California has always been the land of big dreams, big ambitions and big plans. But big developments? Alas, they may be history in this state.
Just look at what happened to the Newhall Ranch project. It would have been a big development, all right. The north Los Angeles County planned community would have included seven public schools, shops, offices, parks and houses – in fact, 21,000 houses. It would have been a new home to almost 60,000 people. That’s much more than either Culver City (with about 40,000 residents) or Beverly Hills (about 35,000).
But the California Supreme Court a little more than a month ago sided with naysayers and nixed Newhall Ranch’s environmental impact report. And with that, years of planning, untallied expenses and untold work was tossed out of the proverbial window.
The developers gulped and gamely declared that they would soldier on and try again. But the rest of us are left to assume that Newhall Ranch, while it may not be dead yet, sure is breathing hard. If anything gets built at all, it will probably be much smaller.
What’s astounding about all this is that the Newhall Ranch developers played by the rules – rules that developers in other states don’t face. They agreed to all manner of energy-efficiency initiatives. They’d build bicycle paths and install drought-tolerant landscaping. They agreed to create wildlife refuges and arranged to have tiny minnowlike stickleback fish caught and released elsewhere, out of harm’s way.
Los Angeles County supervisors approved Newhall Ranch 12 years ago. The environmental impact report, more than 5,800 pages, was approved by the state’s Fish and Wildlife Department in 2010 and it eventually got de facto approval by an appeals court more than a year ago.
But a divided state Supreme Court picked apart the methodology used in the environmental report. For example, even though the state wildlife department reportedly projected the Newhall Ranch development would reduce greenhouse gas emissions by 31 percent by 2020 – better than the state’s goal of 29 percent – the court, on its own, decided to move the goalposts and said that new projects needed to go even further to counteract the less than 29 percent reductions from existing developments.
The court also didn’t like the plan to relocate the little fish and, well, we could go on. The point is clear: Big developments such as Newhall Ranch cannot be built in California. Opponents will wear down developers. Settled matters will get relitigated. Rules will be added and then changed. Courts will agree with opponents.
Think back on the size of Newhall Ranch. It would have been so big that, by itself, it would have provided relief to L.A.’s undersupply of homes. It would have driven down prices.
If you play with the numbers, you’ll see that if just 2 percent of Newhall Ranch’s 21,000 homes were finished and put on the market each month, that would be 420 homes. To put that in perspective, 420 homes is equal to 10 percent of the number of homes that have sold, on average, each month in all of the county over the last year.
If you took Econ 101, you know that if you have a constrained market but suddenly add 10 percent to the supply each month, month after month for 50 months, you no longer have such a constrained market. Prices will go one way. Down. L.A.’s housing market would have been transformed by Newhall Ranch. L.A.’s housing prices may not have gotten down to Arizona or Texas levels, but they would have been far more affordable, and likely would have pulled down apartment rents as well.
I don’t know about you, but I doubt I ever would have lived in Newhall Ranch. But I sure would’ve enjoyed the lower and more normal housing market here.
But alas, big developments like that will never be built in California.
Charles Crumpley is editor of the Business Journal. He can be reached at email@example.com.
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