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Housing Policy: It's community, not generational

Uploaded: Oct 20, 2015
Although the debate on housing policy has recently been stated in terms of affordability for Millennials, it is actually one of different cultures, and of questions about who profits and who is forced to sacrifice. It is a question of what sort of city that Palo Alto should be, and whether it should be a community, or simply office parks surrounded by high density housing with a few very wealthy enclaves, or something in between. Others have offered similar versions of this choice.(foot#1)

This blog entry was occasioned by the City Council meeting of October 5 (PA Online news article "Residents call for more housing in Palo Alto"). Based on the comments on that article and on a related blog, comments about "entitled Millennials" will be unavoidable, but let me try to blunt that. If you are a Millennial and you make a statement that others can reasonably interpret as a demand that others sacrifice for your benefit, that is entitlement. Similarly if you think that a problem that has afflicted others now warrants special attention because if affects you. On the other hand, a display of entitlement by a Palo Alto Millennial may be the sense of entitlement related to living in Palo Alto, and not generational. Millennials should be aware that the discussion of this issue has been poisoned by individuals and groups claiming to be representative of the concerns of your generation, a topic that will be deferred until a possible later blog entry.

The Council meeting was "It's like deja vu all over again" (Yogi Berra). Housing affordability was a problem when I moved to this area over 30 years ago. For example, I arrived with a PhD + experience in Computer Science and it took me several years and sacrifices to be able to afford a small house (800 sq ft). Even before the DotCom Boom, I had many colleagues move away when they accepted that they couldn't afford both a child and a house. In the 1990s, it was already long recognized that the Palo Alto and nearby areas were not affordable for teachers and City employees. And it wasn't just the employees, but many of the residents active in civic affairs: During a Comprehensive Plan Advisory Committee workshop, a CPAC co-chair asked the participants how many would be able to buy their current houses if they were to move here then. No one raised their hand. ... When such an important and widely recognized problem has not only persisted, but worsen, for this long, you should ask why. I will address two aspects. Is the way we are thinking of the problem impeding a solution? Or are there powerful forces that profit from the situation?

I have argued for the first aspect in an early blog entry "The Law of Supply and XXXXXX" (2014-06-10). Briefly, the "Housing Crisis" is a side-effect of the "Jobs Crisis": The local, regional and state governments have allowed/encouraged job growth far in excess of the corresponding housing, schools, parks, transportation and other aspects of infrastructure. But housing advocates insist that increasing supply will improve affordability, ignoring the effects of demand.
Note: When you hear someone say that housing affordability should be a priority, always remember to ask whether they give higher priority to policies that make the problem worse.

The second aspect can be categorized as Crisis Capitalism, which evolved from the term "Disaster Capitalism". Briefly, elites wring concessions from the majority that give the elite additional advantages as a price for their participation in addressing the crisis, or for their not impeding its resolution. Often these crises are the result of that very elite abusing its advantages. The 2008 financial crisis is a prime example. People in the upper levels of the financial industry made fortunes from bad financial transactions, escaped accountability and were allowed not only to keep their ill-gotten gains, but took extortionate bonuses from the taxpayer-funded bailout--the bonuses were rationalized as necessary to retain those people because only they understood the complex mess that they had created.(foot#2) "Privatize profits, socialize losses" was not just in the US, but also in the EU.(foot#3) Crisis Capitalism can involve a chain reaction, where the purported solution to one crisis sets up an even bigger crisis, or crises, and ... For example, recently enacted California Assembly Bill 744 (AB 744) is the latest in a long line of giving zoning bonuses that provide increased profits for developers, both by encouraging larger projects and by exempting them from paying the costs of the project impacts.(foot#4)

One basic purpose of zoning is to balance development with the corresponding public infrastructure, and to provide all property owners a fair share of that infrastructure. The disastrous consequences that can arise from unregulated use of public resources has long been understood in economics under the term "Tragedy of the Commons". A second important purpose of zoning is to provide the balance of uses needed by a functioning community. Different uses--housing, retail, different types of commercial operations--have different returns on investment (ROI), and that allows the buyer and seller of these properties to negotiate fair prices. However, in an environment of Crony/Corrupt Capitalism, the politically-connected buyer can make huge profits from having the property rezoned for higher ROI. For example, Palo Alto's PC zoning (Planned Community) has been suspended because it was so rife with corrupt practices.(foot#5)(foot#6)

The reigning political philosophies in Palo Alto are Neoliberalism and Libertarianism (each with many interpretations). These put little if any value on community, focusing almost entirely on maximizing the value for the individual. In terms of zoning and development, they see regulation to protect the community as being an undesirable burden on the individual: They characterize zoning that prevents over-development as preventing them from "maximizing the value of their property". The lesson they draw from "The Tragedy of the Commons" is to get in early, subvert the regulatory mechanisms, grab as much as they can and get out before the inevitable collapse. It's an economic philosophy that echoes a famous line from The Godfather: "A lawyer with his briefcase can steal more than a hundred men with guns" (multiple minor variations).

Financialization is closely related to both Neoliberalism and Libertarianism. With its focus on financial instruments and financial transactions, there is no room for community, and people are reduced to little more than interchangeable cogs in the economic machine. And because it is a philosophy based on the most fungible of assets--money and assets with high liquidity--it grossly understates the transaction costs for other elements of the economy. For example, it presumes that a 35-year-old hardware designer whose job has been off-shored can trivially obtain a job writing software, ignoring the costs of training and loss of seniority (from project leader to intern). And it ignores that age discrimination (and other forms) is prevalent, if not rampant, in the tech industry. I find it very difficult to have any discussion with advocates for this philosophy because I can't tell how much of their cluelessness is genuine and how much is intentional self-interest (predatory).

The traditional notion of economic growth was to support the inherent growth of your community's population and to improve their standard of living. However, until recently, the dominant perspective--which is labeled "Establishment"--has been that the local economy is crucially dependent on rapid job growth, and the accompanying population growth. When you listen to these advocates you hear about how important it is to support corporations that want to locate jobs here and the necessity of providing housing for those that will move here to fill those jobs. Notice who this perspective benefits: commercial real estate investors and developers. By increasing density of both office buildings and housing, their properties and projects increase in value. For the corporations that occupy these spaces, this densification is both an advantage and a serious problem.

