Tag Archives: housing

Bay Area IPO’s Coming to Raise Your Rent

The San Francisco Bay Area seems to be on a housing treadmill. Just as housing inventory started to grow and prices responded accordingly in some areas, tech companies are planning to go public. Airbnb, Lyft, Pintrest, Slack Technologies, and Uber are expected to issue initial public offerings in 2019. This will mean an infusion of cash into the pockets of the many tech workers who own their company’s stock. The logical thing to expect these workers to do is to use the cash to purchase a home. No more growing housing inventory and possible growing housing prices.

IPOs and Housing Prices

Doubt the correlation between IPOs and housing prices? Market Watch has a good article on the subject.

Zillow examined the link between Facebook’s IPO in 2012 and rising home prices across the Bay Area and found that home values rose more quickly in neighborhoods with higher concentrations of Facebook employees after the social network became a publicly-traded company.

Specifically, every 10 Facebook employees living in a given U.S. Census tract at the time of the IPO were associated with an extra 1.6-percentage-points increase in home values over the following year, the report said.

In dollar figures, the median value home in a neighborhood with a high concentration of Facebook workers rose by an extra $20,800 between May 2012 and May 2013.

Business Clusters 

In the Bay Area, companies highly valued by market standards, as well as startups hoping to join the value crowd at some point, are concentrated in close proximity to one another.  They comprise the world-famous Silicon Valley hub. This concentration affords the most return on investment for the companies, for their host government jurisdiction, and for homeowners in the community.

Clusters and cluster strategies cannot be seen as the answer to every economic challenge faced by a community or region. However, they do represent a valuable tool that economic development stakeholders should have at their disposal. A cluster approach may be most useful in helping officials and practitioners to see a community’s economy in a new way—not as a collection of individual firms, but as a system in which interventions can assist companies, industries, and the entire community.  Cluster-Based Economic Development Strategies, International City/County Management Association, March 29, 2012

Business clusters are the in thing, and the Bay Area has jumped on the bandwagon with two feet. But, when cluster advocates say clusters benefit “the entire community,” are they including those folks in the community’s lower and middle-income brackets who rent their homes? Those community residents might be employed by fast-food restaurant, or might be the people educating your kids in neighborhood schools or caring for your toddlers. Chances are they will never get their hands on IPOs, do not own a home, and never will own a home in the Bay Area.  But as prices increase due to the IPO infusion of cash, their rents will go up.  And forget about rent control, since everybody pays for that by way of taxes or prices.

Is There a Line of Defense?

The Bay Area has chosen to engage in an endless tug of war between developers and slow-growth advocates, high-income workers and lower-income workers, landlords and renters, YIMBYs and NYMBYs.  Meanwhile, housing costs are transforming the Bay Area into a poster child for unaffordability.  Maybe it is time for all sectors to give in a little by balancing housing and business spaces in every community.

Progressive Cities: We Have a Problem

San Francisco is one of California’s jewel cities.  Prized not only for its magnificent views, but also for its progressive populace.  There is not a tax the City does not love, or a compassionate deed that is left undone.

Yet, the City’s vistas, cable cars, resident technology giants, multi-million dollar mansions, as well as its busybody Board of Supervisors have taken a back seat in the City’s consciousness to its streets littered with human feces, discarded needles, and homeless misery. San Francisco has 7,499 unsheltered and sheltered individuals, in the streets or in temporary living arrangements. This number is not surprising, since one-quarter of homeless people in the United States live in California, even though Californians make up only 12% of the U.S. population.

Once Far Back In Time and Now

CableCarTurstile

San Francisco was once called “The City That Knows How,” where streets were clean and safe. Those were the days before the immense tragedy of the AIDS epidemic, before liberals took over City Hall, before developers – for profit or not – joined forces with corporate think tanks to redraw the City, before environmentalists hit upon the gold mine of climate change, and before the City’s Department of Public Works had a Poop Patrol or the City’s Department of Health had free injection needles.

