Answers to Most Posed Questions: Facts & Implications
 of Not Meeting Regional Housing Demand


  — Published by London Group Realty Advisors. Republished by Lilac Hills Ranch February 11, 2016.

 



Answers to Most Posed Questions

White Paper:
Facts & Implications of Not Meeting Regional Housing Demand

Since the November distribution of our White Paper titled Facts & Implications of Not Meeting Regional Housing Demand we have received a lot of feedback. Much of it was generated from those of you who read it, but also from persons who shared their thoughts from the ULI Panel discussion on the topic that I moderated, as well as the various media appearances and interviews.

The report held that “…the incorporated cities will be hard pressed to accommodate their share of housing demand that is presumed by them in the SANDAG Series 13 forecast. Opportunities to accommodate additional housing units do exist in unincorporated San Diego County. It is mostly undeveloped, while the cities must accommodate development through infill and increased density. The County, on the other hand, has the ability and the land available to accommodate development, certainly a greater share than in the past, and in a manner which is consistent with state law which requires reductions of greenhouse gases, water, energy and vehicle miles traveled.”

Here is a rundown of those questions, and our answers:

Is today’s housing problem somehow different than in the past?

Yes. The California Department of Finance just released their growth estimates from last year (June 2014 to 2015), which showed that the San Diego region grew by 28,000 persons, all but 3,000 from natural increase. This means that the overwhelming growth demand will be from persons who are born and raised here. Never before has our region been faced with the very clear fact we are growing our own. So, unless we find housing, we lose our children to other regions. In fact, on the migration side, we added 11,000 persons, but 8,000 San Diegans left (that’s how the 3,000 mentioned above is calculated). So, this natural growth/out migration phenomenon has now begun, and it is unprecedented in our region. That is why the housing problem is different, and why it is now imperative that we find resolutions through new housing construction of every type.

Are we ‘biased’ in some way?

Yes, to a certain extent. Our clients are often developers and their capital sources, and certainly we have their interests in mind. But the empirical information that we have presented in the White Paper is incontrovertible as to the facts and the possible outcomes. We suggest that readers focus less on our ‘bias’ and more on the issue. It is real. You can’t just look away, unless you do not care whether regional policy makers should make good decisions which impact our economy and its people.

Is the existing plan flexible?

Yes. As we stated in the White Paper, the ability to accommodate new housing — whether inside or outside the designated Villages — is spelled out in the County’s GP, although they have set a “high bar” for developers. But we have received some feedback from persons who regard the plan as a sort of Magna Carta, permanent and inflexible. The County never intended that and, in fact, it is against all precepts of land use planning. Plans must be able to flexibly accommodate new demands, changing needs and the unanticipated future.

What about the impact on habitat in the unincorporated areas?

Are we suggesting that this is a contest between “people habitat” over environmental habitat? No, although we still would not have any problem if we were (we consider housing needs for people quite important). The San Diego region has adopted rigorous standards for habitat preservation, and have set aside vast corridors to achieve it. No one is suggesting compromising that, nor is there any need. It is important to keep in mind that it is the County unincorporated area where just about all of the undeveloped lands in the San Diego region remain. It should not be off limits for development. Our position is that this is unacceptable public policy, particularly in light of the fact that with their diminishing land supply the County’s cities are struggling to find land for housing, mostly of another type (high density and vertical).

Why are SANDAG’s projections wrong?

They are not wrong. What is wrong is the underlying principals, and perhaps the objective. What we mean by ‘underlying principals’ is that the various plans and policies of our region’s cities that have fed the projections cannot and will not be realized. The cities will buckle under the pressure to accommodate much of the housing.

The ‘objective’ is wrong because the SANDAG projections are an attempt to achieve over 80% multifamily development in the coming years. While many projects will fit this bill, some portion will not. To achieve this objective, we are engaging in the planning form of “selective breeding”: we are mostly not accommodating the housing needs of young families. Only with the participation of the County of San Diego can a broader spectrum of housing needs be accommodated.

Will the unincorporated County be able to accommodate their designated fair share of growth from the SANDAG forecast?

Theoretically yes. In practice, much of their fair share is accomplished through the development of large lot homes on sites which well exceed two acres. This type of housing accommodation is inefficient, sprawl inducing and by its very nature cannot provide single family housing which is affordable.

Will the urban areas be able to accommodate their designated fair share of growth?

Theoretically yes. In practice, no. We have repeatedly observed that when ‘the rubber meets the road’ neighborhood pushback and compromises will put proposed new housing projects at risk of density reduction or produce no development at all. We have serious doubts whether the SANDAG projections will be real. There is limited constituency for the politics of change or housing accommodation: it is a long held maxim that people want to be the last to move into their community.

By pressuring the County to accept projects in the unincorporated areas, aren’t you further causing negative environmental impacts?

No, in fact, quite the opposite. The problem with the SANDAG forecast is that it stops at the San Diego County line and at the International border. Households demanding affordable single family homes, unable to find what they need in San Diego County, will drive right through those invisible lines. San Diego employees who live in Temecula or Tijuana then commute further to work. That is a far bigger problem for the environment, our transportation corridors/infrastructure and our overall regional quality of life.

How does the inability to build housing impact affordability?

The combination of not building in the unincorporated areas, coupled with the “on the ground” push back in the urban communities, will limit supply relative to demand. This will bid up housing prices, cause even smaller unit sizes to be built, and further stratify the supply relative to the demand.

Can the County’s General Plan really accommodate the new communities that are in the pipeline?

Yes, it can. While sobering that there are only six major projects currently in their pipeline, we are hopeful that once they approve the first couple, more developers will step up and propose new projects. Even projects within the so called “villages” are going through a disproportionately rigorous entitlement process despite the County Plan statements that those are the places where they most want to accommodate the growth.

If nothing changes in the plans, the projections or the political/entitlement atmosphere, what are the consequences?

That’s easy. As we said in the paper, there will ultimately be an economic price to pay; housing prices will continue to be bid up, accommodating an ever narrower band of housing consumer; and there will be significant economic and fiscal consequences. In short, we believe this is a scenario that will ultimately deeply and negatively impact our region.

What’s your next white paper?

Next, we are going to tackle the crisis in the urban communities, starting with the City of San Diego communities of Hillcrest and North Park, both of which are far along in authoring new plans to downsize their projected housing counts. In their quest to process the community plan updates, the San Diego City Planning Department is determined to process updates as expeditiously as possible, perhaps with potentially calamitous consequences. More on that in the next paper…

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