While that excessive growth benefits some, the higher prices and further overburdening the infrastructure results in lower standards of living and quality of life for many, many more. The perspective that prioritizes people, especially residents, over commercial entities has been labeled "Residentialists". They talk of "homes", not "housing". Of neighborhoods, and neighbors. And of community. This perspective is often referred to as "slow growth", but is more accurately "balanced growth" (jobs, housing, infrastructure). You should draw your own conclusions about why the Establishment chooses to misrepresent this perspective as "no growth".(foot#7)

In considering the policy choices to be made, first ask yourself where you fall between the position that priority should be on providing workers to fill jobs and the position that jobs exist to support the community. Then for each of the policy choices, ask the related questions of "Who profits?" and "Who incurs the costs and sacrifices?"

If you asked people what is Palo Alto's dominant industry, most would likely reply "High Tech". But a case can be made that it is education (I haven't crunched the numbers myself, but have heard this from multiple people). If you apply the premium that homebuyers pay to live in the PAUSD and apply it to all residential properties, the total is boggling (the premium--the differential between PAUSD and surrounding districts--is one cited by real estate professionals based upon what they observe dealing with buyers and sellers). With this calculation involving economics, it is naturally more complex than this and subject to being sliced in many different ways. Regardless, this is a reminder about the balance of people in the community.

Families pay for the PAUSD housing premium by either sacrificing other aspects of their lives to pay for it, or by settling for far less house in order to fit within the family budget. Although the latter has been well-known for decades, City Hall's practice has been to allow developers to use national averages to estimate the number of children likely to be in the housing, and through those underestimates, minimize the developer's impact fees.

When you hear someone advocating building housing for Millennials, your first reaction should be skepticism of their advocacy. Are they clueless and naive about the extreme difficulty of targeting housing to specific groups given the extensive local experience with projections and intent going very wrong? Or are they using that goal as cover for a separate agenda? When you hear advocates arguing that letting big developers do their thing will result in good things for the broader population, ask yourself how Trickle-down Economics is working (Acceptable Answers: "Badly", "Increasing income inequality"...).

Your second question should be about what sort of housing units are being considered. You should understand that many compromises are being advocated, for example "micro-apartments" of 150-300 square feet for families.(foot#8) Of course, one should not expect such to ever get built: The traditional practice in Palo Alto has been for the developer to propose such "benefits" to get the project started in the pipeline at City Hall, and then to find that "Whoops, the economics (his desired ROI) don't work" and then get approval to drop most of the benefits. The current City Council is much better at not fall for this shuffle, but this victory is tenuous--it could easily be overturned in any subsequent election.

Other definitions of smaller housing units are 600-800 sq ft. Some seem to think of 1500-1700 sq ft as small.(foot#9) And then there is what is meant by "affordable". Is it relative to the combined salary of a couple with advanced degrees in tech at companies paying well above normal for the area (Google acknowledges doing this)? It is so easy to have an endless argument when you don't bother to determine if you are talking about even faintly similar things.

Similarly when advocates talk about increasing density to allow housing units for "Millennials who want to start families": When concerns are raised about how to handle the impacts of those projects--traffic, schools, parks and other play areas...--the response is that there will be few children living there. One of the bitter lessons of dealing with Palo Alto's pro-development advocates is that you don't ask yourself whether they are going to pull a bait-and-switch, but rather which ones.

The argument for why very small units would be useful is that the intended occupants are rarely there: They are spending most of their time at work or out in public (restaurants...), that is, the housing is a glorified storage unit where they sleep and occasionally eat. They may even get by with showering and changing clothes at work by using facilities provided for bikers or the gym. So the community is being asked to sacrifice to provide housing for people who, by design, are expected to have no involvement in, much less contribute to, the community. Their community revolves around work--this is extremely dangerous because becoming socially isolated is a well-known problem for people who lose their jobs, even for those with a network of non-work friends and neighbors.

The attitude toward restaurants is a useful marker in what sort of city that people favor. For example, Palo Alto Forward (PAF) is an advocacy group that opposes limits on new office developments intended to allow time to reduce deficits in housing and other infrastructure, and one of the frequent refrains from their members is that having more office workers would support a better, broader array of restaurants, especially in the University Avenue area (PAF tends to regard U Ave as the (only) important portion of Palo Alto).(foot#10) Although this is a common attitude of those claiming to speak for Millennials, one hears it from people of all ages. For example, pro-development Council member Liz Kniss routinely uses the ability to find a restaurant to her liking at 10:30pm as a metric for the "vitality", or "vibrancy", of Palo Alto.(foot#11) When "retail" is being discussed for either a district or a particular building or development, listen for how much the advocates equate retail to restaurants, coffee shops and similar food service establishment. People need to be thinking about their metrics for vitality for the city, and injecting it into policy discussions.

Architecture and urban design have a large influence on what types of people live where, and how they interact.(foot#12)(foot#13) This in turn is part of what influences who wants to live where, and who wants/needs to leave.(foot#14) When friends and friends-of-friends who left Palo Alto during the DotCom Bubble return for visits the first thing they comment on is the absurd congestion and the stress levels. But the techies comment on how much the vibe has changed: They encountered far fewer discussions of science and technology, and too many of those tended to be shallow and poorly informed. They complained about encountering unrelenting hype, PR and other forms of marketing, and about the quality of a product being measured in terms of market share and company valuation. Such observations are hardly news to anyone living here, but it is interesting how quickly and strongly it comes from former residents.(foot#15) This cultural difference has long been visible in the differences between Palo Alto's High Schools: Gunn draws more from families that tend to be STEM (Science, Tech, Engineering, Math) and Paly draws more from families that are in finance, law and other professions and from executives. Consequently, it isn't surprising that Paly dominates in activities such as football and Gunn in robotics. Housing policy isn't going to reverse this trend, but we shouldn't pursue policies that make this situation worse.

