According to a recent survey of local government leaders by the federal government’s General Accounting Office (GAO), San Luis Obispo County is among the nation’s counties where "sprawl" is considered a "very high concern."1 Like many other dynamic areas around the nation, San Luis Obispo County is experiencing an unprecedented increase in prosperity, which has generated a large and growing upper middle class. This prosperity has fueled an increase in new housing, job sites, and traffic congestion. The blessings of prosperity also come with negative side effects, such as traffic congestion, crowded public schools, and the loss of familiar open space. All of these factors are bound up in the controversy that goes by the term "sprawl."

The heightened public concern over the character of our communities is a healthy expression of citizen demand for solutions that are responsive to our changing needs and wants. At one level the debate over urban sprawl is a sign of Americans’ enduring propensity for self-renewal. As such, public concern over sprawl in San Luis Obispo County is ultimately part of a larger national discussion about how to live "the good life" in an affluent democracy.

Although controversy over land use and growth is not new to California, in recent years the debate over growth has taken on new dimensions with the advent of the "smart growth" and "new urbanism" movements, both of which offer challenging insights and bold prescriptions for changing the way our communities and neighborhoods evolve over time. "Smart growth" comes in many forms, but usually includes a call for higher-density "compact" development, better-planned or "targeted" infrastructure, urban growth boundaries, more public transit, and, in states like California that have direct initiative and referenda, voter approval of land-use decisions. Some "smart growth" and "new urbanist" ideas offer great potential for improving the quality of urban and suburban design. Yet tradeoffs between different policy options for implementing these ideas are poorly understood by policymakers and the public alike.

The people of San Luis Obispo County are facing the difficulties and complex tradeoffs between strategies for managing growth in an immediate form this fall through a ballot initiative (the "SOAR" initiative, an acronym for "Save Open-Space and Agricultural Resources") that seeks to freeze the current county General Plan in place for the next 30 years, and to require future local zoning changes to pass a county-wide vote of the people. To make informed decisions about SOAR and other new ideas for securing the quality of life for current and future residents of the region, San Luis Obispo County citizens need to know the basic facts about growth and land use. They also need a deeper understanding of some of the tradeoffs and dilemmas that any honest planning effort will have to confront. The purpose of this report is to provide background facts and analysis in order to help the public and community leaders deliberate about growth.

For decades San Luis Obispo County’s location roughly halfway between Los Angeles and San Francisco assured that it was a sleepy agricultural and ranching county dotted with small beach communities far off the beaten path. Its population growth rate has often been below the statewide growth rate for California, reflecting its remote location and limited economy. Today, of course, the county boasts a rapidly diversifying economy and its beach communities have become premier locations for tourists. The economy has diversified well beyond agriculture and tourism, with strong growth in manufacturing and high technology. The Milken Institute of Santa Monica has identified San Luis Obispo as one of the five best locations in the state for high technology business opportunity.

The old downtowns of both San Luis Obispo and Paso Robles have been revitalized in recent years, such that a leading complaint of residents is insufficient parking for the number of people who wish to visit these destinations. This compares favorably to cities and towns throughout America where "sprawl" is said to be destroying downtowns, or to regions where falling population (half the counties in Pennsylvania, for example) are leading to boarded up downtown neighborhoods.

To be sure, some of the growth of the county consists of exiles from the major metropolitan areas of Los Angeles and San Francisco, but most of the growth in the county is not occurring as a result of the spillover of the growth of those big cities, as is the case in Ventura, Orange, San Mateo, and Contra Costa counties. To a larger degree than other areas of California, San Luis Obispo County has more opportunity and latitude to determine its future. It is seldom possible in a democracy to agree on a single "vision" that harmonizes all the knowledge, values, preferences, and passions that different people and different communities have for their own future. Hence, it is not realistic to think that a single countywide "vision" for the future can be generated, without having to impose one vision over competing visions. The question for the leaders and citizens of the county, both for the immediate issue of SOAR and over the long term, is what ideas and what forms of governance will enable the county to evolve in a positive way over the next generation. Land-use facts and the question of how best to make decisions need to be considered.

