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Lynne Plambeck: Much more development OK’d, sadly

Environmentally Speaking

Posted: May 17, 2012 1:55 a.m.
Updated: May 17, 2012 1:55 a.m.
 

Well, I guess it wasn’t unexpected. Neither the county, nor the city for that matter, ever says no to any development project. If a project is proposed, it will be approved eventually.

So, it should be no surprise to anyone in the Santa Clarita Valley that in the last year, the county and the city have approved an additional approximately 8,000 units in the SCV. That includes the Vista Canyon Project at 1,100 units, the Newhall Ranch first phase at 1,444 units and 1,000,000 square feet of commercial development, and last Tuesday’s approval, the Newhall Ranch second phase at 4,200 units and additional commercial space.

One might wonder how this could be considered “planning.” After all, vacancy rates for commercial buildings in the SCV remain high, and there are empty storefronts easily visible in any strip mall. Housing prices remain low, with many foreclosures still outstanding.

Although investors with cash are reportedly buying up housing at rock-bottom prices, purchases are made to flip or rent, so these units will still come on the market again at some future date.

It is obvious that there is no market for this housing at this time. Newhall Land Development Inc.’s West Creek and Riverpark projects are only half-built. Thousands of other housing units have already been approved, but not yet built.

Normally, under the laws of supply and demand, the greater the supply, the lower the price. As homeowners continue to watch their equity plummet, developers ensure the trend will continue by adding thousands of units to the stock.

This doesn’t seem logical. Development corporations are businesses that evaluate their bottom line. They will undoubtedly not build housing that they can’t sell. The inventory costs are too high. Not long ago, several new housing starts in Victorville were burned down to get rid of them.

So, why have developers pushed through so many housing approvals? I have long had a theory about this.

A land appraisal for vacant agricultural value is very low. Even approval of a project at the planning commission level can increase the value by a factor of 12 to 15 times. The land hasn’t changed. No infrastructure has been added, but with a piece of paper, the developer can now go to the bank and borrow substantially more money. With final approvals, the land appraisal may again double or triple. That’s a lot of borrowing power.

But the land is still vacant. No roads, no water lines, no sewer treatment.

As happened with Landsource, the holding company for Newhall Ranch, these massive loans went south to the tune of $2.5 billion. The California Public Employees Pension Fund lost $1 billion and Barclay’s Bank lost $1.5 billion. But all of us lost, too.

Our losses came in the equity crash of our homes, no interest in our savings accounts and rising taxes to pay for bailouts and make up lost pension funds.

Developers, such as Newhall Land, filed for bankruptcy. They dissolved the limited liability corporations set up to shield them from losses. They changed the name, and they started again. So, Newhall Land & Farming became Newhall Land Development Inc. You and I lost.

Where are the regulations that would have protected the public from the current crisis? Banking safeguards formulated in the 1930s, such as the Glass-Steagall Act, where thrown out to “ease regulations.” Corporations, in order to speed approvals, constantly hammer county and city governments to reduce planning and environmental regulations.

Lastly, who can ignore the plain, old-fashioned corruption in business and government transactions? Certainly reductions in regulation and oversight are not helping in this area.

With a continued failure by our government to regulate banks, and local planning agencies, such as our own county and city, failing to exercise their oversight duties, I don’t see that any of the factors leading up to the 2007 housing crisis have changed.

Perhaps the saddest part of all of this for me is that our own Santa Clara River, the last free-flowing river in Los Angeles County, home to more than 100 threatened and endangered species, and source of much of our local water supply, is the gambling chip in these 8,000 units, as well as our air and water quality. Building this housing in the flood plain will require concrete banks — soil cement — levees and hundreds of millions of cubic feet of fill.

Will we lose the river to hedge fund investment schemes?

Conservationists are not giving up. We have yet to see who will win this modern-day David-and-Goliath battle.

Lynne Plambeck is president of the Santa Clarita Organization for Planning and the Environment, and a board member of the Newhall County Water District.

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