Do Latest Cities Offer a Solution to California’s Housing Crisis?

California is grappling with a persistent housing shortage, leading to soaring costs and affordability challenges. Amidst this crisis, proposals have emerged to build entirely new cities within the state, mirroring similar initiatives underway in countries like Egypt and Saudi Arabia. But are these ambitious projects a viable solution, or are they unrealistic and costly endeavors? Economists and industry executives weigh in on the potential benefits and drawbacks of creating new urban centers in California.

The Promise of a Fresh Start

The concept of building new cities appeals to some as a way to circumvent the obstacles hindering development in existing Californian municipalities. These obstacles include stringent regulations, lengthy permitting processes and the “Not In My Backyard” (NIMBY) attitude of established homeowners who resist increased housing density. Proponents suggest that new cities could be designed with modern infrastructure, prioritizing public transit and higher-density housing, addressing the shortcomings of older, automobile-centric urban layouts.

Economic Perspectives: A Divided Opinion

Economists offer differing viewpoints on the feasibility and desirability of new cities in California. Some express skepticism, citing the enormous costs associated with establishing essential infrastructure – roads, utilities, schools, and more – and the difficulty of attracting businesses and residents without a robust job market. Others believe that, under the right circumstances, new cities could stimulate economic growth by expanding the state’s capacity for housing and employment.

Arguments Against New Cities

• High Costs and Coordination Challenges: Caroline Freund of UC San Diego emphasizes the significant financial burden and logistical complexities of building a city from scratch, particularly given California’s track record of project delays and budget overruns.
• Population Trends: Ray Major, an economist, points to forecasts indicating a potential decline in California’s population due to factors like stricter immigration policies and lower birth rates, suggesting that investing in new cities now would be ill-timed.
• Existing City Capacity: Kelly Cunningham of the San Diego Institute for Economic Research argues that California already possesses the infrastructure to support additional housing units within its existing cities, but political obstacles prevent their utilization.
• Dysfunctional Conditions: Cunningham further contends that replicating existing regulatory and cost issues in new cities would likely yield similar unsuccessful outcomes.
• Obstacles to Relocation: Phil Blair of Manpower highlights the difficulty of convincing companies to relocate to a new, isolated area of the state.

Arguments For New Cities

• Economic Growth Potential: David Ely of San Diego State University believes new cities can promote economic growth by expanding housing and business opportunities.
• Addressing Structural Problems: Alan Gin of the University of San Diego notes that existing cities face structural challenges in addressing affordable housing, particularly regarding low-density development and NIMBYism, which new cities could avoid.
• Opportunity for Innovation: James Hamilton of UC San Diego welcomes new approaches to affordable housing and is open to the possibility of success for a new city.
• Holistic Planning: Norm Miller of the University of San Diego suggests that well-planned new cities, similar to Irvine or Columbia, Maryland, could be more effective than attempting to retrofit existing urban areas.
• Bypassing Frictions: Austin Neudecker of Weave Growth argues that a new city could bypass the regulatory constraints hindering development in established areas, allowing for denser, transit-oriented models.

Industry Perspectives: A Mixed Bag

Executives also offer diverse opinions. Chris Van Gorder of Scripps Health expresses openness to the idea, provided that new cities can be supported with essential utilities. Jamie Moraga of Franklin Revere advocates for strengthening existing cities, citing concerns about declining populations, water scarcity, and wildfire risks. Gary London of London Moeder Advisors suggests focusing on master-planned communities on the edges of metropolitan areas as a more achievable alternative.

The Necessitate for Pragmatism

A common thread among the perspectives is the need for pragmatism. While the vision of starting fresh with a new city is appealing, success hinges on economic viability, infrastructure feasibility, and the ability to attract businesses and residents. Bob Rauch of R.A. Rauch & Associates suggests that existing cities should strive to emulate the characteristics of new ones – streamlining permitting, embracing density, and modernizing infrastructure – rather than attempting to build entirely new urban centers.

the question of whether California needs new cities remains open. The challenges are significant, but the potential rewards – increased housing availability and economic growth – could be substantial. A measured approach, focusing on pragmatic planning and addressing the underlying issues hindering development in existing cities, is likely the most effective path forward.