An angry public distrust of both government and the financial sector has resulted from this deep, seemingly unending recession. A completely self-inflicted growth bubble based upon financial weapons of self destruction, to quote Warren Buffet, has been based upon inflating property values to the point that landscapes are littered with unneeded and abandoned "projects" that enriched only banks and developers, leaving taxpayers with the tab. Ireland is a devastating case in point.
Building and development became the sole support structure for revenue and taxes, and ballooned into the stratosphere due to lack of fiscal oversight formerly provided by the Glass-Steagall Act passed in 1933 that established the FDIC. This was overturned by the Republican-sponsored Gramm–Leach–Bliley Act in 1999 on behalf of the banking industry, and signed into law by President Clinton. While this was going on, the housing industry pushed the State legislature into forcing more development through massive housing requirements (RHNA allocations via SCAG) in order to keep the bubble ballooning. SB 375 is a legislative device designed to bust CEQA and force more development into communities, rather effectively disguised as a regulation designed to reduce traffic while forcing massive additions of square footage.
Today in Los Angeles, Development Overlay Zones are being created that void the need for public review and, again, bust CEQA guidelines and public oversight, promised to the Neighborhood Councils. Los Angeles, like Sacramento,appears to be still hooked on the same deadly development drug. It finally fell to Orange County cities to quit the League of California Cities over SB 375 housing allocations and threats of developer litigation. A deeper issue underlies the financing that was supposed to carry all this development; in the ensuing collapse of the CDO market, the banks are no longer lending. The supposed underlying mortgages do not in fact exist, so there's no product upon which to leverage sales of these tranches. The evaporation of assets has hit the public in their pockets in the form of public ownership of big banks (Freddie and Fannie) as well as millions of home foreclosures and the disappearance of jobs.
This has led to an early signal on State policy change with respect to population increase. There is a dawning understanding that profits come more effectively from streamlining instead of physical construction and development. If the artificially instigated pressure comes off of Sacramento for growth, then the overdevelopment simply goes away.The Jerry Brown grab for CRA money is the front edge of a major policy change that will shift investment towards many industries as well as the streamlining of infrastructure and business. If money must now be used wisely in productive strategies, the old brute-force buildout has seen its final days.
Sim Van der Ryn is back!