Infill: Pro and Con

Infill is the new urban development approach that isn’t new. City planners, designers, and urban policy officials have been trying to encourage central city development in various forms since the early 1940s. Federal involvement in this issue dates from the passage of the Housing Act of 1949 which authorized federal funding for urban renewal.

Conceptually at least, the fit between infill housing development and smart growth is a natural one as each additional housing unit built in a central city or older suburban neighborhood reduces the demand for housing at the urban edge. Indeed, while smart growth’s attempts to contain sprawl at the urban edge have met with resistance from developers, homebuyers, and many suburban officials, everybody, it seems, likes infill housing.

And they should. Infill housing makes three types of policy sense. As noted above, encouraging additional infill development reduces development pressures on outlying farmland, open space, and habitat lands. Second, encouraging additional infill development, particularly near transit lines and in neighborhoods that are currently or potentially “walkable,” may help slow the inevitable increase in automobile travel both on freeways and local roads. Third, and perhaps most important, many older neighborhoods are in dire need of new investment. Some of these neighborhoods are demographically and economically stable, but are suffering from years of inattention and underinvestment. Other neighborhoods, such as those of new immigrant populations, have become focal points of demographic and economic flux. Regardless of the particular situation, the increased private investment that is at the core of infill housing development can provide the additional financial and human resources that these communities will increasingly require.

As appealing as infill development may be in theory, it can be less appealing in practice. Done without good planning — that is, when not linked to appropriate infrastructure development and public service improvements — additional infill development becomes a formula for increased local traffic congestion, over-crowded schools and parks, and buildings that disrespect the history and character of existing neighborhoods. Done too quickly and without adequate safeguards, additional infill becomes a formula for gentrification, as existing residents are displaced to make way for new homes they can afford to neither buy nor rent. Done without reference to a viable financial model and the needs of private developers to earn reasonable rates of return, infill becomes simply a pipedream.

The California Context

Nowhere is enthusiasm for infill greater than in California, where state officials and legislators, regional agencies, local governments, organizations, environmental groups, and even homebuilders have all jumped aboard the infill bandwagon. Its reputation as the world capital of sprawl notwithstanding, California has already done a credible job accommodating infill development, particularly within its coastal cities and counties. Depending on how infill is counted, and based on an analysis of census data, infill housing accounted for between 20% and 35% of new homes built in California during the 1990s. Among counties, infill accounted for more than 40% of new housing units constructed in San Francisco, Yolo, Los Angeles, Santa Clara, Merced, Orange, Stanislaus, and San Mateo during the 1990s.

With California growing at a rate of five million people per decade, even more needs to be done. Recognizing this need, in 2004 the California Business, Transportation, and Housing Agency, and two of its departments — Caltrans and the California Department of Housing and Community Development — commissioned UC Berkeley’s Institute of Urban and Regional Development to prepare the first-ever statewide assessment of infill housing potential. Undertaken by DCRP graduate students Guangyu Li, Michael Reilly, Thomas Rogers, and Charles Warren, under the direction of DCRP professor John Landis and IURD Community Partnerships director Heather Hood, the assessment includes a statewide, parcel-based inventory of potential infill sites; an estimate of the sites’ potential to accommodate additional housing in appropriate locations and densities; current constraints preventing the development of infill housing; and an estimate of the current and projected demand for infill housing. In addition, results will be made directly available to local planners, redevelopment officials, elected officials, and developers via the internet.

Inventorying Infill Parcels

Because inventorying infill sites on a parcel-by-parcel basis is infeasible at the scale of a state or metropolitan area, this study makes use of county assessors’ records to identify vacant and refill (previously developed) parcels. Following the definition commonly used by county tax assessors, a vacant parcel is defined as one that has no inhabitable structure or building, or is currently not in use for extractive purposes such as mining or oil drilling. Parcels with structures too small to be inhabited, or for which the structure value is less than $5,000 (measured in constant 2004 dollars) are also deemed to be vacant. Refill parcels, also known as redevelopable parcels, are privately-owned, previously-developed parcels with a structure valued at $5,000 or more, but for which the improvement-value-to-land value (I/L) ratio is less than 1.0 for commercial and multifamily properties; and less than 0.5 for single-family properties. County tax assessors estimate improvement values and land values whenever a property is sold based on transaction values as reported to county deed recorders.