A large part of the debate on housing policy involves the role of single-family homes. These neighborhoods are under assault from multiple groups. One group are "sustainability" advocates who focus almost exclusively on carbon footprint, ignoring the large body of research on the effect of urban and suburban design and environment on human health and well-being.(foot#16)(foot#17)

A second group opposes single-family neighborhoods on political grounds: presenting them as inherently racist, although often using the code phrase "Exclusionary Zoning".(foot#18) Sometimes this is cynical; sometimes the result of ideological blinders. For example, in the debate over the Maybell upzoning, housing advocates argued for it saying that it was a good location for the low-income senior housing component because there was so much other affordable housing nearby, and then turned around and attacked the critics of the project as seeking to maintain an "exclusive neighborhood". These political tactics are national, for example, in Seattle.(foot#19) An article on this area--"The Facebook Effect on Real Estate Prices"--characterized the situation here as using "exclusionary zoning", and by providing a link to the corresponding Wikipedia page (cited above) alerted the readers that the author was using an established meaning for that term and that that meaning included racism . This article was endorsed in the comments by 3 of 6 members of the Board of Palo Alto Forward: Eric Rosenblum and Kate Vershov Downing--both members of the City's Planning and Transportation Commission--and Elaine Uang, PAF founder and member of the City's Citizen Advisory Committee on the update of the Comprehensive Plan. Of course, if you were to ask these people if you are a racist for wanting to have a backyard so that your child and friends can play while you keep an eye on them from inside as you do work, they would say no. Similarly for wanting to have a small vegetable garden. Wanting to hear the chirping of birds outside your window is iffy. But, of course, ideology is immune to the Socratic method, and so they persist in casting those aspersions.

One of the claims of the Urbanistas is that they want more economic diversity (in additional to cultural and racial). However, this doesn't hold up under even mild scrutiny. For example, Palo Alto's Urbanistas support the regional El Camino Grand Boulevard Initiative to redevelop large swaths on both sides of El Camino into high density offices, housing and some retail. The well-known problem for Palo Alto is that this would wipe out large amounts of our more affordable housing. However, the accounting used by the regional/state government favors developers, not residents. For example, if an apartment building that has 20 affordable units is replaced by a new development that is primarily offices but that has 10 units of market-rate housing and 5 units of "Below Market Rate" housing which were each more expensive than any of the units being replaced, the regional government credits Palo Alto with having increased affordable housing by 5 units. This has long been a well-known problem: I have notes of current-Mayor Karen Holman talking about this in 2005 (and recollections of her and others talking about it before that).(foot#20)

Warning: You are not using the term "economic diversity" correctly if you mean that you want to make it easier for you to live in an area where most of the residents are better off than you, especially when that comes at the cost of pushing out those less well off than you.

Although the Urbanistas talk a lot about supporting diversity, it is only as a concept, not in practice. They are quite open in their contempt for people who have different styles of living than theirs, for example, Planning Commissioner Downing's comment cited above included that current residents "very much want to hold onto the Silicon Valley of the past - a pretty suburb and nothing more." For example, Steve Levy (PAF Board; blogger here on PA Online): "trying to go back to an earlier era" (in "Why I Became Active in Palo Alto Forward"). For example, PAF member and unsuccessful City Council candidate A. C. Johnston campaigned on people with other perspectives being "afraid of the future". Similarly for Planning Commissioner Michael Alcheck.(foot#21) And the innumerable references to anyone other than the Urbanista perspective wanting to "return to Mayberry", "return to the 1950s", "return to a sleepy college town",... I sit in meeting where young, childless techies are dismissive of the experience of parents. I shake my head at an elite biker who presumes that because he chooses to bike from Palo Alto to work in south San Jose that everyone should be biking to work....

An emerging public policy problem is that larger and more profitable companies are offering more and more services to their employees, and thereby hollowing out the public sphere. Onsite meals and pickup services such as dry cleaning are examples where the employer wants the employers to spend more time at work. "Google buses" are a different example. Local public transportation has been widely criticized as not viable for most residents, with the typical response from transportation advocates being that people should sacrifice, either by spending inordinate time on transit or to live closer to their jobs. Yet when an employer provides provides its employees with a benefit so that they can live where they want without the sacrifice of public transit, that's an entirely different story.

But elite employers pulling inside increasing amounts of what used to be in public sphere has larger implications: For example, Mountain View merchants are complaining about substantial drops in business from the office parks. Similarly, in San Francisco, there recently was an opinion piece provoked by the disappearance of laundromats in some neighborhoods, and aggravated by a certain cluelessness about pick-up service not being for everyone.(foot#22) I am beginning to hear comments about how things are starting to feel like the former Soviet Union where Party members had access to stores with superior merchandise, and similarly for various cities in Central America (I don't have personal experience with either).

Recognize that hollowing out the public sphere not only impacts those of us living there, but it creates a substantial barrier to people leaving those elite companies for new rising companies, or it so raises the costs for those rising companies that the risk-reward calculation forces them to locate elsewhere.(foot#23)

As usual, I don't offer any suggestions for a solution, other than to start with a better understanding of what is already known. We are currently going through yet another iteration where there are people believe that this is a new problem or a problem that exists only because they haven't applied their brilliance to it (people working on it earlier were a mix of incompetent, stupid and evil).

Before commenting here, I suggest that you scan the comments on the PA Online article cited in paragraph 2 and Steve Levy's blog entry "Do we want a palo alto where only the rich can move here to live" to better inform your comment and to avoid unnecessary redundancy. Levy's blog itself is an example of why it is so hard to address these questions: He asks a very complicated question without even encouraging readers and commenters to consider costs, tradeoffs, side-effects and other considerations that are the basic currency of economic thinking.


