Isegoria

Brian Potter explains how California turned against growth:

Residents found themselves surrounded by polluted water, poisoned air, and a destroyed landscape. Views and natural beauty were increasingly spoiled by overhead power lines, outdoor advertising, freeway overpasses, and thousands of identical houses. Infrastructure like roads, schools and sewer systems were stretched to their breaking point. Crime was rising, and neighborhoods of single-family homes with largely white residents were being encroached on by apartment buildings housing the poor and minorities. In response to this unwanted change, Californians began to create land-use restrictions that would curb growth, help stop environmental harm, and limit the influx of new residents. When this drove up property values, Californians then passed Proposition 13, which cut property taxes, reduced the government’s ability to fund services, and locked in the low-growth culture that had taken root.

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Since the days of the gold rush, growth in California came at the expense of the landscape and the environment. Six years after the discovery of gold, the landscape surrounding the motherlode was “scarred and devastated” from mining operations. Following the development of hydraulic mining, which uses high-pressure water to break up rocks, entire mountains were torn apart, and the resulting silt and debris clogged the rivers. The large-scale water projects that brought water to cities and farms flooded ravines, drained lakes, and destroyed ecosystems. Diverting water from the Owens River to Los Angeles dried up the formerly-fertile Owens Valley, and large-scale water diversion caused Buena Vista Lake and Tulare Lake to dry up. Damming of the Tuolumne River to provide water for San Francisco flooded the Hetch Hetchy Valley. Conservationist John Muir, who had fought against the dam, lamented that “These temple destroyers, devotees of ravaging commercialism, seem to have a perfect contempt for Nature.” In 1905, a canal dug from the Colorado River to the Imperial Valley overflowed, causing an enormous flood which only stopped when the Southern Pacific Railroad filled the breach with 2,500 carloads of rock and gravel. The result of the flood, the Salton Sea, has today become an “environmental disaster” due to steadily increasing salinity. In 1928, the St. Francis Dam collapsed, causing a flood that killed 400 people and destroyed everything in its path as the water rushed out to sea. In 1940 the Los Angeles River, one of the city’s major amenities, was turned into a concrete channel to protect the surrounding areas from flooding.

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Between 1910 and 1930, the number of salmon in the Sacramento River fell by 80%. In the mid-1930s, 750,000 tons of sardines were being caught annually off the California coast, but the industry was completely wiped out by the end of the 1960s, in part due to overfishing.

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Harvests of California’s majestic redwoods rose to “unprecedented levels” to provide lumber for new housing, and by the end of the 1950s, 90% of California’s redwood belt had been chopped down. Air pollution from industry and millions of cars created a lingering “smog” in cities like Los Angeles and San Francisco that poisoned the air and blocked off views: smog attacks were so common by the 1960s that they were reported by the news along with other weather announcements. Sewage was regularly dumped into lakes and rivers: in 1961 an estimated 250 million gallons of sewage was dumped annually in the San Francisco Bay. Developers regularly made plans to fill in thousands of acres of the Bay to make more land, to the point where many worried it would be turned into a narrow shipping channel just wide enough for ships to pass. In 1969, a blowout from an offshore platform created an oil spill off the coast of Santa Barbara, killing thousands of animals and polluting more than 30 miles of beaches. Excessive pumping of groundwater for agriculture had caused the land to subside by tens of feet in some locations, and excessive irritation had deposited minerals and other pollutants in the soil.

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Much of this concern was about the aesthetic effects of ongoing growth. Many people had moved to California to be surrounded by natural beauty, not billboards, neon signs, traffic congestion, and thousands of identical “ticky tacky” houses.

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While California had traditionally been a bastion of single family homes, by the late 1960s construction had shifted to building large numbers of apartments, which would inevitably be occupied by low-income residents. This was “perceived as a categorical threat to the detached culture of low-density residential life.” One California housing expert noted that “one of the most cherished property rights in our ‘free enterprise system’ is not the right to do what one pleases with one’s property, but the right to live in a neighborhood in which no more multi-family housing may be constructed.”

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In 1965 the U.S. removed quotas on immigration based on national origin, and subsequent immigration reforms created a path for previously illegal immigrants to become legal residents. In 1960 only 1.3 million of California’s ~16 million residents were foreign born, and only 8% of residents weren’t white. By 1970, the non-white fraction had risen to 12%, and by 1996 it had reached 51%.

