A Problem 50 Years in the Making
On January 19, 1971, the Petaluma City Council, led by Mayor Helen Putnam, did the unthinkable—in the midst of a construction boom, they declared a moratorium on further land annexation and zoning changes within the city, essentially stopping the boom in its tracks. They then hired a consulting firm to convene Petaluma’s first community-wide planning process in developing an Environmental Design Plan to manage growth and curb the suburban sprawl overtaking the city.
Challenged legally by developers all the way to the U.S. Supreme Court, the council won a landmark decision to preserve the city’s character and open spaces “by growing at an orderly and deliberate pace.” The victory made Petaluma the darling of the so-called “slow growth movement.”
It also gave birth to a chronic problem with affordable housing, one that today has reached epidemic proportions.
Petaluma’s suburban housing boom began immediately after World War II, as developers, armed with government subsidies for returning servicemen, descended upon the area, buying up cheap farmland east of town and building tract homes. The city’s population, which stood at 8,000 in 1945, quickly mushroomed to 25,000 by 1970.
That same year, new housing starts, which averaged 300 per year throughout the 1960s, tripled. When the City Council convened in January, 1971, not only were they facing a population surge to 32,000 by 1972, they were also presented with a new slate of development proposals, that, if approved, would further raise the population to 37,000 by 1973, completely overwhelming the city’s infrastructure, particularly its wastewater treatment plant.
The sudden growth spurt was caused by water. The City Council agreed in 1961 to divert water to Petaluma from the newly constructed Coyote Dam on the Russian River. With the exception of Novato, Marin County refused to follow suit, placing a natural limit on its housing development, which in turn increased land costs. San Francisco commuters looking for affordability turned to Petaluma, where, in 1970, they could purchase the same quality and same-sized home as in Marin for 20% less.
In 1972, Petaluma adopted its growth management plan, limiting new home development to 500 units per year, and allocating those units evenly between the town’s east and west sides in hopes of preserve the vitality of the downtown. To improve the quality and variety of home construction, it placed a 100-unit cap on each developer, seeking to create a field for competition. To protect Petaluma’s agricultural heritage, they imposed a greenbelt around the city.
The quality issue was in response to complaints from homeowner associations of the shoddy construction of their new tract homes, in particular those built by one of the city’s largest builders, Condiotti Enterprises of Santa Rosa, who offered the lowest priced houses in the area.
Most of the defects were due to poor construction techniques, including squeaky floors that humped and dipped, buckling walls, ineffective heating, cracked and overflowing toilets, defective tubs, broken drain pipes, cracked stucco, and wavy roofs.
The popularity of Condiotti’s poor-quality, cookie-cutter homes spoke to an underlying driver of Petaluma’s housing boom: affordability.
A primary argument in the lawsuits developers waged against the city’s managed growth plan was that it would drive up home prices, excluding lower income buyers. To withstand the legal challenges, the city required each new development to allocate between 8% and 12% of its units to affordable housing. Market forces quickly rendered the allotment woefully insufficient.
By the time the Supreme Court allowed Petaluma’s plan to stand in 1976, the growth tsunami had rolled northward to Rohnert Park, where land was selling for 30% less than in Petaluma. That city’s population, which stood at 7,200 in 1972, quickly tripled to 22,000 by 1978, causing them to impose their own growth management plan.
Meanwhile, construction of small, lower-priced houses almost disappeared from Petaluma. While only 20% of new homes in 1970 sold for more than $30,000, by 1976, almost 70% did (in 1970 dollars). The average home size during that time also expanded from 1,600 to 1,900 square feet.
Some of the price increase was due to higher costs. The 100-unit cap reduced building efficiencies for developers, and construction on the hilly westside proved more costly than on the eastside flats.
But builders also surmised that luxury housing was more likely to get approval from city officials, who placed more weight on quality and amenities than on affordability in assessing development proposals. Luxury housing also played well with nearby residents, who formed housing cartels to protect their property values.
The final kicker was passage of Proposition 13 in 1978, which limited property taxes to 1% of a property’s assessed value. To help replace funding the taxes had provided for infrastructure, the city was forced impose new development fees, which raised building costs about 25%.
By 1982, less than 50% of the city’s new homes quota had been built since the growth plan went into place in 1972, delivering a further blow to any meaningful production of affordable housing. The city increased the quota for affordable units to between 10% and 15%, and also offered builders the option of paying a fee in lieu of designating certain units for low or moderate income residents.
However, the ability of even these stronger incentives to overcome the adverse impacts of growth control programs on affordable housing weren’t able to keep pace with housing scarcity that would face Petaluma in years to come, further driving up homes prices, and reducing mixed-income housing.