Because most development takes place in land contiguous to existing towns and neighborhoods, our perception of the amount of land being developed is understandably exaggerated. The perception that growth is occurring at a rapid pace is likely enhanced by the fact that population growth is higher in the smaller, outlying south county communities such as Atascadero and Arroyo Grande than in the city of San Luis Obispo. (See Table 1.) A closer look at the land use statistics is necessary to put matters in proportion: San Luis Obispo County is far less developed than the state of California as a whole. For the state of California as a whole, the developed area is slightly more than five percent of the state’s total land area.

According to U.S. Census Bureau figures, the "footprint" of all cities in San Luis Obispo County accounts for 2.9 percent of the county’s total land area of 3,304 square miles.2 Ninety-seven percent of San Luis Obispo County is open space. Most of the population of the county seldom sees the bulk of this open space. According to CalTrans figures, fewer than 350 cars a day travel over the Carizzo Plain on State Highway 58, where there is virtually no development of any kind. When the entire county is considered, there is no reason to conclude that there is any danger of the county "running out" of open space. The question of open space in and around our communities where people live is another matter, which will be discussed below.

Another surprising fact is that population growth in San Luis Obispo County slowed down in the 1990s. Figure 1 shows that population growth was substantially higher in the 1980s than in the 1990s.3 The Census Bureau projects that by the year 2030 San Luis Obispo County’s population will grow by 81 percent, to 461,000 from the current estimated population of 254,000. Previous long-range Census projections have often had a margin of error of up to 30 percent, so these long-range forecasts need to be taken with a grain of salt. Already discrepancies between estimates and actual growth can be observed. In 1997 the Census Bureau found that population growth in the county was occurring at a rate below its current projection (in 1997 the Census Bureau estimated county population at 233,291, an increase of only 16,129 from 1990). Unless growth in the last two years has been exceptionally high, it is unlikely that the county’s population will reach the Census Bureau’s projected year 2000 population of 254,818.

That population growth has slowed over the last decade is borne out by looking at statistics for residential building permits. Figure 2 shows that building permits for the first seven years of the 1990s (the most recent years for which county-wide Census data is available) were less than half the level of the last seven years of the 1980s. Of course, much of the reaction against rapid growth comes from the concentration of housing in new large subdivisions, and even more so from commercial development such as "big box" retailers that, while highly functional, seem inelegant. A good local example of this kind of controversy can be seen in the case of the proposed San Luis Obispo Marketplace, a 500,000 square foot commercial development slated for the Dalidio farm adjacent to the existing Madonna Plaza development.

A major growth-related concern is the fate of farmland. The SOAR initiative in San Luis Obispo County is not unique in targeting farmland preservation as a priority. It bears repeating that when farmland conversion occurs contiguous with an existing town or neighborhood, our perception of the amount of land in question is often exaggerated. According to U.S. Department of Agriculture statistics, between 1987 and 1997 the total amount of farmland in San Luis Obispo County declined by 35 square miles, or 1.7 percent of the total land area in the county.

This does not necessarily mean that this land was developed. The USDA’s Census of Agriculture does not track conversion of land into other uses; since some land is classified as "farmland" for tax purposes, much of the farmland that is "lost" in this data set is classified as a different kind of non-farmland open space. USDA figures also show that there are slightly more farms in the county than 10 years ago (1,880 farms in 1987, 1,916 farms in 1997). Figure 3 below compares the change in "land in farms" in San Luis Obispo County with the state of California as a whole. This figure shows that the amount of land classified as farmland in San Luis Obispo County is much more stable than the state of California as a whole. There is little reason to suppose that San Luis Obispo County is ever going to "run out" of farmland.

