Luxury Homes Won't Solve the Housing Crisis - Voice of San Diego

Opinion UNVEILING THE UNSEEN

Luxury Homes Won't Solve the Housing Crisis

An army of public affairs firms is expending great effort to downplay the climate crisis and the danger of wildfires and to convince decision-makers and the public that luxury homes are the solution to affordability.

The proposed site of Lilac Hills Ranch. / Photo by Jamie Scott Lytle

The recent op-ed by Tony Manolatos is a stark reminder that the power of public affairs firms to mislead the public should not be underestimated. His firm, Manolatos Nelson and Murphy, represents Lilac Hills Ranch, a project funded by Merced Capital, a company that describes itself as a “multi-billion dollar opportunistic investment firm.” The op-ed fits into the strategy of the industrial sprawl complex: an army of public affairs firms that expend great effort to downplay the climate crisis and the danger of wildfires and to convince decision-makers and the public that luxury homes are the solution to affordability.

As a refresher, Lilac Hills Ranch is a high-end housing project proposed in rural Valley Center asking for numerous special exceptions to the county’s “smart growth” general plan to allow building in an extremely high-risk fire area and without one iota of affordable housing. It was so controversial its developers put the entire 600-page project to a voter initiative complete with $5 million worth of emotionally manipulative ads touting vague solutions to our affordable housing crisis without actually referencing the luxury housing project that it was meant to approve. It included questionable fine print about immunity from lawsuits. Ballot-box planning at its finest.

The voters were not duped and could smell the deception a mile away. Despite outspending their opponents more than 10 to one, Measure B went down in flames with two-thirds of San Diego County voters saying “no.” Now, three years later, the developer is going for “third time’s a charm” with the help of Manolatos.

So what’s the big deal with the general plan? The county’s smart growth-oriented plan was exhaustively developed based on thousands of hours of input from a diverse group of stakeholders, including the building industry, environmentalists, taxpayer groups, planners and of course, regular citizens. It cost taxpayers $18 million to develop and represents the best possible compromise between competing interests. Importantly, it created one of the first “smart growth” general plans in the state — one that focused on incentivizing affordable housing near jobs, reducing greenhouse gas emissions, preserving open space, limiting construction in high-risk fire zones, and it created capacity for over 65,000 housing units in “smart growth” areas allowed “by right,” no environmental review or supervisor vote required.

It is important to note that the projects in question, like Lilac Hills, Newland Sierra, Valiano and Harmony Grove Village South, are fundamentally different as they seek to invalidate this careful planning process through an amendment to the general plan. These projects are asking for special considerations to allow building in rural areas that were specifically limited due to the extremely high fire risk, lack of infrastructure, biologically sensitive open space and to help meet state-mandated emissions goals. Obtaining these exceptions requires a costly and time-consuming environmental review process that culminates in a vote by the Board of Supervisors.

So why bother? Less-developable rural land is less expensive due to its lower development value. Hedge funds like Merced Capital, Colorado’s Real Capital Solutions (which is funding Harmony Grove Village South) or Japan’s largest homebuilder, Sekisui House (which is funding Newland Sierra) buy the parcels for cheap and then hire land use consultants and lobbyists to increase its value via up-zoning with three votes. Simply increasing development potential of the previously undevelopable land provides an incredible return on investment (via government fiat, no less). All you need is three supervisors to vote “yes,” many of whom were elected with the help of developer money.

The end result is that developers opt to go the general plan amendment route and thus have no incentive to actually build in the higher-density villages where affordability is easier and where fire risk is lower and habitat loss is reduced. It is one of the main reasons the county has done a poor job building housing to begin with.

Making matters worse, none of these projects includes any affordable housing, despite a county requirement that they do so. These projects average in the mid $650,000 range ($663,000 for Newland and $770,000 for Valiano, for example). This will certainly not provide an incentive for people to move from Riverside, where you can buy a suburban home in the mid $400,000s. And that’s not including the homeowner association and special district fees that can add $700 to $1,000 a month to the monthly payments, bringing down affordability even more.

This all brings us to the Safeguard Our San Diego Countryside initiative that has Manolatos and his allies in a tizzy. This “smart growth” initiative is intended to preserve the principles behind the “smart growth” general plan and ensure that the public has some input whenever there is a wholesale change being proposed in rural areas by developers. If speculators want to make drastic changes to how we develop our region, it should be brought to a vote of the people to ensure it is in the public’s best interest.

The initiative would require a higher threshold for general plan amendments and would, in effect, incentivize the type of housing that our region needs: village-oriented, higher density, more affordable housing closer to jobs and away from high-risk fire areas. In fact, even the county’s staff report acknowledges that:

“it is possible that passage of the Initiative could result in a renewed focus on Village lands. With continued housing demand, and the reduced availability of Semi-Rural and Rural lands, development in Villages may become more attractive to developers.”

If Manolatos and his anti-Sierra Club coalition of special interests truly feel the general plan needs updating then we should start a process to revamp it and to allow all stakeholders to weigh in. No, they would rather let a handful of developers and their out-of-town speculators tear apart the sustainable, smart-growth-oriented plan for their convenience. With the Save our San Diego Countryside initiative, we at least have a say.

JP Theberge runs a public opinion and market research company and is the director of Grow the San Diego Way, providing data and analysis on housing issues in San Diego County. He also serves on the board of San Diegans for Managed Growth, which is backing the Save Our San Diego Countryside ballot initiative.

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