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Press Release · January 30, 2002

Growth-Control Measures May Not Be Biggest Deterrent To Homebuilding In The State – Other Forces Slow Production

SAN FRANCISCO, California, January 30, 2002 – Market forces and state policies may contribute more to California’s high housing prices and slow rates of home construction than local growth-control measures adopted by city councils or passed by voters, according to a new study released by the Public Policy Institute of California (PPIC).

In Cities Under Pressure: Local Growth Controls and Residential Development Policy, authors Paul Lewis and Max Neiman suggest that less obvious factors – including zoning that allows only low-density development, widespread litigation over construction defects in condominiums, and stock market gains that increased Californian’s wealth and demand for housing during the late 1990s – have limited the supply of new homes in California or driven up prices. Overt growth controls are likely a smaller part of the problem because they are fairly uncommon, according to the study, which included a detailed mail survey of planning officials from nearly 300 cities across the state.

“Strict growth-control policies tend to be the exception rather than the rule,” says Lewis. Only 6 percent of cities set annual limits on building permits issued, and only 6 percent restrict residential development to areas that are already built-up. More common are policies aimed at shaping the form or type of residential projects, such as design-review standards and affordable housing set-asides. Most planners view their city councils as favorable or neutral toward new housing.

The authors suggest that policymakers should focus on improving the development process rather than trying to limit the power of cities to regulate and manage growth. Some of their recommendations include: reducing growth conflicts with city residents by getting them involved in and informed about the planning process; addressing infrastructure shortfalls, such as crowded roads and schools; streamlining environmental reviews; and passing state legislation to decrease litigation over construction defects.

Other key findings

  • Significant regional differences: A typical city in the San Francisco Bay area had more growth management policies in effect in 1999 than cities in the Central Valley or Southern California. Further, planners in the Bay Area are far more likely than those in other regions to report that residential growth issues are often or almost always controversial in their cities.
  • Growth issues are more contentious in communities where residents face long commutes.

The Public Policy Institute of California is a private, nonprofit organization dedicated to objective, nonpartisan research on economic, social, and political issues that affect the lives of Californians. The Institute was established in 1994 with an endowment from William R. Hewlett. David W. Lyon is President and CEO of PPIC.