THE WAR AGAINST GROWTH HEATS UP Put out by traffic jams, opponents of development in Southern California are stymieing builders. The effort may backfire, but the movement is spreading.
By Brian O'Reilly REPORTER ASSOCIATE Kate Ballen

(FORTUNE Magazine) – THE LONG-RUNNING BOOM in Southern California is the stuff most chambers of commerce can only dream of: a soaring population, office buildings sprouting everywhere, and prices on some single-family homes climbing in value by more than $2,000 a week. But lately something has changed. Growth isn't such a kick anymore. Increasingly it's looked upon as a threat to a pleasant and prosperous way of life, and as something to be resisted. The growth-control movement that has resulted just may be the harbinger of a national trend. For much of the population of California, and particularly that of the vast mountain-ringed Los Angeles basin, economic growth now conjures up visions of stupendous traffic jams, overflowing sewer systems, and pollution-filled air. The natives are growing rebellious. In 1986, 69% of the voters in Los Angeles approved a plan to slash by half the allowable density of future commercial and industrial buildings in most of the city. Last year a slow-growth candidate won a seat on the Los Angeles city council, defeating the council president. Across California 14 of 20 growth-control initiatives carried the vote in 1987. Eight of ten cities in Ventura County, just west of Los Angeles, have passed slow-growth measures in recent years. In all, 57 cities and eight counties in California have voted to limit growth, according to Madelyn Glickfeld, an urban planning consultant in Malibu. ''There was a time when Los Angeles was going forward and people wanted growth,'' says Sandy Brown, a physician's wife in Westwood, an upscale neighborhood that includes the campus of UCLA. But then a few years ago, Brown stared out her kitchen window and saw a bulldozer pulling down yet another home nearby to make room for apartments. ''All of a sudden I said to myself, 'What is going on here?' '' She proceeded to help create Friends of Westwood, a neighborhood association that has become the scourge of developers ''For years growth didn't intrude on my comfort zone,'' says Brown. ''But now it's become an infringement on my way of life.'' SUCH SENTIMENT in favor of slowing or halting growth could prove a more virulent national movement than the tax reform measures that began in California with Proposition 13 in 1978 and spread to many other states. ''No- growth is more fundamentally grass roots than Proposition 13,'' says Dwight Worden, a Solana Beach, California, attorney who has written nearly a dozen growth-control measures for different ballots. ''Proposition 13 had a charismatic leader in Howard Jarvis,'' observes Worden. ''This movement has no single leader. It is spontaneous in city after city.'' Less vigorous strains of the antigrowth virus are already flourishing around the country in parts of New York, Virginia, and North Carolina. Former U.S. Senator Paul Tsongas of Massachusetts is publicly opposing uncontrolled growth on Cape Cod, and a senior aide to Governor Thomas Kean in New Jersey declares growth management the ''biggest looming public policy issue in the state.'' But few regions have ever succeeded in using this concern to generate support for useful, comprehensive planning. J. Ronald Terwilliger, head of Trammell Crow Co.'s residential division, the biggest builder of apartments in the country, notes that antigrowth feeling was rare ten years ago. ''Now,'' he says, ''of the 60 cities where we operate, we see it in about half.'' If you go back to the 1970s, you can find some precursors of the present drive for slower growth. The movements then ostensibly were prompted by concern for the environment, but sometimes were just disguised opposition to construction of low-income and multiracial housing, which opponents thought were a threat to property values. The current sentiment, on the other hand, more often stems from immediate and infuriating problems created by rapid commercial or residential development, says Harvard economist Joseph Kalt: ''This time it is the reality of inadequate roads, sewers, water systems, and other infrastructure.'' Across the country citizens have responded in ways often heavy-handed. City councils and planning authorities are being pressured into forcing developers to pay every nickel of the cost of the added public services that their projects make necessary. This usually means that new businesses and new-home buyers wind up paying just that much more. Ballot measures have also imposed severe and inflexible limitations on new construction. Such extreme steps reflect a deeply felt resentment -- often justifiable -- that citizens have lost control of their local governments to developers.

For all the seriousness of the conditions that spark it, the push to slow growth can end up causing severe problems, even for the people behind the movement. The short-term result of limiting growth in a community is often to create a housing shortage, sending home prices shooting skyward and forcing many of those with jobs in the area to live far away. This only clogs highways all the more. Typically such initiatives curtail the growth of housing more than they do any increase in the number of jobs, compounding the problem. Ultimately, a community can price itself out of business expansion, and in fact drive some businesses out, leading to a loss of tax revenues and deterioration of services and property values. As young workers are forced to live elsewhere, employers leave to pursue them.