Whether a parcel should be counted as a potential urban infill site depends in part on where it is located as well as its availability for development or redevelopment. Using detailed Census data and digital maps, researchers delineated three sets of geographical “catchment” areas for identifying potential infill sites: Largest Infill Counting Areas (LICAs, having an average gross residential density of 2.4 dwelling units per acre), Middle Infill Counting Areas (MICAs, with a gross residential density greater than 2.4 dwelling units per acre and commercial and industrial areas within the urban footprint), and Smallest Infill Counting Areas (SICAs, with gross residential densities greater than 4 units per acre and potentially “walkable” — that is, their housing densities are high enough that a significant number of potential trip destinations are within an easy-walking distance of a quarter-mile).

Based on this inventorying method and additional exclusion conditions, California’s cities and urban neighborhoods encompass nearly 500,000 potential infill parcels comprising 220,000 acres of land. These totals were calculated by counting up all vacant and underutilized parcels within the state’s Largest Infill Counting Areas (LICAs). Moving from the Largest to the Middle Infill Counting Areas (MICAs) reduces the total number of potential infill parcels by about 10 percent and the amount of infill acreage by about 28 percent. Further restricting the set of potential infill sites to the Smallest Infill Counting Areas (SICAs) reduces the statewide number of vacant and refill parcels to about 345,000, and the amount of potential infill land area to approximately 84,000 acres.

Most potential infill sites in California are refill sites — that is, they are currently developed. Refill parcels account for 89 percent of potential infill sites within the LICAs, 92 percent of potential infill sites within the MICAs, and 95 percent of potential infill parcels within the SICAs. In terms of land area, refill parcels account for 71 percent of potential LICA infill acreage, 83 percent of potential MICA infill acreage, and 91 percent of potential SICA infill acreage.

Most potential infill sites are also small. The average LICA refill parcel is just 4/10ths of an acre in size; the average SICA refill parcel is but 2/10ths of an acre. Vacant infill sites are a bit larger, but barely so: the average LICA vacant parcel is just over an acre in size while the average SICA vacant parcel is 4/10ths of an acre. Some smaller parcels may be appropriate for lot consolidation, but this cannot be determined from assessors’ parcel data.

The largest share of refill acreage is currently in multi-family residential use. Multifamily residential uses account for 29 percent of LICA refill acreage and 44 percent of SICA infill acreage. Single-family homes account for another 13 and 22 percent, respectively, of LICA and SICA infill acreage. Turning to underutilized industrial sites — which have their own unique problems as potential housing refill sites because of the possibility of toxic contamination and a lack of residential services — only 11 percent of LICA infill acreage and 4 percent of SICA infill acreage consist of this property type. Although much has been made of the possibility of recycling older commercial buildings and shopping centers into new housing, only 6 percent of LICA infill acreage and 8 percent of SICA infill acreage is currently in commercial use.

Before considering how many housing units California’s infill inventory might accommodate, it is important to reiterate that all these estimates are based on an analysis of assessors’ parcel data, and not on individual site inspections. The quality of assessors’ parcel data varies by county, with land and structure assessments based on older transactions being particularly problematic. Of greater significance, we have no information regarding which, if any, of the parcels identified in the infill inventory are or might ever be made available by their current owners for sale and/or development. Indeed, the current lack of development activity in many infill neighborhoods that are otherwise ripe for redevelopment suggests that many owners of potentially developable sites do not see them as such.

