Beyond Sprawl: New Patterns of Growth to Fit the New California

Bank of America

Continued from page 1

BEYOND SPRAWL

In the postwar era, the continuous cycle of suburban sprawl-counter-productive as it was in many ways-actually helped to fuel California's prosperity, as consumption of new houses and new cars became one of the bases of our prosperity. It is clear, however, that the new California cannot sustain old patterns of urban development, if the state is to prosper in the future.

The sponsors of this report-Bank of America, the California Resources Agency, Greenbelt Alliance, and the Low-Income Housing Fund-firmly believe that California cannot succeed unless the state moves beyond sprawl. Strong policy direction from our political leaders on both the state and local level is essential. But government policies alone will not help California move forward. Our businesses, our community groups, and our citizens must also take the initiative. We must understand how sprawl affects each of us individually, how it impedes the state's progress, and how it could make a prosperous future more difficult to achieve.

Population growth will require some degree of development on the suburban fringe. The question is whether we will be able to use existing urban and suburban land more efficiently in order to minimize sprawl and protect valuable open spaces. The answers will lie in our ability to attract housing and businesses to older urban and suburban areas and to channel development on the fringe to achieve the desired protection and economic benefits.

California businesses cannot compete globally when they are burdened with the costs of sprawl. An attractive business climate cannot be sustained if the quality of life continues to decline and the cost of financing real estate development escalates. People in central cities and older suburbs cannot become part of the broader economy if sprawl continues to encourage disinvestment, and the state can neither afford to ignore nor fully subsidize these neglected areas.

California must find a new development model. We must create more compact and efficient development patterns that accommodate growth, yet help maintain California's environmental balance and its economic competitiveness. And we must encourage everyone in California to propose and create solutions to sprawl.

A do-nothing approach, in effect, constitutes a policy decision in favor of the status quo. This, in fact, has been the de facto direction for the last generation. While the state and the regions have created a leadership void in this area, many local governments have stepped in with their own policies, which often have served to promote sprawl rather than prevent it. Recent research has shown that individual local growth-control policies do not stop development, but merely deflect it- often to another area further out on the metropolitan fringe, where the cost of development is even greater. The question is not whether to address sprawl. The question is how to address it.

In the early 1990's, the California Legislature convened a consensus project on growth management, and in 1991 Governor Wilson formed a cabinet-level council charged with developing a plan on how the state should address the challenge. A great deal of good work was done and agreement was reached in some areas. These processes did not result in legislative action, but a good foundation of understanding has been established.

As was stated at the outset, this report is not meant to be a manual or a tactical "how-to" on changing development patterns in California. Rather, it is meant as a wake-up call to all Californians that the sprawl issue has a new urgency in the state, and that all of us can play a role in addressing the problem.

To succeed, we will have to set aside individual interests, build on the foundation that has been laid, and work for the good of the whole. We need to address sprawl through community action, public policy, private business practices, and individual behavior. It is our intent that the ideas and examples that follow will be used as a basis for further refinement and concerted action.

First, more certainty is needed in delineating where new development should and should not occur. Sprawl occurs partly because current policy constrains the real estate market by rewarding "leapfrog" development driven by cheaper and more easily developed land on the metropolitan and suburban fringe. The alternative is to be more explicit about conservation and development priorities, targeting actions and policies for better integration of the two.

Using this approach means utilizing land at the suburban fringe more efficiently and encouraging the reuse of land and other development opportunities in already developed areas. It does not mean stopping growth at the fringe, but doing it at density levels that will not promote further sprawl. To succeed, this approach needs more effective public policies encouraging such compact growth and removing barriers to it.

However, the other side of certainty for developers requires commitments to conserve ecologically important habitats and other open space. Accelerating statewide planning efforts such as Natural Communities Conservation Planning (NCCP), which involves voluntary action at the local level and requires consensus among development, environmental, community and local government interests, will enhance our ability to provide greater environmental and economic certainty regarding new development. With its emphasis on biological assessment, ecosystem protection and compatible economic development, NCCP can provide much greater certainty to both those who want to develop their property and those who want to protect the natural environment. Broader use of mitigation banks can facilitate market-based compensation to landowners who choose to help protect ecologically valuable land.