1. At a Council hearing after the defeat of the Maybell upzoning, now-Council member Eric Filseth said:
"Vision A is we're a medium-density family town, a great place to live, with good schools to send your kids to. Vision B is more like San Francisco South -- basically the financial and professional hub of the Peninsula. The idea is that Palo Alto will accommodate regional growth through high density office and housing construction, near public transit, and with a thriving retail and entertainment sector to support it. That said, Vision B also comes inherently with unsolvable traffic and parking problems, pollution, and overstretched city infrastructure and schools. If you want Vision B, these things are the price. It is San Francisco South, for better and worse."
A full transcript of his comments available as footnote 4 of my blog entry "Listen for Yourself: An index into 'A Conversation on the Future of the City'" (2013-12-13).
I quibble with Filseth on "thriving retail": Most of the retail of Vision B other than entertainment and restaurants would be for those with high disposable income. I live in southwest Palo Alto where Vision B would make the already badly depleted retail even worse.

2. Most people remember the financial meltdown as involving sub-prime loans on housing, but it was much broader than that. For me the most egregious example was insurance giant AIG and credit-default swaps. These were sold as a form of unregulated insurance, but unlike regulated insurance, there was no requirement that AIG have reserves from which make payouts. Instead, that money went directly to extravagant bonuses for AIG executives.

3. Interesting reading: "The Great Irish Bank Heist" by Brian M. Carney in the Wall Street Journal (tiered subscription model) (2014-11-09): "Five years later, the public still has no clear idea who was paid back for their bad bets on Ireland, or why, or what the stakes were."
An oversimplified version of the Greek bailout is that the German government loaned the Greek government funds to bailout the Greek banks, but with conditions that the Greek banks pay off German banks (and others) that had made bad bets on private loans in Greece. In essence, the German government found a way to bail out its banks while sticking the Greek public with the cost of that bailout. (Note: I am not saying that the Greeks were blameless in having a role in the crisis)
I recommend articles by Joseph Stiglitz (economist, Nobel Prize 2001) such as "Joseph Stiglitz: How I would vote in the Greek referendum" in The Guardian (2015-06-29).

4. AB 744: Links and arguments against the bonuses are in an email letter by Lydia Kou that circulated on various local discussion groups. I am providing a standalone copy (PDF) because the other online copies are difficult to access. This letter appears multiple times in the Packet for the City Council meeting of 10/19/2015 (PDF, 154 pages).

5. See the section "Background: Corruption" in my early blog entry "Replacing the defunct Planning and Transportation Commission: Part 1: Cronyism and Corruption" (2015-08-18).

6. A prime example was the PC rezoning of Alma Plaza (now Alma Village) in contravention of the Comprehensive Plan. Using real estate Comps (comparable properties), it was estimated that the rezoning would alone more than triple the developer's investment, from $6M to at least $18M ("Guest Opinion: Alma Plaza is a $12 million giveaway by our City Council" by Doug Moran (me) in the Palo Alto Weekly, 2007-06-20). It turned out to be even more: The developer had made a contingent sale of roughly 80% of the property for $20.5M with the option payment almost covering the purchase price ("Greenbriar Homes wants $5.31 million back: Fremont-based homebuilder that pulled out of the Alma Plaza project sues developer to get option fees returned", Palo Alto Online, 2009-06-19).
The different aspects of the Alma Plaza fiasco has been used as an example in multiple earlier entries in this blog. The closest to an overview is in "A Self-inflicted Hardship: The City caves in yet again (Alma Village sign)" (2013-12-18).

7. "A reprehensible political ad", blog entry of 2014-11-02.

8. See the section "Workforce Housing" in my earlier blog entry "Should Palo Alto really aspire to be more like a Chinese factory city?" (2014-06-22).

9. There is a growing body of research on the effects of living in small units in various contexts. Although I am not qualified to judge this research, I am very concerned that it appears to be being ignored in Palo Alto's discussion of very small units. One entry point: "The Health Risks of Small Apartments: Living in tiny spaces can cause psychological problems" by Jacoba Urist, The Atlantic, 2013-12-19.

10. For example, in PA Forward's letter to Council opposing an annual office development cap ("Smart Solutions to Parking and Congestion: Addressing Palo Alto's problems head-on", 2015-02-16), they cite faster rates of growth as providing "more vibrancy" via restaurants,...
Palo Alto Online/Weekly news article: "Palo Alto Forward joins opposition to office-space limits: Citizens group joins Stanford, high-tech giants in taking a stand against proposal", 2015-02-26.

11. For example, in the Council meeting discussed in my blog entry "Listen for Yourself: An index into 'A Conversation on the Future of the City'" (2013-12-13), in the segment beginning at roughly 2:54 into the meeting.

12. Examples of discussions of downtowns. Summary: You want a large measure of order, but not too much. Palo Alto routinely violates this long-established, well-known principle going for "gateways" and "signature buildings" (euphemisms for buildings that are not just ugly, but stick out like a sore thumb).
• ==I "Remembering the Human Scale in Walkable City Neighborhoods"== - F. Kent Benfield, 2014-10-06. Interesting because he is an advocate for Smart Growth who contrasts what motivates the theory with what it produces.
• ==I "Why Do We Love Paris but Hate Frankfurt? A Swiss Author's Six Qualities of Beautiful Cities"== By Kristin Hohenadel - Slate, 2015-03-06. This cites a 14-minute video ==I "How to Make an Attractive City"== by The School of Life.

13. During the workshops in the 1990s on developing the current Comprehensive Plan, a number of design features that that encouraged and inhibited community were discussed. One example was the Eichler design which orients the living space toward the backyard, with its most prominent feature facing the street being the garage. Although this is commonly attributed to the "car culture" of the suburbs built in the 1950s and 1960s, there are many examples of similar developments in which houses faced the street and promoted much more interaction between neighbors. Palo Alto's building code has been changed to prohibit the "nose-out" garage, but I don't see it having been very effective--the narrowness of many lots doesn't leave enough room for the remainder of the house to have a real street-facing presence.