Many advocates of growth control say that such controls are necessary to preserve the importance of the agricultural sector of the economy. This is a self-refuting argument in some ways, because, like any other kind of commerce, where farming is prosperous there is little reason to worry about its economic viability or the prospect of farmers selling their land for suburban development. In fact farming nationwide has been under pressure for decades, as increased productivity, falling farm commodity prices, and competition from world markets have made farming much less profitable. Farmland values nationwide have been flat or falling for most of the last 20 years—except in areas where nearby city growth raises the value of farmland for alternative uses.

It is necessary to take an unsentimental look at the agricultural sector of the economy in San Luis Obispo County. Farm earnings as a proportion of total earnings in the county have declined from 7.5 percent in 1970 to just 2.6 percent in 1994 (the most recent year for which Census data is available), as shown in Figure 4 below. Agricultural employment growth had badly lagged employment growth in retail and manufacturing sectors. Figure 5 shows that between 1980 and 1990, employment growth in manufacturing grew 66.1 percent and in retailing at 71.5 percent, while agricultural employment only grew 26.4 percent.

The point is: the economic growth of the county is increasingly driven by a diversified specialty manufacturing, high technology, professional services, retailing, and tourism. To be sure, agriculture contributes significantly to the less tangible "amenity value" of the county that is important for tourism and the overall quality of life. The important point to keep in mind is that both the agricultural sector and the other growth sectors of the local economy require a flexible land market and a dynamic planning process to meet their mutual needs.

Rigid growth controls harm both sectors. The allocation of land resources between the agricultural sector and the non-agricultural sector is a two-way street.

First, there is an important issue of basic fairness or justice for farmers in San Luis Obispo County who face the prospect of having their current land use frozen in place for 20 or 30 years by SOAR or other restrictive policies. In San Luis Obispo County, according to the USDA, two-thirds (67 percent) of the county’s 1,916 farms have gross sales of less than $25,000 a year.4 Nearly half of the farm owners in the county are over 55 years old, while only 93 farm owners—just five percent of the total—are under age 35. Many of these middle-aged farmers who are nearing their retirement years may not wish to have their single largest asset encumbered by arbitrary and inflexible land use laws.

Second, the obverse must also be considered. There is agricultural land within the existing or proposed "spheres of influence" for Paso Robles and other areas of the county. These farmers will eventually face pressure to convert their land for development whether they wish to cease farming or not.5

One sector of agriculture in the county is booming: wine vineyards. Wine grapes are a high-value crop, and prices keep rising notwithstanding the steady expansion of the size of the crop. Vineyards are also a barrier against suburban sprawl, because the high value of grape crops makes it much less attractive to develop land for other uses. The vineyards of the Edna Valley south of San Luis Obispo and east of Paso Robles are forming de facto urban growth boundaries and are securing the agricultural character of the two cities for generations to come.

The robustness of the wine grape industry gives room for doubt that the Napa County SOAR initiative, enacted 10 years ago and held up as a model for the current San Luis Obispo County measure, was really necessary. Raw land prices for flat, vineyard-suitable land in Napa Valley are now more than $100,000 an acre, making the cost of land too high for most other kinds of development.

Roughly one percent of San Luis Obispo County’s land area is planted in wine grapes according to the most recent USDA figures. Yet wine vineyard planting has occurred at a rapid rate in the county, and offers some insight into the fundamental social reaction to growth of any kind, which is that many citizens are reacting against change more than growth itself.

In February 1999 the Los Angeles Times carried a front-page story entitled "Vineyard Neighbors See Mostly Wrath from Grapes," in which San Luis Obispo County residents complained about the proliferation of vineyards. One resident told the Times: "Just rows and rows of all that. I don’t know. I wish the market would be saturated. I almost would rather see houses than all that it’s so bad; at least [developers] plant trees." (Emphasis added.)