California’s Infill Housing Potential

Based on the concept of neighborhood-appropriate density which links potential infill densities to the availability of quality transit service and supportive neighborhood land uses; and irrespective of physical, economic, and community feasibility issues, California could accommodate as many as four million additional infill units within its Largest Infill Counting Areas (LICAs). This is equivalent to twenty years of housing production based on a statewide production level of 200,000 units per year. About three million of these four million new homes would be constructed on previously developed sites in the form of refill. Another one million units would be constructed on currently vacant sites. Limiting infill housing development to California’s Middle Infill Counting Areas (MICAs) reduces the state’s estimated infill housing potential to about 3.6 million potential units. Further limiting it to California’s Smallest Infill Counting Areas (SICAs) would reduce the state’s estimated infill housing potential to about 2.1 million potential housing units.

Among refill housing units, the largest share could be built on parcels currently in residential use. Twenty percent of California’s LICA infill housing potential is associated with multi-family properties. If nothing else, this percentage indicates the vulnerability of the state’s multi-family neighborhoods to possible gentrification. Industrial sites comprise the next largest source of potential refill units.

By itself, Greater Los Angeles accounts for sixty to seventy percent of California’s infill housing potential. Based on its superior transit service and positive land use mix, the Greater Los Angeles Region could accommodate an additional 2.3 million infill housing units within its LICAs, an additional 2.2 million infill units within its MICAs, and an additional 1.5 million infill units within its SICAs. Most of this new housing development would occur in Los Angeles County. Elsewhere in Southern California, San Diego County could accommodate an additional 220,000 infill housing units in its SICAs and 422,000 in its LICAs. The infill potential of the San Francisco Bay Area, although sizeable, is far less than that of the Greater Los Angeles Region. Altogether, we estimate that the nine-county San Francisco Bay Area could accommodate between 360,000 and 752,000 infill housing units at average densities ranging from 37 units per acre down to 21 units per acre.

Much has been made of the potential contributions of transit-accessible development toward meeting California’s future housing needs, and this attention is merited. Statewide, it is estimated that upwards of 550,000 additional infill units could be accommodated on potential infill sites within walking distance (1/3 of a mile or less) of existing rail transit stations. This includes commuter systems such as Los Angeles’s MetroLink or the Bay Area’s Caltrain, subway systems such as BART or the Red Line in Los Angeles, and light-rail systems such as the San Diego Trolley or Santa Clara County’s VTA system.

Turning from rail transit to bus transit, there are more than 25,600 acres of potential infill land in California that are within a quarter-mile’s distance of a bus line offering high-frequency service. Altogether, we estimate these sites could potentially accommodate nearly 1.1 million infill housing units. As exceptional as this total sounds, most of it is in just one county — Los Angeles. The Los Angeles County Metropolitan Transportation Authority has been a national leader in the implementation of high-frequency bus service, including bus rapid transit, and approximately 900,000 potential infill units — almost half of all potential infill units in Los Angeles County — could be constructed on potential infill sites that are within a quarter mile of one of MTA’s high-frequency bus lines.

Barriers to Infill Housing Development

These estimates assume that every potential infill parcel that could be developed as infill housing would be developed as infill housing. This is unrealistic. Would-be infill housing developers face numerous difficulties and constraints — among them physical and financial feasibility. Physically speaking, larger lots are easier to develop than smaller ones. The attendant regulatory and parking challenges developers face in designing marketable housing on lots less than 2,500 square feet become so great as to render the lot almost un-buildable. Not until a lot is about 5,000 square feet in size — about 1/8^th of an acre — do the constraints to designing marketable infill projects begin to recede. Financially, the profitability of developing for-sale projects, while much greater than for rental projects, is insufficient to overcome the risks associated with the possibility of being sued for damages under current construction dispute concerns. A related constraint is the expense of infrastructure improvements — particularly schools, parks, and roadway capacity — necessary to accommodate additional development. Should the costs of upgrading local infrastructure and public services fall entirely on the subject property, they would likely render its development economically infeasible. Additionally, development on brownfield sites often entails remediation that is only discovered after construction has begun.