14. Starting points for people new to this problem:
• International interest: "Tech overkill destroyed the loveliest, liveliest city on the West Coast" by Adrian Weckler - Business News, The Independent, Ireland, 2015-09-20.
• Not just here: "'Amageddon': How Amazon's culture is taking a toll on Seattle's future" by Jeff Reifman (Guest Commentary) - GeekWire, 2014-11-19.

15. Local discussion often focuses on the startups that were huge successes, routinely ignoring that most startups are unadorned failures. The most common diagnosis I hear about the failures is "Lack of adult supervision", "key people were toxic", and management that "refused to understand how little they knew". I hear this both from those inside the startups and from those dealing with them, especially from Millennials about other Millennials. But part of this is imposed from above: One hears and reads VCs saying that they regard a successful entrepreneur as being inherently "difficult" (although usually using a less restrained euphemism).

16. The beginning of scientific research on this is credited to Roger Ulrich, and especially his research on outcomes for hospital patients (1972-1981) that found that those that had a view of greenery vs. a wall had faster recovery time and fewer complications. There had been numerous earlier studies involving animal proxies that had been highly suggestive of these results.
For more information, do web search on terms involving "human dimensions", "urban", "(green OR forest OR nature)".

17. For those who look for an economic expression of individual preferences and intuitions, a starting point for more web searches:
"New market for developers: homebuyers want view of woods, not large lawns", The University of Michigan press release, 2004-06-28. Note: Links to the research itself are broken, but it provides web search terms that produce related and subsequent work on this topic.

18. There are two basic (fallacious) arguments that single-family housing is racism:
(1) Only whites can afford single-family houses, and therefore single-family zoning is intended to exclude non-whites from those neighborhoods.
(2) The post-WW2 creation of suburbs was driven by whites seeking racially segregated neighborhoods. This ignores the reality that most of the urban areas that they were leaving were segregated by not just race, but by ethnicity, religion... and that those suburbs, while typically racially segregated, were much more diverse. For example, when I was an undergrad in the early 1970s, those of us from the suburbs and suburban-type towns were amazed that so many of the students from large cities were so insular and insulated. For example, many of the urban Jews and Italians were oblivious to northern Europeans having larger interpersonal distances. And those two groups often went to the same high school, but never mixed before college. It was students from the suburbs who were giving "diversity training" to many of those from the big cities. But never let it be said that ideologues let facts get in the way of their agendas, or of their need to feel superior (no matter how undeserved).

19. "'Get Rid of Single Family Zoning in Seattle' Housing Task Force Says in Draft Report" by Danny Westneat in Seattle Times, 2015-07-07.

20. A recent example of this perverse accounting is part of the email letter on AB 744 by Lydia Kou cited in an earlier footnote.

21. For example, "...I don't think that individuals that are over 55, and over 65, and over 75 always necessarily vote for what they really want. I think that they vote against change a lot because it's scary,..." from the Council meeting discussed in my blog entry "Listen for Yourself: An index into 'A Conversation on the Future of the City'" (2013-12-13), in the segment beginning at roughly 2:01 into the meeting.

22. "One Tweet Shows What Silicon Valley Really Thinks of the People It's Crushing", by Jack Smith IV, Tech.Mic, 2015-08-03.

23. For more discussion, see the section "Perks, Golden Handcuffs and plain Handcuffs" in my earlier blog entry "Should Palo Alto really aspire to be more like a Chinese factory city?" (2014-06-22).

An abbreviated index by topic and chronologically is available.

The Guidelines for comments on this blog are different from those on Town Square Forums. I am attempting to foster more civility and substantive comments by deleting violations of the guidelines.

I am particular strict about misrepresenting what others have said (me or other commenters). If I judge your comment as likely to provoke a response of "That is not what was said", don't be surprised to have it deleted. My primary goal is to avoid unnecessary and undesirable back-and-forth, but such misrepresentations also indicate that the author is unwilling/unable to participate in a meaningful, respectful conversation on the topic.

If you behave like a Troll, don't waste your time protesting when you get treated like one.
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Posted by Prudence...., a resident of Palo Verde School,
on Oct 20, 2015 at 10:04 pm

This is one of the more balanced pieces on this issue.... unfortunately as we all know, no easy answers exist.... until there is an enabling, unifying regional strategy on housing and transportation I believe the only prudent path forward for Palo Alto is to maintain the current policies on zoning business and housing densities.... actively force the issues to be solved regionally, don't break what is left of this great place to live.

Posted by "sacrificies", a resident of Crescent Park,
on Oct 21, 2015 at 1:01 am

[[Blogger: I am leaving the first two of this commenters postings because they are excellent examples of why it is so difficult to have an honest discussion]]

You talk about existing residents "sacrificing" for new residents but you can't "sacrifice" something you never had a right to in the first place

1. You buy land and put a house on it. Other people have a right to build on their own land, too.
[[Blogger: Strawman fallacy: No one is arguing against the second sentence. Rather the argument is that that building should be within the current zoning.]]

2. The law across the entire country is that cities have a right to upzone and downzone at will without compensation. Cities do this regularly. There is no right or expectation that cities will not change their zoning ordinances.
[[Blogger: This is highly disingenuous: Zoning is very stable over decades. And when a property is down-zoned, there is typically a multi-year (typically 30) amortization period where the owner is allowed to operate within the previous zoning to have proper return on investment.]]

3. It is known to all that successful cities grow and that failing cities die. It's just the way the world works. Change is a part of life. Every major city in the world started as a small town. You always face the "risk" that your city might be successful.
[[Blogger: If you look at "successful cities", what you find are large districts that have maintained their basic character since the late 1800s or early 1900s. For example, see the article in the footnote comparing Paris to Frankfurt.]]

So if you really want to talk about entitlement, let's talk about the people who ignore points 1-3 and believe that cities should remain exactly as they were at whatever date they personally moved in, without regard for what anyone else in the community needs or changing economies, industries, cultures, etc.
[[Blogger: Strawman fallacy, repeating one that was called out in the blog post. Yet another demonstration of the misconduct of the advocates such as this commenter.]]

