‘Let the developers pay’ is a familiar scheme


Posted by on Wed, May 11, 2005

This is the Half Moon Bay Review opinion column I wrote in response to their recent Ken Jones/Jim Larimer column.  It’s in today’s paper and you can see the complete article on their site.

Ken Jones and Jim Larimer keep telling us on the editorial page of the Review that we should get developers to fund the infrastructure we need in exchange for letting them build large developments on the coastside.

It’s an interesting idea that deserves further examination. A Boston financial guru came up with a similar idea in the 1920’s. He set up an investment company that guaranteed remarkable returns of 50 percent within 90 days.

When it became clear to investors that he was delivering on his promises, his business really took off. In less than a year, his company was producing so much cash that he had no place to put it. He was filling desk drawers and even closets with currency.

The logic of Charles Ponzi’s scheme is similar to what Ken and Jim suggest. Later investors were paying off the earliest investors. Within months it was impossible to find enough money to pay off everyone who had bought in.

Ponzi’s business collapsed when he could no longer pay the promised returns to his investors. He was bankrupt and bound for prison.

The problem with using future development to pay for the infrastructure we want now is that it also creates an unmet demand for additional infrastructure. This new infrastructure can only be delivered, under this logic, by more development. Eventually you run out of developable land and the money machine stops.

Fully built-out communities across the Bay Area are struggling to find the cash to maintain their infrastructure right now, let alone improve it. I would like to see some numbers that prove it would be any different on the Coastside.

We can’t finance the community of our dreams by putting that burden on future residents of the Coastside.

It seems weirdly un-American to me to expect someone else to pay for the amenities we want. If we want a new library, or a new park, or smooth roads we have three alternatives. We can resolve to pay for them ourselves, stop complaining, or move to Foster City, where the roads are well-paved - and so is the coastline.

Furthermore, the only kind of development that will fund the schools, roads, libraries and parks that Ken and Jim describe is the Wavecrest kind - huge pretentiously-named mazes of identical houses whose residents would starve to death without a car because there’s nothing within walking distance but more hungry mouths. Is that your vision for the Coastside?

My vision of development on the Coastside is different. I want to see new houses built on vacant lots in already-developed areas, small houses for small families built on small lots, rental and caretaker units added to existing homes and businesses, and the expansion of existing houses to accommodate growing families.

My vision is that we can do all of that within our mandatory growth limit - not by reserving the limit for big developers and trying to add small-scale development onto it as an exception.

My vision of Coastside infrastructure is small-scale amenities that are suitable for small-town life.

Here’s my challenge to my neighbors on the Coastside: Are you willing to appreciate what you can afford and are you willing to pay for what you need? I think you are. It’s time for you to write and call the Review and tell its readers that you want to live in a community that can pay its own way in the world.

Remember, when Charles Ponzi got out of prison, he went into the coastal real estate business. He died penniless in 1949.