Vineyard planting should be regarded as the very opposite of sprawl, the epitome of agricultural vitality, and the kind of change that is adding to the tourist attraction of the region. The remark that houses might be preferable to vineyards makes it clear that it is the scale and pace of change, more than growth and change itself, which is at the root of much of the public discontent with sprawl.6

The single most important question that any growth management strategy raises is: What will our towns and neighborhoods look like in the future? Under SOAR or any other form of "compact" development plans, unless voters approve substantial re-zonings to open up land not currently included in existing general plans, most future development will have to occur within the existing boundaries of cities and unincorporated towns within county jurisdiction. (This is probably the deliberate intent of SOAR.)

This means, in other words, that future growth will have to be accommodated through the "densification" of cities in San Luis Obispo County. "Densification" is the key component of nearly all "smart growth" plans,7 but its full effects are not well understood.

For example, most smart growth advocates believe that if our neighborhoods were developed at higher densities, traffic congestion would diminish because we would all live closer to our work and leisure destinations, and can either walk, take transit, or drive our cars shorter distances. The theory sounds plausible in the abstract, but real world data show that as population density rises in cities and suburbs, traffic congestion gets worse instead of better. Although people may take fewer and shorter trips in their cars in higher density neighborhoods, the additional number of cars and people in the neighborhoods more than offsets the trip savings that each individual may take.

Figure 6 below shows the relationship between density and congestion as calculated by the Texas Transportation Institute at the Texas A & M University for the top 30 metropolitan areas in the U.S. (The curve looks nearly identical if all 300 cities with population over 100,000 in the U.S. are plotted in the same fashion.) Figure 6 shows that as population density per square mile rises, traffic congestion increases as well.

This fact raises significant unanswered questions for towns and neighborhoods in San Luis Obispo County. Under SOAR or any other "smart growth" plan, densities will rise significantly in every town in San Luis Obispo County.8 For some towns with currently low density and large amounts of undeveloped land within their existing sphere of influence, such as Atascadero, accommodating growth and increasing density may not substantially change the character of the neighborhoods. On the other hand, Atascadero’s ostensible "surplus capacity" means that it may be the de facto "growth center" for the county under SOAR. Table 1 shows population growth and current densities for San Luis Obispo County towns.

Source: 1990 population figures taken from the 1990 Census; 1998 population figures are Census Bureau estimates, except for those marked with an asterisk [*], which represent author’s estimates. The Census Bureau does not maintain an estimate series for these towns between decennial censuses.

Other San Luis Obispo County towns, however, are likely to experience significant increases in traffic congestion. The city of San Luis Obispo, for example, has a current population density per square mile of 4,615, which is slightly higher than the city of Santa Barbara, and nearly one-fourth higher than the city of Sacramento. In other words, the population density of San Luis Obispo is already high compared with other congested cities in California.

If the population of San Luis Obispo grows by only two percent a year for the next 30 years (slightly lower than the growth rate of the last decade) and grows only within its existing municipal boundaries, its population density in the year 2030 will nearly double to 8,316 people per square mile, almost the same density that Long Beach is today. Table 2 shows how San Luis Obispo compares with other well-known (and highly congested) California cities.

Source: U.S. Census Bureau

The point is: Under SOAR or any other scheme of "compact" development, traffic congestion is likely to grow much worse. This is a tradeoff that citizens need to understand in evaluating policy choices for managing growth. Higher density development can be done in ways that are attractive and which minimize traffic congestion.9 The highly-lauded "new urbanist" communities such as Seaside, Florida, and Kentlands, Maryland require a sophisticated planning process. However, such innovative communities are unlikely to come about as a result of "ballot box planning."

The uncertainty compounds when two other factors are considered. First, the SOAR initiative contains a partial exemption for "affordable housing." Up to 20 acres a year can be rezoned for affordable housing without triggering the requirement for a popular vote, "provided that the land is immediately adjacent to existing compatibly developed areas." This latter clause is clearly intended to promote sequential, contiguous development rather than patchwork "leapfrog" development. However, allowing a single housing-related exception to the popular vote requirement creates a powerful incentive for using that provision as a loophole of sorts, by which land categories are swapped around to serve particular interests at the expense of local neighborhood interests.

