The impact of slow growth policies on local economies: Through housing boom and bust

This case study considers the economic implications of various growth policies in the Sacramento region over the last decade. Counties and cities throughout the Sacramento region have varying policies and attitudes toward residential and commercial growth. Over the last decade we have seen extremes in development in the region, from the Roseville area which experienced a residential and retail explosion, to Davis, which has restricted growth to relatively few projects. Growth has impacted property and sales tax revenue, and city and county expenditures. Changes in the housing market and the economy over the past few years have had a large impact on new construction activity. This paper examines how cities and counties in the Sacramento region have weathered the housing boom and bust, based on their growth policies during the past decade. The relationship between growth policies, measured by building permits, local government revenue, housing markets, and employment is assessed. Comparisons are presented through charts and panel data regression. Rapid development leads to higher levels of sales tax revenue, coupled with greater volatility in sales tax revenue. Employment rises more quickly in areas that have a high level of non-residential construction relative to residential construction.