The movement also sets up a wrenching conflict between the haves and the have-nots. ''It's like people in a lifeboat agreeing to save themselves by not letting anyone else on board,'' says Frank Mittelbach, a professor of urban economics at UCLA. ''The people in the water should have a vote.'' In Los Angeles considerations as diverse as geography and taxes have come together to push slow-growth sentiment onto fast-forward. The five-county Los Angeles area, with its beaches and good weather, has attracted many new residents anxious for a more pleasant life. Between 1975 and 1987 the population of the metropolitan area grew rapidly, adding almost three million people, 22 times as many as the metropolitan New York area gained. Los Angeles also has become a prime example of urban sprawl -- 95% of the region's jobs are outside the downtown area. Even as the region has boomed, its ability to handle growth has diminished. Since the mid-1970s, California has fallen to 49th among the 50 states in per capita spending on roads. Adjusted for inflation, nationwide federal spending for many infrastructure programs has decreased since 1980. At the same time, the California tax initiative, Proposition 13, has limited property taxes on homes that have not been sold since 1978. Still other measures severely limit what a municipality can spend even if it is growing rapidly.

Nowhere is the pace of development more visible than in southern Orange County, down the coast about 50 miles south of downtown L.A. What not too long ago were vast ranches still largely intact from the time they were granted to settlers by the King of Spain, now crawl with bulldozers and earthmovers. Even in the face of antigrowth campaigns, vast stretches of hillside are being stripped bare for construction. A double whammy is at work here: Those Proposition 13-style tax-cutting measures have wound up tempting many financially desperate municipalities to ignore good planning in pursuit of another source of tax revenues -- commercial growth. ''Proposition 13 is driving changes in land use,'' says C. Bradley Olson, an executive at the Irvine Co., which owns and is developing a 100-square-mile tract of land in Orange County. ''The city of Costa Mesa near here gets huge sales taxes from a big shopping center it allowed there. But people from all over drive there, so Costa Mesa has huge traffic problems.'' Sometimes the hunger for tax revenues is almost comical. To win city approval for a big project on its land in Tustin, the Irvine Co. had to agree to include a dozen automobile dealerships in its plans so Tustin could collect sales taxes on all the new cars sold within its borders. More often towns pursue developers of high-rise office buildings while vigorously opposing new housing, which would require adding expensive new municipal services such as schools. ''There is an absolute imbalance of jobs and houses,'' says John Martin, the Irvine Co.'s head of residential marketing. ''There has been an average of 53,000 new jobs a year created in Orange County for the last five years, and for that we should have built 42,000 housing units. But at tops, Orange is adding only 20,000 units a year.'' As a result, workers clog the freeways, driving long distances to get to work. ''The commute to Riverside used to take 40 minutes during rush hours,'' says Martin. ''Now it takes 2 1/2 hours.'' Talk about lifestyle. Infrastructure problems dog outlying areas too. With planning commissions there less sensitive to the growth issue, builders are able to put up massive housing developments in what was previously untouched terrain, packing the units together as tightly as if they were in the middle of a city. In some big developments south of the Irvine properties, one noteworthy amenity is in - short supply: main roads. Commuters from thousands of homes are funneled into a handful of streets before reaching the nearest freeway. With frustration over growth mounting, developers usually feel the heat, and no one is turning up the temperature more vigorously in Orange County than Tom Rogers, who has emerged as an unlikely leader of the slow-growth movement there. Rogers, 63, a small-scale shopping center developer himself and a former chairman of the Orange County Republican Party (''I'm about as right wing as you can get''), proudly displays autographed pictures of Ronald Reagan on his wall. To drive with him through bulldozed and newly developed areas of Orange County as he points out monotonous rows of houses and clogged intersections is to see the full fury aimed at developers. ''They're greedy bastards,'' he fumes. ''Thugs in three-piece suits.'' Rogers's transformation from growth booster to basher follows a fairly common pattern. ''I used to be part of that growth-is-progress crowd,'' he explains. ''But I changed when the government showed it couldn't plan for growth.'' Orange County traffic already was dreadful in 1984 when county supervisors proposed a $5 billion transportation improvement program to be financed by a sales tax increase that required voter approval. Rogers argued that the major beneficiaries would be developers, who would use the new roads to justify new development. ''It was socialism for the wealthy, an attempt by developers to put the cost of their sins on the public,'' says Rogers, who pulled together environmentalists, open-space enthusiasts, antitax groups, and others to oppose the measure. WHEN THE SALES TAX lost by more than 2 to 1, Rogers figured that was a message to government officials to slow the pace of development. ''Instead, they kept right on just like they always did,'' he says. In 1987 he began