Back in 1971, after the City Council declared a moratorium on further land annexation and zoning changes, they hired a San Francisco consulting firm to recommend revisions to the city’s 1962 General Plan. The consultants began by surveying residents.
They found that the majority wanted light industrial growth for jobs, open space of surrounding agricultural land, and a permanent greenbelt between Petaluma and towns to the north and south.
Most importantly, they wanted controlled growth with a target population of no more than 40,000 people, considerably lower than the ultimate population of 77,000 envisioned in the city’s 1962 General Plan.
That became clear in June of 1971, when the mayor and the city council put a $2 million bond issue before voters, to be matched by federal funds, for expanding the sewage plant to accommodate a maximum population of 100,000. It was soundly defeated.
For the past 50 years, Petaluma’s growth management plan has succeeded in holding the city’s population well below the ultimate target of of 77,000 set in the 1962 General Plan. As of 2020, the population stands at 60,700.
However, the curb on growth has come at the expense of affordability. In December, 2020, Petaluma’s median home price stood at $769,000. Discounting for inflation, that’s the equivalent of $115,000 in 1970 dollars. The median home price for a home in Petaluma in 1970 was only $20,600.
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A version of this story appeared in the Petaluma Argus-Courier.
SOURCES:
Newspapers
Petaluma Argus-Courier: “Annexation Rejected by Council,” December 8, 1970; “Moratorium on City Rezoning,” January 19, 1971; “Planning Department Pays Key Role in Area Future,” April 24, 1971; “Residents favor Industry, Open Space,” April 13, 1971; “Support the Sewer Bond,” June 1, 1971; “Bind Measure in Close Vote,” June 9, 1971; “Planners Ask that Citizens’ Committees be Established,” September 9, 1971; “Sewage Disposal Problems Council’s Latest Headache,” October 21, 1971; “Environmental Design Plan Report Tuesday,” November 17, 1971; “Sewer Improvement isn’t Answer,” January 12, 1972; “Design Plan Passes, is Effective immediately,” March 28, 1972; “How to Control Growth?” April 11, 1972; “House Builders Meet with Council on 500,” March 23, 1972; “Design Plan Passes; Is Effective at Once,” March 28, 1972; “Petaluma Environmental Play Fails to Get OK,” January 25, 1973; “Controversial Growth Policy Goes on Ballot,” April 4, 1973; “Housing Limit Challenged,” April 25, 1973; “Good Case for Housing Limit,” April 26, 1973;“Owners Itemize Condiotti Homes Complaints,” May 11, 1973; “Growth Case Moves to High Court,” AC, December 31, 1975; “Growth Review Denied,” AC, February 23, 1976; “Disgruntled Homeowners Say Agreement Reached,” June 18, 1976; “Scharer Brings Different Personality to City Manager Post,” October 5, 1981; “Petaluma’s new Housing Element Conforms to State Law,” October 27, 1982; “Council Adopts In-Lieu Fee System,” August 21, 1984.
Santa Rosa Press Democrat: “Census Says Median Value of 78,060 County Homes is $20,900,” March 4, 1971; “No Permits Until Builder Makes Good,” November 24, 1976; “Growth: Tract home, bedroom community has much to offer,” March 14, 1979; “Development Plan Embroils Builder in Political Scrimmage,” October 4, 1992.
Journals, Magazines, Books, Websites
California Planning & Development Report, “Petaluma Marks 30 Years Of Growth Control”
Apr 1, 2002. https://www.cp-dr.com/articles/node-962
Conor Dougherty, Golden Gates: Fighting for Housing in America
Bernard J. Frieden, “The Exclusionary Effect of Growth Controls,” The Annals of the American Academy of Political and Social Science, Vol. 465, Housing America (Jan., 1983), pp. 123-135.
Douglas R. Porter and Elizabeth B. Davison, “Evaluation of In-Lieu Fees and Offsite Construction as Incentives for Affordable Housing Production,” Cityscape, Vol. 11, No. 2, (2009), pp. 27-59.
Benjamin Schneider, “How to Make House Crisis,” Bloomberg Citylab, February 21, 2020. citylab.com.
Seymour I. Schwartz, David E. Hansen, and Richard Green, “The Effect of Growth Control on the Production of Moderate-Priced Housing,” Land Economics, Vol. 60, No. 1 (Feb., 1984), pp. 110-114.
“Home values in Petaluma, CA,” realtor.com.
“Petaluma, California Population 2020 (Demographics, Maps, Graphs,” worldpopulationreview.com.