Silicon Valley may be the economic phenomenon of our time, but unless real inroads are made in alleviating its severe housing shortage and accompanying transportation mess, the region could lose its economic luster and driving core of innovation.
That was a pointed conclusion — a warning with a keen edge of urgency — that emerged from the recent "State of the Valley" conference in San Jose.
The morning-long annual conference at the McEnery Convention Center on Feb. 9 was attended by a sellout audience of about 1,300 leaders from business, government, education and nonprofit organizations from throughout the south bay region and beyond. Congresswoman Kamala Harris had to cancel her scheduled appearance due to the political quagmire in Washington, D.C., but she provided recorded comments.
As for the conference's key message, warnings about housing and transportation problems are not new: Traffic begin to snarl up as far back as the postwar growth years of the late 1940s and 1950s, and freeways and local expressways quickly jammed. In transit, almost nothing effective has been done.
"Our choo-choo trains are at capacity," conference organizer Russell Hancock noted in a passing reference to potential future expansions of transit, now stalled in the discuss-and-debate stage.
Hancock, a Palo Alto resident, is president and CEO of Joint Venture Silicon Valley. He currently teaches in the Public Policy Program at Stanford University, from which he received a Ph.D. in political science. He earlier served as vice president of the Bay Area Council, where he pushed hard for the BART extension to the San Francisco International Airport. He is a recognized concert-level pianist and founder of the Palo Alto-based St. Michael Trio.
The annual conference draws heavily from Joint Venture's primary publication: the Silicon Valley Index (available online at jointventure.org), which compiles research on key "indicators."
Much of this year's gathering focused on "the phenomenon" of Silicon Valley's success in technological innovation, economics and entrepreneurship. It featured a "What's New and Next?" presentation by two leading futurists: Jure Leskovec, chief scientist at Pinterest and computer-science associate professor at Stanford, and Paul Saffo, consulting professor at Stanford and a founder of the Palo Alto-based Institute for the Future.
Hancock led off the morning by summarizing "the phenomenon of Silicon Valley," a "swath of land" defined loosely as the South Bay counties of Santa Clara, San Mateo and Alameda (sometimes including San Francisco) separated by a water chasm of the bay and hemmed in by mountains on the east and west.
"For most part we're already built out. We don't have the option of sprawling," he noted, adding: "Trust me if the bay was land, it would be filled."
Even so, the area has logged seven straight years of job growth, at 3.3 percent per year, above state and national rates. The regional total last year was 107,139 new jobs (47,000 in Santa Clara County, 18,000 in San Francisco, 25,000 in Alameda County and 25,000 for "the rest of the Bay Area").
Unemployment is 2.3 percent. "We've never seen a rate that low," Hancock said. "Economists say that's full employment."
Technology "infuses every sector of economy," and is driving everything from transportation to health care, education, retail, construction and "community infrastructure" jobs. Venture capital supports much of the growth, now including "megadeals" in cancer and other health-related research, including pharmaceuticals.
A megadeal is $100 million-plus, and 23 such deals in Silicon Valley and 16 in San Francisco racked up $5.2 billion in such giant purchase/investments, he said.
There has been a steep drop in smaller startup ventures over the past four years, Hancock noted, with growth currently "being led by a few large companies."
Innovation remains strong, with 19,000 new patents emerging from Silicon Valley, comprising 54 percent of patents statewide and about 15 percent nationally.
Commercial expansion is booming, with about 6 million square feet of completed commercial development last year. That's equivalent to about 160 football fields, Hancock noted, showing a slide. With the Tesla expansion in the Warm Springs area of Fremont that would be about 306 football fields, he said.
And expansion has moved far past the boring tilt-up buildings of past decades into imaginative, space-age buildings. "It sort of feels like Florence during the Renaissance," Hancock said.
But there are two dark shadows looming. They are the area's inability to match its historic job growth with housing and its failure to create effective alternatives to the single-occupant commuter automobile.
Hancock bored in on that topic in a dialogue with two persons engaged in hand-to-hand combat with the challenges: Carol Galante, director of the Turner Center for Housing Innovation at the University of California, Berkeley, and Steve Heminger, executive director of the Metropolitan Transportation Commission. Galante earlier was assistant secretary for Housing/Federal Housing Commissioner at the U.S. Department of Housing and Urban Development (HUD). Heminger oversees more than $2 billion a year in funding for "operation, maintenance and expansion" of the region's "surface transportation network."
Neither had an easy answer to Hancock's pointed questions. But their warnings were pointed also.
"Housing is a disaster with seeds of destruction that go back 40 years," Galante said. "We are not building enough housing." Job growth after the 2008 recession "poured gasoline on the fire, but the fire was already building."
Heminger said there are "plenty of villains to go around" in terms of blame for lack of effective transit and transportation alternatives.
Both cited the barriers of environmental requirements and decision-making powers scattered over nine counties, hundreds of cities and a battery of regional, state and federal agencies. They agreed that developing a stronger regional network would be a step forward.
"Some say the system is working today" when jobs move elsewhere, Galante said. "The markets are working if you don't care about the future of Silicon Valley. If we don't solve housing we will be losing Silicon Valley in its innovation and value.
"We're having this out-igration. Amazon isn't coming here."
Firms are "going to places where there is housing affordability and livability for their workers," he said. "I think we are really at risk. ..."
Former Weekly Editor Jay Thorwaldson can be e-mailed at [email protected]