Affordable Housing in Monterrey County: Analyzing the General Plan Update and Applied Development Economics Report

This report analyzes the old proposed General Plan Update and the Economic Impact Analysis (EIA) conducted by Applied Development Economics, Inc. We find that the economic analysis for the county is based on false premises and faulty economic logic. The future General Plan Update should seek to avoid the mistakes in the old proposed GPU and the EIA.
The old proposed GPU included numerous regulations that would have severely affected the livelihood of Monterey citizens. Among the documents’ stated goals were the reduction of residential development and the promotion of affordable housing. Unfortunately, these goals are contradictory. By mandating large minimum lot sizes and requiring developers to provide a certain amount of money-losing “affordable housing” units, the county would only reduce the available supply of housing. This would lead to price increases, quite the opposite of more affordable housing.
In addition, the GPU and the EIA made unrealistic assumptions about the cost of additional services and infrastructure required by new development, particularly in rural areas. Such rural areas currently do not receive full government services. Thus, including the cost of full government services in rural development impact projections is disingenuous. Those projects that require additional services in rural areas should instead be encouraged to ensure that developers provide the necessary infrastructure in their new developments or to form homeowners’ associations or other voluntary cooperative organizations to adequately address the homeowners’ needs.

Benjamin Powell, Edward Stringham and Adam Summers

Reason Foundation

August 1, 2004

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