Other potential barriers include pre-emption and community character issues. Many of the identified sites carry current zoning designations that would not permit residential uses. Assuming these sites were reserved for future economic development, and therefore pre-empted from redevelopment into residential use, California’s infill housing potential would fall by about one million units. Redevelopment of parcels already occupied by apartment buildings — about thirty percent of the state’s infill inventory — runs the risk of displacing hundreds of thousands of low-income families. In addition, infill development, like any new development, has the potential to alter the character of existing communities. Even when individual projects pay attention to issues of community character and context, the cumulative effect of many such developments on a neighborhood or community may be considerable — especially when many changes occur over a short period of time.

Who is Moving to Infill Neighborhoods?

Taking a line from the 1989 movie, Field of Dreams, when it comes to infill housing, planners and developers alike seem to believe that “if you build it, they will come.” History cautions otherwise. While a number of central cities around the country — notably Chicago, Seattle, Houston and Atlanta — have successfully attracted significant numbers of new residents to downtown neighborhoods, this is still the exception; metropolitan decentralization continues to be the dominant residential development pattern. Compared to the market for suburban housing, the market for infill housing remains relatively small. But, like California itself, the infill market is growing and as the state’s population grows ever more diverse, the market for infill housing is also likely to grow.

A marketing axiom states that the best way to understand a prospective market is to study the current one. Rather than studying who is currently living in infill neighborhoods — defined in this study as central city neighborhoods and older suburban communities — we focus on who is choosing to move to those neighborhoods, and why. Recent movers are identified in the 2000 Census as those who changed location between 1996 and 2000.

Race and Ethnicity: Compared along race and ethnicity lines, California’s central city neighborhoods were far less attractive to white movers than its suburban ones. Based on the 2000 Census, white households comprised 46% and 61% of recent movers to older and newer suburban communities, but only 35% of recent movers to central city neighborhoods. The situation was exactly the opposite for Latino households, who comprised 35% of recent movers to central city neighborhoods and 28% of recent mover households to older suburban communities, but only 22% of recent movers to newer suburban communities. African-American households favored central cities even more than Latinos: 14% of recent movers to central city neighborhoods were African-American, versus 8% of recent movers to older suburban communities, and 6% of recent movers to newer suburban communities. Asian-American households, by contrast, tend to favor central city neighborhoods and older suburban neighborhoods (14% and 13%, respectively) more than newer suburban neighborhoods, where only 6% of recent movers where Asian-American. Not surprisingly, these percentages vary significantly by region.

Should these trends continue, many of California’s older central city neighborhoods will become more Latino in character, while the state’s newer suburban communities will continue to remain predominantly white. Between these extremes, California’s older suburban neighborhoods will continue to grow ever more diverse.

Household Type: Married-couple families, both with and without children continue to favor newer communities over older ones. Statewide, married-couple families with children accounted for 31% of recent movers to older suburban communities and 37% of movers to newer suburban communities, but only 21% of recent movers to central city neighborhoods. Mover households consisting of married couples without children favored suburban locations in similar proportions. Mover households who were separated, divorced, or widowed were equally distributed among the three neighborhood types, accounting for 12% of recent movers to central cities, older suburbs, and newer suburbs. Single-parent families followed a similar pattern, accounting for 11% of recent mover households to each of the three neighborhood types. Singles and non-traditional, multiple-family households, by contrast, continue to significantly favor central city locations over others. These percentages vary only slightly by region.

Should these trends continue, California’s central cities will become home to ever more singles and non-traditional multiple-family households, and fewer married-couple families. Newer suburban communities, by contrast, will be more oriented toward families — albeit many different types of families — while older suburban neighborhoods will be a melting pot for all household types.

