Having It All: Quality of Life Amid Expansion

This is clearly an important time for Ventura County and this region, as you think--in the context of the tremendous growth our state is going to face in the next 20 years--about how you shape a future that is truly sustainable and that is defined not only by economic success but also by a strong and vibrant social fabric.

What I have been trying to do in Sacramento in many ways parallels the discussions you are having here in Ventura County. As the state’s chief investment officer, I’ve been undertaking to construct a state investment policy that supports good long-term growth patterns.

In many ways, these are the best of times and the worst of times in our state. So much of what we hear about, all over California, is about how good times are. And if you look at the numbers, we are experiencing exceptional economic circumstances. But it is in this very context of comfort and good economic times that I want to talk to you about the steps we need to take to maintain economic success in the years ahead.

California is on the cusp of enormous challenges. In this free society, in which freedom of movement is essential to our democracy, we are going to see a California that, according to almost every respected demographer and economic forecaster, is going to grow by 12 million residents in the next 20 years, in the context of 5 million new jobs, the need for 4 million new homes, 2 million children entering our school system. Ventura County alone is expected to gain 250,000 residents.

I believe that this surge of growth is going to bring us head to head with a number of significant public policy challenges. And I would like to highlight two of those today that I believe are fundamental to our future success as a society.

Our first challenge is, how do we meet these tremendous demands of projected growth while preserving the unique environmental qualities and the very quality of life that have historically defined California and made it such an engine of economic success?

The Center for the Continuing Study of the California Economy makes a very cogent observation: “A high quality of life is increasingly a determinant in attracting entrepreneurs and workers in global industries. Failure to protect the natural attractiveness of California can, therefore, hurt the state’s future prosperity.”

I believe that many of the growth patterns we are now experiencing will undermine our quality of life. As you look around this state, you see the price we’re now paying for the way we have been growing.

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Last year, Californians spent more than 800,000 hours per day sitting on congested freeways. We now have eight of the nation’s 15 worst air quality basins. We have 13 of the nation’s 25 least affordable housing markets. Since 1995, for every 3.2 jobs we have created in this state, we have created only one new housing unit. So it should not be a surprise that all over this state, increasingly, housing affordability and supply are growing as worries that can affect our future economic success.

Now is the time for us, as a state, to come to grips with the tremendous growth pressures we are going to face and to construct a new growth dynamic focused on more sustainable patterns of growth at our urban perimeters and a genuine commitment to renewed growth and investment in the urban fabric of our communities.

In many ways, this is more critical in Ventura County than anywhere else. The prized open spaces and vistas that you have must be preserved at the same time that the county builds a balanced-growth future and plays its responsible role in California’s future.

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The second challenge before us is, how do we grow in the 21st century in ways that promote equality of opportunity across our state? Our future economic strength will be elusive if there are two Californias--or, candidly, if there are two Ventura Counties--with much of the state and your county experiencing a buoyant economy while we leave behind communities in economic struggle, decline or devastation.

I started out by talking about how good things are. You and I know that is not the whole California story. The story of the San Joaquin Valley is not the story of Silicon Valley. And all too often, the story of Santa Paula and Oxnard is not the story of Thousand Oaks.

All across this state, you can see a growing division between classes and between how and where we live. It is worth reminding ourselves, for all our successes, that California now has the greatest gap between rich and poor of all but four states. We had a 28% increase in the number of Californians living below the poverty line from 1989 to 1996. And in this richest state, in this richest nation on earth, in the 1990s the poorest 20% saw their real incomes drop by 10% to a median family income of $12,000 per year. And even here, in blessed Ventura County, there are tens of thousands of children living in poverty.

We are at a critical time where we must embrace a set of policies across the board--from education to land use to investments--that focus on how we preserve our quality of life and how we broaden economic opportunities.

For those who doubt whether we can meet these challenges it is worth reminding ourselves that a previous generation of Californians looked ahead and made a set of investments and public policy initiatives to help lay the foundation for this state’s great success--from a great university to a transportation system that, in its time, was the best in the world. Then, for many reasons, we sat on our lead.

Our charge now is to look ahead and embrace a new set of policies that can move us forward. It is in the context of these larger challenges that I have thought about how state investment policy can support better growth patterns for the future.

I want local communities to think about how local investment policies can achieve those results. I also want to talk about investment policy as an example of the kind of thinking across broad public policy fronts that we must embrace.