Posted by Jane, a resident of Barron Park,
on Oct 21, 2015 at 1:51 am

@ "sacrifice"

Your points are very micro. Cities succeed for many reasons and depends on its visions and origins. For example, schools are important to the success of a city. City provided community services and its facilities are important to the success of a city. Functional infrastructure are important to the success of a city. Circulation and community mobility are important to the success of a city.

Cities can change their zoning ordinances but they also have to take into consideration the ramification of their actions. Also, you state the cities have the right to up- and down-zone at will without compensation. So, let me ask you, who are the ones who end up with the bill- taxpayers/homeowners/property owners.

Demanding entitlement when one is not entitled is laziness and shifting ownership onto others.

So hey, look macro.

Posted by sacrifices, a resident of Crescent Park,
on Oct 21, 2015 at 10:42 am

Pretending like you have rights that you don't is actually the definition of entitlement. Please show me where you have the enshrined right to move into a city and then tell everyone else that they can't do the same?
[[Blogger: Another strawman fallacy.]]
Where is this right you speak of? You can advocate for that because it's your personal opinion and that's what you personally want but don't try to claim it as a right and go around crying about how you're "sacrificing" rights you don't even have.
[[Blogger: When people buy a property in a community, they are also investing in the public facilities -- the communal property. They do have rights not to have that investment arbitrarily taken away. People such as the commenter reject "The tragedy of the commons".]]

People asking for more housing aren't saying they have a right to it and never have. They're saying it's the right thing to do to actually build out enough housing so that we have room for the people who work here, who perform services for us, and keep our city safe. They're saying it's good for a city to have a socioeconomic diversity and they're saying it's good for the environment if people stop driving an average of 50+ miles to get to work in PA.
[[Blogger: Blatantly false. 50+ mile commutes are the outliers and exceptions. For details, see section "Exceptional cases proffered as typical" in my blog entry "Shills and Charlatans of 'Smart Growth'"(Web Link See also the followup "Public Transit Follies" (Web Link
No one has EVER claimed a RIGHT to live here. We're arguing that it's a good thing to do for our community and the world.
[[Blogger: Claims to good intentions ring hollow when one uses false arguments to advocate for policies that more than two decades of experience has shown to make the situation worse.

You on the other hand ARE making up a non-existent right to control the direction of the city by virtue of getting here before other people. You invoke that every time you claim that you're making "sacrifices" because you can't make a sacrifice of something you never had a right to in the first place. THAT's entitlement.
[[Blogger: Again, Strawman fallacy and misrepresentation of what has been said.]]

Posted by sacrifices, a resident of Crescent Park,
on Oct 21, 2015 at 10:54 am

[[Deleted by blogger: This comment when *way* over the line for misrepresenting what others had said (multiple instances) and also into casting aspersions.

I allow some misrepresentation as inadvertent and also informative of how comments think about issues, but this was much to much. It was on this basis that I decided against editing out his earlier misrepresentations.

Posted by Todd, a resident of Another Palo Alto neighborhood,
on Oct 21, 2015 at 12:32 pm

[[Blogger: Deleted: Incoherent. Despite multiple attempts, I could not figure out what he was trying to say.]]

Posted by Thanks, a resident of Adobe-Meadow,
on Oct 21, 2015 at 1:19 pm

Thanks Douglas, for a very balanced piece on this topic. Would you consider running for City Council? I would vote for you! You show the ability to filter out the noise and represent the facets analytically. I would vote for you!

Posted by I work in Palo Alto but do not live here, a resident of Menlo Park,
on Oct 21, 2015 at 1:47 pm

Thank you for the informative and well-thought-out article.

Just to comment on references to folks using the term "exclusionary zoning" with undertones of racism. In this area you can still see the exclusionary language in subdivision CC&Rs attached to some property deeds (of course these restrictions now are illegal). I think perhaps the point others may be trying to make is that in fact at one time only whites were allowed to own single family homes in certain areas, and regulations that tend to preserve the status quo also tend to preserve existing inequalities.

Posted by Noel81, a resident of Barron Park,
on Oct 21, 2015 at 2:02 pm

Re. Comment from Menlo Park;
Very good example of the views of others when truly "understanding" the many variables (meaning and intent) of a writer's view, and by an impressive reader. As long as you exist (along with Mr Moran), hope exists for our country.

Posted by Douglas Moran, a Palo Alto Online blogger,
on Oct 21, 2015 at 7:33 pm

Douglas Moran is a registered user.

Expanding on comment by "I work in Palo Alto but do not live here", a resident of Menlo Park:

Those CC&Rs became illegal almost 50 years ago in the Fair Housing Act section of the Civil Rights Act of 1968.
As to "regulations that tend to preserve the status quo also tend to preserve existing inequalities", no one is making a fact-based argument on this.

The average turnover for residential properties is 5-7 years (nationally), although this average is misleading because the lower end properties tend to turn over faster in this, and most, markets and higher-end slower. So not only does this average, but the faster turnover of entry-level homes, argue for access based on income, not race.

Furthermore, simple sampling Palo Alto neighbhorhoods shows that "whites-only exclusivity" has not persisted. I can simply walk down my street to see homeowners of all races. Similarly for going to my neighborhood parks.

However, the primary takeaway is what it says about advocates who choose to use false accusations of racism as one of their primary arguments.

Challenge: If you (a potential commenter) believe "exclusionary zoning" to be true of RM-1 (single-familY) zoned areas in the immediate region:
1. name the Palo Alto neighborhoods where non-whites are being excluded,
2. explain how this is being accomplished, and
3. why non-discrimination laws are failing to prevent it.

Posted by Robert, a resident of another community,
on Oct 21, 2015 at 8:26 pm

I think people make the cc&r and rm-1 comparison simply because they used nearly the same arguments in favor of both and have nearly the same effect on existing neighborhoods.

[[Blogger: Readers, please try to be clearer in your comments.
Since CC&Rs have zero impact (illegal), Robert seems to be arguing that RM-1 has zero impact.