Age: Following the family trends profiled above, younger movers tend to favor central city neighborhoods over suburban ones, albeit only slightly. On the other side of the age distribution, middle-aged and senior mover households continue to prefer suburban locations, particularly newer suburbs. This is not to say that empty-nesters — middle-aged couples whose children have left home — are not moving to central city neighborhoods; they are, along with older and newer suburban neighborhoods as well. These trends do not vary much by region. Should they continue, California’s central city areas will grow slightly, although perceptibly, younger over time, while its newer communities will grow perceptibly older.

Household Income: Central city neighborhoods are increasingly losing out to newer suburban communities in terms of resident incomes. Nearly half of California households who moved to central city neighborhoods between 1995 and 2000 earned less than $40,000 in 1999. By contrast, only a quarter of recent movers to suburban communities had household incomes less than $40,000. Among wealthier households, only 12% of recent movers to central city neighborhoods had household incomes above $100,000. In comparison, 20% of recent mover households to newer suburban communities had household incomes above $100,000. As with other demographic characteristics, older suburban communities fell in between, attracting a mix of households with diverse incomes. These findings do not vary much by region.

The Future Demand for Infill Living

Applying the recent mover demographic cross-section from the 2000 Census to the California Department of Finance’s 2010 and 2020 population projections suggests that the number of households living in California’s central city neighborhoods across the state will grow by 2% between 2000 and 2010 (rising from 4.4 to 4.5 million), and by 3% between 2000 and 2020, rising to a total of 4.6 million in 2020. The growth in central city households will be concentrated in a limited number of counties, notably Los Angeles, San Diego, and San Francisco counties, and to lesser extent in Santa Clara, Sacramento, and Sonoma counties. In a number of other counties, most notably Alameda, Contra Costa and Orange counties, the number of households living in central city neighborhoods may actually decline. Indeed, except for San Francisco, there is no California county in which the share of households living in central city neighborhoods will grow. Still, the past should never be regarded as automatically predictive of the future. Should a wider range of housing types and products be offered in central city neighborhoods than in the past — particularly housing of interest to families — it is possible that the demand for central city living could grow by more than these amounts.

The bulk of the increased demand for infill living will be concentrated in California’s older suburban communities. The number of households living in the state’s older suburban cities (e.g., Glendale, Pasadena, Torrance, Van Nuys, Fullerton, Santa Ana, and Chula Vista in Southern California; Berkeley, Fremont, Richmond, Sunnyvale, and Vallejo in the Bay Area) is projected to increase by 26% between 2000 and 2010 (rising from 2.7 to 3.4 million) and by 56% between 2000 and 2020, rising to a total of 4.2 million in 2020. Much of this increase will be driven by growth in the number of Latino households, who, if present trends continue, will favor older suburban communities offering inexpensive, single-family housing. Among the counties likely to see the largest population and household growth in older suburban communities are Los Angeles, San Diego, Alameda, Santa Clara, Orange, and Contra Costa. In the absence of policies and programs to encourage new construction to accommodate this growth, California’s older suburban communities will likely become much more over-crowded. The strong future demand for housing in the state’s older communities will also put upward pressures on land and housing prices.

Matching Infill Demand with Infill Potential: Quantitative and Qualitative Dimensions

It is now time to try to reconcile potential infill supply and possible infill demand. This will be done in two ways. The first is quantitative: it compares projections of the demand for infill living with the number of potential infill housing units. The second way is more qualitative: it compares the attributes sought by the types of households interested in infill living with the availability of those attributes in different locations.

Starting with the quantitative approach, there are six California counties in which infill housing potential greatly exceeds projected demand: Los Angeles, San Diego, San Bernardino, San Joaquin, San Francisco and Riverside. Los Angeles, San Diego and San Francisco counties are similar in that they couple a large numerical demand for infill living, a large supply of potential infill sites, and available transit and public services capable of supporting higher densities. Riverside and San Bernardino counties are different: their infill potential and development densities are low by regional and state standards, but their demographic demand for infill housing is lower still.

