What's at stake:
Building rates in Fresno have declined for four straight years. The city has over-built single-family homes by almost 30,000 units.
But the city wants to build potentially tens of thousands more in Southeast Fresno.
In a city struggling to build enough affordable housing while battling climate change, Fresno leaders are preparing to spend more money studying a massive suburban development that critics say would exacerbate both problems.
The Fresno City Council plans to vote Thursday on an additional $150,000 for environmental planning of the Southeast Development Area, known as SEDA — a proposed community of 45,000 homes that would stretch across 9,000 acres of farmland on the city’s southeastern edge.
The vote comes at a pivotal moment for California’s fifth-largest city. According to California HCD’s Annual Progress Reports data, Fresno is on track to build just 8,844 units between 2020 and 2024. Even if every single one of those homes were affordable housing — which they aren’t — the city would still achieve only 59% of the goals set in Mayor Jerry Dyer’s One Fresno Housing Strategy, with just one year remaining.
The latest funding request comes after the consultant, FCS International, failed to deliver required analyses under a $625,000 contract from 2020. The consultant never completed required infrastructure evaluations, cost analyses, funding matrices, improvement cost allocations, project financial feasibility studies, or financing strategies for SEDA, according to a letter to the city from Fresno attorney Patience Milrod.
Those analyses were meant to determine how to pay for what could be billions in infrastructure costs. The city has still not disclosed an infrastructure cost for SEDA.
“We’re getting closer,” City Manager Georgeanne White said about a potential cost estimate. “I think I have a draft.”
The housing crisis has become the city’s biggest issue – one that the city faces increasingly daunting odds of building itself out of. The city is forecasted to fall far short of its affordable housing goals.
State projections show Fresno County needs to build 35,000 new housing units between 2020 and 2030. The region is also short more than 30,000 affordable units, according to the California Housing Partnership.
After accounting for the 8,800 units built over the last five years, addressing Fresno’s share of the region’s end-of-decade deficit of 56,156 homes would require building 4,634 homes each year from 2025-2030 — a more than 200% increase from the city’s current pace.
Meeting this housing crisis in a sustainable way would require essentially creating an entirely new economy for Fresno. Fresno has greenlit more than 4,600 units in a single year only three times going back to 1980, according to state and federal housing permit data. And years where building rates rose to what’s needed for the current housing crisis occurred during housing bubbles in the 1980s and 2000s that ended in devastating crashes.
Since the last crash more than 15 years ago, Fresno hasn’t built more than 3,000 units in any year, according to state data. Even during the subprime mortgage crisis, construction peaked at just 3,500 units annually – again, far short of the 4,600 needed every year by the end of this decade.
Rather than a boom to help address the crisis, Fresno appears to be on the cusp of a building recession.
Building rates in Fresno have declined four straight years, according to the state HCD data. With just 1,193 units projected to be completed by the end of year, 2024 is on pace to be among the bottom 10 years for housing construction over the last 45 years.
The development pattern that created this crisis remains stubbornly entrenched. Single-family homes have dominated 90-95% of Fresno’s residential real estate market for four decades, according to state data. As a share of the overall residential real estate economy, Fresno’s multi-family housing market is seven times smaller than the state average, according to state data.
Rather than address this imbalance, SEDA would likely worsen it. The city already has a “glut,” according to Dyer’s housing plan, of nearly 30,000 single-family homes above what households need.
And yet, despite this oversupply, both the market and city leaders seem locked in a self-reinforcing cycle. Single-family homes continue to dominate the city’s local real estate economy and officials try to greenlight more of the same through projects like SEDA. Social housing or affordable housing bonds remain undiscussed and less developer-friendly approaches, such as rent control, remain off the table at City Hall.
“There’s a big demand for housing in our region, specifically in Fresno, and frankly, Fresno is running out of room to build more market-rate housing,” said Darren Rose, head of Fresno-Madera Building Industries Association, a major advocacy group for developers.
Rose’s group “supports SEDA moving forward.”
City officials argue SEDA will overcome previous limitations and address the twin climate and housing crisis — a kind of green sprawl that attempts to overcome eight decades of market trends through unprecedented density.
The project aims for 3,200 housing units per square mile — a figure never achieved at a large scale in Fresno’s post-WWII history, according to a recent Urban Institute analysis. Each new wave of suburban expansion since the 1970s has yielded progressively lower densities: from 2,000 units per square mile in the 1970s to just 1,100 in the 2010s.
“The evidence is clear. In order for SEDA to pay for itself, we have to assume unrealistic market numbers,” City Councilmember Miguel Arias told Fresnoland in May. “And the backstop would be public utilities. There’s no way I would sign off on that.”
Beyond the market contradictions, the project faces mounting environmental challenges. SEDA would generate 510,000 tons of carbon dioxide emissions annually, according to the city’s environmental review for the project, nearly canceling out the 559,000-ton reduction the city committed to in its 2021 climate plan.
In August, state courts dealt the project a major setback, invalidating the city’s environmental review process which was planned on being used for SEDA. In its 2020 application, the city stated that after initial council approval, residential and commercial projects within SEDA “would be exempt from CEQA” – potentially giving developers a free pass on environmental mitigation for one of the largest developments in city history.
Even population projections used by the city to help justify SEDA appear increasingly dubious. While SEDA’s plans assumed 1.5% annual population growth, the California Department of Finance now projects Fresno County will grow by just 0.18% annually over the next 50 years — a nearly tenfold difference that fundamentally undermines the project’s key assumption.
“We don’t really have an economic model,” said Dillon Savory, whose Central Labor Council represents 105,000 workers and opposes the project, said in August about SEDA. “The economic model of the city is to let everybody live here for cheaper than other parts of California.”
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