Now Downtown, and increasingly the neighborhoods, is a place where one walks gingerly in order not to accidentally step of human faces or on discarded needles. In spite of the talk about placing children’s playgrounds in every neighborhood, parents are cautious least their children are inadvertently injured by drug paraphernalia on the ground.

Why the Descent Into Hades?

Unfortunately, no one agrees on the cause of the City’s descent; therefore, remedies are irrelevant and ineffective. The laundry list of culprits is varied:

* High-income technology workers that bid up housing costs and displace lower-income residents.

* Out-of-towners attracted by relatively balmy weather that allow for outdoor living, generous public assistance, a permissive population, and free injection needles.

* A welfare-homeless cabal that profits from the homeless trade. Think social workers, non-profit organizations, shelter operators, food banks.

* Legislators that seem to work to attract and keep the homeless. For example, the City is working hard to establish “safe-injection sites,” where homeless addicts can shoot up under the supervision of medical professionals. Another example, the City’s Mayor has proposed legislation that would forcefully place homeless individuals who cannot take care of themselves into conservatorships administered by the City’s Public Guardian. Once plugged into a conservatorship, no legal escape from the City is possible without a Court order.

From the Experts

The health implications of the mounting trash are stark. Discarded needles may be contaminated with diseases like Hepatitis B and C and HIV, infectious disease scientist Lee Riley told NBC Bay Area back in February. Dried feces, he added, can release viruses into the air … Riley, a University of California, Berkeley scientist who has researched the effects of extreme poverty on the health of some of the poorest groups in the world, said the contamination in San Francisco was “much greater than [in] communities in Brazil or Kenya or India.”  Newsweek 08/02/18

Mohammed Nuru, the director of San Francisco Public Works, told Boston’s NPR-affiliated WBUR station the waste is tied to the San Francisco’s high rates of homelessness. People often live in tents with little access to sanitation facilities or trash collection, he said … “Our city has been a magnet for providing services, and you know a large number of the people we see on our streets are not necessarily from San Francisco,” Nuru told WBUR. “They’re coming from surrounding counties and in some cases even from across state lines.”  Newsweek 08/02/18

San Francisco has a ‘Poop Patrol’ to deal with its feces problem, and workers make more than $184,000 a year in salary and benefits.  Business Insider 08/24/18

The main reason that so many people in San Francisco, and other cities like Los Angeles, are living on the streets is that the cost of housing over the past two decades has vastly exceeded the amount of income that people earn making minimum-wage jobs or bring in from modest pensions, disability, or welfare … Before Reagan took office and destroyed the American safety net, and San Francisco decided to be the West Coast Manhattan, you could live on SSI or a low-wage job and still pay rent in this town. When that changed, people who were formerly housed became homeless.  San Francisco Tenants Union 06/07/18

Bad and Beautiful

As one approaches the City for the first time as a tourist, a convention attendee, or a prospective resident, one might notice two breathtakingly beautiful bridges, as well as an ugly as sin structure visible for miles from all parts of the City. The dichotomy is made readily clear.

January Should be MTC Awareness Month

The San Francisco Bay Area is ground zero for tech companies, astronomical housing costs, and homelessness.  Those who are priced out of the housing market or their own homes often blame the influx of high-earning techies into the Bay Area particularly within the last 5 years or so.  Few are aware of the powerful trio micromanaging Bay Area residents’ lives, and how in-spite enormous power, the trio has not been successful in making the Bay Area “affordable.”  To the contrary, the trio might have made matters worse.

The trio in question consists of Plan Bay Area, the Association of Bay Area Governments (ABAG), and the Metropolitan Transportation Commission (MTC).  Enabled by California’s state legislators, the MTC and ABAG determine how much land will be available for building homes (not much:  about 90% of the Bay Area is “protected” from development in one way or another), how many people must be accommodated within each county (too many according to those who prefer tranquility over GDP growth), how dense cities and counties need to be (pretty dense:  remember the 90% under protection?), and how many residents must have access to subsidized housing.  All the plans, mandates, and ever-intensifying goals are spelled out in Plan Bay Area.

