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'No-Growth' Overreaction Can Sink the Southland

November 18, 1987|RICHARD L. WEISS | Richard L. Weiss is a partner in Dixco, a residential development firm, and chairman of the housing and community development committee of the Los Angeles Area Chamber of Commerce

The platitude "That's the straw that broke the camel's back" is so much a part of our colloquial parlance we often don't remember that such expressions derive from some ancient truth. There must have been a camel whose back was actually broken by the imposition of that fatal straw--and possibly the whole caravan faltered as a result.

I suggest that there is now such a straw in the wind in the Southland; and that unless moderated, the vitality of the economy of the Los Angeles metropolitan area is in danger. If the no-growth fever pervading Southern California today, however honestly motivated, is allowed to spread, we will have unintended consequences far more serious than any good anticipated by the frustrated citizens who are its supporters.

The city of Los Angeles has passed an ordinance that places some limits on commercial building; the city of San Diego has an ordinance that puts a severe limit on the number of residential units that can be built.

Now slow-growth initiative petitions are being circulated in Orange and Riverside counties.

If it qualifies for next year's ballot, the Orange County initiative would bar major construction projects in places where the infrastructure, including roads and schools, are deemed inadequate. The Riverside County initiative would limit the number of residential building permits. Already, residential building-permit limitations exist in Ventura County and other small cities.

What are the intended consequences? Obviously, reduced traffic, cleaner air resulting from less traffic, less demand for infrastructure including schools, water, sewers, streets, police and fire protection, parks and recreational facilities and all else that population and economic growth requires. And, of course, for those already here, better quality of life and increased property values.

Why increased property values? Obviously, the shortage of any commodity makes its price more dear and if there are fewer new houses and apartments to be built, those already in place and those few that are developed will increase substantially in value.

Of course, there is a flip side, and that is the radically reduced value of property for which, by reason of constricted availability, a building permit is not available.

What are the unintended consequences?

The slowing of development will have an immediate and devastating effect upon the construction industry, which is one of the Southland's largest employers. There will be quite a few carpenters, steel fabricators, masons, plumbers, electricians, laborers, etc. out of work. And how about employment in those industries that produce, supply and manufacture lumber, concrete, plumbing supplies, wire, brick, roofing material? It is not only Orange, Ventura and Riverside counties that are affected; the growth-limitation movement in the city and county of Los Angeles is alive and well and if Riverside County goes, will San Bernardino be far behind?

Not only will a radical reduction in development directly affect the construction industry, it will have a ripple effect throughout the economy for businesses, directly or indirectly, providing goods and services ancillary to the development industry--there are myriad examples.

What happens to industries and businesses in general whose very existence is dependent upon the availability of labor--employees who now commute from the outlying areas to job centers in Los Angeles and Orange counties. Where will they live if little new housing can be built in the few "affordable" areas that remain?

Unlike gold or some other fungible commodities, land has no intrinsic value. Value is only achievable by reason of potential use. If real property cannot be put to its highest and best use because of the lack of availability of a building permit, it loses value dramatically--and with that loss of value, so erodes the tax base of the community. The potential loss of tax base precipitated by the severe restrictions inherent in the proposed growth-limitation initiatives might make the drop in land values in 1988 seem like the 1930s.

And what about the social consequences? The opportunity for upward mobility is the American Dream. The immigrant and the newcomer (and also those here awhile) who find themselves on the lower rungs of the economic ladder look forward to a chance "to make it," to achieve and share a bit of the American Dream--like owning their own home. If affordable housing production in the Inland Empire and elsewhere is foreclosed, the stratification of Los Angeles society that would result will likely have serious social consequences.

Developers only develop where there is a perceived demand for their product. The low current commercial and industrial and multiple-housing vacancy rates and the extremely low inventory of new and existing single-family housing indicates that the perceived demand is real.

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