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Palo Alto is taking a defiant stance toward a recommendation from the Santa Clara County Civil Grand Jury that it pursue more area plans and mixed-use projects as part of an effort to create affordable housing.
Instead, the city is arguing in its formal response letter that the commercial components of these projects would add to the demand for affordable housing and, as such, only exacerbate the problem.
The City Council voted 5-2 on Monday night, with council members Alison Cormack and Greg Tanaka dissenting, to approve its response letter to the December report, which compared Palo Alto’s policies on affordable housing with those of Mountain View and issued recommendations for both cities to boost their supplies of below-market-rate apartments. Palo Alto bore the brunt of the criticism from the grand jury, which noted that the city was on pace as of 2019 to meet just 10% of its targets for low-income housing in the 2015-2023 cycle of the Regional Housing Needs Allocation process. Mountain View, meanwhile, was on pace to meet 56% of its housing targets for this period.
The city’s response agreed with several of the grand jury’s recommendations, including its calls for Palo Alto to identify ways to raise money to subsidize affordable housing projects (Palo Alto recently raised its housing impact fees to further this goal and it is preparing to place a business tax on the 2022 ballot, with the intention of dedicating some portion of the receipts toward affordable housing) and to consider both mixed-use projects and 100% affordable housing developments in its housing plans.
The city pointedly rejected, however, the suggestion from the grand jury that it depend more on “area plans” — a tool that Mountain View and Redwood City have relied on extensively to boost their housing stock.
“The City is not persuaded that area plans are inherently a solution to providing more affordable housing,” the city’s response states. “Rather, the City believes the primary challenges to affordable housing are economic, and the same economics apply equally in both the presence and absence of specific plans.”
Council members Eric Filseth and Tom DuBois, who helped craft the letter, both took issue with the grand jury’s analysis, which DuBois argued unfairly pitted Palo Alto against Mountain View. Even though Mountain View approved more affordable housing between 2015 and 2019, the period that the grand jury evaluated, Palo Alto has about 2,300 such units overall compared to 1,420 in Mountain View, he said. And in terms of affordable housing per capita, Palo Alto is second only to Gilroy among all Santa Clara County cities.
“It’s unfortunate that the report compared two cities, us and Mountain View, which had the effect of making it competitive,” DuBois said. “We didn’t buy into that narrative.”
Filseth argued that unlike the grand jury, which focused strictly on housing supply, Palo Alto’s policies have looked at both supply and demand. To that end, the city over the past decade implemented an annual cap on office space and modified its Comprehensive Plan to reduce the amount of nonresidential development that could be added citywide — actions intended to reduce jobs growth and, by extension, housing demand.
While Mountain View added more housing than Palo Alto in recent years, it has also added many thousands more jobs during that time and constructed far more commercial space, Filseth said.
“The basic idea is that when you have commercial space, it creates — assuming people come and work here — a need for housing, because you have jobs,” Filseth said Monday in explaining the city’s response.
The response later states that jurisdictions throughout the county are struggling with the fact that “a given land-use policy or project can simultaneously influence both the supply and demand for affordable housing.”
“Whether cities consider both the demand and supply impacts, or just the supply in isolation, makes an enormous difference in how to evaluate a project’s housing availability and affordability impacts,” the letter states.
The grand jury acknowledged in its report that building affordable housing is “neither simple nor inexpensive” and suggested that the council appoint a planner specifically dedicated to the task. The grand jury also encouraged council members to increase communication with city residents on the importance of boosting housing supply. It cites the 2013 citizen referendum over a proposed housing development on Maybell Avenue — which included 60 apartments for low-income seniors and 12 single-family homes — and the city’s recent struggle to reach a consensus over a new vision for a portion of the Ventura neighborhood as examples of the city’s failures in this area.
“Palo Altans need to understand the possible locations, design requirements, and financing required for AH (affordable housing),” the grand jury report states. “Responding to residential apprehensiveness that an AH project will lead to crime and increased traffic, the City can lead discussions that explain to residents how an affordable-housing project will allow teachers, city workers, and service employees to live in the city where they work.
“City leaders can also lead discussions to combat the idea that AH developers are motivated by profit when, in fact, they are often non-profit organizations.”
Mayor Pat Burt argued that the council has in fact taken a “strong approach” on communicating the need for affordable housing.
“We hadn’t relied on rhetoric primarily, but we’ve been focusing on action,” Burt said. “In the last City Council campaign, we had strong consensus among candidates for identifying public land sites (for affordable housing).”
He pointed to the council’s recent moves to create transitional housing on San Antonio Road in partnership with the nonprofit LifeMoves and its decision to explore use of downtown parking lots for affordable housing developments.
The city’s response letter states that the city disagrees with the grand jury finding that the council does not play a strong enough role in educating the public about the importance of affordable housing. Cormack was the only council member who backed that finding and urged her colleagues to amend their response.
