Opinion: California relied on growing to pay for its needs. What happens now that it’s not?
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The U.S. Census Bureau reported that California’s population started growing again last year after three years of unprecedented decline. But don’t let the modest, 0.6% rebound fool you: California is in a new era of slow population growth at best. The go-go growth that the state was long accustomed to isn’t coming back soon.
To listen to the many Californians who have chafed at the state’s continued growth and opposed further development, you would think this reversal would solve all our problems. But the truth is that even the state’s slow- or no-growth communities have effectively chained themselves to the idea that growth will pay for everything. If California communities are to thrive in a future without more people, we’re going to have to figure out how to unchain ourselves from that idea. It won’t be easy.
Ever since the state’s voters capped property tax rates by passing Proposition 13 almost a half-century ago, California has embraced the idea that growth must pay for itself. But “Growth must pay for itself” often winds up meaning that “Growth must pay for us too.” So when population growth stops, everybody has to pay more.
One Alhambra family tried an extreme fix: finding a home in Ontario and commuting three hours to keep their jobs and maintain school ties.
The prevailing expectation is that when a community grows, its current residents should bear no cost whatsoever. That’s why “impact fees,” which most of the state’s localities impose on developers, have gone through the roof, reaching more than $100,000 per home in some jurisdictions and at least $1 billion a year statewide.
Furthermore, developers and new residents often pay more than their fair share because of California’s unique “development agreement” law. The state allows cities and counties to permit a developer to build new housing and retail in exchange for an agreement to pay for infrastructure, such as roads, sewers and water lines, that often has nothing to do with their projects. In other words, developers responding to population growth — and the new residents they sell to — are helping to foot the bill for infrastructure that cities need but have failed to consistently finance, build and maintain.
So what happens now that California isn’t adding many people to its communities?
By excluding single-family zones from affordable housing incentive programs, L.A. leaders are squandering the potential to transform the city into one that works for people of all income levels.
Even though our population isn’t growing much, we’ll still have some real estate development. We could yet begin to make up for 30 years of insufficient housing production for the existing population, which drives our disproportionate housing prices and homelessness. But recent history doesn’t inspire much confidence that we will: California’s housing production has remained stubbornly low despite a series of legislative efforts to encourage development.
And a stagnant population doesn’t eliminate the need for new or improved infrastructure and community facilities. Roads, schools and parks will wear out and need to be repaired, replaced or updated. Public needs and desires will change. (Think pickleball courts and dog parks.)
But we can no longer rely on new homebuyers to pay for any of that. California is already bleeding residents because of its high home prices and rents. It’s not clear whether new development is even going to be able to pay for itself, let alone pay for the improvement and maintenance needs of existing communities and residents. Lawmakers in Sacramento are under significant pressure to reduce impact fees to help make housing less costly.
So how can California communities fund their infrastructure and public works in an era of slow or no population growth?
The problem stems largely from the structure of Proposition 13. Repeal or major reform of the popular measure is unlikely, but steps short of a major revision could help California break its addiction to growth.
Proposition 13 prevents communities from raising property taxes to pay for needed infrastructure repair and replacement unless two-thirds of voters approve. By contrast, property tax increases for similar projects for schools require only 55% approval. In a world where school enrollment is declining fast and the needs of an aging population are growing fast, this is backward. Communities should be able to raise property taxes to pay for infrastructure with the same 55% majority.
That was the intent of last fall’s failed Proposition 5. But that measure would have lowered the vote requirement for affordable housing as well as infrastructure bonds. Affordable housing is certainly an acute need in California, but the result might be different if the two purposes were presented to voters in separate measures.
The state could also vastly increase funding for local infrastructure. This could be accomplished by putting an enormous local infrastructure bond proposal — perhaps $100 billion or more — on the statewide ballot. Or the state could create a dedicated fund for local infrastructure to be augmented in years of high income tax revenues.
Neither of these ideas would have an easy time of it in Sacramento. Compared with teachers, public employees, trade unions and other political heavyweights, cities and counties don’t have much clout in the capital.
Still, lawmakers will have to do something. Most of their constituents live in communities that are struggling to pay for the basic infrastructure that makes everyday life possible. And barring changes that have proved even more difficult for California, growth isn’t going to pay for it anymore.
William Fulton is the editor and publisher of “California Planning & Development Report.” He previously served as mayor of Ventura and planning director for San Diego.
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