Conservation of other habitat and open space, such as prime agricultural land, will also require us to find creative approaches like the NCCP process. The newly established California Environmental Resources Evaluation System (CERES) will help this process by expanding access to data about important resources in the state.

Regardless of the methods used, much of the leadership for providing greater certainty for conservation and development must come from the state, regional agencies, and local governments working together. But private businesses also have a critical role. Especially in difficult economic times, real estate developers and their lenders know that certainty of approval and availability of infrastructure, rather than speculative leapfrogging, will reduce costs and reduce processing time. Thus, new real estate developments can be brought to market more quickly and cheaply within areas where effective consensus plans for conservation and development have been created.

Second, we should make more efficient use of land that has already been developed. Older urban and suburban neighborhoods should be reinforced as good places to live and do business, and the process should take place without displacing low-income residents. Sprawl occurs partly because of the perception that older neighborhoods are dangerous, expensive, obsolete, unpleasant, or otherwise unacceptable to those who have the option of leaving. The result is a tragic neglect of both people and capital investments.

Older neighborhoods must be maintained and improved so they are again desirable places to live and work. Old Town Pasadena, the South of Market area in San Francisco, and the train depot reconstruction in Sacramento are all prime examples of successful restoration projects. Better school systems, job training and access to capital for small businesses are prerequisites. These efforts require a combination of government policy initiatives, active business investment, and special efforts by individuals and community groups.

Attracting jobs is absolutely critical. State and local governments should adopt land-use and transportation policies that reinforce investments in older neighborhoods. Incentives must be developed for job- creating businesses, homebuyers, and others willing to invest in older neighborhoods. For example, Superfund laws can be made more sensible so existing industrial sites can be recycled into new uses. Investors can make more aggressive use of low income housing tax credits. Wider use can be made of Enterprise Zones. And tax credits or other incentives can be established for lending and equity investments that support small businesses and job growth. Development on the fringe imposes infrastructure, pollution and social costs well in excess of assessed development fees. If we rationalize development and control the costs of sprawl, it will free up capital that can be reinvested into existing cities and suburbs.

Older communities themselves need to make their neighborhoods attractive to job creating and housing investments. Individuals and community groups in those areas should redouble their efforts to improve the quality of urban life in small ways, for example, by forming community- based crime prevention groups and supporting local community development efforts that will enhance their neighborhoods.

Home ownership at all income levels needs to be encouraged. In general, those who own homes have the greatest interest in maintaining neighborhood vitality. Public policy should support methods of keeping low-income people from displacement through development of affordable housing (both home ownership and rental) and provision of supportive services. Also if developers are to provide quality housing in existing neighborhoods, they need protection from frivolous environmental and product liability suits.

The closing of military bases in California offers interesting potential for development. Bases have substantial potential as alternatives to building houses and job centers on the suburban fringe. While there are problems associated with redeveloping many bases, they also have excellent potential for showcasing how to resolve difficult urban rebuilding strategies.

Third, a legal and procedural framework should be established to create the desired certainty and send the right economic signals to investors. Four elements are needed.

(a) Where development is allowed, state and local permitting should be streamlined. This is critical to encouraging development in urban and older suburban areas. It may require changes to legislation that relates to permitting.

(b) Development at the metropolitan fringe should be required to pay the full marginal cost of development. Housing and business space on the metropolitan fringe is often inexpensive because those developments pay for local infrastructure, but do not pay the full cost of constructing roads, developing water supplies, mitigating environmental problems, and creating regional imbalances. Imposing such costs on those developments would discourage sprawl. For example, the city of Lancaster adopted an innovative program that requires new development to pay capital and operating costs of infrastructure. Development further out pays its full cost, while development that is closer to the city's center pays much less, since it is tied in to existing city services.

Again, this is a task that requires the active participation of both government and business. For example, many government agencies, such as water suppliers, subsidize development on the metropolitan fringe by spreading the cost of their infrastructure across all users, new and old. Changing such policies would discourage sprawl.

Failing to levy the full marginal cost gives leapfrog development an unfair competitive advantage over projects in existing urban areas, where transactions are made more difficult and expensive by toxic waste and other environmental liability issues. Expanding environmental audits to include wetlands, endangered species, and other issues-a practice that is already beginning-would also discourage sprawl by including the full assessment of environmental cost in private real estate transactions.