“Regardless of what the council has voted on, I think there is an opportunity to aid in resident acceptance of affordable housing,” Cormack said.
While I agree that there should be no false comparisons between Palo Alto and Mountain View, the idea that “mixed used” simply must mean housing and office space seems short-sighted to me. If we have apartments above retail spaces that provide services like dry cleaning, pharmacies, cafes, or small grocery stores, the change in zoning can make housing more attractive and reduce traffic by allowing residents to do their shopping near their homes. In Europe, it’s commonplace to have housing above retail shops, and if we are ever to reduce our dependency on automobiles, it makes sense to combine services and housing. There is no reason why housing need only be built above offices that invite further commuting. I’d like to see Palo Alto explore mixed use, and while we’re at it, perhaps Mountain View could consider mixed use for the shopping center that used to house Bed Bath & Beyond, Best Buy, and REI. With its quick access to 101 and parking, that site looks idea for such a zoning change. All Peninsula cities need to think creatively about how to provide housing while not contributing unduly to traffic and turn NIMBYism into YIMBYism as much as possible.
The take away message from the response letter from the City of Palo Alto is that it is ridiculous to try to meet housing demand if you are building and filling more and more jobs. Palo Alto is the only city in this are that has virtually stopped allowing large development with the tens of thousands of jobs they are creating. (Menlo Park and Facebook, Mtn. View and Google are making the housing problem worse). Each job means another person who will want to be housed. Getting a few low income or even market rate houses from a development while adding thousands of new jobs in these developments is the height of lunacy. This is obvious if you pay any attention to the way the Facebook expansion has driven up the cost of housing and displaced people from Belle Haven and East Palo Alto areas.
Cities need to stop allowing the massive build up in this area that is the underlying cause of a lack of housing. Plus it makes no sense to keep adding more people to the state when we are facing massive water shortages and pollution challenges that are not being addressed.
“Even though Mountain View approved more affordable housing between 2015 and 2019, the period that the grand jury evaluated, Palo Alto has about 2,300 such units overall compared to 1,420 in Mountain View, he said. And in terms of affordable housing per capita, Palo Alto is second only to Gilroy among all Santa Clara County cities.”
Those 2,300 units were a legacy of an earlier Palo Alto that creatively pioneered measures that made it possible to construct affordable housing. Before 2013, few would have thought that such a project would be defeated in a city so supportive of diverse housing. It feels discordant to have politicians who gained office through opposition to the Maybell project highlight Palo Alto’s remarkable record on affordable housing prior to the Measure D referendum in defense of the city’s poor performance in recent years.
I’m encouraged by the “strong approach” on the council to communicating the need for affordable housing mentioned by Mayor Burt. I hope results will show that Palo Alto can be a leader again in providing it.
The article should include how each council member voted and what arguments if any those who voted No offered.
I learned at a workshop that Alta Housing (then Housing Corp), the Palo Alto based non-profit affordable housing developer and manager, that every new tech job creates the need for 5 support jobs. This workshop was sponsored by Palo Alto Forward.
It’s not about “defying” which sounds immature and trivializes the detailed, respectful and thoughtful response to the grand jury.
Demand is critical to address housing need and prevent displacement. Often MV ignores this and RWC seems to not care at all, making the affordable housing situation even worse. So glad to live here not there.
The deficit in affordable housing choice for normal (essential) wage earners , service, health care, educators is grossly neglected in Palo Alto. The sheer fact that the City uses Alto Housing properties as its drop down menu partner without any ANY city staff assisting in facilitating or managing the wait list or no list dwellings is beyond pale. The city turn coated on Alta when it supported the Measure D referredum. Now they hold AH up as the Gold Standard. Most of Alta multi family homes are outdated, have outlived their useful life (although HUD refreshes have help update the properties). The city works against the rising tide of its civil and social responsibility to ensure everyone gets a choice or a chance to live where they work. Giving essential workers a fair shake at the game supports the multi millionaires and billionaires work in in front of computer screens orchestrating (designing) the world as we now know it, Internet program and watch their wall street stock. It “appears” the city does not “have an apatite” for poor people. It’s like PA wants all the credit for doing nothing in the fight for fair, equitable choice housing for — Yet wants all the credit for the little it has provided. Sort of a Rip Van Winkle scene outside the pub. Better. PA’s lack of housing action is more like Jonathan Swifts, “Modest Proposal”, the poor are left stranded to elements of dramatic climate change and so very vulnerable to be eaten by the very, very rich. Oh well. Don’t look down . It’s a design obsolete situation for local humans. Cooperations treated as people and people treated as “things”. The very day the county did their homeless count, Palo Alto looses a long time resident to the outside elements to freezing temps. He was treated less than human because he did not have a safe roof in which to self identify and grandurllize . He. A rolling cart with his life’s possessions. He was a son of Palo Alto and not a mention in the paper of this sad loss.
