California’s Inept Central Planners

Maybe Gavin Newsom needs to read a bit of history.  How about reading how the Soviet Union with its central planning of the economy, tanked the economy and brought down the communist empire.  Look at the housing created by the Soviets—in Russia as well as in Eastern Europe.  Slums, crumbling buildings.  That is what Democrats like Gavin Newsom are demanding.  His Administration is threatening to sue Simi Valley because the city council refused to approve a slum building in their community.

“The list of newish blunders, built upon nearly thirty years of disastrous policies, include such things as new rent control measures, mandates for “zero emissions” homes and mandatory solar installations. Worse yet, and soon to be strengthened, are attempts to block development in outlying areas, where land costs are cheaper, in favor of dense development in already expensive, dense urban areas.

The idea that these policies will encourage home-building could only be appreciated by a fantasist. Since California began its ratcheting of regulation, house prices have more than tripled relative to household incomes, the result of which is that in the major metropolitan areas, most middle-class households cannot afford the median priced house. Housing production has fallen because most households have simply been priced out of the market.”

Sacramento is the cause of the problem, not the solution.  Apparently the only difference between the Soviet Central Planners and California Democrats like Newsom, is the language they speak—policies are the same.

Tents from a homeless encampment line a street in downtown Los Angeles on Tuesday, Jan. 26, 2016. Some 7,000 volunteers will fan out as part of a three-night effort to count homeless people in most of Los Angeles County. Naomi Goldman, a spokeswoman of the organizer the Los Angeles Homeless Services Authority, said the goal is to “paint a picture about the state of homelessness.” (AP Photo/Richard Vogel)

California’s Inept Central Planners

Joel Kotkin, Newgeography,  1/13/20   

Gov. Gavin Newsom, the Legislature and the state’s bureaucracy claim to be addressing the state’s much discussed “housing crisis.” But rather than improve the state’s awful affordability crisis, the policies being enacted are precisely the wrong medicine, more akin to witch-doctoring than a scientific curative.

The list of newish blunders, built upon nearly thirty
years of disastrous policies, include such things as new rent control measures, mandates for “zero emissions” homes and mandatory solar installations. Worse yet, and soon to be strengthened, are attempts to block development in outlying areas, where land costs are cheaper, in favor of dense development in already expensive, dense urban areas. The idea that these policies will encourage home-building could only be appreciated by a fantasist. Since California began its ratcheting of regulation, house prices have more than tripled relative to household incomes, the result of which is that in the major metropolitan areas, most middle-class households cannot afford the median priced house.

Housing production has fallen because most households have simply been priced out of the market. Tragically home ownership is declining, particularly among minorities and millennials, and rents now exceed that of any state other than Hawaii. It is not surprising that the latest Census Bureau population estimates, released on the last day of 2019, show that more than 200,000 more people moved to other states than moved into California.
California’s net outmigration exceeded that of New York for the first time in over a decade. Sacramento’s dystopic vision In the past, California addressed demand for housing by allowing construction to take place in areas with lower land costs. The state’s developers built, for the most part, the single-family or townhome construction preferred by most Americans, including Californians. Even today in state’s six largest metropolitan areas (Los Angeles, San Francisco, Riverside-San Bernardino, San Diego, Sacramento and San Jose) at least 90 percent of population growth takes place in the suburbs and exurbs, a pattern that continues in the rest of the country.

Over the past decade, California government has decided to revoke these preferences, in large part to create a “greener” and denser housing environment. They seek to replace single-family housing with dense multi-family units, which developers indicate can cost up to 7.5 times that of single-family dwellings per square foot. These measures, particularly in urban areas, are widely opposed in stable, middle class urban neighborhoods. Sacramento seems to think that all of California needs to look more like San Francisco and less like Lakewood, Foster City or Irvine. For the rich, and transient hipsters, San Francisco, or its pale cousins like downtown LA, may indeed be an ideal, but it’s doubtful most California families would like to live amidst the dystopic reality of mass homelessness, filth and rampant inequality that increasingly characterize these urban cores.

New state regulations targeting vehicle miles traveled or VMT will worsen things, forcing growth only into those few areas that have considerable transit shares, largely restricted to a few locales like San Francisco and downtown Los Angeles. This approach was demonstrated by recent decisions by the Southern California Association of Governments to steer new housing development to urban “in fill” areas with better transit connections as opposed to more affordable locations on the periphery. Los Angeles Mayor Eric Garcetti, who favors higher density, insists this is all part of our “growing up” and dismisses the notion that more development in already congested areas might cause legitimate concerns about traffic and instead boost transit ridership.

