A SPECIAL REPORT ON THE SOUTHERN CALIFORNIA ECONOMY : CLOUDS ON THE HORIZON : Winds of Change: The Slow-Growth Movement : Economic Effects of Rising Calls to Limit Development Are Uncertain

Times Staff Writer

Los Angeles City Councilman Zev Yaroslavsky, who has tied his mayoral hopes to a slow-growth movement of uncertain economic consequences, traces the movement's roots to the energy crisis of the 1970s.

Until then, he notes, Southern California was characterized by increasingly sprawling growth. But suddenly, soaring energy prices made commuting long distances less desirable, and developers focused their attention on already settled areas.

As they started to build up rather than out, areas such as Yaroslavsky's Westside district and the Ventura Boulevard corridor of the San Fernando Valley became so congested that residents had difficulty getting around.

'Not Yet New York'

Groups such as "Not Yet New York" formed, advocating use of the political process to slow or eliminate growth.

Analysts differ on the likely economic effect of these groups. But they agree that, barring a major economic downturn, the slow-growth movement is here to stay and is likely to have an important effect on Southern California's business climate.

The movement represents a dramatic turnaround.

"The whole psychology of Southern California has been boom or bust for so long," Yaroslavsky observes. " . . . Now the public attitude has changed almost 180 degrees."

In response, Yaroslavsky co-sponsored the city's first slow-growth ballot measure, Proposition U, which voters overwhelmingly approved last year. The measure reduced by one-half the allowable size of new buildings on about 70% of the commercial and industrial property in Los Angeles.

So far, its passage and the recent defeat of City Councilwoman Pat Russell by slow-growth advocate Ruth Galanter have cost developers more in lost sleep than in dollars.

But that is because Proposition U still allows considerable growth. Under old city zoning, for example, there was room for enough commercial development to create 10 million jobs, planners say. Under Proposition U, there is still room to create 5 million.

Developers fear that more Draconian measures lie ahead.

While Los Angeles so far has sought to regulate only commercial development, they note, other parts of the region have moved to limit new home construction.

In Ventura County, for instance, the number of new housing permits that can be issued has been tied to air quality, planners say.

In San Diego, in what was widely viewed as a preemptive strike to head off a potentially more restrictive initiative, the City Council voted recently to cut the number of new housing starts nearly in half, to 8,000 from 15,000.

And in Riverside and Orange counties, signature drives are under way to qualify restrictive measures for next year's ballots.

The Riverside proposal would tie housing starts to overall state growth. But since Riverside is the fastest growing county in the state, conforming to the state average would mean a substantial reduction in new housing starts.

In Orange County, major construction projects of any kind would be barred whenever traffic did not flow swiftly enough to meet strict standards spelled out in the proposed measure.

Ken Willis, executive vice president of the Building Industry Assn. of Southern California, the region's principal developers' group, says he expects both measures to qualify for 1988 ballots.

If they pass, he says, "tens of thousands . . . of people who are now employed will basically lose their jobs."

Willis laid out a sort of doomsday scenario: Development pressures would increase in Los Angeles and San Bernardino counties, which would respond with their own restrictive measures; construction employment would plummet; the value of existing housing would soar, and corporations would choose to expand elsewhere because their employees would be priced out of housing markets in the Southland.

Ironically, Willis says, Southern California's commercial tax base would erode to such an extent that governments would be even harder pressed than they are now to fix the deteriorating infrastructure, which sparked the effort to restrict growth.

Mark Pisano, executive director of the Southern California Assn. of Governments, is considerably more sanguine.

He says that he expects the region to continue to thrive because of powerful economic and demographic forces that are stronger than the slow-growth movement.

Because of the area's pleasant weather, its location on the Pacific Basin and its economic diversity, he says, there is likely to be no decrease in the number of jobs the region adds each year. The figure typically is between 70,000 and 100,000, he says.

Because much of the region is populated by minority groups with traditionally high birth rates, about two-thirds of the area's population growth will occur through births rather than immigration, Pisano says.

That growth will be substantial. SCAG has estimated that, in the next 25 years, the population of the six-county area it serves will rise to 18.3 million from 12.4 million.

Pisano says he does not believe that the slow-growth movement will affect regional job or population totals.

But he expects that it will create shifts in development within the region, as one area's growth limitations pressure other areas to accept growth.

Eastward Growth

That is happening now in parts of Los Angeles County, such as the Santa Clarita Valley and Palmdale, which are absorbing growth that nearby Ventura County has rejected, he says.

Pisano says he expects the deserts and eastern portion of the region to be under the greatest pressure to grow.

The slow-growth movement could make traffic problems worse if jobs are separated by extreme distances from available housing, he notes.

Ron Rudkin, chief economist for the Southern California Gas Co., says he predicts that that may happen.

Rudkin says he expects the slow-growth movement to have "some impact . . . (but) . . . not as great as it could be because I think Southern California is going to continue to be one of the most vibrant areas in the nation, principally because of Pacific Rim trade."

However, he expects that cost of living in population centers will rise to such an extent that "newcomers are going to have to go farther out from their work . . . or work is going to have be moved closer . . . to where people are going to be living."

The slow-growth movement "will mean that wage rates will have to increase to compensate for the fact that workers are going to have to commute further," Rudkin says.

Industrial Flight

That will lead to higher production costs and, as a result, "some reduction" in the region's production.

"Some industries are going to lose out to . . . industries in other states or abroad," he says. "Also there will be some shifting away from industries that are labor-intensive."

"As there is a reduction in output, there will be a multiplier effect on industries that serve the more basic industries--a reduction in, say, output in a glass manufacturing industry would mean a reduction in the need for (the industry's employees to get) haircuts and tires and things like that," Rudkin says.

But Yaroslavsky says he believes that the slow-growth movement will actually be good for business.

"I don't believe there's any economic downside to what we've done so far," he says, referring to Proposition U.

"It's not good for business if the Santa Monica Bay is full of raw sewage because we can't handle sewage from new construction. . . . It's not good for business if it takes an hour to get from downtown to Vermont Avenue."

Right now, he says, "The supply of infrastructure is exceeded by the demand for it. We're got a sewer pipe that can't handle all of our sewage . . . streets that can't handle all of our traffic. . . . To do nothing in the face of what we confronted would cause economic harm."

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