The Grand Jury’s main actual finding was that from 2015 to 2019, Mt View added 260 more new AH units (VLI/LI) than Palo Alto did (Table 4).
The Report’s recommendations tie back to this, and fall into two main categories: “Process” issues, such as approval cycle and community engagement; and “Economic” issues (a very strong analysis). The Grand Jury states “cities by themselves rarely have the resources needed to build AH” and identifies two funding approaches: (1) publicly-funded 100% AH projects; and (2) privately-funded Mixed-Use projects, with the AH paid for by commercial development, which it also recommends for area-specific plans.
The City Response (https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/city-council-agendas-minutes/2022/20220228/20220228pccsm-amended.pdf , packet p240) mostly agreed with the “Process” ideas, and with funding Approach (1); but did not favor Approach (2). This was really the major gap.
Using only one of the two funding approaches lowers our production vs cities that use both. But to produce a feasible ROI for private developers, using commercial expansion to fund AH in the mid-peninsula normally creates roughly 3X more AH demand than it supplies (Appendices 1, 2). For each low-income person housed this way, two others get displaced. Arguably, you’re actually using low-income displacement to fund commercial.
All this boosts RHNA numbers, which ignore demand; but once you consider both supply and demand, most of these projects lose ground. Hence City reluctance on Approach (2), even though the Grand Jury recommends it.
To its credit, the Grand Jury actually asks the question: if a project produces more AH demand than supply, should it be approved? But it leaves it unanswered; it recommends a study.
The concrete version of this is the 395 Page Mill proposal in Appendix 2: 76 AH units, in exchange for 200,000 sf of new office space = Demand for 232 AH units. Should we approve it?
I should be very clear that whether accepted or not, the 395 Page Mill proposal referenced above is helpful, and much appreciated. Private developers are not charities. They are accountable to their investors, and have real economic constraints that matter; yet they continue to invest their time and effort on this very hard problem. Thank you!
Comparing MV apples to PA oranges is not very useful. Doing an area plan for MV made sense. MV had multiple enormous, contiguous, underused parcels in and around San Antonio Center. The opportunity for large scale development was there, but an area plan was needed with zoning to enable high density housing, offices, hotel, movie theatre, school construction. Note that the planned development is not yet complete.
This area is well-supported by a major arterial, state highway, multi-lane collector streets, a train station and multiple high frequency VTA bus routes.
Even with those resources, anyone will tell you traffic impacts have been significant.
MV also had a gigantic revenue windfall from Google development impact fees to resource development planning while Palo Alto, by comparison, was slammed by $40mill revenue reductions through Covid. PA is starting to rebound.
Palo Alto is more built out with lots of smaller parcels that are more separated and, therefore, more challenging to develop. We have fewer big blocks of parcels supported by existing transportation facilities adequate to support high density.
I am following an AH proposal that is being fast-tracked in Palo Alto that amounts to 64-units/acre but is only 50 units because the parcel is less than an acre. The project has real transportation challenges which will become more evident once it is built. It will be built, and I support it. But I raise this to illustrate the different challenges of developing AH in today’s Palo Alto. It is much harder than it used to be. Cost psf of land is only the first significant hurdle. I can’t think of any large-scale opportunities comparable to San Antonio Center in PA.
Thank you, Eric. Your presentation at Monday’s city council meeting was excellent and substantive.
I don’t like the term “affordable housing” because it is NOT affordable. But that deceptive name is a clever catchy deception that hides this truth. Housing these days is so expensive that it has become unaffordable in most cases without government intervention. A utility apartment in a multi-story development can cost on the order of $400,000. The only issue is who pays that $400,000, or who subsidizes the rent on that tiny $400K unit? In this case, it’s either other people who buy units at a premium, or the government heavily subsidizing the rent.
But if Palo Alto were to consider such multi-story units, there are a lot of small, marginal businesses along El Camino Real between Charleston and Page Mill Road for which the land can be “more efficiently” used. And sadly most of those businesses probably couldn’t afford the rent for a first story retail unit in one of those new buildings.
Filseth’s “analysis” assumes that economic growth will grow infinitely if we build the housing for it. If Palo Alto has the secret for that, they should send it to Detroit.
Just legalize sufficient housing to meet demand. Job growth is not a bottomless well. Once we have abundant housing, prices will fall and affordability will rise. Children will be able to live where they grew up, and Palo Altans will be able to see their grandchildren without buying plane tickets.
This is not a difficult problem. During World War 2, Berkeley suspended zoning to accommodate war workers. It was not the case that this induced infinite jobs to appear in Berkeley. What actually happened is their housing crisis was rapidly addressed. The greatest failure of the greatest generation of policymakers was utterly failing to pass their bravery and wisdom on to their children.