Yet most Californians instinctively know this notion is nothing short of chimerical. The vast majority of Californians drive alone to work, two million more today than in 2010. Dealers continue to sell autos at a nearly two million unit annual rate. For most, getting to work by bus or rail vastly increases travel times and limits the number of jobs available to workers, especially for low-income workers. Ironically, transit’s share of commuting has dropped 15 percent since 1990, before the extensive Metro and
Metrolink rail networks were opened.

Under this policy virtually any improvement in road infrastructure, including such things as synchronizing traffic signals, can be seen as “traffic inducing.” So too would any large-scale economic development — say an aerospace factory or office park — that would bring jobs closer to places where people can afford to live such as the Inland Empire, Bakersfield or the San Joaquin Valley largely out of business in terms of new development.

What kind of California are we building? Rather than lead to more residential production, the state’s regulations have served to reduce new housing. In a state that promises to build 3.5 million new housing units by 2025 the reality is that we are building little —only 97,000 houses, condos and apartments were permitted in 2019 through November, fewer than over the same period in both 2018 and 2017 At the current rate it would require more than 30 years to meet the state’s stated goal.

Apologists for the state effort to increase density often cite the need to meet population growth, although the state now has the lowest growth in memory, so much so that the state could lose a congressional seat for the first time since joining the union. Ironically the very urban areas favored by state planners are experiencing some of the slowest population growth. Los Angeles is already losing population and the trends in the Bay Area, with mounting out-migration, may be heading in the same direction. Recent polls show that one-third of all San Francisco residents, and half of millennials, plan to leave the Baghdad by the Bay.

The call for more density, the summum bonum of state policy, will do little improve affordability or address the needs of young families. Due to the higher land costs and the higher costs of apartment construction, most new housing will likely be more expensive, largely restricted to smaller units that appeal mostly to singles and childless couples, not families. Once the incubator of youth culture, California is now aging considerably faster than the rest of the country according to Census Bureau data.

Most devastating of all, these policies offer no relief for the working-class population. UCLA and London School of Economics Professor Michael Storper’s recent study shows, that forced densification is a “blunt instrument” more likely to destroy and reduce affordability, particularly in urban areas. It constitutes instead what he describes as “a mechanism of displacement. “

Such concerns have engendered two lawsuits, including one specifically looking at VMT. Backed by 200 civil rights leaders they argue these policies are essentially discriminatory toward poor people and minorities. Time to change course California’s current housing policies treat our “crisis” about as effectively as Medieval doctors proved by treating pneumonia with leaches. Rather than make things better, it’s making the patient even sicker. The bright side is that these policies are so absurd and counter-factual, that reforming them could quickly have salutary effects. To do so means countering the notion that promoting density helps the environment or that suburbanites are somehow more responsible for greenhouse gas emissions than inner city residents.

In reality, as data from an Australian environmental organization indicated, residents of higher density urban core areas, with their use of elevators, more frequent airline travel and greater spending on food, and other materials, produce greater greenhouse gas emissions per capita than residents of suburbs, with their lower densities.

Similarly forcing people to live in more congested conditions engenders stop-and-go traffic that, according to a recent London School of Economics report, wastes fuel and produces more greenhouse gas emissions. Instead, we should encourage working at home, as well as encouraging job growth in more affordable areas. From 2010 to 2018, nearly 300,000 additional Californians have started working at home, more than triple the increase in transit ridership. In the state more workers at home daily than ride transit.

More critically, California can best address our lack of housing largely by allowing construction in less expensive peripheral areas. This would offer a reasonable lifestyle choice for more California households. This would recognize the diversity of California’s population, particularly as millennials age and seek out the very existing stable middle-class neighborhoods threatened by as Storper puts it, by “imposing centralized solutions”.

Existing zoning capacity in our cities should be used to the maximum extent as well as seizing opportunities to redevelop under-utilized retail space into housing. Rather than try to impose oppressive solutions, California policymakers need to stop blaming the market or NIMBYs for the state’s housing maladies. California’s housing crisis cannot be remedied by doubling down on prescriptions that have repeatedly failed.
About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

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