The lion’s share of the trio’s power rests in the hands of one MTC Executive Director and 21 opaquely-selected MTC Commissioners.  MTC’s Executive Director will retire at the end of February 2019, and MTC is searching for a replacement.  Commissioner’s term expires in the middle of February 2019, and cities/counties must select new ones or re-appoints old ones.

Given MTC’s enormous power, its significant effect on the lives of Bay Area residents, and the opportunity for activism presented by MTC’s changing of its guard in February, the Nine-County Coalition — an organization dedicated to fighting the growth of entities run by unelected bureaucrats — has decided to unilaterally declare January 2019 “MTC Awareness Month.” 

Just Vote No joins them in their effort to make the voting public aware of MTC, its track record, and its obscurely-picked Commissioners.

Pictured below is MTC’s latest effort: the Bay Area’s multibillion-dollar Transbay Center, which opened with much fanfare August 2018, and closed for structural failures six weeks later.

transbay terminal opening 3

If You Are Poor, You Are Not Alone.

The Big Picture

The U.S. is a rich country judging by its massive economy as measured by GDP, standard of living and availability of goods and services. Yet, the U.S. has one of the highest poverty rates in the world. Among OECD (Organization for Economic Co-operation and Development) member countries, mostly developed countries, the U.S. ranks third highest in poverty.

When viewed as percentage of a population, poverty rates usually understate the misery. The OECD’s as well as many other measures of poverty count individuals living below a certain poverty income line. Therefore, individuals need to be countable and receiving some form of income, which leaves out people participating in underground economies and other invisible endeavors.

Income is defined as household disposable income in a particular year. It consists of earnings, self employment and capital income and public cash transfers; income taxes and social security contributions paid by households are deducted. OECD: Household Income and Wealth

The Smaller Picture:  U.S. States

The big picture shows the U.S. as having a significant GDP in relation to other countries, as well as a noteworthy poverty level. What drives such unfortunate poverty numbers? For example, what U.S. states contribute the most to the bleak figures?

Poverty rates

The above figures show the number and percentage of people living in poverty by state, using a 3-year average over 2015, 2016, and 2017. Additionally, these figures, provided by the U.S. Census Bureau on September 2018, are the Supplemental Poverty Measure, which factor in cost of living in each state. One state stands out: California.

The Golden State, Not So Golden

California has 7.5 million people living in poverty, the nation’s highest rate.  The next worse is Florida with 3.7 million — a little less than half of California’s numbers.  And remember these are the people that are counted, not living in invisible settings.

State legislators throw up their hands, blame the “housing crisis” in the state for the lamentable poverty numbers, and return to their business as usual: creating more poverty by insisting on restrictive land use, irresponsible fiscal policies, curbing mobility of residents (think rent control; think high property taxes and Proposition 13), and just plain brain washing folks against the idea of striking out in search of better opportunities. In California everybody is supposed to stay put, stay progressive, stay PC, and stay either very poor or very rich.  The strategy may not be working all that well considering the state’s net out migration, but California has mighty persistent politicians.

Were California less effusive in bragging about its economy – never mentioning its poverty rate as a self-inflicted wound, and seldom mentioning its unsustainable unfunded pension liabilities; and were California more focused on making efficient use of its enormous tax revenues instead of “resisting” change, it would have been mean spirited to pick on California as the lead contributor to the regrettable U.S. poverty rate. But, given the circumstances, it is not wrong to randomly throw the blame on the Golden State.

Laws, Policies and Consequences

The law of unintended consequences is as merciless as the law of gravity. This article lists three instances where the law of unintended consequences caused supposedly well-intentioned laws to turn into nightmares, especially for those of modest income.

Unintended consequences

The Fast Food Franchise Bright Idea

Chin Jou’s book Supersizing Urban America: How Inner Cities Got Fast Food With Government Help, published in 2017, should become a classic on the subject of unintended consequences.