Whether you agree with the letter or not, Palo Alto needs to find a way to add truly affordable housing or we will be sitting in an island of un-affordability with no place for teachers, police, firefighters, childcare, senior care, gardening, cleaning, etc.
Scott repeats this refrain:
> Once we have abundant housing, prices will fall and affordability will rise.>
He doesn’t notice that almost all real estate sales listed in the newspapers is sold to Asian investors. This is an UNENDING demand. No amount of new construction will stop it.
Interesting that no one seems to take this demand into account, just quoting simplistic economic platitudes. Fear of seeming biased? So the truth is lost.
Unfortunately, you can’t build your way out of a shortage of affordable housing. Patrick Condon gives a very accessible explanation in his book “Sick City”. (As he notes, they relaxed zoning to quadruple density in Vancouver but still weren’t able to reduce the per-square-foot cost of housing, and he works through examples to help the reader understand why.) Richard Walker gives a much more detailed analysis in chapter 6 of his book “Pictures of a Gone City”, which I recommend, but won’t attempt to summarize here.
Investors fund, and developers build, the projects that yield the most profit. So long as there’s a stream of highly-paid residents moving in, investors and developers will build modest amounts of expensive housing for them. If there are enough new residents, they displace existing residents. If the in-migration stops, investors and developers don’t continue to build housing until it gets affordable for the population at large; they build until they no longer meet their minimum profit targets, and then stop. Particularly, since housing became a global financial instrument, investors move on to greener pastures. All this happens well before the market price of housing drops any significant amount.
I think a good answer is to make hiring in the Bay Area more expensive and leverage that to make housing less expensive. There are several ways to do so. Condon’s book discusses approaches that are being tried elsewhere. Check it out.
How about developing an excellent transportation (trains and busses) system that can get workers from more remote locations, where housing prices would be affordable, to their work in Palo Alto and other cities in the Bay area.
Why do we always talk about affordable housing in Palo Alto, and why do people feel entitled to it when they work in Palo Alto? When I lived in The Netherlands in my early twenties I worked for Philips in Eindhoven. I still lived with my parents, an hour train ride away, and Philips gave me a free monthly travel passport, which I could use for trains and busses. I remember it as a very positive time in my life. I liked the train ride and made a number of friends with other passengers.
An effective transportation system would automatically take care of more “reasonable” housing, as there would be less demand for housing in Palo Alto, thereby lowering the asking prices. Law of economics.
To Anneke, While I completely agree that we need effective transit, that would require one functional transit agency. Sadly, we have multiple dysfunctional transit agencies who are more interested in politics, turf wars, and protecting their jobs than they are in serving the public. Caltrans, Caltrain, VTA, MTC, HSRA do not cooperate with each other, and they cooperate even less with local city governments (excepting, of course, San Jose, in the case of VTA).
I haven’t read the Condon book but I’ll look for it. The Walker book has the best analysis of Bay Area housing and transportation dynamics I’ve ever seen; and very highly recommended to anybody who wants to really understand this issue and not just blow off steam over it.
The really short answer on affordable housing is Money, which the Grand Jury acknowledges; everything else is just nibbling around the edges of the problem. Sorry — it is what it is. But of course, nobody wants to spend money, so we get an ocean of rhetoric about pretty much everything else imaginable. A cynical person might well look at any proposal on this topic that isn’t Money, and say, “that’s code for ‘because it doesn’t cost Money.’ ” Why recommend commercial development to fund AH? “Because it doesn’t cost Money.” Why SB xxx … ?
I’ve said this enough times that it probably counts as a stump speech by now, but since the Great Recession the Silicon Valley Engine has created wealth at a level simply unimaginable in most other parts of the world; yet we haven’t reinvested enough of that wealth in the housing, transportation and social-services infrastructure necessary to sustain that Engine over the long run, and the results are what we see.
No private-sector business loves spending money either, but any business that doesn’t reinvest its profits in its future won’t likely have either for long. The same is true for the Valley: despite the ever-increasing compensation the tech sector pays to bring talent here, we still have more people leaving than arriving, with “cost of living” and “quality of life” consistently cited as the top reasons why. Time to stop distracting ourselves that this can be fixed without Money.
I agree that money is the solution to housing and transit problems, but the vast majority of the “unimaginable,” magnificent wealth that was generated isn’t going into city coffers, while cities are being asked to solve the housing and transportation problems that these companies and their wildly wealthy and powerful leaders are creating with rapid growth.
So much for tech creating a better world. These are the robber barons of our century.
According to Joint Venture Silicon Valley last month, the public market capitalization of Silicon Valley plus San Francisco is $14 trillion, not including another few hundred billion in decacorns and unicorns. The corresponding household wealth is $1.2 trillion, of which a third is tied up in private residences. Do the math.
That said – tech companies are not charities; their job is to serve their investors. Deciding who pays for Society, and how much, is a Government responsibility.
