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worth reading -- really!

From: Pat Marriott <"Pat>
Date: Sat, 3 Feb 2018 11:05:51 -0800

Council Members:

I don't know this blogger, but he writes well-researched articles about
critical issues we're all facing. Definitely worth reading.

                Pat Marriott


Housing Update 1/31/2018:


At no time in the last 26 years have more than 28% of San Francisco
residents been able to afford a house in San Francisco. Most of the time it
has been bouncing around between 10% and 25%. SF is expensive now, has been
in the past, and will be in the future. Even in Sonoma County the
percentage of people who can afford a house has varied from 10% to, at the
very most, 50%. Usually affordability is around 30% meaning only 30% of
residents can afford to buy a house. This is not a crisis. This is a
permanent condition.

If you want continued growth in high income jobs, then housing will keep
rising in cost.
If you want housing costs to stay constant, then you can't have continued
growth in high paying jobs.

Perhaps the anger floating around about housing costs can be directed at the
companies that can't figure out how to create jobs outside the SF Bay area.
They can have R&D centers in India but not Indiana?

So how is this boom different? Mainly in the builders' PR. By terming
this, not particularly exceptional boom, a "housing crisis" and getting
everyone to accept that term, they create a panic-driven urge to over-ride
all reasonable zoning limits. And ignore the problems of getting people to
and from work.




Conclusion: Palo Alto is a poster child for bad (or lack of) urban planning
on a regional level. Transit infrastructure is insufficient and cannot be
made sufficient without paying billions of dollars just so Palo Alto and
Menlo Park can continue creating jobs while leaving other cities to build
and provide services for housing workers.

Yet with the geographic limits of Palo Alto (hills on one side, bay on the
other), and the layout of Palo Alto streets for single family housing it is
hard to see how increasing housing to accommodate the number of jobs is
possible without creating total gridlock in and around Palo Alto. Which
makes it self-evident that further job creation in Palo Alto is not in the
best interests of the region, including Palo Alto itself, since widespread
resentment may force it to dramatically change itself in unpleasant ways.

One reason promoted for increased density is to supposedly bring down
housing prices so that more people can live in Palo Alto near their work.
Some hope this would reduce congestion and greenhouse gas emissions. This
runs counter to experience - if increased density lowered housing prices,
reduced traffic, and pollution, why doesn't NYC have low cost housing, light
traffic and clean air?

If you increase the density, two things happen.

First Thing: More people will be trying to fit on a fixed amount of land so
the bidding for land will raise the price of land. If you attempt to
distribute the increased cost of land over more units by building up to have
more rental income per acre you trigger the second thing.

Second Thing: Building higher gives more rental income from the greater
number of units per building. But, the price of land is based on the income
that the land can generate ("bid-rent pricing") so the price of land will
rise along with the total apartment building income. Therefore building up
doesn't make rents cheaper because the landowner "captures" the supposed
economies of building up. As noted, lower Manhattan and Hong Kong are very
expensive, despite (actually because of) their high density housing.

Increasing density won't lower the cost of housing as I showed at length and
in depth here



Whom do we blame?

Blame the Residents? Palo Alto's residents bought nice little houses on a
nice quiet streets. Those streets weren't designed to handle a lot of
traffic or parking and cannot be retrofitted to do so. They have every
reason to not want to have their house in the perpetual shade of 8 story
apartment buildings everywhere.

City Council? The city council wants the revenue from having businesses and
sales tax revenue in town to fund the city services including pensions that
the state legislature authorized in 2000.

Businesses? If the prestige of a Palo Alto address brings more business why
not pay the higher rents?

Workers? Palo Alto workers sought and accepted jobs there. Every day they
go to work in Palo Alto they are making a decision to keep on working there.
They are making a trade-off between high-rents-with-less-commute and
lower-rents-and-longer-commutes. They may not like the trade-off but they
are adults so must accept the consequences of their fully informed decision.

What you see in the above description is a lot of groups each reasonably
seeking their own best interests. Is there a bad guy there?

Notice that there is the complete absence of an "adult in the room" to look
at the big picture and decided what is best in the overall long term for

Housing takes a lot of city services meaning a lot of city money - more than
residential property taxes bring in (except in richer communities like Los
Altos Hills). On the other hand, businesses provide taxes including sales
taxes if the corporate headquarters is located in the city. Businesses
typically require very few city services. A proper mix of each makes a
community financially stable.

ABAG (now MTC-ABAG) gets a lot of criticism but not for what they most
deserve it for. That is the complete failure to allocate housing, and jobs
so as to optimize commutes. That is their mission - to set jobs and housing
to minimize VMT and associated pollution at which they have failed
miserably. Just putting up housing doesn't do any good if you can't get
from the housing to the jobs. Maybe they don't have the power, or the will,
or maybe they are getting bad advice but whatever the reason, Palo Alto is a
poster child for bad planning on a regional level.



Received on Sat Feb 03 2018 - 11:09:10 PST

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