Smart Growth meets big money

A first priority for California state Treasurer Philip Angelides: Reinvigorate neglected urban cores.

July 14, 1999|By Neal R. Peirce

SACRAMENTO -- Smart Growth has just met big money in the office of California State Treasurer Philip Angelides. The impact on California -- and, by example, all states -- could be profound.

Mr. Angelides believes California's immense government investment power through its pension funds and capital budgets shouldn't be used haphazardly -- one more lane on a freeway or fulfilling some agency's wish list:

"Instead, we need to focus on the long-term economic health of California, 20 to 40 years out. That means sustainable development on the urban fringe -- lose our environment and we lose everything. And it means restoring the fabric of our older inner cities."

You may wonder -- what difference does it make if a state treasurer makes these arguments? In California's case, the answer is a lot.

First take Mr. Angelides, the catalyst. Here's a hard-charging, 46-year-old policy entrepreneur who was a legislative staff insider in his 20s and became the successful real-estate developer of Laguna West -- a path-breaking New Urbanist project -- in his 30s. He has an independent power base as the elected state treasurer, a post he won last November.

Second, the state treasurer is California's chief governmental asset manager, banker and financier. He manages the state's pooled money investment account ($30 billion-plus). He sits on a long list of state authorities, boards and commissions. When he talks, financial markets snap to attention.

Third ingredient: California's immense to-do list. In the first 20 years after World War II, the state invested in a world-class public fabric -- universities, waterworks, freeways. After passage of Proposition 13 in 1978, investment shriveled.

Spending spree

Today Gov. Gray Davis says a major new wave of infrastructure spending -- it may eventually total $60 billion to $100 billion -- is badly overdue. Lots must go for catch-up. Even more funding will be demanded as California adds 5 million more jobs and 12 million new residents by 2020. That means more growth than the boom decades of the '50s, '60s and '70s combined.

But how will the money be spent? This is where hard thinking and clear strategic choices become critical -- much like a corporation, looking to its future. "For all our success as a state," Mr. Angelides argues, "we've been throwing away neighborhoods on a 25-year cycle, contributing to environmental degradation and to an increasingly dangerous gap between our classes and races."

The perils of a two-tiered 21st-century California are real, he argues: Educational failure will damage the quality of the work force. Poverty will increase the burden on taxpayers. Less public safety will frighten off high-quality private investment.

"And most importantly," Mr. Angelides insists, in a "Smart Investments" report fresh from his office, "the very essence of the California dream -- equality of opportunity -- will be lost."

A first priority, in Mr. Angelides' view: Reinvigorate neglected urban cores. He points to the $50 million the California employees pension fund invested in former Los Angeles Laker Earvin "Magic" Johnson's movie theaters and rehabilitated shopping centers in depressed neighborhoods. The pension fund is getting solid 13 percent to 15 percent returns.

But smart investing, Mr. Angelides suggests, could pervade state and local government spending. Examples: Build schools, libraries, community centers as joint facilities. Support new "infill" housing over new cul-de-sacs on the urban fringe. Cut back on new highway needs through expanded public transit and new telecommunications infrastructure that makes telecommuting easier. Reduce demand for new prisons through expanded parolee services, substance abuse and community mental health programs.

A regional approach

But while California needs to think smarter statewide, it needs strong new regional planning, too, says Mr. Angelides. Affordable housing, jobs and housing balance, transportation and open space preservation -- all transcend city and county boundaries.

Mr. Angelides would give California's local governments the right to pass bond issues by a simple majority vote -- not the two-thirds now required. And then, rather than mandating some regional structure from Sacramento, he'd offer a carrot in extra state infrastructure assistance to those regions that find a way to coordinate their projects and "get their act together."

All this represents a massive policy shift. Of course, lots of dots remain to be connected. But the divergence from standard past practice is profound: Here's a state treasurer, wielding influence over billions in state assets, enthusiastically pushing precedent-shattering "smart investment" ideas.

Neal R. Peirce is a syndicated columnist.

Pub Date: 7/14/99

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