Keeping Out The Riff-Raff

Written by: 
Aubrey Freedman

With the Nimby’s and Yimby’s battling each other over land use rules in tackling The City’s and California’s housing problems, we wonder why so little is being said about another major cause of the high prices—urban growth boundaries (UGB).  UGB’s have been around for decades all along the west coast, so it should be no surprise that the highest cost of housing in the nation tends to be in California, Oregon, and Washington state. Boulder, Colorado has a UGB and not coincidentally very high housing costs too.

An urban growth boundary is a policy that limits growth by establishing a line where a city or metropolitan area will not expand into for development purposes.  Not all entities take the same approach to stopping growth—some are worse than others, though none are good. Communities that do not want to grow will size their UGB to the current municipality’s boundary, which prevents any future expansion of the city.  Other UGB’s are a little more flexible and provide an amount of undeveloped land for development to meet future city growth estimates, which allows for “controlled and orderly growth.” In Oregon, state law mandates that regional bodies draw metropolitan-scale UGB’s for all cities.  In California, there is no state mandate (a good thing), but many cities have enacted their own disastrous homemade policies to stop growth.

San Jose is a perfect example of government planning gone terribly awry.  Starting in 1971, under Mayor Norman Mineta’s (later became US Secretary of Transportation) administration, the city conjured up a land-use plan that called for limiting growth not only in the 136 square miles in its city limits but another 200 square miles in its “sphere of influence” with the help of Santa Clara County.  The boundary prohibited subdivisions to the east and south of San Jose, while west of the boundary were other cities, which were either surrounded by other cities or had their own boundaries. When the bureaucrats drew the UGB around San Jose, they expected moderate growth in the next 15 years. Of course, no one could have predicted the birth of Silicon Valley—so much for central planners and their special “knowledge”—and the mad rush of workers for high-paying tech jobs who moved to the San Jose area.  As the city refused to expand the UGB to allow more development to accommodate all the new workers, the obvious occurred: a dramatic increase in land prices and housing costs. Housing prices almost doubled between 1985 and 1990 and then doubled again between 1996 and 2001. Meanwhile San Jose’s density, which had dropped to less than 3,300 people per square mile before the UGB scheme began, increased to 5,000 people per square mile in San Jose and almost 6,000 people per square mile in the San Jose urban area.  To make matters worse, San Jose’s officials wrote a new General Plan in 1994 that kept the UGB just as it was with no expansion despite the rapidly rising home prices. They also classified Coyote Valley and South Almaden as “urban reserves” and refused to allow development in those areas. Even though Cisco Systems wanted to build a new factory in Coyote Valley, which would have allowed for less commuting, and homebuilders offered to pay for all the infrastructure needed to support residential housing, San Jose still did not allow the development.  Is it any wonder that San Jose’s housing prices rank as highest in the nation?

Davis, California, just west of Sacramento, is another good example of how an urban growth boundary impacted housing prices.  In 2000 Davis voters approved by 54% adopting an urban growth boundary to mitigate “greater traffic problems, overcrowded schools and other associated problems.”  Measure J established the UGB by requiring a public vote by the city’s residents for any conversion of agricultural designated land into developed land. At least the measure required going back to the voters in 10 years to be renewed or ended.  Unfortunately Measure R in 2010 passed by an even wider margin of 77%. It thus became an ordinance that any time the city’s land use map is amended to change land designated from agricultural or open space into urban use or urban reserve use—the voters must approve it.    Two large areas in Davis’ 1999 Land use Map called Covell Center and Nishi Properties that were earmarked for development would also need voter approval. The Covell project was submitted to the voters in 2005 and 59% voted no. Then the Wildhorse Ranch project to develop land within Davis city limits which had an agricultural designation went to the voters in 2009 and failed at the ballot by a 75/25 margin.  Not only was Davis determined to limit its own growth—it also went to extraordinary efforts to limit growth of nearby cities. When the cities of Dixon and Woodland considered new residential and commercial development to provide jobs to UC Davis graduates, additional shopping options, and lower housing prices than Davis, the voters in Davis approved a $24 annual tax to purchase development rights for up to 2,200 acres of agricultural land to contain Dixon and Woodland.  Furthermore, Davis sued to stop any development outside its city limits but within reasonable distance in its “sphere of influence.” When a developer tried to develop an area called Kidwell near UC Davis, David successfully sued to stop the project. Since then, the city has been very active in the easement purchasing business. Is it any wonder that housing prices in Davis have gone through the roof while nearby cities are much lower?

Housing figures as of December 2014:  San Francisco-741,200; Davis-580,900; Folsom-440,500; Dixon-344,900; Winters-322,200; Woodland-280,400; West Sacramento-280,000; and Sacramento-265,600.

One ironic trend that has occurred over the years that UGB’s have been around is that UGB’s adopted through initiative and direct democracy are generally more restrictive than those adopted by politicians and bureaucrats.  In the case of Davis, even before the voters get to weigh in, the change in land use must have a project plan that outlines all the land use components and proposed public and recreation facilities. Once the project plan is established, it can’t be changed without a public vote.  Then it must be shown that the project is in compliance with all California environmental, planning, and zoning laws. Then the City Council must approve the change in land use, and finally the voters must approve the change by a majority vote. Small wonder that one study of 65 UGB’s in California found that 27% of the municipality-adopted UGB’s had been modified in some way to accommodate some growth, but in the 15 UGB’s that were approved by voters, not one had changed at all.  The biggest beneficiaries are people who owned land before the UGB’s were drawn, and they’re not about to allow a drop in their home values.

The equity issue is perhaps the worse consequence of UGB’s.  Clearly, limiting the amount of land that can be built on benefits relatively affluent property owners at the expense of renters and low-income families.  This has contributed to the wealth inequality we hear so much about these days, as the higher housing prices prevents first-time buyers from moving on up. Plus living in dense, crowded, dirty, crime-ridden cities—even with high-paying jobs—isn’t necessarily a higher standard of living.

Fortunately, it doesn’t have to be this way.  Did you know that only 5.1% of the land in California is developed?  In the 5 counties that make up the San Francisco-Oakland urban area, only 34% has been urbanized.  Since 20% is government-owned land, that still leaves 45% that could be developed but, due to UGB’s and other governmental restrictions, has been taken out of circulation.  If UGB’s were eliminated, new communities would pop up all over the west coast that could accommodate everyone’s taste—from those who prefer bustling cities to those who prefer suburban or rural lifestyles.  Expanding out from 5.1% to 10% would dramatically slash housing prices, and still there would be plenty of open space left to enjoy the natural beauty of the state’s forests, lakes, mountains, and farm land. It’s not necessary to cram everyone into crowded high-priced cities or gated communities that have closed the doors behind them—there’s plenty of room for everyone.