A Grim View of Curbing Development : Initiative Would Worsen Traffic, Doti Report Says

The slow-growth initiative that may be on the countywide ballot in June will worsen traffic and could lower the quality of life in Orange County, Chapman College economist James Doti said Monday.

“Yes, it would increase delays and add to congestion,” Doti said during a press conference at Chapman’s campus in Orange, where he released the final results of a study commissioned by the Board of Supervisors.

Doti said the initiative would mean a relative standard-of-living decline for some people and could push the median resale price of an existing home--at $167,000 in 1987--to $366,000 by 1997 instead of the $320,000 expected without the initiative.

Preparted for Supervisors

Doti, dean of Chapman’s Center for Economic Research, said he based his conclusions on the economic analysis of the proposed ballot measure that the center prepared for the Board of Supervisors for $10,000. Every supervisor has declared opposition to the initiative.

A draft of his report, which became public last week, said the county’s economy would continue to grow, but at a slower pace, if the proposed ballot measure were adopted for unincorporated areas of the county and for its cities. The final report, while more detailed, did not contradict the draft.

The report said the initiative would cut tax revenue with which cities can improve local roads and build public facilities and push housing prices up at a higher rate than otherwise expected. That, Doti said, will force a greater proportion of the county’s workers to live elsewhere, congesting existing freeways.

The entire study was based on a key, much-disputed assumption supplied by the county’s Environmental Management Agency: that the initiative will result in a 15% cutback. That projected cutback has been attributed to increased time needed by the county to process development projects and the elimination of projects that will become unprofitable to developers if built to meet the initiative’s strict requirements.

Builders have argued that the cutback in construction if the initiative passes will be even more dramatic than Environmental Management Agency officials expect.

But Tom Rogers, co-founder of Orange County Tomorrow, the group that drafted the initiative, argued that there is no way to predict what kinds of projects developers will propose under the initiative’s restrictions.

“I strongly disagree with the study, because it is biased by the information the county gave him (Doti),” Rogers said Monday. “He admits that the entire study is based on the county’s numbers, so what can I say? It’s simply a biased study.”

Doti said that the county’s economy has been growing at an unsustainably high rate for years and that such growth could not be expected to continue indefinitely.

“We are projecting a slowdown (in the county’s economy), even without the initiative,” he said.

In the report, Doti averaged six possible scenarios, ranging from applying the initiative only in unincorporated areas to applying it throughout the county and all of its cities. In the most extreme of Doti’s scenarios, recently approved projects would need to be upgraded to comply with the initiative.

Under the composite of the six scenarios:

- In 1997, the total county building permit valuation would be 26.4% or $1 billion lower if the initiative passed than the $3.8 billion projected without the measure.

- In 1997, if the initiative passed, employment would be lower by 2.2%, or 31,673 jobs, than the 1,446,474 workers expected without the initiative.

- Taxable sales would be lower by 3.1%, or $1.8 billion, in 1997 than the $56.6 billion expected without the measure, leading to a $22-million loss in anticipated local government revenues.

- Average per-worker personal income in 1997 would be 4%, or $1,320, less than the $33,000 projected without the initiative. The $33,000 projection is adjusted for inflation and expressed in 1988 dollars.

- Housing prices would be 14.5% higher in 1997 if the initiative passed than they would be without the initiative.

Effect of Housing Increase

Doti said a 14.5% increase in housing prices means that the $167,000 median resale price of an existing home today, which is otherwise expected to rise to $320,000 by 1997, would hit $366,000.

Under the study’s worst-case scenario, the growth in the county’s work force could be slowed so much that it would be 6.8% smaller than it would be without the initiative. That would mean there would be 98,792 fewer employees in 1997 with the initiative than without it.

The study also indicated that, in the worst case, local government tax revenues in 1997 could be 9.8%, or $69 million, less than the $56.6 billion expected without the measure.

Finally, the report said that, in the worst-case scenario, housing prices would increase at an average, inflation-adjusted rate of 4.69% annually under the initiative, contrasted with 1.41% without it.

Russ Burkett, a key initiative supporter, said the results are “all hypothetical. There’s no way to determine what the market conditions are going to be around here 10 years from now. How can they prove that there will be less housing? There’s nothing in the initiative that stops anyone from building new houses.”

Doti acknowledged that he did not take into account changes in the housing market, for example, that could be caused by the county becoming less popular as a place to live if nothing is done to curb traffic. “There’s no way I could do that,” he said.

He also said he did not compare the effects of the initiative to the impact of the county’s current policies, which involve the Board of Supervisors approving a series of special agreements with developers that are as strict in some respects as the proposed ballot measure.

“Our baseline (1997 projections of what would happen without the initiative) does not deal with any development agreements,” Doti said.

Under Doti’s worst-case scenario, per-worker personal income in the county in 1997 would still be higher than it is today but would average just $29,450--in 1988 dollars, adjusted for inflation--contrasted with $33,000 without the initiative, a difference of about 10.8%.

Income Growth Below Average

Such levels would place the county’s growth in personal income below the national average, Doti said. Although many communities fail to match the national average, Doti acknowledged, the difference for the county would be noticeable and could even result in “signs of economic blight and urban decay.”

However, Doti said he could not determine at what point the county would become such a less desirable place to live and work that it would affect market demand for housing and commercial development--either under the initiative or without.

But with cities less able to afford the public services that people have come to expect, and with personal income rising less rapidly, the quality of life in the county could get worse rather than better, Doti said.

Doti said he believes that people who live under slow-growth policies eventually want more economic activity.