General plan 2020; windfalls and wipeouts



"A candle loses nothing in lighting another candle."
        – Author Unknown

by Gary Piro

In April, the County Planning Department goes before the Board of Supervisors with maps which outline a radical “rezone” of more than 1 million acres of land in the unincorporated area of San Diego County. It's a plan that could work, but only if they first perfect a methodology to reimburse the owners whose land values will be wiped out as a result of this massive population shift.

    The County General Plan 2020 represents the single largest shift of wealth in the history of our region. At a hearing before the Board of Supervisors in January 2001, Winston Elton, a director with SOLV (Save Our Land Value, a newly formed group of downzoned landowners), testified that the proposed new maps represent property value losses between $3 billion and $5 billion to rural landowners. Mr. Elton should know since he is a state accredited land appraiser who has testified in over 100 land condemnation cases.

    The maps propose to remove more than 75,000 potential homesites from rural areas of San Diego County. Of these units, approximately 42,000 units will be increased densities to existing properties in urbanized areas of the County and the remaining 33,000 will be removed from the plan altogether and go to “unit heaven.”

    The owners of lands who will be receiving the 42,000 units – we'll call them the Windfalls – will see a massive increase in land valuation as a result of the upzones. The owners of the lands who will be losing the 75,000 units of zoning density – we'll call them the Wipeouts – will see a devastating decrease in land values.

    I was fortunate enough to serve on the County appointed Interest Group as one of two representatives of the landowners who are the Wipeouts in this rezone scheme (the other being Al Stehley of the Farm Bureau). During the course of the meetings, many people have said “that's just tough luck” for the Wipeouts, because of the risk involved in land speculation. I might agree with that assessment if these owners had bought properties “on the come,” expecting to upzone for much higher impact uses. Based on my 30 years of land development experience working with farmers, small scale builders and family trusts, what I've seen instead are hard working, “non-savy” people who bought their property to achieve their future dream based solely “in good faith” on what the County had told them they could do with their land.

    Take, for example, a rural landowner (Mr. Wipeout) who bought a 40-acre avocado grove in an 8-acre multiple-rural zone with the hope that someday each of his 3 children could eventually have an 8-acre agricultural homesite to help maintain the family farm. Mr. Wipeout would have a “reasonable expectation” that he could achieve his dream, especially since I know that the existing 8-acre designation was thoughtfully determined over a nine year period in the 1970s when the County had a vision of itself as a “haven” for rural agricultural estates.

    Now, the County has changed its mind, based on a national “smart growth trend” that is more transit oriented and urban centered. Those rural estates are now caustically referred to as “ranchettes.” Mr. Wipeout (or at least his dream for his property) is devastated, and the County needs to exercise sensitivity to him and others who are being severely hurt by this “change in philosophy.”

    Eric Bowlby of the Sierra Club has correctly stated that “nobody has the right to develop their property in a specific way,” and County Council has cited cases verifying that any agency has the right to change zoning regulations. What many people fail to realize, however, is that the County has a moral obligation to give consideration to the Wipeouts who will be harmed as a result of the County radically changing its mind on these zoning maps. There is also the pragmatic question of how hard these owners will fight, lobby and litigate when backed into a corner with severe land devaluation.

    The Board of Supervisors agrees that we need to help the Wipeouts. Supervisor Diane Jacob has said, “I will not vote for any plan which does not make everybody whole.”  When responding to testimony about the windfalls that will be coming to urban landowners, Supervisor Pam Slater said, “We are not in the business of creating instant millionaires.”

    Fortunately, the County is not the first to go through this change in development attitude and can benefit from many other areas who have successfully overcome this hurdle. Two years ago I spoke with the American Planning Association's Planning and Research Center. They recommend to all public agencies the implementation of a Transferred Development Rights (TDR) program, whereby Windfalls purchase their additional units from the Wipeouts. This concept was overwhelmingly supported by the County Interest Group to be part of General Plan 2020.

    Take, for example, urban owner Mr. Windfall, who has 20 acres in a 1-acre zone. He has done preliminary research on his property and determined that he can have 20 lots. His minimum required road is 24 feet, minimum water pipeline is 8-inches in diameter, and the minimum sewer pipeline is also 8-inches in diameter by government ordinances. Based on GP 2020, his density is increased to 2 dwelling units per acre, which can increase his lot yield by 15 or 20 lots with virtually no change in processing and infrastructure costs. In extreme cases, this is a WINDFALL of $100,000 or more per windfall lot. Of course, not all the upzone units will have such a large value to the urban landowners. But with 42,000 units of upzones, we are still taking big, big money.

    The way that successful TDR programs in smart growth states like Maryland, Washington, Rhode Island, Tennessee and New Jersey work is to require that, if these Winfall owners want the extra lots, they don't get them from “the unit fairy.” They must purchase the additional units from the Wipeout rural owners. If Mr. Windfall wants the additional units, he can buy them from Mr. Wipeout, who can sell the lost units for an estimated 25% of the windfall to the urban owner, due to the cost of the infrastructure saved by not developing in these rural areas. If Mr. Windfall doesn't want to buy the units, Mr. Windfall doesn't have to buy the units. However, they invariably do because it's still a very, very good deal.

    Unfortunately, County planners have released the new maps before they have completed their TDR program. Now, instead of the Windfall owners seeing the potential to get a $100,000 per lot windfall, provided they purchase a credit for approximately $25,000 for each lot, they see only the $100,000 gain. Now some of these Windfalls owners are lobbying very heavily to do away with the TDR program, greedily saying to the rural Wipeouts “let them eat cake.”

    Many in the environmental community are now arm in arm with the Wipeouts in support of a good TDR program. Carolyn Chase, of the San Diego Earth Times, cautions other environmental activists that, “What can be down-zoned can be upzoned. Later zoning is a blunt tool, best and always used in combination with other factors,” and encourages others to support programs that can get monies to rural owners to purchase the future development rights. Other environmental activists see that a portion of billions gained by upzoned Windfalls may be the biggest pot of monies available for permanent preservation, so it is in their interests, as well as the interests of the Wipeouts, to get a fair price to the rural landowner.

    San Diego will NEVER get an opportunity like this again. We have the potential to buy development credits on hundreds of thousands of  rural acres at absolutely no cost whatsoever to the taxpayers. All we have to do is tell those who are receiving the huge Windfalls as a result of the County rezone to payback about 25% of their gain to those Wipeouts who are downzoned. Sure seems like a win all around to me.

    Mr. Piro is a former County Planning Commissioner and the owner of his own civil engineering and land planning firm in San Marcos. He can be reached at PIROENGRCS.COM.