LAFCos Destroy California Housing Affordability

Whenever the Antiplanner blames Oregon’s high housing prices on planning, someone says, “What about California? Their housing is even less affordable, and they don’t have statewide land-use planning.” California doesn’t have statewide planning, but a new report from the Cato Institute shows that it has something worse: LAFCos.

LAFCo is short for local area formation commission. In 1963, the California legislature created these commissions — one for almost every county — to oversee the formation of new cities and service districts and annexations to those cities and districts. LAFCos are governed by members of the councils of each city in the county plus the county commission.

LAFCos were not created to fight urban sprawl, which was hardly a blip on the political radar in 1963. But the legislature failed to foresee that the cities would soon use the power of LAFCos to preserve their tax bases by keeping developers from “escaping” to unincorporated areas outside their borders. They drew urban-growth boundaries and vetoed annexations in order to boost the value of the land within their boundaries.

In 2000, the legislature gave LAFCos the additional mission of controlling sprawl, but in fact LAFCos had become de facto growth-management agencies long before that. Thanks to LAFCos, California is the most compactly developed state in the nation. The 2000 census found that 94.4 percent of the people in the state live on just 5.1 percent of the land. California urban areas have an average density of 4,000 people per square mile, while urban areas in the rest of the country average just 2,400 people per square mile.

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If California had allowed people to build homes at the national aveage density of 2,400 people per square mile, the state’s urban areas would cover 8.5 percent of the state instead of 5.1. Is that 3.4 percent worth driving housing costs up by hundreds of thousands of dollars?

One of the unintended consequences is that the black population of many parts of California is declining even while the overall population is growing. Some fear this is a symptom of racial discrimination, but it may be simpler than that: black incomes tend to be lower, and low-income people can’t afford to live in California.

As the Antiplanner’s faithful ally, the Dynamist, notes in a recent column in the Atlantic, the U.S. now consists of affordable cities, which are “good for raising children” (which also means they are “boring”), and “superstar cities,” that have lively leisure activities and creative workplaces. Ironically, the people in the superstar cities are the ones who are most likely to talk about the need for diversity and mixed-income communities, even as their policies effectively push low-income people to other states and urban areas.

In any case, please download and enjoy the Cato study, which is full of fascinating insights about California land-use and transportation policies.