The Grand jury is working a political agenda which does not take in the facts – or refuses to consider the financial aspects of their evaluation process. Palo Alto as a city has city boundaries which are defined by residential homes – all of which are being upgraded to current standards and sold for many millions. The tax base of the city has to first work the budget for the employees and services that it is required to provide and maintain those services to current standards. There is very little open land and what the city provides is parks that require maintenance on a continual basis. That is the starting point for discussion. SU property is not part of that discussion – they manage their own property issues. The shoreline is cut in close to Hwy 101 and open to tidal flooding.
Contrast that to surrounding cities which have a different tax base, more solid land east of Hwy 101 available for building, more commercial business in varying stages of sustainability that can be repurposed. All are very different. The tax base of surrounding cities is highly varied. MV’s tax base is Google oriented and funded, Menlo Park’s tax base is FB oriented and funded.
What I have discovered is that the city is not funding the tree maintenance services – we are talking manpower that can work the trees in electrical line areas – that is almost all of the trees on residential properties. So one budget item is being underfunded – one that is critical to the power grid.
If anyone providing direction at the state level cannot function with all of the pertinent facts then they should be challenged as to how they reached their conclusions. We cannot run cities on political agendas that are flying by the seats of their pants.
Yes. That is a government responsibility. However, concentrated private wealth (and now control of mass media, too) has diminished the power (or, rather, the willingness of government to do that important work.
The Grand Jury is attacking cities – not private companies. It is attacking the processes by which housing is approved and funded – partially by the cities. PA the city is being attacked by a state government group that has a political agenda which disregards all of the facts relative to land development.
Finished Condon. He says he’s distributing it free online, so here’s the link: https://drive.google.com/file/d/1-vyL-XyzWdEl0kkQQ_Y-u3LyUNkYP7Z2/view
Both Condon and Walker are very, very Progressive guys, but IMO Walker is much more rigorous and analytical (as is Piketty, whom Condon cites a lot). Condon seems all over the place, especially on inequality where I think “Dream Hoarders” (Reeves) is more convincing. Condon tends to throw out data (some of it quite good) and simply claim cause-and-effect without much evidence. His claim that most American homeowners get their downpayment from their parents … yeah, not in my experience. Surely some, but most in America, really?
Still, his prescriptions are generally sensible and he’s got some interesting ideas … residential land as an asset class and therefore inherently subject to (Piketty’s) r>g is one of them. He basically argues that in high-demand regions, any value of upzoning is captured by property owners and therefore doesn’t lead to lower housing prices. That’s surely right in much of Silicon Valley; without using the words “SB9,” he argues that if you’re going to do an SB9, it should entail affordability requirements (… speaking of “Government responsibility …”). And he’s a big fan of AH impact fees that actually scale to their full impacts, including from market-rate housing, which is a place the current City Council has not really gone at this time.
There is truly a need to tax the “filthy” rich, so they pay their fare share. Our tax loop holes need to change dramatically.
When I think of Jeff Bezos and his enormous wealth, contributed to by nearly all of us (including me), needs to be abundantly taxed.
Please remember that money increases the want for power, and over time, that power can become evil. We see that clearly in Russia but also in the US. Remember Mr. Trump?
SB9’s value windfall varies with the size of the parcels involved. A big factor is that SB9 applies equally to all size properties. Split a 5000 sfh lot? Not very likely. Split a 43,000 sf home lot that was previously limited to one home in Barron Park? FREE MONEY.
It’s too bad the some way doesn’t exist to buy up property at current values before the upzoning or entitlement to reap big rewards….. for public subsidized housing that is. Private speculators are of course already doing that.
“It’s too bad the some way doesn’t exist to buy up property at current values before the upzoning…”
Condon discusses using tax policy to achieve the same end.
One problem with being an autodidact is that it’s easy to wander into a technical field and be attracted to whatever manifesto best flatters your priors. If you want to avoid that temptation, the best thing you can do is stick to peer-reviewed academic work. Start from a meta-analysis, wherever possible so you aren’t cherry-picking.
Here’s a roundup of several papers dealing with housing supply and rents:
https://www.lewis.ucla.edu/research/market-rate-development-impacts/
Zoning does drive supply. See numerous citations here (along with some other looks at papers NIMBYs like to cite):
https://stephenhoskins.notion.site/Why-I-m-A-YIMBY-27ae7791bab141058b82d94875ca98f3
PAO doesn’t like too many links, so I won’t post more. But anyone interested should also google ‘City-wide effects of new housing supply: Evidence from moving chains’ to find a study that’s still undergoing review, but has an amazingly granular data set.
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A thought experiment I keep coming to is: where are all the multigenerational housing shortages throughout human history?
If inequality is key, what does the first Guilded Age tell you? Urban housing in the late 19th c. had different problems caused by too little regulation, but it was sufficiently abundant and affordable to support the industrial revolution while absorbing waves of immigrants.