But another reading of Robert's comments are that he believes that RM-1 is equivalent to the pre-1968 CC&Rs that could be used to exclude non-whites from certain neighborhoods.

Additional note: The vast majority of suburban neighborhoods never had CC&Rs.

Posted by Robert, a resident of another community,
on Oct 21, 2015 at 9:00 pm

[[Deleted: Commenter is a "Social Justice Warrior" (deservedly derogatory term) -- a form of Troll that specializes in false allegations of racism,...]]

Posted by MG, a resident of Downtown North,
on Oct 21, 2015 at 9:46 pm

"Housing affordability was a problem when I moved to this area over 30 years ago."

Surely this is true, but there's a big difference between the numbers today and the numbers in 1980, even though Palo Alto's housing stock is virtually identical to what existed in 1980. Here are some stats:

Palo Alto median home price in 1980: $148,000
US median home price in 1980: $59,500
1980 Ratio of PA median price to US median price: 2.5:1

PA median home price in 2015: $2.46M
US median home price in 2015: $230K
2015 Ratio of PA median price to US median price: 10.7:1

The "typical" (median) Palo Altan was paying 2.5x as much for their home in 1980 as the typical American. Today, they're paying 10x as much. That's a very big difference, and it changes the complexion of the city toward being older and wealthier.

Sources (unfortunately I was blocked from adding all of the urls):
Web Link
Web Link

Posted by Douglas Moran, a Palo Alto Online blogger,
on Oct 21, 2015 at 10:27 pm

Douglas Moran is a registered user.


First, recognize that 1980 was a year of deep recession (from the OPEC oil shock). I remember because I was job-hunting that year and had multiple job offers rescinded as companies and universities instituted hiring freezes. Mortgage interest rates were 13-16.5% which also depressed prices. So those stats should be treated with caution. My recollection is that by 1985 typical Eichler prices were closer to $280-300K.

Current national averages should also be treated with caution: There are areas in the country where people cannot sell houses at any price -- some cities have actually staged house giveaways to get enough residents to be able to keep their schools open. There are many more areas where houses are cheaper now than in the 1980s (in real terms).

While dollars are an easy measure, they not a good one. Instead look at the affordability in terms of education level and field. As I stated, individuals and couples with PhDs in hot tech fields had problems affording housing here. Salaries in high tech are much higher now relative to even the height of the DotCom Bubble -- for a Stanford Computer Science B.S., it is now at least double, before stock options. And there was probably a doubling in the 15 years before that. Good economic comparisons are very difficult and tricky.

But the bigger argument by MG is that Palo Alto was a built-out city in the 1980s and didn't radically restructure itself to accommodate industrial growth, much of it in nearby cities -- while people talk about the expansion of Stanford Industrial Park, the Bayshore areas of Mountain View and Menlo Park expanded massively. This is another iteration of the argument that Palo Alto residents should sacrifice to support the profits of commercial interests.

Posted by Just work here, a resident of Menlo Park,
on Oct 21, 2015 at 11:03 pm

Mr. Moran,

What I'm suggesting is that in addition to considering various philosophies, potential impacts of change, etc as noted in your article, that it is useful to have an understanding of how we came to be where we are. I quite agree with the comments you made on the TechCruch site in response to the "Facebook Effect" piece. That same author wrote another piece called "East of Palo Alto's Eden" which I found to provide a more measured view than her other articles, you might take a look if you had not seen it. Perhaps the author might be persuaded to weigh in on your question regarding use of the term "exclusionary zoning"?

I would be curious to know the rate of turnover of single-family house properties in Palo Alto over the years (e.g. pre- and post-Prop 13 and again post-2011).

Mr. Levy's blog piece, while provocatively titled, did present the question of what kind of community would we like to have? I appreciate that your article touches upon much more. But Mr. Levy's question is a fine place to start. Are people happy with the status quo? If people aren't happy with the status quo, what can or should be done to change things? What would be the other consequences of such changes? Whose voices count?

I first came to Palo Alto from the east coast as a student around 1990 and was quite surprised by what I perceived at the time as a comparative lack of diversity. When we bought our house in Menlo Park my spouse and I remarked that under the (illegal) covenants included with the title documents, neither of us would have been allowed to live in our house except as the "help." There have been lots of changes in the past decades. I personally think there is danger in complacency, in thinking that everything's fine now, no need for further changes -- because things often can get better (and many times it is the younger folks pushing for these changes). So I favor continuing re-evaluation with contributors from many viewpoints. But as you point out so well, we have to be careful to understand what we are doing so that we do not make things worse!

Thanks for the discussion.

Posted by Douglas Moran, a Palo Alto Online blogger,
on Oct 21, 2015 at 11:19 pm

Douglas Moran is a registered user.

> "I would be curious to know the rate of turnover of single-family house properties in Palo Alto over the years (e.g. pre- and post-Prop 13 and again post-2011)."

I don't have that information. However, during presentations of City finances by the City Manager (or proxy) during the late 1990s and 2000s, the comment was made that although Palo Alto housing valuations were going up, property tax revenues were far less because although there was a high turnover of housing, "it was the same houses over and over again" -- predominantly the entry-level houses and that the high-end houses turned over very infrequently.

Aside: During a City Council candidate forum in 2012, Liz Kniss commented to the audience that they were under-taxed because she expected that almost of all them had lived in their houses from pre-Prop13 days. The Prop 13 effects further exacerbate inequities, but remember that commercial interest benefit disproportionately from this and thus it is unlikely to change (Before Prop 13, about 1/3 of property tax was paid by residential properties; now it is roughly 2/3).

Posted by Douglas Moran, a Palo Alto Online blogger,
on Oct 21, 2015 at 11:36 pm

Douglas Moran is a registered user.

> "Mr. Levy's blog piece, while provocatively titled, did present the question of what kind of community would we like to have? I appreciate that your article touches upon much more. But Mr. Levy's question is a fine place to start."