The book recounts the story about the federal Small Business Administration setting up a program to help residents of inner cities become entrepreneurs. The SBA would guarantee loans to start business franchises. Dunkin’ Donuts stepped right up to help promote the program, followed by McDonald’s and Burger King. Once fast food companies realized inner cities had become a gold mine, they leveraged their prospects with advertising, and inner cities residents became faithful consumers of fast foods.

The unfortunate unintended consequence is unhealthy obesity.

The War on Terror and the Rise of Terrorism

9/11 was a tragedy where we experienced in real time, in U.S. soil, the death of almost 3,000 civilians. Therefore, the hurt and anger that resulted in the war in Afghanistan, and later Iraq, could be understood. George Bush sent troops to Afghanistan to clean out terrorist camps, and to Iraq to eradicate supposed weapons of mass destruction.

The unfortunate unintended consequence is well described by this paragraph,

What the US tends to forget, or intentionally ignores, is that armed reactionary groups like ISIS are born out of the destabilization created by Western military intervention … [H]ostile anti-American resistance groups gain momentum, sympathy and legitimacy from the actions carried out by Western forces.  Foreign Policy Journal, 2015

Fighting Climate Change

Everybody wants clean air, clean water, and the absence of extreme climate. Therefore, to ensure these graces, legislators have done what legislators tend to do – pass laws. The laws of preference favor transit-oriented development (TOD) intended to reduce automobile miles traveled and greenhouse gas emissions.

TOD policies set strict urban-growth boundaries, establish vast conservation areas where development is not allowed, and encourage development only along transit corridors. Under such plans, density is promoted as desirable not only as means of reducing greenhouse gas emissions, but also as an engine of growth and, therefore, tax generation.

The unsurprising unintended consequence of transit-oriented policies is unaffordability of real estate. As places to build shrink and neighborhoods resist high density, supply of housing decreases and prices for renting or buying a roof over one’s head go up.

California, a state that boasts its leadership in controlling climate change and forcefully promotes transit-oriented policies has chased away its working poor and its middle class, who cannot afford astronomically housing costs.

The problem is that high-density housing–that is, mid-rise and high-rise housing–costs 50 to 68 percent more, per square foot, to build than low-density housing. If California really wants to build housing that is affordable to low-income people, it needs to build more low-density housing. To build that, it needs to open up land that has been off-limits to development because it is outside of urban-growth boundaries.  Will Density Make Housing Affordable? New Geography, March 2018.

Examples Abound

Government policies apparently implemented in good faith can easily turn sour and result in unanticipated harm. Who can forget the mass displacement of residents in the 1950s -1960s in the name of urban development? Who can ignore the cost of health insurance after the Affordable Care Act? How many families have been torn apart and how many children have been caught in the cross fire of the war on drugs?  But these are all subject for future articles on the Just Vote No Blog.

Therefore, regardless of your party affiliation or political leanings, proceed with caution in supporting sweeping legislation, regulation, or executive orders at all levels of government.

Divide and Conquer: Now it’s NIMBY vs. YIMBY

Divide and Conquer GoetheNever let a crisis go to waste. And if there is no crisis, start one. When fomenting a crisis, it helps to encourage group identification, then to pit one group against another. This has been the modus operandi of political leaders going all the way back to Philip II, whose maxim “divide and conquer” served him well in transforming self-governing city states into one big Macedonian kingdom.

The latest California crisis (besides the coastal progressives’ obsession with “resisting” something or other in Washington DC they are not supposed to like) is housing, and the latest division is between NIMBYs and YIMBYs.

The Not In My Backyard faction identifies with older residents who like the way things are in their neighborhood. They like their neighborhood’s “character,” they own or hope someday to own a single-family home with a backyard, they prefer not to take public transit, and they fiercely defend their turf from outsiders who feel entitled to change it. Bastions of NIMBYism, such as the Bay Area’s Marin County and San Francisco’s Westside, have traditionally used city and county zoning to preserve their neighborhoods.