circulating petitions for an elaborate Citizens' Sensible Growth and Traffic Control Initiative, which essentially required developers in Orange County's vast unincorporated areas to provide roads and public safety facilities for their projects. His measure was vigorously opposed by builders and lost last June. But polls in Orange County show that two-thirds of the voters continue to be in favor of slowing growth. The combination of overburdened infrastructure and increasingly sophisticated antigrowth groups is forcing big changes in how developers do things. In the San Fernando Valley to the north of downtown Los Angeles, Jack Spound faces a bizarre chore if he is to obtain an exemption from the city's limit on new sewer connections. So that his proposed office project won't add to the strain on the system, he will refit 8,000 toilets anywhere in Los Angeles with plumbing that uses three gallons per flush instead of the usual five. To overcome the opposition of homeowners near his proposed buildings, he hired Sharon Browning, a former social worker with a blossoming career in helping developers work with slow-growth groups. Browning persuaded Spound to go door to door through the neighborhood asking how he could change his design to make it acceptable. He's gained support but still awaits approval by the planning commission. In Los Angeles, Friends of Westwood brought a landmark suit that focused on a proposed 26-story office tower, winning a ruling from the state court of appeals that the city has to assess the environmental impact of major projects before issuing building permits. Though the development company, Center West, had won zoning approvals for the office, its president, Kambiz Hekmat, negotiated an agreement with Friends of Westwood to cut the building's size by 18.5%. In addition, the city is requiring that he ''plant, water, and prune the trees I put on the sidewalk,'' says Hekmat. That's nothing: As part of settling a dispute over parking at a new hotel near Beverly Hills, the owners agreed to pay $250,000 to Friends of Westwood and other slow-growth groups, money that presumably can be used to finance growth-control efforts against other new projects. Developers around Los Angeles routinely find themselves picking up the tab for much of what municipalities once provided. Some have been forced to donate land and build new firehouses, police stations, even city halls, in order to win municipal approval for their plans. In parts of Orange County there is talk that developers may soon have to pay the salaries of policemen and firemen made necessary by their projects. Orange County forced the Irvine Co. to build a $45 million, six-lane road to accommodate a planned 2,600-unit community. Normal planning would call for two lanes for that size community. The cost of meeting such requirements is staggering. For a new business center, the Irvine Co. is paying $225 million for road construction and improvements. Says vice chairman Watson: ''In 1963 improvements on land cost about $15,000 a acre. Now it costs $250,000 an acre.'' ANTIGROWTH movements may be emotionally satisfying to the participants, but the eventual outcome can be a disaster. ''No-growth movements hurt the people who wanted them,'' argues professor Kenneth Rosen, chairman of the Center for Real Estate and Urban Economics at the University of California at Berkeley. ''They have a negative effect on the local economy as firms relocate and real income goes down. In the long term these antigrowth areas become elite communities without economic dynamism.'' Trying to send newcomers elsewhere probably sounds just fine to slow- growthers, but it won't solve Southern California's problems. Only one- third of the region's projected growth will come from migration. The rest will derive from a high birthrate. Even if Southern Californians put a wall around the place, the population would grow by three million -- equal to another Orange County -- in 22 years. Failing to provide housing to accommodate such growth simply drives housing prices skyward. In a study of San Francisco-area municipalities, housing costs in communities that passed growth-control initiatives are 30% higher than those that did not, says Rosen. IN THEORY expensive or infrastructure-short surroundings should drive unwanted residents away. Trouble is, it doesn't happen that way, observes Robert Paulson, managing director of McKinsey & Co.'s Los Angeles office and head of a chamber of commerce study on growth. ''It's the rich and the young who can move out to follow jobs,'' says Paulson. ''The poor, the elderly, the immigrants, the people who need the most services, are the ones who remain.'' Companies eventually pull their operations out of a slow-growth region to find suitable workers living in lower-cost areas. According to a University of Southern California study of growth-control efforts, if the Los Angeles region reduced housing growth by 15% and the rate of new commercial space by 25%, unemployment would double in the 1990s. Unlike the environmental movement, which was arguably more altruistic, slow growth has a distinctly selfish, ''sock it to the newcomers'' side to it. That means that inconvenient changes in lifestyle that might help accommodate even carefully planned growth -- car pooling, say, or recycling waste -- will be slow in coming. The same spirit, but on a grander scale, will likely get in the way of coordinated regional solutions to planning problems. ''Everyone wants to see it happen,'' says Ruth Galanter, the slow-growth candidate elected to the Los Angeles city council last year, ''but without giving up their prerogatives.''