California’s Governor Edmund Gerald “Jerry” Brown Jr. offered those attending the ULI Fall Meeting some lessons in pragmatic leadership during a keynote conversation with Marcus & Millichap chairman George Marcus.
Brown also sounded stern warnings that California’s much-touted recovery is sure to end and that the state will have to make tough decisions on climate change, development, and infrastructure.
But much of the conversation focused on the qualities of pragmatic leadership in a state known for its divisions. These days, he is doing a better job of leading the state by picking his battles, Brown said.
“You have to focus on what can be done and what can’t be done,” Brown said. He was once told he had too many positions, which he decided was true. More positions mean more adversaries and more battles.
“You have to let a lot of other things take care of themselves,” said Brown, who has also served as the state’s attorney general and mayor of Oakland. As mayor, he narrowed his goals to two central principles that drew the majority of his attention: “The city needed money in and the criminals out,” he said.
Throughout his career, Brown has been a staunch advocate of the California Coastal Commission, which oversees development on the coastline. More recently, he has pushed plans for a high-speed rail connection between San Francisco and Los Angeles, which he believes will spark high-density development in outlying areas.
Brown is a firm believer in creating higher-density neighborhoods and increasing the ability of people to live closer to where they work. “Elegant density” is the name he has given it. “We have to find how people can live closer together with greater density and greater elegance,” he said.
Brown is California political royalty: his father, Pat Brown, was governor from 1959 to 1967. In Jerry Brown’s first stint as governor, from 1974 to 1982, he dated rock singer Linda Ronstadt and earned the “Moonbeam” nickname for his hippie-friendly stances.
But he has earned a new level of respect in his second run as governor, which began in 2010. He inherited a state government saddled with $27 billion in debt and a deeply divided legislature that had been in disarray for many years. But Brown balanced the budget, improved the state’s credit rating, and cut waste, earning reelection in 2014.
“I learned it was better to take office when the economic cycle turns,” Brown joked. “It’s better to follow failure than success.”
But Brown also said he is a different type of leader as governor now. “This time around I had more experience,” he said. “I learned to work with people with different views.”
Despite the California economy’s emergence from the wilderness, Brown sounded a pessimistic note, saying the cycle is sure to end. Most recoveries last no more than ten years, he said.
“We don’t have a steady flow of money, but we do have steady demand to spend it,” Brown said. Right now the state is saying yes to programs, but that may not be the case going forward as money tightens. The ratio of no to yes may change. It takes leadership to look five or six years down the road.”
The continued drought, coupled with a warming climate, is creating long-term issues that will not go away, he said. The first desalination plant in the state is ready to open in Carlsbad, but desalination remains too expensive as a long-range solution to a shortage of water, Brown said.
Continued drought and deterioration in the environment could lead to “climate refugees” fleeing areas of drought and a declining quality of life, he said. “It’s not going to happen tomorrow, but we need to take thoughtful action,” he said.
In response to questions from the ULI audience, Brown addressed several development issues.
Asked about the state’s Proposition 13, which froze property taxes in 1978, he made it clear he does not favor a proposal to split the property tax categories, which would allow tax increases on commercial property. “Splitting the rolls” would lead to a wave of complexities about taxing farms and apartment complexes. “I’m not advocating splitting the rolls,” he said.
Brown is pessimistic about the ability of the state to adequately reform the controversial California Environmental Quality Act (CEQA), which critics say increases the cost of doing business in the state and delays projects that could provide major economic benefits. “Reforming CEQA is the Lord’s work. Unfortunately the Lord’s work doesn’t always get done,” he said.
He was equally cynical about the state’s chances of reducing the shortage of affordable housing. “Everyone wants housing, but housing is controlled by local governments, and local governments don’t like change,” he said.
Asked about increasing the use of tax credits for affordable housing, Brown said there are too many complexities and the tax credit system is too “rigid,” and any credits in California require a two-thirds vote in the legislature to change.
“As far as tax credits [to incentivize developement], don’t count on it,” he said.