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California’s violent crime rate doubled between 1960 and 1970, and by 1980 had doubled again.

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By 1970, 25% of the country saw pollution/ecology as an important problem, up from 1% in 1960. That same year there were over 8000 environmental bills introduced in congress.

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Between 1971 and 1975, 244 CEQA lawsuits were filed alleging that projects failed to properly complete an environmental impact report, and a state study found that CEQA litigation had been “excessive and frivolous, resulting in unnecessary legal costs and costs of project delay.” An environmental organization handbook at the time noted that “the mere threat of a suit can also be an impressive political tactic… suits can be an effective delaying tactic in order to force compromises.” Between 1971 and 1975, CEQA lawsuits were used to challenge more than 28,000 units of housing construction in the San Francisco area alone.

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Los Angeles had the first zoning law in the country in 1908, and California set the precedent for single-family home zoning in the 1920s. But historically, restrictions had been part of a broader plan to encourage growth by making cities appealing; now they were being used to shut it down. By the mid-1970s, most cities and counties in California had some form of growth restriction in place.

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prices. In 1973, southern California homes were on average $1,000 cheaper than homes nationally. By 1979, they were, on average, $42,400 more expensive (reaching $143,000 more expensive by 1988). Between 1970 and 1977, San Francisco had the largest home price increase of any of the 16 biggest metros in the U.S., with average home prices nearly doubling. By 1977 San Francisco had the highest home prices of any large metro in the country, up from 6th highest in 1970. Los Angeles followed behind as a close second.

Increased home prices, coupled with a property tax reform that raised residential tax rates and assessment frequency, caused property taxes to skyrocket. A home purchased in Los Angeles for $45,000 in 1973 with a $1,160 property tax bill would have a $2,070 tax bill just three years later. As home prices rose throughout the state (going from an average of $34,000 in 1974 to $85,000 in 1978), average property taxes doubled, and in some cases even quadrupled.

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Dissatisfaction with the taxes also came from the fact that taxes were increasingly being spent on things like welfare, healthcare, and schools in poor urban areas (a 1976 state supreme court case mandated that spending per-pupil be roughly equal across the state). In other words, in many jurisdictions taxes were being funneled to the poor and minorities rather than improving local services like police or road construction.

In response to increasing dissatisfaction with property taxes, California passed Proposition 13 in 1978. The ballot measure, which won by a 2-1 margin, rolled back assessed home values to their 1975 levels, limited assessed value to a 2% increase each year unless the house was sold, and capped property tax rates at 1% of the value of the house. Later amendments allowed a homeowner to pass on his home to his children (or even grandchildren) without triggering a reassessment, letting the low property taxes be passed from generation to generation.

Proposition 13 did exactly what it said on the tin. Homeowner property taxes immediately fell by nearly 60%, reducing government tax revenues by roughly $7 billion annually (with “losses” even higher later as property values continued to climb). City tax revenue declined by 27% on average, and county tax revenue declined by 40% on average. While government spending had risen by 4.1% per year between 1957 and 1971 in inflation-adjusted terms, after Prop 13 it began to fall. One estimate suggested that by 1988, Prop 13 had saved taxpayers $228 billion. California fell from 7th in the nation in tax revenue per $100 of personal income to 35th.

Cuts in government services quickly followed.

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Perversely, Prop 13 in some ways acted directly against homeowners’ desire for more local control. The measure eliminated local control over property tax, redirecting it to the state legislature and governor. Local governments and school districts were forced to hire lobbyists to represent their interests in the state capitol in the hopes of getting a portion of reduced tax revenue.

Prop 13, along with the enormous number of growth controls passed by various jurisdictions, forced California into a vicious cycle. With reduced tax revenues (and inability to control the revenues that remained), residency became far more zero sum. Services allocated to new residents might easily come at the expense of existing residents, incentivizing jurisdictions to create further growth controls. Rising property values forced people to live farther and farther away from their jobs, exacerbating the problems of growth: longer commuting distances meant more air pollution, more traffic congestion, and more freeway.

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Economist Ed Glaeser estimated that as early as 2002 land use restrictions in San Francisco add nearly half a million dollars to the cost of a typical home, and in 2009 Hseih and Moretti estimated that relaxing land use restrictions in San Francisco and New York alone could boost national GDP by 8.9%.

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