For most other hypothesis you want to advance, I think you can come up with easy historical debunkings.
Zoning was invented in 1908, and ratified by SCOTUS in 1926. First wave of housing shortages in US that I’m aware of were connected to World War II war workers. Berkeley suspended zoning, and that worked.
Housing construction in the Bay Area has never since been as high as it was in the 1970s when downzoning became popular. So it fits both history and economics that before 1908-1926, we didn’t have the legal technology for inflicting the kind of suffering on its children that has been a la mode in the Bay Area for some 40 years.
@scott: The Lewis Center roundup is well worth reading, but note that (1) The measured effects are small and variable (2) The analysis is very carefully qualified, with caveats that are relevant to the Bay Area (3) Not all the papers reach the same conclusions. This is a selected subset of research in progress, not a comprehensive statement.
Since 1910, US population has grown 260%. The ways housing is financed and owned have changed drastically. Housing shortages are a worldwide phenomenon, not limited to places with US-style zoning or US zoning history. Construction standards for health and safety and environmental impact have changed substantially, affecting both where housing can be built and how expensive it is. The geographic distribution of demand has changed significantly from generation to generation. Around here, housing isn’t being built even in all the places zoning already allows it. These observations, and more, suggest that it’s a mistake to focus exclusively on zoning as a cause of housing shortages. If you have a meta-analysis that controls for these things, please pass it along.
Repeating what we’ve discussed before, multigenerational “housing” (usually land) shortages have been common throughout human history. This is one reason many cultures adopted primogeniture. If you want to require that all subsequent generations must be housed locally, then you’re forced to control reproduction rates and limit immigration, or deal with the consequences of unlimited population density. In the past the preference was to expand.
I think your statement about construction rates is probably incorrect. Walker, Figure 6.20 shows that new units completed per year in SF in 2000-2016 typically exceeded the completion rate in the 1970s. Figure 6.21 shows that multi-family unit construction statewide was also comparable over those periods, though single-family unit construction dropped. I recommend checking out Walker’s book.
So many people….
@Allen, my statement about Bay Area housing production since 1970 is factual. See graph partway down:
http://2040.planbayarea.org/the-bay-area-today
The way you’re thinking about this in general is giving yourself extensive license for special pleading to confirm priors. When you get down to fundamentals, a) lots of places don’t have have trouble producing housing, even places with much higher baseline densities, b) physics being universal, and materials markets being globalized, we should be able to address whatever truly local issues we have.
The US in general and California in particular have very low population densities relative to much of Europe and Asia. UK has more than 2x CA’s density. Japan more than 3x. It’s patently absurd to suggest we need population controls.
To pick one case study: Japan is in a worse EQ zone than we are, was facing a lot of the same populist pressures to underbuild than we were, was starting from much higher baseline population densities, with even less buildable land, is facing demographic problems that impact labor availability –and simply fixed the problem politically because all the problems that create a housing shortage are political. Almost everything they did was deregulatory and required no state funding:
https://www.sightline.org/2021/03/25/yes-other-countries-do-housing-better-case-1-japan/
You can look through Sightline’s other case studies. Germany’s “secrets” include mandatory upzoning to accommodate growth & by-right construction. France went big on social housing, while abolishing many floor area ratios, and aggressively fining cities that have construction rules that are too restrictive. New Zealand did something very much like SB-50. There’s nothing magic about capitalism, but successful social housing approaches also emphasize production, and no one, AFAICT, has had success without prioritizing production.
Which makes sense, because it’s physically impossible to house people w/o housing.
@scott: Ah, I see the problem. The graph you cited is for *units permitted*, not *units actually constructed*. As you can see from Walker’s figures, which show both, the difference is substantial. So we still don’t have evidence to verify your original assertion about housing construction for the Bay Area, though we do know it’s incorrect for the specific case of SF.
Unlimited (unmanaged, if you prefer) growth here is not mandatory. Infrastructure for water and transportation, and funding for other requirements of growth, can’t be deferred. Increasing income- and wealth-inequality needs to be addressed directly.
Framing the situation narrowly and ideologically as “a housing shortage that will be solved automatically if only we deregulate” does nothing to illuminate the assumptions or solve the underlying issues. It would be helpful to look beyond that. Walker’s a good place to start. Good luck!
@allen -there is no ‘problem’, permits issued are a perfectly fine lens for inferring trends in housing construction.
Hard pass on Walker. The conclusions you’re relying on him for are coming from outside his area of expertise. He’s published in Jacobin, and the book you’re citing was put out by PM Press, “an independent publisher that specializes in radical, Marxist and anarchist literature, as well as crime fiction, graphic novels, music CDs, and political documentaries.”
The background is screaming ‘crankery’ so loud I’m flashing back to when I used to argue with climate change deniers.
