inadequacies are the result of several factors not controlled by the builder.

In some instances, builder fees have been wrongly diverted from their intended purpose by local jurisdictions. Similarly, governments have hoarded building fees and failed to spend them as quickly as they should.

Building restrictions do slow development, but they rarely solve the problems they are intended to address. Simply stated, limits on new homes will not stop population growth or speed the provision of needed public facilities.

Most of the region’s population growth is completely unaffected by land-use regulations. Twenty-four percent of the region’s recent growth is attributable to natural causes (more births than deaths). Thirty-six percent of our growth is caused by increased defense spending creating new jobs. Finally, about 10% of the growth is due to retirees moving to San Diego.

All combined, at least 70% of the region’s growth occurs in spite of local land-use restrictions. Artificial caps on the number of new homes will not stop these people from living in the San Diego region. History has demonstrated that when housing production is down because of growth limits, recession or high interest rates, residents who cannot afford housing make due by doubling up. College students, recent high school graduates and newlyweds live under their parents’ roofs. Grandmothers live with their children. Young, poor families share apartments. Ultimately, the very poor are forced into the streets.

Those making up the remaining 30% of the population growth that might be affected by land-use policies are not readily deterred by limitations on housing production. These new residents move to San Diego in response to job opportunities in the private sector. Generally, such job formation is deemed desirable since it increases employment, incomes, tax revenues, opportunity for economic advancement and the quality of life.

If land-use policy can’t solve problems, prolonged building restrictions can and do create new problems such as these:

- Increased home prices. The effect of building restrictions on home prices is obvious. If demand for homes continues while government artificially restricts supply, the market place will bid up the price of each new home. Then, only the very wealthy will be able to purchase new homes. This market phenomenon is an already apparent consequence of local growth restrictions, as San Diego has become the least affordable housing market in the nation.

- Higher rents. With fewer people able to purchase fewer homes, more families are forced to remain renters permanently. As fewer rental units are built, demand further increases and rents skyrocket.

- Unemployment. The construction industry directly employs about 52,000 workers, about 6.5% of the region’s labor force. For every construction job lost due to growth restrictions, three other jobs throughout the economy are also lost. Such widespread unemployment touches all segments of the economy; suppliers, manufacturers, the service sector, retailers etc. Similarly, stopping commercial and industrial development would destroy about 13,000 new jobs a year.

- Lower standard of living. High unemployment causes greater competition for the jobs that are available, which translates into lower wages throughout the economy. Lower wages coupled with higher housing costs caused by growth restrictions will slowly but surely drive down the region’s standard of living. But these setbacks will not affect all segments of society evenly. Most of the well-to-do, the environmental elite, will survive if not prosper. But, the backbone of our community, the working-class families, those seeking economic opportunities and people on fixed incomes, will find it increasingly difficult to afford the no-growth life style.

- Decline in public services. Proposition 13 shifted the tax burden away from the homeowner and onto new development and commercial and industrial properties. It is a simple fact that the owner of a home built in 1987 pays about four times the taxes as he would on an identical home purchased in 1977. It is also a fact that commercial development generates more tax revenue than is required to meet the needs of the new development. Accordingly, halting new construction or limiting jobs curtails the flow of tax dollars and will eventually lead to the deterioration of public services.

- Decline in public facilities. Another consequence of Proposition 13 is that most cities do not now have enough money to construct the infrastructure needed to serve existing residents. So, even though builder fees are technically intended only to pay for the impacts of new development, as a practical matter cities have come to rely on them to solve existing deficiencies. The private builder has become the public financier of last resort. Halting or severely slowing new development stops new facilities needed to serve the entire community.

Moratoriums or other growth restrictions are not the answer to the problems that give rise to their adoption. Rather, they serve to compound the problems and cause new and possibly worse troubles, such as a decrease in the affordability of both owner-occupied and rental housing, higher unemployment resulting in a lower standard of living, and a decline in the availability of public services.

The attention of the local jurisdictions is more properly focused on working to provide real solutions to the difficulties created by growth. These real solutions include requiring new development to guarantee provision of needed facilities concurrent with or in advance of need.

By addressing the root problem--the lack of adequate facilities such as roads and parks--the residents of the San Diego region and their children will be much better-served.