The current California YIMBY movement goes back only to 2014, with the founding of BARF, Bay Area Renters’ Federation, by a charming and articulate former math teacher by the name of Sonja Trauss. In a 2015 article, What’s Your Housing Utopia, Sonja states her case unequivocally,

I want the market to provide a unit I can afford… I want to consume housing the way I consume all other products: Buy used, old or out of fashion, buy scratched and dented, buy odd lots, split the cost with friends… How do we get market rate housing for all markets? Step One: End the shortage. If we need 100,000 units, we have a lot of work ahead of us. If you’re involved in opposing a new housing project, stop, just stop. Our need for housing at all price levels far outstrips our supply at any level. Are you preoccupied with whether the new units “match” the rest of the neighborhood? Matching is for your belt and your shoes. Housing supply is a serious problem. If you’re sentimental about the past, swallow your tears.”

Then there is SPUR, San Francisco Bay Area Planning and Urban Research Association, renamed from San Francisco Planning and Urban Renewal Association in 1977, after the razing in the 1960s of San Francisco’s Fillmore District in the name of “urban renewal.” Gabriel Metcalf, president and CEO of SPUR, elevates the NIMBY/YIMBY war to the level of opposing views on private property – homes as property purchased and owned by someone vs. homes as infrastructure provided to all regardless of means.

I think there are more people understanding housing as a social-justice issue. While they might not like their communities changing with higher-density buildings, more people understand that they are necessary to live up to our values as progressives.

A recent article in the neighborhood newspaper, The Westside Observer reports on a community meeting discussion on California Senate Bill 827, which would mandate construction of buildings up to eight stories high along all transportation routes – bus routes as well as fixed rail – regardless of local zoning or neighborhood character.

What had started out as a community meeting slowly became a referendum on the land value of homes and apartments that younger generations would like to take away from older generations — right now!

The war, yet another identity-politics war, is on. Absent politicians never letting a crisis resolve itself peacefully, NIMBYs and YIMBYs, in spite of their vastly different outlook and needs, might have worked things out. However, that is not to be.

If we understand what is going on, we can choose our political leaders and our legislation with an eye to rejecting continuing crises provoked by identity wars. We can choose instead peacemakers who can encourage local solutions and compromises that offer remedies to challenges.

Identity Politics: Good way to Divide and Conquer

Divide and Conquer GoetheIdentity wars are useful when politicians wish to deepen or to widen their power over the populace. Such wars divide populations into smaller groups, which can then be pitted against one another. While each group is focusing on its own challenges and fighting other groups to defend its limited interests, all groups are ignoring the big picture. They are missing opportunities. They are ignoring their real manipulator. They have been divided and conquered.

So, we the people, divided and conquered, focus on a myriad of wars: class, race, gender, disabilities, environmental, social justice, gentrification, fetus-as-person, open space, climate change, drug, opiod. Meanwhile, our liberties are decimated unnoticed. We are slaves to the IRS, mandated to pay our pound of flesh under dire penalties if we do not obey. We are hostages to the obscene costs of healthcare and education. We are automatic criminals given the numerous laws and regulations at every level of government, of which we are bound to break some unwittingly. Our Bill of Rights is constantly under siege.

Some enclaves in these United States have become epicenters of identity wars. California is such an epicenter. The state’s residents never tire of group warfare, while they lose their basic constitutional liberties, such as free speech, self defense against tyranny, or local jurisdictional control of their destiny. At present California is fighting the “housing crisis,” pitting NIMBYs vs. YIMBYs, while politicians crank out laws obliterating local control of what gets built where and how.

As Joseph-Marie, Comte de Maistre, 19th century lawyer, diplomat, writer, and philosopher said every nation has the government it deserves. In a republic such as the United States, where the ballot box is available to all citizens, this maxim could be interpreted as meaning every individual has the government he/she deserves.