Friday, February 2, 2018

Silicon Valley's housing crisis: Why we have it and what it costs us

In an interesting juxtaposition, this morning's Mercury News front page featured a story about how 90 percent of the housing California needs isn't getting built, and in another section, a story about how Apple's mothership donut was built with no thought to where the 12,500 people who work there will live.

Santa Clara's own marquee tech campus, the NVIDIA flying saucer, was also built without any thought to where the people who work there will live. It wasn't part of the conversation when it was conceived about 10 years ago, even though we were talking about a housing crisis then, too.

Instead, the Santa Clara City Council has made a u-turn on housing development—surrendering public policy to the anti-development faction because that's the one that yells the loudest.

Remember how John Sobrato got—literally—shouted out of the City Council Chambers for offering to build a $1 million supported housing-for-the-unhoused complex on Monroe?

The Council micro-managed Irvine's Mission Town Center 2016 proposal into a risky venture as far as the developer was concerned. Prometheus—a big donor to an independent expenditure committee for Gillmor-aligned candidates—has another proposal to bring forward. But it's not much different from the Irvine proposal. The only difference is that the Viso family, which owns the land, will probably want more for the lease—making it even harder to pencil out.

More recently the Council stifled the Moonlight Lanes project, leaving that property to provide low-cost housing for rats. Then there's the Mariani project that likely won't get get a hearing for another generation.

Related's City Place has yet to put a shovel in the ground. And if Mission Town Center's 400 apartments had the anti-development brigade in hysterics, imagine how far Genzon/Kylli's plan for 35-story apartment towers on "Yahoo acres" (now vacant for a decade) will go over.

And this, I've been told without sarcasm, is responsive government in action.

Council Members and their anti-development cheerleaders would strenuously deny the charge of being anti-development and say they're all for the right development. The beauty of the "right development" is that, like J.K. Rowling's wizarding world, it's invisible to the rest of the world.
As that's an impossibility here in the reality-based world, we continue—and will continue for the foreseeable future, I'm betting—to enjoy the quaint charm of mid-century strip malls and used car lots on El Camino.

Our children, young educated professionals, aren't yelling. They're not at City Council meetings because they took jobs in Dallas, Indianpolis or Pittsburgh where they can afford to buy a house, according to Carson Bruno at Real Clear Markets. So they don't care if Silicon Valley slowly fades into the economic sunset. They're willing to pay higher property taxes (and they do) for a decent home rather than share a $3,500/month one-bedroom apartment with four people to pay the rent.

But I wander.

We keep hearing Silicon Valley has a housing crisis. And the reason is pretty simple: we haven't built enough housing. Not only that, we're make things worse by building even less housing than we did as recently as a year ago.

Joint Venture Silicon Valley's 2016 "Silicon Valley Index" reports that the number of new residential construction permits dropped more than 50 percent between 2014 and 2015—from 11,000 to slightly less than 6,000. The percentage of multifamily construction dropped 20 percent. In that time, Silicon Valley built only 22 percent of the needed moderate income housing but 130 percent of the high income housing target, according to the Assoc. of Bay Area Governments (ABAG).

This isn't some kind of inevitable catastrophe like a tsunami or an earthquake. It's  largely of our own making. Only one factor, limited land, has passed out of our control. The rest are in our power to change.

First, there's the California Environmental Quality Act—an equal opportunity tool for obstructing development and a lucrative revenue source for specialist attorneys with no end of tricks up their sleeves for using CEQA to the advantage of developers, unions and NIMBYs.

In a textbook example of the law of unintended consequences, CEQA is most effective at obstructing its ostensible goal of improving environmental quality.

The most frequently challenged projects are transit-oriented, urban infill, those using renewable energy and housing, according to Elana Eden at Panetizen. Then there's local governments' preference for commercial development with its higher revenues and lower service needs. And last but not least, are vociferous self-absorbed NIMBYs who, quite simply, want to freeze time in an imagined past -- agriculture is very picturesque to those who never had to do the backbreaking work and face the financial risk.

The cost of obstructionism is our economy.

In a 2015 California Legislative Office report, the LAO laid out the causes and costs of California's stratospheric real estate prices and rents in this infographic.

There's a simple answer: build more housing. In won't be politically easy, now that the opponents of development have captured the spotlight. But what's worse: the noise from 100 complainers now or being judged 'guilty' by history for smothering the goose that laid the golden silicon eggs? 


  1. What a one-sided, misguided crock. Screw new housing. And screw the developers of your precious high-density ugly housing initiatives. If you don't like the situation Ms. Schuk, you're welcome to move out of the city.

  2. I've lived in Santa Clara 35 years and it was urban when I got here. In fact. I like the present "situation" - you seem to be the dissatisfied one. 35 years ago the El Camino was the same ugly strip it is now and likely will continue to be, thanks to obstructionists' efforts -- perhaps they like the quaint mid-centry "slurban" sprawl and car exhaust. Maybe we can bring back leaded gasoline to really get that old-timey feel.

    Most of the U.S. and Canada is wide open space, where the real estate is cheap and one can live without seeing another person for weeks. Nothing is stopping people from moving to those places. I lived in a 250 year-old upstate NY town with plenty of history and beautiful Victorian houses -- and no jobs, except in hospitals, nursing homes, home care, and operating student rentals for the growing state university. Life in a dying town has its inconveniences, like deteriorating infrastructure -- two of early 20th century bridges connecting the two sides of the town across a river have been closed for decades because there's no money to repair them. Ditto parks, playgrounds, pools, athletic fields and community centers.