Who Gives a Hoot for Home Buyers?

Unsettling bulletins are arriving from the Inland Empire and high desert that bode ill for homeowners throughout Southern California:

--The costs of land and lumber are going up, making new homes more expensive and home repair more costly.

--Plans are afoot for new and novel assessment districts and real estate transfer taxes, which will tighten homeowners’ monthly budgets a notch or two.

--Huge areas are off-limits to new home development, and significant tracts have been stopped dead in the middle of development.

Each of these data bursts can be traced to a common denominator: the federal Endangered Species Act.

The northern spotted owl, the Stephens’ kangaroo rat, the desert tortoise and the Mojave ground squirrel, among others, are big issues for prospective and existing homeowners east of the Interstate 15.

In the wings are other species that could spread bad news from the I-15 to the coast.

That we need to monitor growth to ensure the continued existence of a wide range of plants and animals (biodiversity, one of the first buzz words of the ‘90s) is not in question.

But there is a controversy raging over whether the Endangered Species Act, as now enforced, encourages biodiversity or is just a weapon of no-growth advocates who put stopping development at any cost ahead of saving species.

To date, the controversy over the act has been localized, because for the vast majority, the act’s impact has not yet touched home, figuratively or literally. But the controversy will surely grow because the bill is definitely in the mail.

Until recently, it appeared that the first sizable installment would come from the Northern Spoted Owl in the Pacific Northwest. Plans to save the species called for putting millions of acres of timber off limits to loggers, at a cost of 28,000 jobs. The Bush Administration, thankfully, is finally balking at the high price of protecting a species, and the war will go on.

This may all seem to be happening comfortably far away. But its impact is already hitting home. The general counsel of the Building Industry Assn. of Southern California, Bart Doyle, reports that lumber industry sources attribute April’s 10% jump in lumber costs to the spotted owl controversy.

Home builders, home buyers and home owners are already paying a high price for saving the bird.

Closer to home, the classification of the Stephens’ kangaroo rat as an endangered species is revealing the immense economic impact of the Endangered Species Act.

The rat, or SKR as it is known among cognoscenti, is widespread throughout western Riverside County. No one is sure how many thousands of rats remain, since its classification as endangered did not depend on a head count, but on the projected continual fragmentation of its living quarters as habitat gave way to housing tracts.

The U.S. Fish and Wildlife Service has suggested that 30 square miles of land--19,200 acres--is about right to protect the animal into perpetuity, and now local government has to figure out how to pay for the rat reserves.

An SKR fee as high as $1,950 for each graded acre now blankets every new project in western Riverside County. Obviously, that fee will be added to the cost of new homes. But there will be a much larger cost in the future.

Already, 75 square miles have been removed from the planning process, which means that land left outside the planned preserves will be much more valuable. As the price of raw land is driven up, retail costs will follow.

Even SKR advocates admit a preservation price tag of $100 million. These are local dollars, not some federal budget line item. Some form of fee or tax must provide this revenue. Even existing homeowners may have to pay the price.

The $15 million raised to date from the fee on new projects is only a small portion of the cost of protecting the SKR. Where’s the rest to come from?

Perhaps from a huge new assessment district, where a parcel-by-parcel fee is extracted annually from all to pay the SKR’s and other species’ bills.

Or perhaps a real estate transfer tax will be needed for the entire state. Both of these plans are under active consideration, as are others.

The easiest way to extract dollars is to hit the builders, and ultimately the buyers, of new homes. But both groups are already staggering under the burdens of the exploding fee structure. How much more, the consumer should ask, before we break the industry’s back?

Despite the rhetoric of environmental activists, these concerns are not self-serving, alarmist doomsaying and wolf-crying by the building industry.

The environmental agenda laid out over the past decade costs money; huge, huge sums of money. To fulfill it without the economic growth required to pick up the tab is a fiscal fantasy.

We will ultimately be left with a thousand unfulfilled wishes and a polluted environment unless a sensible middle path is struck, balancing the top priorities of environmental protection with the objectives of those who generate the jobs, and thus the taxes that pay the cost of a clean environment.

Whenever development occurs, the impact on the environment must be assessed. Is it not reasonable, then, to ask that whenever development is stopped, the impact on the economy be assessed? And much more important, shouldn’t every species preservation plan be evaluated to ensure that it offers the most efficient method of preservation possible?

The current system of protecting species is inefficient. Assume that over the next year Californians will spend $1 billion--directly or indirectly--as a result of the Endangered Species Act. If the $1 billion is used wisely, it will protect many, many species. If it is frittered away without careful planning, it will protect less.

Applying the global perspective that is de rigueur for the 1990s, perhaps the best way to use the money would be a $1-billion debt-for-land swap in the Amazon, where clearly the greatest number of diverse species are threatened. If protecting foreign species with U.S. dollars is unpalatable, however, then consider how much better $1 billion could be spent within the United States.

A Fish and Wildlife Service expert recently said that three states, California, Texas and Florida, should be the focus of species preservation efforts. I am willing to bet the farm that considerably more species habitats could be bought in Texas than in either of the other locales. If the goal is biodiversity, then a group like the Nature Conservancy, armed with $1 billion, could preserve hundreds of species in Texas, versus just a few in California.

Of course, this resolution is unlikely in the extreme, so under the current Endangered Species Act, we can expect an uninterrupted flow of disjointed, costly flailings at preservation. Bruised by all of these flailings will be the home buyer, since keeping land undeveloped is the cornerstone of every species preservation effort.

A more likely approach to interjecting sensibility into the Endangered Species Act is to rewrite the act. Of course, rewriting the act will be difficult because it would remove from the no-growth activists’ arsenal a blunderbuss capable of blowing away all planned development.

The firestorm of criticism following the Bush Administration’s suggestion last week that the act should be rewritten shows that many “species advocates” actually use the act to stop growth, not to save a species.

But as we enter the decade of the environment, we must consider rewriting the act if we are to have an economy healthy enough to fund a reasonable environmental agenda.

At the very least, the act must require a scientifically valid foundation to all studies regarding the existing threat to a species. At present, any science appears to be good enough to ensure classification but only good science should be allowed.

Further, the act should be changed to at least require an economic analysis of the cost of preservation. When the 1980s opened, such economic data was a factor in declaring a species endangered. Even if the congressional consensus holds that such data ought to remain exiled from listing decisions, at a minimum the public deserves to know the price tag.

Finally, the issue of biodiversity must be addressed. If having a diverse collection of species is the ultimate goal of the act, then it makes sense to preserve only land that can support a diverse group of animals. It makes no sense, environmentally or economically, to set aside a parcel for this animal here, another parcel for that plant there, and so on.

The home building industry is committed to ensuring that the first-time home buyer not become an endangered species. The debate between advocates of the act and those that are looking for a more sensible way to provide biodiversity will rage on.

The state’s homeowners should follow the story. It’s much, much more than mere bird-watching.