Last June our office released a report called Smart Investments. Each year the treasurer is required to report to the governor and the Legislature about how much the state can afford to invest in infrastructure over the next 10 years. This time we focused on what should be the policies that drive state investment in the next 10 years, so we can have good growth patterns.

I was struck, as we began to prepare this report, by how much of the debate in Sacramento was around whether we needed $70 or $80 or $90 billion worth of infrastructure investment, and by the fact that almost none of the debate was about how to spend that capital in a way that meaningfully supported us in the years ahead. Given the nature of the challenges we face, we decided it was important to begin to focus policymakers at the state, regional and local levels on growth principles to guide state policy and state investments.

Two principles ought to be guiding our actions with respect to state investment policy. The first is that investments that support livable communities, sustainable development and sound environmental practices, in the long term, strengthen our economy. That means more of our infrastructure dollars, state and local, must support new forms of more sustainable growth at the urban fringe and more of our dollars must be redirected into the tattered fabric of California communities that we’ve had the bad habit of throwing away.

To me, “sustainable development” means a different direction for growth. It means land uses that support transportation options for the 21st century beyond more freeways and roads. It is time that we begin to look at land-use patterns that are adaptive for the next 50 years, not just reflective of the last 50 years. It means locating jobs near housing, and truly balancing job growth and housing growth in communities and across regions. And it means well-planned, higher density use of land, recognizing that even in the West, land is not an inexhaustible resource.

This last challenge is particularly relevant for Ventura County. At the same time that you seek to preserve your phenomenal open spaces, it does mean rethinking the nature of our communities. Increased density does not mean diminution of the quality of life--the density of Paris is nine times that of Los Angeles. It is about better design. It is about building vibrant, workable, dynamic communities.

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So we have been thinking of how, at the state level, we can begin to adopt investment policy and programs that support the goal of more sustainable development.

Let me give you a couple of examples of what we have done. As treasurer, I chair the California Tax Credit Allocation Committee, which each year awards $450 million in tax credits for affordable housing. Now, my predecessor awarded that money--for which there is fierce competition--by a lottery. I knew on a public policy basis we could do better. We adopted a point system to select projects. We give points for projects that are located next to transit; projects for families that are located within walking distance of public schools; and projects that are located within walking distance of community services, recreational facilities and shopping. And we give points to projects in lower-income communities, where the housing is part of a comprehensive effort to bring new vitality to that community.

Here is another example of how we are trying to support this new thrust. As your treasurer I serve on the boards of both the California Public Employees’ Retirement System and the California State Teachers’ Retirement System that together have $270 billion in assets. We have committed $1 billion in new investment capital for urban, in-fill development--from mixed-use, to office, to commercial, to housing--targeted to California communities. These investments are designed to bring market-rate returns because there is growing demand within existing communities, at the same time that we use our own state investment capital to support smart growth principles.

The second principle around which we believe state investments must be centered is closing the gap between the two Californias. We must work to provide as much opportunity to Oxnard and Santa Paula as is enjoyed in Thousand Oaks and Ventura. Trying to close this gap all over the state is not only the right thing to do, it’s the smart thing to do.

Across the board, we are looking at how we can marry state investment capital to better growth patterns. I urge everyone--whether you are a local official or a private-sector individual--to think about how your actions, your investments can support the kind of growth patterns that will allow California and Ventura County to be successful in the decades ahead.

The breadth of our challenge is large, particularly on the very troubling question of the growing divide of opportunity in California. We have a long way to go in this state to build a sustained economic future. To really make a difference, we need partners at the regional leadership level.

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We need to have a tax system, with tax equity across regions, that allows communities to make the right land-use decisions, not the ones that allow them to sustain their budgets for the next year.

One of the phenomena that has struck me most is the extent to which billions of dollars of American capital are now flowing across this globe and into the so-called emerging markets, some of the most highly volatile and risky markets in the world. It is time to look again at the emerging markets of California: the Oxnards, the Santa Paulas, the Fillmores. I believe there is a great coincidence between the need for capital and the opportunity for capital to be successfully invested. Accordingly, I am asking private sector leaders to look anew at the ways in which we can use the powerful tool of American capital to try to help us achieve our sustainable development and economic opportunity goals.

It is possible to invest well financially and invest well in our future.

Our challenges are large but our opportunities are great. Your challenges in Ventura County are as great or perhaps greater than those faced across this state. We must look at all our public policies--from how we invest public and private capital, to our land-use practices, to our fiscal policies--and ask how can we fashion them to ensure California’s economic success into the 21st century.