Context: Steve Levy has long been an advocate of rapid population growth. He reported played a significant roll in ABAG (regional government) setting higher projections for population growth than the State agencies. This in turn encourages cities to facilitate more job growth (as recently happened in Mt View). Vice Mayor Schmid, himself an economist, strongly criticized ABAG's numbers and their basis (ignoring history).

While Mr Levy may ask about Palo Alto being only for the rich, he has been, and continues to be, a very vocal advocate for the policies that have exacerbated the jobs-housing imbalance.

Posted by Just work here, a resident of Menlo Park,
on Oct 22, 2015 at 12:03 pm

Thanks, I will take a look at ABAG. On the surface, regional coordination seems like a good idea.

It is taking a while to work through the various sources you linked. Hope you can keep the conversation going.

Posted by Curmudgeon, a resident of Downtown North,
on Oct 22, 2015 at 4:35 pm

"While Mr Levy may ask about Palo Alto being only for the rich, he has been, and continues to be, a very vocal advocate for the policies that have exacerbated the jobs-housing imbalance."

As with Palo Alto Forward as a whole, Mr Levy presses for more jobs and more housing simultaneously. Building either creates substantial income for their investors, many of whom have no regard for Palo Alto as a liveable community. Always follow the money trail.

Posted by Guy_Fawkes, a resident of Old Palo Alto,
on Oct 22, 2015 at 5:48 pm

Guy_Fawkes is a registered user.

Wow - this is a truly impressive bit of writing and I think it really hits the nail on the head. For me, what has separated Palo Alto from its neighbors is a real focus on community. Rather than "Residentialists" maybe we need to start having a discussion about "Community Builders" and "Community Destroyers". THere's this myth that nothing happens in the suburbs. We need to build Urban Town squares and official places where "things happen". These artificial places become sterile and the same across the US of A.

Plenty of things happen in the suburbs, it just isn't centralized. Schools, Churches, community centers, clubs, YMCA, etc - all are community building organizations. Once you're really living in a community you look for and use the unique store and services. When you're commuting, it's about where to go for lunch then getting out of Palo Alto to get back home.

We need to become much more clear about what we're doing to support commuters and what we're doing to support the community that lives here. Attacks on R1 zoning and other proposed forms of mass urbanization don't make sense through a community building lens.

We really need to get back to basic city planning - what do we want in each part of our city. For example, why are there large companies downtown? I've been looking through our comprehensive plan and our city ordinances and I don't think it was ever planned and I don't think large scale software development or technology services are even permitted. So how did this happen?

Posted by Abitarian, a resident of Downtown North,
on Oct 22, 2015 at 6:25 pm

Guy_Fawkes raises an interesting point about the growing size of companies located downtown. In my opinion, it would be far more beneficial to have a larger number of smaller companies rather than a smaller number of larger companies.

Let's take Palantir as an example. And I do mean example; these points would likely be applicable other successful software development firms of a similar size.

From an economic perspective:

- Palantir provides employees, family, and guests with a private cafeteria serving breakfast, lunch, and dinner. This means Palantir employees spend far fewer dollars at our local eateries than would employees without this perk.

- Palantir provides employees with a veritable rainbow of company T-shirts and jackets. This means employees spend far few dollars at our local clothing shops than would employees without such freebies.

Smaller companies are much less likely to provide such generous amenities. They might provide lunch, for example, but they would be more likely to bring in take-out from a rotating list of nearby establishments.

From a political perspective:

- Palantir employees often come as a group to speak at City Council meetings, frequently advocating for more downtown housing. They may give the impression that they represent a wide variety of businesses when their interest might be specific to the Palantir policy of providing a housing stipend to employees who live close to the office.

Posted by Curmudgeon, a resident of Downtown North,
on Oct 24, 2015 at 1:56 pm

Curmudgeon is a registered user.

[[Blogger: Please don't followup on this comment -- it is off-topic. This body entry is a discussion of *policy*, not the policy *document* and the process surrounding it.]]

This debate reminds me of the old chestnut about why disputes in academia tend to be so fierce: There is nothing at stake.

The Comp Plan is a Potemkin document. It exists because we're supposed to have it and for the joy of the process, to be cherry picked as it favors what city hall wants to do at a given moment, and ignored or spot-amended otherwise.

So dial down the heat, everybody.

Posted by Curmudgeon, a resident of Downtown North,
on Oct 26, 2015 at 2:27 pm

"Blogger: Please don't followup on this comment -- it is off-topic."

Your blog, your rules of course. But my intent was to build upon your cataloging of the subtle chicanery employed to advance oversized development projects in this town. The comp plan that you referred to at the opening amounts to just another tool in this scripted razzle dazzle.

"...the [returning] techies comment on how much the vibe has changed: They encountered far fewer discussions of science and technology, and too many of those tended to be shallow and poorly informed. They complained about encountering unrelenting hype, PR and other forms of marketing, and about the quality of a product being measured in terms of market share and company valuation."

I interpret this as an index of how shallow this current boom is, and hence of its ephemerality.

FOMO rules in the Establishment. Build it now, baby, for it will soon be too late.

Do run for CC.

Posted by Just Work Here, a resident of Menlo Park,
on Jan 3, 2016 at 5:51 pm

Mr. Moran,

You might find it interesting to peruse a couple of other blog pieces:

Web Link

Web Link

Excerpt --

"The American achievement appears to be the high proportion of detached single-family homes, which on this chart is behind only Australia, Croatia and Hungary, as well as the size of those homes. Hirt cites evidence from Fischel's work that, to me, shows that American focus on legal protections for the detached home form may have actually impeded growth in the homeownership rate by establishing excessively large minimum lot sizes. In Japan, by contrast, families are able to purchase slivers of urban land, which enables robust single-family homeownership levels in an intensely urbanized country. The same is true in Mexico, where homeownership, overwhelmingly of attached homes, is around 80%.

It appears that, in the United States, despite rhetoric to the contrary, the exclusionary principle and the notion of ownership as investment are (or have become) the primary concerns of local planning and of national housing policy and finance rather than promoting homeownership. Those policies, though, are beyond the scope of Hirt's book and this post as well."

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