Efforts to Build Infill Housing in California Won’t Solve Growth Woes

Steeper housing shortfall and higher prices likely result

Smart growth and the buzzwords that accompany it are swarming our neighborhoods – sustainable development, viable communities, healthy neighborhoods, and infill development are just some of the terms of choice for planners and politicians these days.

Infill housing, promoted by a new California law, is a process where vacant sites located closer to established, developed areas receive preferential treatment for development than sites not located as close to historical city centers. Infill housing is supposed to increase density, promote affordable housing closer to jobs, preserve open space, reduce traffic congestion, and improve the environment. It doesn’t. An examination reveals this policy actually exacerbates many of the aforementioned problems and does very little to alleviate the others.

A typical infill site, by virtue of its central location, would usually command a very high price on the open market. However, in a strange combination of policies, smart growth advocates call for a significant percentage of the rental units built on these expensive locations to be reserved for low-income residents as part of the Low Income Housing Tax Credit program. So we would have housing built where land is the most expensive and then specifically allocated to lower income residents -meaning we have to subsidize residential rents for those living on some of the highest-priced real estate in a metropolitan area. Much of this is occurring in the San Francisco Bay Area, the priciest area in the state and perhaps, the nation. Expensive neighborhoods in San Francisco, San Jose, and even Carmel have apartment projects with a “low-income” component. The price tag for these tax credits statewide is nearly $65 million annually, not to mention an additional $50 million granted in federal tax credits.

Simultaneously, relatively cheap land on the urban fringe remains vacant-land that could be developed to allow subsidy-free homeownership opportunities for families with low to moderate incomes. It is clear that promoting infill rental housing over “for-sale” housing located on the urban perimeter is a more expensive alternative to society and hurts overall long-term housing affordability.

The traffic congestion and air quality benefits of infill housing, touted by smart growth advocates, are also based on misconceptions. The underlying assumption is that as densities increase, residents will reduce their driving and walk and use transit for their trips. This belief has little grounding in reality. With the exception of places with very high densities such as the downtowns of New York City, Boston, Chicago, and San Francisco, increased density does not force people out of their cars. Since most markets will not bear densities high enough to induce the switch to mass transit, it is unlikely people will be leaving their cars at home. Witness Los Angeles; it is the one of the densest metropolitan areas in the country, but has very low transit use.

Since infill housing won’t increase transit use, the increased density will actually increase traffic congestion as more drivers use the same amount of roadway. And that also means increased air pollution since vehicles emit more gases when traveling at slow speeds in stop-and-go traffic.

Preserving open space is a worthy goal, particularly when focusing on environmentally sensitive lands. Land use policy should work to preserve fragile open space, but on the basis of environmental need, not its distance from an established city center. Advocates of infill development make a faulty assumption in today’s society – that land closer to the historical city center is always less desirable to keep vacant than land on the urban fringe.

Of course, infill housing is really part of larger smart growth agenda to reshape development patterns to resemble older central cities. It is an elitist belief about what constitutes a good and proper city form instead of cities that function as residents demand, suited to modern technologies, amenities, and desires. Evidence suggests most families continue to prefer low density, suburban locations so instead of subsidizing construction of rental units in central cities, we should promote home ownership in areas where land is cheaper. This focus on infill development could ultimately lead to an even steeper housing shortfall and higher prices if growth opposition continues to prevent housing construction on the urban perimeter.

Chris Fiscelli is a senior fellow in urban and land use policy at Reason Foundation

Chris Fiscelli is a Senior Fellow at Reason Foundation. Currently a market analyst in the real estate industry, he formerly worked as a research and policy analyst for the Arizona Legislative Council conducting policy-related studies and analyzing a variety of policy issues for the state legislature. Mr. Fiscelli also worked in local government as a land use and economic development planner.