That doesn’t mean that he’s wrong, exactly. But it does mean that I don’t trust him to conduct economic research correctly, get basic facts right (no one would catch him if he were flat wrong), or present them honestly if they are right (ie: cherry-picking.) If I were to read his non-peer-reviewed stuff, I would do so like I used to occasionally read Fox News articles (or citations from climate deniers): fact checking every line. You haven’t done that. Neither will I. Moving on.
Infrastructure can absolutely be deferred. Traffic is self-regulating, in that as it gets worse, people schedule around it or find alternatives. When a bike is a better use of time, more people will use bikes –e-bikes are a quantum leap in that regard. Or work from home. Or schedule shift their commutes. Last time I was commuting we were already past that point, so I was saving time on my bike.
Water doesn’t limit human growth, it limits almond growth. And Palo Alto has a huge surplus of guaranteed capacity from the district that we’re considering selling off.
Inequality is worth addressing, but that’s orthogonal.
There’s definitely a tradeoff here, but the humanitarian costs of worse traffic for stubborn people are less than the humanitarian costs of human displacement and homelessness.
I’ve used that chart; permits seem ok. Though neither “if zoning were different we’d go back to 50 years ago” nor “for four decades now, Bay Area housing production has been roughly constant, what’s likelihood that zoning changes will suddenly double or triple that?” is as rigorous as Walker’s analysis. His Marxist politics aren’t mine, but it’s not a “hard stop” for me.
The big disagreement between Palo Alto and the Grand Jury wasn’t zoning at all, but how to finance Affordable Housing. Market rate housing really is a different market – even the Trickle Down studies that did find an effect found it only at the margins, not the scale needed to make market-rate housing affordable to people at 80% AMI. Plan Bay Area, cited above, calculates that to meet its 2050 AH targets will take nearly half a trillion dollars in subsidies https://www.planbayarea.org/sites/default/files/PBA50_Draft_Needs_Revenues.pdf – and that assumed 2.2% inflation. The Plan does not say, “upzone everything and the private sector will take care of it for us, so we don’t have to pay.”
The simple test is the Page Mill proposal: 76 units of AH in exchange for 200,000 sf of new office space. Should we take the deal? Three basic answers:
1. No. It creates more AH demand than it supplies.
2. Yes. I disagree that commercial expansion drives AH demand.
3. Yes. I want the commercial expansion, and I don’t like thinking about the uncomfortable AH implications, especially if I can blame it all on somebody else.
The City leaned (1); @Scott’s “the private sector will outbuild demand” argument is sort of (2); and a deplorably large number of agencies from HCD and ABAG on down favor (3), including the Grand Jury if you read their report carefully.
Supporters of (3) also provide political cover for a fourth answer, the real one: “Yes – don’t do anything that might slow down the Gravy Train!” Yet that’s exactly what the Valley must come to grips with, one way or another. Best to manage it proactively.
It’s mostly not Walker’s politics, per se, it’s more a question of the intellectual health of the institutions that work product is filtering through. Academic journals get their reputations from advancing their art, and have absurdly high editorial standards. PM Press just needs to flatter the priors of the hard left. PM’s same institutional incentives are at play in the rightwing small-publisher press (ie: Clinton hate cottage industry), the climate denial and antivax movements, Q Anon facebook groups, state media, et cetera.
Doesn’t mean none can be right, but it’s folly to trust anyone’s been careful about anything.
It’s not so much that commercial expansion doesn’t drive BMR demand, it’s that much of BMR demand itself is an artifact of housing scarcity -a condition humans have generally failed to achieve absent specific choices to make housing illegal.
There’s a level of employment that the local private sector could support, and we have a lot of pent-up demand but “a lot” is finite. Drive toward abundant housing at that implied population level, and you’re eventually going to start generating AH without BMR subsidies.
Remember: every time someone moves into a new luxury condo, they’re moving out of what is by-assumption older housing. Most people are “moving up” as they move. So the place they’re leaving behind skews cheaper on two axes. Create housing opportunity, and you can’t avoid generating AH vacancies. You can see this in multiple studies, Helsinki clearest. (And BMR is amplified by vacancies left behind.)
You don’t actually *need* to satisfy 100% of BMR demand, so long as you’re generating enough housing to make progress toward building out of the shortage. RHNA is a floor, not a ceiling so you can get even more BMR by cross-subsidizing w/ luxury residential.
You can’t say “but luxury housing doesn’t help with AH RHNA” because neither does throttling job creation to drive our children to self-deport –and the city is eager to do that.
