By Robert Mcleod. Elected officials, led around by people who don smart-growth hats, claim that in order to manage growth properly, we must regulate how many homes we allow to be built. The idea is based on the premise that if we control the amount of housing, then we control growth. That's wrong. Growth comes from one thing and one thing alone: jobs.

For the most part, jobs come about from the desire to build manufacturing or service-oriented facilities in a certain area. Cities and counties, and the politicians in them, promote job growth, but you can't create jobs and then try to manage growth by controlling housing. Not only is this an intellectual error, it doesn't work. It forces people to move outside the existing living area to find housing. In this manner, sprawl is created. From there, the theory would be if you want to slow growth, you must slow jobs, but this is something communities aren't willing to do.

Show Me the Money

In California, the answer is to let growth pay for itself. Politicians say that if regional facilities and infrastructure must be built, then let the builders pay. The problem, of course, is that politicians simply fail to grasp that it's the home buyers who really pay. The builder most definitely does not. Even if he wanted to, he can't. He has only a certain profit level, and if he gave it all up for these costs, it still wouldn't be enough. In response to sewer and water fees being raised, for instance, builders and developers are forced to raise home prices to cover the extra costs, with the result of pricing more home buyers out of the market.

The question I ask the whole state of California is this: Where did all the money go? It's like the Watergate of the 2000s. California is the fifth-largest economic power in the world, the fourth-largest military power in the world, the most populous state. Likewise, it has the highest salaries and the nation's highest state income-tax rate. So how can it have no money for infrastructure? If you're the biggest, the best, and the most capitalized, where is the money? How can the Carolinas, Georgia, Florida, and Texas pay for their infrastructure but not California? No one can explain it to me. No one can say where it went, but where that money did not go is to schools, parks, and infrastructure.

Photo: Courtesy Newland Communities

View from the Top: Robert McLeod is chairman and CEO of Newland Communities in La Jolla, Calif. Since its inception in 1987, Newland, which operates in 11 states, has developed more than 56 master planned communities, ranging in size from 500 to 8,000 acres. Looking elsewhere in the country, I think we're seeing more government officials starting to fall into the same trap of saying let the builders and developers pay. Fees are being raised and, in many cases, created. For many of these states, the danger in adopting California's position is their lack of sufficient economic power, or a large enough job base, to withstand the impact of a housing crisis. At this rate, though, people will continue to be priced out of the housing market. Because of this, affordable housing falls through the cracks, and it shouldn't. The whole idea of community planning is to provide a variety of housing styles in a wide price range within a community. Affordable housing means housing that you're going to let people purchase for less than it took to build it. Inclusionary zoning is one working example, and I'm against it. What happens is that, in order to make up for the loss in supplying the cheaper homes, 80 percent of the homes end up costing more. There's this theory abroad that says, "Let the rich pay." I guarantee you that a middle-class family doesn't see itself as wealthy. Again, the builder and the developer don't eat these costs; the home buyer does.

Blended, Not Divided

My theory on growth management is one of creating a variety of product through densities, and then letting densities create a range of pricing from a lower-priced product to a higher-priced product. There has to be a blend. Density should not be construed as a dirty word. It ought to be embraced. Therefore, housing policies must reflect the kind of densities communities with a range of incomes require, and this is what politicians need to sell to their constituents. Any community with a variety of jobs and incomes needs to produce a variety of housing, in a variety of units.

Where Will Job Growth Be Highest in 10 Years?
Top 10 Metro Areas in 2012 (projected)
Metro Area
Total Job Growth
Phoenix?Mesa 577,000
Atlanta 541,000
Dallas 525,000
Washington 489,000
Chicago 409,000
Las Vegas 364,000
Tampa 349,000
Riverside?San Bernardino 341,000
Orlando 341,000
Houston 338,000
Source: John Burns Real Estate Consulting
New Leader: Looking ahead 10 years at total projected job growth, Phoenix will dethrone Washington, which has ranked the highest for the past five years.

Adding to the problem of growth management is another aspect that politicians may understand but don't deal with. If a community member violently opposes a project, that person will show up to a project's public meetings. On the other hand, if someone strongly supports a project, they may show up. And if someone merely likes a project, they probably won't show, because people are living their lives and expect their politicians to deal logically and correctly with growth standards. So in most cases, the only people politicians hear from are the very small minority who are absolutely against whatever a developer or builder wants to do, which taints their perspective. Politicians need to have the political guts to stand up and tell people they can't have it both ways: They can't have jobs on the one hand and acre lots for an entire community on the other. Most politicians simply don't have the gumption to say, "I heard what you said, but this community is going to be a blend." As a result, a small minority dictates public policy, and we all pay the price.

Published in BIG BUILDER Magazine, September 2002