Affordable Housing in Monterrey County

Policy Study

Affordable Housing in Monterrey County

Analyzing the General Plan Update and Applied Development Economics Report

Executive Summary

Monterey County is in the process of updating its General Plan. The old proposed General Plan Update (GPU) had a number of problems and was voted down by the Board of Supervisors in May 2004. Now that Monterey County has an opportunity to draft a new General Plan Update, it can learn from the mistakes in previous work.

This report analyzes the old proposed General Plan Update and the Economic Impact Analysis (EIA) conducted by Applied Development Economics, Inc. We find that the economic analysis for the county is based on false premises and faulty economic logic. The future General Plan Update should seek to avoid the mistakes in the old proposed GPU and the EIA.

The old proposed GPU included numerous regulations that would have severely affected the livelihood of Monterey citizens. Among the documents’ stated goals were the reduction of residential development and the promotion of affordable housing. Unfortunately, these goals are contradictory. By mandating large minimum lot sizes and requiring developers to provide a certain amount of money-losing “affordable housing” units, the county would only reduce the available supply of housing. This would lead to price increases, quite the opposite of more affordable housing.

In addition, the GPU and the EIA made unrealistic assumptions about the cost of additional services and infrastructure required by new development, particularly in rural areas. Such rural areas currently do not receive full government services. Thus, including the cost of full government services in rural development impact projections is disingenuous. Those projects that require additional services in rural areas should instead be encouraged to ensure that developers provide the necessary infrastructure in their new developments or to form homeowners’ associations or other voluntary cooperative organizations to adequately address the homeowners’ needs.

The preservation of agricultural land is also a major issue. While supporters of the old proposed GPU and the EIA claim that the policies they advocate will aid farmers, the truth is that restrictive land-use regulations will only reduce the value of the farmer’s chief asset: his land. Scientific and technological advances have increased agricultural productivity. Farmers should have the flexibility to use their property as they see fit and the ability to make their own land-use decisions to improve their well-being. The old proposed GPU attempted to micromanage the economy of Monterey, and it would have led to dire consequences. In every case, the old GPU and EIA call for additional land-use regulations that would have only led to greater economic hardship and a diminished quality of life for Monterey County residents. The new General Plan Update should seek to avoid these mistakes.