July 10 will be the last chance to appeal dramatic changes by two non-elected regional bodies that will threaten the character of Palo Alto as we know it. On that date, any chance of an appeal on our housing requirement will officially expire.
How has this happened and what can we do about it?
First, who are these non-elected bodies deciding our future for us? They are our regional council of governments (Association of Bay Area Governments, or ABAG) and the State Department of Housing and Community Development (HCD), both appointed bodies not elected by residents.
What are they approving on July 10? On that date, they will lock in the number of new housing units the Bay Area is required to accommodate between 2022 and 2030. They have determined that this number is 441,176. The formulas prepared by the two agencies will translate into a required housing allocation for Palo Alto of between 5,800 and 6,500 units. This is approximately three times as high as the number required during the current housing allocation cycle, which stretches from 2014 to 2022.
To ensure that these new numbers are reached, there are a number of bills currently in the state legislature that would mandate new zoning laws permitting construction of between two to six units on single-family plots in residential neighborhoods near transit or substantial density bonuses and new height limits in commercial areas well above what our current zoning allows if residential units are included.
This astounding number of 441,176 residential units comes from an in-house technical committee appointed by ABAG. The starting point is based on a jobs estimate — an assumption that the Bay Area will continue to maintain its current very high share of a rapidly growing high tech industry. This jobs number is compounded by the fact that the current long-range plan, known as Plan Bay Area, hugely underestimates recent job growth. The model further assumes that Bay Area growth will continue to be centered in jobs-rich priority development areas like Palo Alto.
The problem with these assumptions is that they become a self-fulfilling prophecy. Jobs do not have to grow in just one part of the Bay Area. Proper incentives can be used to disburse part of that growth in jobs to other parts of the Bay Area where they are needed.
California Government Code even warns of perpetuating jobs and housing imbalances. Code 65584.01, which HCD cites in its approval of the numbers, carries a very explicit warning of potential problems. Code Section 65584.01 (b) (1) (G) states clearly that "the council of governments shall provide data assumptions … including the relationship between jobs and housing, including any imbalance between jobs and housing."
The Code further states in Section 65584 that HCD must make a written report to the council of governments that determine "whether the methodology furthers the objectives listed in subdivision (d): 'providing an improved intraregional relationship between jobs and housing.'"
If history repeats itself, we are in for huge problems, based on the impacts of the current Plan Bay Area on jobs and housing balances within the region.
The results over the last decade have been a disaster. The six cities of Silicon Valley have experienced an influx of new jobs between 2010 and 2018, adding 3.3 new jobs for every new employed resident. (The cities of Palo Alto, Menlo Park and Mountain View have added 6.1 new jobs for each new employed resident.)
At the same time, Oakland and San Jose and the counties of Alameda and Contra Costa have added 0.3 new jobs for every new employed resident.
When San Francisco is added to the Silicon Valley cities, that means that close to 150,000 new long distance commuters have been added to the daily commute traffic, and from 2016 to 2019 the transit systems serving those commute corridors have not added new riders.
This, clearly, is an imbalance between jobs and housing.
So why not build more housing where the jobs are, as this new housing allocation proposes? The problem of building more housing in Silicon Valley is one of basic economics. The returns per square feet in building new office space are two to three times higher than in housing — yet the high cost of land makes the median housing costs in the west bay the highest in the country.
The only way to construct new housing is to subsidize housing costs or to provide incentives to builders (such as allowing them more office space). Building such houses will not lower costs as much as create the need for more subsidies and create a middle income gap; i.e., it will increase income inequality, which is already the second highest in the country and rising faster than almost any other metro area.
What can be done? If we had followed the California Government Code that requires public discussion, we could have explored disbursing jobs and housing through every region in the Bay Area. We could have considered a moderate and balanced growth in both jobs and housing throughout the Bay Area, which could possibly lower median housing prices and result in less congestion and lower commute rates.
This might have a positive impact on income inequality, long distance commuting and the huge costs required for new transit and infrastructure in places where land costs are the highest.
But in December, ABAG decreed that "it was not recommended to move forward with jobs caps in any jobs-rich city." And in May, ABAG declared that the coronavirus crisis would not affect the underlying growth in jobs.
These non-elected bodies have ignored the California Code that they cite to justify their own decisions. They are ignoring data from the Census Bureau showing the imbalances that their modeling has created. They have excluded any open public discussion.
We need to restore local decision-making to our city. I urge everyone to ask the City Council and the city attorney to stop the HCD/ABAG process now so that the public can actively participate in an open discussion about our future.