Counties in which infill potential and demand are in rough balance include Alameda, Santa Barbara, Kern, Santa Cruz, Marin, Tulare, Monterey, Stanislaus, San Luis Obispo, San Mateo, Sonoma, and Solano.

There are three counties — Contra Costa, Orange, and Sacramento — in which infill demand far exceeds infill potential. In Sacramento’s case, the demand for infill housing is reasonably strong, but potential infill sites are few and far between. Infill sites abound in Orange County, but they are outstripped by strong demand.

Just as the methods used to estimate infill potential and infill demand must be carefully scrutinized for their accuracy and applicability, so too must these last efforts to balance potential with demand. Infill developers face numerous difficulties, and the cumulative effects of these constraints increase with the number of potential infill units. This is particularly true in Los Angeles and San Diego counties, where infill potential seems to so greatly exceed demand. On the other side of the coin, some of the households counted as infill demand in Orange, Sacramento, and Contra Costa counties — the three counties where numerical demand exceeds potential — could just as easily choose to buy or rent a home in a newer suburban community. This would have the effect of reducing infill demand, and evening the balance between potential and demand.

These last caveats notwithstanding, this analysis suggests that, quantitatively at least, there is likely to be a sizeable market for infill housing in many of the same counties in which there is a large potential to build infill housing. This is good news for households seeking housing, good news for infill builders and developers, good news for planners and environmentalists concerned with smart growth, and good news for community leaders seeking to revitalize older neighborhoods.

The second match condition — the qualitative one — is more complicated. First, the good news: based on a detailed statistical analysis of recent mover preferences, no demographic group in any urban area was predisposed for or against higher densities. To the degree that they are offered the housing and neighborhood services they most value (at a reasonable cost), many households will happily consider living in a higher-density building or neighborhood. For builders, this means putting the emphasis on building quality, neighborhood quality, and product diversity, rather than on density. In a similar vein, except for Asian-Americans, no demographic group exhibited strong preferences for greater employment accessibility. This suggests that the market for infill living extends far beyond downtown commercial cores. On the flipside, all demographic groups had strong aversions to living in or near industrial zones. This suggests that isolated infill projects located in the heart of active industrial districts are likely to find it tough going, at least until they establish a critical mass of related activities. Finally, except for single-person households, the market for infill living seems to be larger, broader, and stronger in older suburban neighborhoods than in central city neighborhoods. Given the large supply of infill sites in older suburban neighborhoods and their more favorable economics, this is good news. At the same time, opposition to infill development may be greater in older suburban neighborhoods than in central city ones.

Ten Policy Suggestions

Ten specific public policy suggestions and next steps for promoting increased infill housing construction emerged from this study.

1. Improve the amount and quality of available information on potential infill development opportunities.
2. Establish a permanent funding source for affordable housing to be used in part to develop and implement cost-effective programs to help low-income households displaced by new infill development.
3. Require cities and counties to specifically identify potential infill housing sites and infill programs and strategies as part of their housing elements.
4. Streamline the development entitlements process, and in particular, the California Environmental Quality Act (CEQA), to reduce the regulatory uncertainty associated with infill housing projects.
5. Create new sources of infrastructure and off-site improvement financing for infill projects.
6. Develop a comprehensive community education/engagement strategy to generate public support for infill development.
7. Undertake a comprehensive review of the effectiveness of national and state brownfield remediation and liability laws; and to identify potential reforms to state law as necessary.
8. Focus and expand existing mortgage financing programs for first-time homebuyers who purchase new homes in designated infill development areas.
9. Review the effectiveness of SB 800 and if necessary, update it to further reduce the stifling effects of potential exposure to construction dispute litigation on the construction of attached infill housing.
10. Establish a demonstration program linking infill development to expanded state funding for elementary and middle schools in infill neighborhoods.

The full set of policy suggestions and alternatives are elaborated in The Future of Infill Housing in California: Opportunities, Potential, Feasibility and Demand–Volume One, available from the Institute of Urban and Regional Development (510-642-4874 or iurd@berkeley.edu).