A comparable example can be seen in the implementation of California’s Community Redevelopment Act (CRA), which offered tax incentives for "blighted" areas of cities. Clearly intended for dilapidated central city areas in need of renovation, many cities have designated open land on the periphery of the city as "blighted," and captured large tax advantages through new car dealers, shopping malls, and so forth. The typical result was for the city to swell its tax coffers, while its truly distressed neighborhoods, for whom the law was enacted, got worse. In the case of the CRA, a law designed in part to help prevent sprawl ended up accelerating it.

In the case of SOAR and San Luis Obispo County, there will be a clear perverse incentive to rezone the maximum 20 acres per year allowed under SOAR whether the land is needed imminently for affordable housing or not, so as to free up other non-protected land for other favored purposes. In other words, this well-meaning exception could become the cornerstone for an elaborate shell game that might not work out to the best interests of existing residential neighborhoods.

The exact effects such a shell game might have are hard to predict. At the present time California’s "fair share" low-income housing laws are difficult to enforce and are, therefore, relatively ineffective. As California’s statewide affordable housing problem grows more severe with continued population and economic growth, there is likely to be increasing pressure to reform the low-income housing mandates or to enforce the existing mandates in a strict fashion. This enforcement might come the old fashioned way: through lawsuits.

Cities may be forced to approve low-income housing, which could only be done at high densities if the land market is constricted. At best, SOAR could result in an oversupply of land zoned for low-income housing. At worst, a shell game over land classifications for affordable housing will make rational community planning nearly impossible, and towns could lose control over the character of growth in their neighborhoods.

Comprehensive land use planning is an inherently difficult task because it is impossible for planners to assimilate all of the knowledge, preferences, and economic conditions that come to bear on the demand for land over a long time horizon.10 This is why most cities and regions use five-year general plans, with an emphasis on the word "general." General plans are intended to provide the basic framework within which flexible adjustments can be made to meet changing market conditions and public desires. Even within a seemingly short five-year time horizon, it is sometimes difficult for general plans to anticipate the rapid changes that our modern, dynamic society is demanding of our urban forms.

For example, no general plan five years ago could anticipate what changes the Internet would bring to urban form and city planning. Commercial buildings that once required large amounts of parking to be functional are now in some cases the sites of Internet switching equipment and servers that require few employees, and hence little or no parking space. Yet it is typical to find general plan ordinances requiring ample parking for new construction, where it may often be unnecessary and, therefore, wasteful of land. Another example is how technology and the Internet are empowering increasing numbers of workers to work at home some or all of the time.

Zoning ordinances on home offices and home-based businesses need to be modernized, yet the full extent and nature of how the Internet will transform our working lives is still unfolding. Planners will no doubt go through several waves of trial and error and incremental improvement before workable planning concepts take hold.

This is only one reason why freezing the current General Plan for San Luis Obispo County in place for the next 30 years is inadvisable. (As the current county General Plan is about 10 years old, by the expiration of SOAR in 2030 the county will have been operating under a 40-year-old plan.) It precludes the elected and appointed leaders of the county from a rational deliberation about large-scale adjustments to the changing needs of the future. By subjecting land-use planning to a vote of the people, SOAR makes it less likely that the cities in San Luis Obispo County can incorporate some of the innovations of "smart growth" and "the new urbanism." Any proposed changes to current plans will come up piecemeal, making it unlikely that any bold or innovative changes (such as a transit system, for example) can be discussed and moved forward.

Submitting all zoning changes to a vote of the people seems the epitome of "direct democracy." There are several negative aspects of this kind of direct democracy, however, that should be considered.

• The law of unintended consequences must be kept in mind. Submitting land use proposals to a vote of the people is similar to the statewide ballot initiative process, which was implemented nearly 100 years ago to break the power of "special interests." The irony of California’s ballot initiatives is that today only well-organized and well-funded special interests make use of them. Similarly, submitting land-use changes to a vote of the people makes it likely that development interests, and not the planners and elected officials, will make the most use of the process. In a sense, SOAR will have the unintended effect of handing over the de facto planning for the county’s future solely to private interests. SOAR becomes an ironic "safety valve" for private interests who are unwilling to accept the outcome of the regular zoning review process. Already this outcome can be seen in other California counties where SOAR initiatives have been implemented.

