The San Diego City Council approved the Strategic Framework Plan, essentially endorsing the City of Villages concept, so called because it embraces a new direction for planning the city, emphasizing the accommodation of growth through redevelopment of communities rather than continuation of the trend of sprawl.

Or does it?

At virtually the last minute, Mayor Murphy and two council members issued a memorandum to fellow council members urging they retreat from the portion of the policy that encouraged communities to accept higher density. The full council agreed, and what it ended up passing was a watered-down version of the City of Villages.

The rationale for this was a San Diego Association of Governments revision of its growth projections. New data suggests the city’s existing zoning will meet its fair share of regional growth. Sandag says the city’s capacity for an additional 108,000 housing units is sufficient to address foreseeable housing needs.

The original Sandag 2020 forecast determined the city needed 120,000 housing units. The city planning department found room in the existing zoning plans for only 108,000 units, so the hunt was on for ways to accommodate the excess. Now Sandag projects that the city will need just 89,000 units by the year 2020.

At best, Sandag’s disclosure of the new, albeit preliminary, 2030 forecast was bad timing. Without it, the City Council likely would have approved the intact version of the City of Villages. Sandag’s fresh projections gave its members a convenient excuse to back off.

Neighborhood activists and community planning groups probably are rejoicing. They represented the major opposition to the City of Villages, arguing that unless the City Council found a way to add and improve existing infrastructure such as roads, pipes, schools, parks, police and fire stations, they could not accept more growth.

It is hard to blame the mayor and council for backing down to these groups in light of the Sandag revisions. So now the strategic plan is reduced to accepting innovative development solutions and encouraging revitalization, but without an increase in housing above what the existing zoning permits.

However, the Strategic Framework Plan ignores the major problem of growth in our community.

The Regional Growth Picture

The table on the following page compares the Sandag 2030 forecast with the last 30 years of growth in San Diego County. The forecast shows employment falling off and housing growth slowing. Part of the reduction is attributed to a small redirection of growth to Temecula in southern Riverside County. Sandag also assumes a massive slowing of regional growth in the latter 2020 period as baby boomers retire and the workforce is not replaced.

Even if we accept these lowered growth expectations, the reality is that since 1996, San Diego County has permitted each year, on average, 13,000 new housing units, far less than population expansion demand has called for. In other words, recent history is not to fully accommodate growth demands, regardless of the need. The result has been a dramatic surge in housing prices coupled with the sprawl and longer commuting patterns.

Jobs-To-Housing Ratio

One way to isolate the problem is to consider its impact on the jobs-to-housing ratio. During the last half of the decade (1996-2000), the region has averaged 43,000 new jobs each year. Compared against housing growth, we have created 3.3 jobs for every housing unit produced. The national jobs-to-housing ratio is 1.5 jobs for every housing unit produced.

Based on a slightly more conservative jobs-to-housing ratio of 1.7, the regional demand for the last half-decade totals 127,000 housing units. However, our region has only permitted 62,434. This is a regional deficit of 64,566 units. Assuming 50 percent of this inventory should have been condos, this would mean the construction of about 160 high-rise condo towers.

Now, if the region today is producing 13,000 new housing permits, based on the last 30 years of 34,000 new jobs per year, the ratio is 2.6. So at today’s permitting level, we are not even meeting the average demand based on the last 30 years. Based on the shortage, the city should not be planning for 89,000, it should be 89,000 plus 63,000, or more than 150,000 units.

San Diego employees have been cheated out of condominium and rental homes, not to mention single-family homes, the other 50 percent of the mix.

This housing deficit problem only will be exacerbated as the housing gap widens with shortsighted perspectives like the City Council’s. This shortage should not be overlooked when planning for the future. As the City of Villages addresses density based on Sandag’s new 2030 forecast, let’s not forget where we have been and the housing shortage we already have.

Encouraging Sprawl

If Sandag’s revised figures are more accurate, and I believe they are woefully low based on our own studies, the issue of where we grow and how we accommodate that growth still remains. Essentially, cumulative decisions in the City of San Diego and the other cities in the county to permit fewer units has bid up the cost of housing throughout the county. Such thinking also pushes new growth into the hinterlands, such as Temecula, thereby stuffing more traffic onto congested freeways.

In effect, Sandag’s growth projections must assume sprawl, with greater numbers of people living in places like Temecula and Baja, commuting to their jobs in San Diego and suffering the corresponding declines in quality of life that lifestyle brings.

The revised City of Villages also lends support to communities to exact more fees and concessions from developers, and ultimately from the pockets of new home buyers. What is likely to happen when developers propose new projects in these communities, effectively conforming to the City of Villages plan, is the communities will hold the “no higher density” clause as a sword, exacting more fees and concessions in exchange for their approval, or not give it, thereby making the path to entitlement more difficult.

This is disturbing, because for the first time the major builders in our community are now investigating development opportunities in the existing communities. They are revamping their strategic plans to take the city at its word and build condominiums and other forms of higher density housing. Now the incentive is being reduced.

While the community activists’ cry for infrastructure improvement and funding is legitimate, the new strategic framework is a long-range vision and was always dependent on redirection of priorities and new funding sources. The sticky problem of infrastructure funding is not positively impacted by the City Council backing down on housing; it is only delayed and complicated. If housing is not built, why push for ways to build infrastructure to improve the communities?

I find what has been advocated by the community activists is a thinly veiled version of NIMBYism, under the guise of community preservation.

But most of all, it is a deliberate and telling blow to the citizens of San Diego and all future homeowners. Housing prices have increased dramatically in the face of the supply/demand imbalance. Why shouldn’t this trend continue if we do not accommodate housing?

Gary H. London is president of The London Group Realty Advisors Inc., providing real estate consulting and economic analysis. Check him out on the Web at www.londongroup.com