A New California City Challenges Old Thinking

SACRAMENTO — Are California lawmakers serious about dealing with its housing and homelessness crises? We’ll soon see once we gauge their reactions to a proposed new city in Solano County — a rural and exurban area nestled between Oakland and the Sacramento region.

The New York Times recently broke the story about a group of venture capitalists who have quietly been buying up 50,000 acres of ranch land — a project that has ignited speculation in the county over the past few years. Supporters envision an “urban blank slate” with thousands of new homes and job centers within the community, plus all the usual parks and amenities.

The report has drawn the expected pushback from Northern California officials, who have complained that leaders of the land company, Flannery & Associates, hadn’t talked to them about their plan. Given these negative responses, it’s easy to understand the company’s decision to operate under the radar.

Before looking at the proposal, let’s look at the housing situation that has prompted this Hail Mary idea.

Housing in California Is Costly, and Legislation Isn’t Really Helping

Despite a nearly 8 percent drop over the past year, median home prices in the eight-county San Francisco Bay Area top $1.1 million — nearly three times the median price in the Dallas-Ft. Worth or Atlanta metro areas, double the price in metro Portland, Oregon, and 50 percent higher than prices in the notoriously pricey Honolulu area. The median price for a home in California is over $800,000, which is astounding given that it includes rural and inland metro areas.

The unaffordability situation has gotten so precarious that even the state’s most progressive lawmakers have passed a variety of laws that reduce regulatory hurdles to building new housing. You know a situation is untenable when California Democrats embrace deregulation, freer markets, and reforms to state environmental laws. A current bill would even reduce the authority of the California Coastal Commission in approving housing developments in the coastal zone.

The new laws are useful but aren’t making a huge dent in the supply problem. For instance, Senate Bills 9 and 10 are noteworthy in that they create a “by right” approval process for building duplexes in single-family neighborhoods and multi-unit projects along transit lines. But the latest research suggests that property owners have built few new houses under the loosened rules, which isn’t surprising given the still-high costs of building and regulatory compliance. Some local governments — mostly in wealthy coastal locales — continue to fight these laws’ implementation.

The state is also struggling with a homelessness crisis (add that to the long list of state “crises”), which isn’t entirely a housing problem. It’s a mental health and addiction problem, albeit one exacerbated by outlandish housing prices that impact those on the margins the most. The state spends billions of dollars a year in addressing that problem, mostly with a “housing first” approach that seeks to build transitional housing — often at $800,000 or more per unit.

Officials Haven’t Commented on the New City That Could Fix the Housing Problem

It’s refreshing that lawmakers have acknowledged the basic supply and demand issue and are intent on incentivizing (and subsidizing) new housing construction. Unfortunately, they’ve generally failed to acknowledge that California needs to build new housing everywhere and not just in carefully designated sites within the existing urban footprint.

So now we’ll get to see if they’re serious about the housing issue — or only are interested in promoting density and transit use. The plan will need various approvals as well as a countywide vote to rezone the agricultural property for homes, offices, and retail. Local pushback should be expected from locals, given the changes it would mean for these smaller communities. But I’ve yet to hear anything from state lawmakers and officials.

The project, as detailed in the new California Forever website, promises not only a stylish new community but an infusion of jobs and taxes for the local economy. It appeals to the “pioneering spirit” and “boundless optimism” that’s long been forgotten in this state. Investors have talked about experimenting with new governance models — a great idea in a state where governments can’t even handle the basics.

“Californians now face increasing government corruption, rising crime rates, lack of housing, hostile environments for business, and long term poverty,” wrote Thibault Serlet, a director of a group that helps investors finance these Special Economic Zones. The problem is “slowly being solved” in developing nations in part because of “the emergence of private cities,” he added. These are cities that are “built, operated and funded by entrepreneurs rather than the government.”

The “start from scratch” approach presents a fascinating opportunity to bypass California’s miasma of regulation and build tens of thousands of new homes in a metropolitan area that desperately needs them — all in an environmentally friendly and walkable way. Here’s hoping that California lawmakers can put aside their knee-jerk dislike of wealthy investors and see how closely this plan aligns with their own stated housing goals.