If a land use proposal has to pass a vote of the people, private interests have an incentive to skip the regular planning process completely. In one case in Napa County, a restaurant skipped the regular land use review process and went directly to voters for all the necessary rezoning and environmental permits, which had the effect of overloading local sewer capacity—an outcome the regular planning review process would have prevented.11 Other basic land use changes to accommodate the sensible expansion of public facilities (such as a hospital in Ventura County, or a home for indigent veterans whose expansion, unanimously approved by elected officials, is costing the non-profit organization $150,000 in election costs that might have gone instead to other purposes) had to go through a needless vote.

• Subjecting development proposals to a piecemeal vote of the people is intended to encourage self-interested voting, in which the practical result will likely be less development, or development shifted from the larger cities to the smaller outlying cities. For example, San Luis Obispo, as the largest city, will tend to vote against growth in its own area, but in favor of growth elsewhere to the south and north. An example of the result of this can already be seen in Santa Barbara County, where years of anti-growth policies had the effect of "exporting" their fair share of the county’s growth to Santa Maria (and generating a number of long commutes).

• Short of self-interest, this kind of governing structure has a negative bias because of the well-known propensity of voters to vote "no" in the face of uncertainty or inadequate knowledge. Voters will have little reason to learn the details of a land-use proposal for an area that is remote from where they live (i.e., a person in Pismo Beach has little reason to learn the details of a land-use proposal for Atascadero). Public choice scholars have a term for this kind of widespread voting behavior: rational ignorance. When time is scarce, voters are more likely to concern themselves with local concerns that bear direct consequences on their lives rather than with distant concerns that will have little or no direct effect on their lives.

Because of its location, economic dynamism, and comparatively moderate rate of population growth, San Luis Obispo County is in the unique position of being able to deliberate about the character of its future. These deliberations are always difficult and fractious, as many competing visions for the future cannot be wholly reconciled. Many people would prefer no growth at all, yet such an outcome is not realistic or just. At the current time San Luis Obispo County experiences about 1,000 more births a year than deaths, which means the county will grow from natural increase alone, even without a single person moving in from somewhere else. To have no growth, the county would have to expel people by some means.

Most citizens are more realistic, and understand that the responsible path is to find ways to manage growth that preserves and enhances the character of the county. If "smart growth" is going to be genuinely intelligent for the county, it will arise from the difficult process of public argument among the leaders and citizens of each local community in the county.

Implementing a process by which every land use change is decided by a direct vote of all the people is a means to ensure that no serious deliberation about the future can take place. As Winston Churchill once remarked of a similar simplistic idea, "It is too easy to be good."

1 Local Growth Issues—Federal Opportunities and Challenges, General Accounting Office, Washington, D.C., September 2000, Publication #GAO/RECD-00-178.

Dr. Steven Hayward is a senior fellow and director of the Center for Environmental and Regulatory Reform at the Pacific Research Institute for Public Policy in San Francisco. He is also a long-time homeowner in the San Luis Obispo County town of Cambria.

He holds a Ph.D. in American Studies and an M.A. in Government from Claremont Graduate University in Southern California. He has written extensively on growth and environmental issues for more than a decade. He has testified on urban issues before the U.S. Congress and the state legislatures of California, Florida, and Pennsylvania. He has written case studies of growth issues in California, Arizona, Florida, Pennsylvania, Minnesota, Oregon, and Missouri.

 Among his numerous writings is a broad survey of the controversy over sprawl entitled "The Suburbanization of America" in A Guide to Smart Growth: Shattering Myths, Providing Solutions, published recently by the Heritage Foundation and the Political Economy Research Center. For more information and additional publications, see www.pacificresearch.org.