(c) California's local governments should encourage more efficient and coordinated local land-use policies. Sprawl has been encouraged by tax revenue competition among local governments for some land uses, such as retail centers, and by slow-growth policies that discourage other land uses, such as housing.

Development patterns that are now truly regional are being created almost completely by an accumulation of local decisions. But some local governments are beginning to show that it is possible to work together toward consistent land-use policies when given the incentive to do so. In planning for the reuse of closed military bases, for example, local governments are forming "joint powers authorities" in which many jurisdictions work together toward a common goal.

The vast majority of Californians choose to locate in large metropolitan areas. But most of these people live in small, politically independent suburban jurisdictions. These local governments must work together toward a consistent set of land-use policies-such as discouraging development on the metropolitan fringe and reinforcing investments in transit systems-that will enhance economic opportunity and quality of life across the entire metropolitan area. Joint powers authorities, such as those created for military base reuse, should be viewed as one model for cooperative planning, and others are needed.

(d) Technological change should be used to combat sprawl rather than encourage it. In the past, technological advancements (such as automobiles and government-sponsored freeways) have supported sprawl, requiring expensive after-the-fact government action of questionable value (such as ridesharing requirements). Today we stand at the threshold of a new technological era that offers the opportunity to have more work done at home and in local communities. We must take advantage of the opportunities presented by the information superhighway to improve our land-use patterns rather than further destroy them.

For example, the information superhighway could end up encouraging a further decentralization of jobs to the metropolitan fringe. Freed of a daily commute to a large employment center, some individuals and small businesses will seek to locate in distant suburbs and travel back to older urban centers to do business as needed. This trend could put more pressure on land at the fringe.

However, the telecommunications revolution can also hold the potential for reviving economically troubled areas. Because of its locational flexibility, telecommunications can provide new job prospects for older urban neighborhoods and for rural towns. Both government policy and private business practice should encourage the use of telecommunications to reinforce existing communities rather than further dissipate them.

Fourth, we should forge a constituency to build sustainable communities. Past efforts to reduce sprawl have been hampered because little constituency exists beyond groups of government reformers, some local government leaders, community groups, and conservationists. But, as this report suggests, many other players in California's future will also find themselves increasingly stifled by sprawl. Political alliances must be forged between environmentalists, inner-city community advocates, business leaders, government experts, farmers, and suburbanites to improve the quality of life in all our existing communities and protect our resources.

This will not be an easy task. Most of these groups are focused on their specific agendas and often harbor animosity toward each other even though alliances make long-term strategic sense.
But it is possible. For example, environmentalists concerned about development at the suburban fringe have tremendous opportunities to work with governments and community organizations seeking to increase investment in more central urban areas. Farmers seeking a long-term future in agriculture near an urban area can form very effective alliances with those working to protect resources. Community groups, government agencies, and builders can explore new marketing and funding options that support homebuilding closer to major transit lines, taking advantage of the huge demand for housing created by the state's dramatically changing demographics. Taxpayers concerned about the inefficiency of governmental expenditures can join with those working to make better use of infrastructure in existing urban areas. There are literally dozens of such alliances waiting to be created.

We must act now. The decisions we make in the next few years will determine California's future course-and its chances for success. To build a strong economy and retain a good quality of life for the 21st Century, we must move beyond sprawl to a new vision of community in the few remaining years of the 20th Century.

Acknowledgments

All of the report's conclusions may not be endorsed in their entirety by each of the four sponsors. At the same time, each of the organizations believes that the time to act is now and that this report can help advance the public dialogue about California's growth and development.

The sponsors are grateful for the assistance provided by Steven Moss and his associates at the consulting firm of M. Cubed for developing much of the basic research behind this paper. We are also indebted to William Fulton for conceptualizing and drafting the paper. His clarity of vision helped consolidate our thinking into a comprehensive whole. If you would like to comment on the paper, or obtain additional copies, please contact any of the following sponsors:

Bank of America
Environmental Policies and Programs
#5800
PO Box 37000
San Francisco, CA 94137
(415) 622-8154

California Resources Agency
The Resources Building
Sacramento, CA 95814
(916) 653-5656

Greenbelt Alliance
116 New Montgomery, Suite 640
San Francisco, CA 94105
(415) 543-4291

The Low Income Housing Fund
605 Market Street
San Francisco, CA 94105
(415) 777-9804