If you drive down El Camino from San Antonio through Menlo Park and Redwood City you will note that there are high rise buildings going up at a fast rate in Menlo Park and Redwood City. That works well for them since the train tracks are on the east side and help carve out an area for high density. That is a commercial section of the cities being repurposed. The city of Palo Alto is set up differently – we have commercial on El Camino which is old and can be repurposed – but is next to residential housing. We need to focus on the old buildings on El Camino which are empty now and in poor repair. The city needs to lean in on those old building owners and force some type of resolution on repurposing those buildings and forcing some resolution on upgrades. That could be commercial on the first floor and residential in upper floors.
This city seems to focus on disrupting residential housing instead of run-down, out of repair commercial buildings. I think the focus area is very obvious. What is not obvious is who owns those old, empty building and how they are able to forestall any action on the old, empty buildings.
This is probably a dead thread, plus we may be edging perilously towards “Communism works, it’s just never been tried!” -style arguments, but:
>> “every time someone moves into a new luxury condo, they’re
>> moving out of what is by-assumption older housing … the
>> place they’re leaving behind skews cheaper.”
This is a key point. The issue, of course, is there’s no certainty that the “moved-out-of” unit is in the Bay Area; in fact, there’s plenty of evidence it’s likely to have been in Cleveland, or Calgary, or Kolkata instead. Bay Area population growth between the Great Recession and the pandemic was driven by in-migration from elsewhere, especially high-wage-earners in the tech sector.
In the last two decades, the foreign-born population share of silicon valley basically doubled, from 18% in Y2K to 39% today. The current foreign-born share in tech work is even higher, at 64%, and tech wages are considerably higher than other sectors: 49% of tech-sector jobs are “Tier-1” high-skill high-wage jobs, vs about 18% of other sectors (1). The Valley headhunts the world’s tech talent – no bad thing – but must pay the in-migrants more than the out-migrants (2). High-wage households outgrew new housing (1).
So the “musical chairs” argument, that one chair’s higher price is offset by another’s lower price, is a stretch if new players enter the game faster than new chairs do, and also if the new players can outbid the existing ones – both of which characterize the pre-pandemic Valley. Demand matters.
That said – in-migration was falling and out-migration rising even before the pandemic. Post-pandemic demand is anybody’s guess. It’s possible this may all be academic going forward.
(1) Joint Venture Silicon Valley, SV Index 2022, and also 2017-2021. Great resource.
(2) https://www.mercurynews.com/2018/01/11/unpacking-the-bay-area-housing-market-why-does-the-inventory-keep-shrinking-and-will-prices-ever-gulp-go-down/
“Post-pandemic demand is anybody’s guess.”
From SV Index 2022, p. 56: “A total of 9.84 million square feet of new Silicon Valley commercial space was completed in 2021. This is just under double the amount completed last year, and the third highest it’s been since the dot.com boom.”
“53% was office space, 23% industrial, 13% R&D, and 11% lab space.”
FWIW, it appears some people are betting a lot of money that in-migration will be very high.
And those same people betting on it will keep spending fortunes opposing paying their fair shares of business taxes, the costs of their underpaying gig workers and the pr costs of calling everyone who disagrees “entitled” Nimbies.”
Filseth’s point about in-migration is absolutely correct: to some extent, people moving into new luxury housing will be from elsewhere. (Nowhere near 100%, so my point also stands.)
When in-migration is people who can find jobs in the highest percentiles of the income distribution, those will not be the people you force out by constraining housing. They will be the last people forced out by Palo Alto’s policies.
Standing in line in front of them for the self-deportation queue are our friends. Our neighbors. Our parents. Our own children.
These are the people we threaten when we constrain housing.
Santa Clara County population decreased by an estimated 2.6% between 2020 and 2021:
https://www.census.gov/quickfacts/fact/table/santaclaracountycalifornia/POP010220
In both the SFC and BAN / SJM today 03/25 are opinion pieces from advocate groups pushing for legislation at the top CA level regarding housing – or lack thereof.
Nowhere do they talk about the natural resources available in this location.
1. Every paper has a whole page devoted to weather across the US and parts of North America. It is the jet stream coming across the ocean from Asia and positioning where rain, snow, sun will be happening – this is there every day. CA is not doing very well in this respect. We are a Pacific Rim state that is beholden to the powers that be in the jet stream.
2. CA’s history is of major port systems for all goods both coming and going in the US with huge railroad systems moving fright and people. This provided jobs for everyone. The city of SF has gentrified their port and Oakland is trying to remove their port – that is jobs for everyone being dismissed and an economic drain of the Supply Chain.
When people came to the US in the old days they worked in clothing manufacture, auto plants, making parts for all of the tools in your kitchen, including your refrigerator. Agriculture – growing food. – Drive down I-5 now and look at the dry fields.
The Housing advocates do not address the requirement for people to have jobs. Being an “Advocate’ is not a job, waiting for the state to give you money is not a “job”. Each area of the US has a specialty that is their economic contribution to the economy. We know what our specialty is here – high tech. And high tech is moving out all over the US. Every economic position needs to address all of the factors required for a successful economic outcome.