YIMBYs and the Dismal Science

Affordable Housing for All?

Among the vast collection of data in the Vital Signs section of the Metropolitan Transportation Commission website, is a chart showing the number and percentage of low-income Bay Area residents at risk of experiencing housing displacement 1990-2015. This is an abbreviated version of the chart:

Note the steady increase in the percentage of residents at risk, until 2015. Although the decline in 2015 could be attributed to increase in housing supply, the more likely story is out-migration of low-income residents. High-income earners move in and low-income residents move out.

Can We Trust YIMBY Basic Economics?

The foundation of YIMBYism is said to be basic economics: increase supply by saying Yes in My Back Yard and housing prices will drop. Unfortunately, life is not that simple.

Economics is generally regarded as a social science, although some critics of the field argue that economics falls short of the definition of a science for a number of reasons, including a lack of testable hypotheses, lack of consensus and inherent political overtones. Investopedia, Is Economics a Science, 08/30/18

Here are some possible examples of the above applied to YIMBYism:

* Lack of testable hypothesis. A Forbes article discussing a Federal Reserve Bank study says, “Researchers at the Fed found there were no ‘direct estimates of the rent elasticity with respect to new housing supply in the literature.’ No one knows how much housing you'd have to add to have any significant impact on costs.”

* Lack of consensus. The YIMBY battle cry is affordable, accessible housing for everyone. Old-time residents displaced by gentrification arising from new housing construction no doubt question the sincerity of that logic. So should middle class and upper middle class young families looking for homes. In Gentrification and Housing Affordability, The Antiplanner says, “Cities can require developers to dedicate a certain number of their new units to low-income renters, but that just forces developers to raise the price of the rest of the units they build, reducing overall housing affordability.”

* Inherent political overtones. When referring to the economics of housing supply and demand, “political overtones” is a colossal understatement. Affordable or inclusionary housing are today’s polite words for subsidized housing that is loaded with government (political) regulations and mandates.

Distortions of Political Economics

Of these three condemnations of economics trying to pass for a science, the most relevant to YIMBYism and the housing shortage is the third one.

* Building costs, especially in areas dominated by progressives such as California, are high largely due to political considerations. Urban boundaries that result in limited and expensive land, requirements for numerous building permits, prevailing wage rates for construction workers, environmental regulations, developer fees, affordable housing quotas all need to be covered in one way or another.

* High costs necessitate government (political) incentives like tax breaks and free or cheap land for private builders to build. And they necessitate government owning plenty of land to use as bargaining chips or upon which to build government-owned, taxpayer subsidized housing.

* In many instances, the only way developers can access land upon which to build is by agreeing to absorb the cost of a certain number of below-market units – covered by high-priced market-rate units.

* Even in an imaginary world devoid of political variables, supply and demand never achieve the permanent balance YIMBYs and bureaucrats envision: housing supply goes up, prices go down, demand goes up as more people take advantage of the lower prices, prices goes up, and so forth. The cycle continues until crowding acts as a natural finale.

Repeat Anything Often Enough and It Becomes Truth

Given the laundry list of politically-generated market distortions, it would seem unlikely that simply increasing supply will bring housing costs down. Especially dubious is the strategy expressed in a recent appeal by California YIMBY.

“There are no simple solutions to the housing crisis. But we are determined to build a grassroots movement to fix it, one bill at a time … Add your name to support affordable, accessible housing for all and work together as neighbors to create change through pro-housing legislation.”

Sounds like a lot of mandates coming our way, in spite of the fact that the incessant mandates already produced by the California legislature as well as by regional bureaucrats have not made any visible dent in the affordability of housing. As the Federal Reserve report mentioned above says, “No one knows how much housing you'd have to add to have any significant impact on costs.”

California General Election November 6, 2018

Election Day is November 6, 2018. Polls are open 7:00 am to 8:00 pm. Whether your favorite candidates or causes have or have not a chance to win or lose is irrelevant. If you don’t vote, you are saying it’s OK for others to determine your future.

The Nine-County Coalition does not officially endorse or oppose candidates or propositions. We leave it to NCC participating groups to do that and reflect the preferences of their members.

However, there are three California state proposals that elicited strong views from NCC participants: Proposition 13 Portability, Gas Tax Repeal, and Repeal of Costa-Hawkins.

Read More

MTC's Transformative Projects Could be More Transformative

And the Winners Are!

The Metropolitan Transportation Commission and the Association of Bay Area Governments announced on October 22 the 12 finalists, out of 500 participants, in the Horizon Transformative Project, a public competition that solicited “big, bold and billion-dollar (or more) project ideas” for improving mobility across the Bay Area. Plan Bay Area 2050 will incorporate submissions that best fit the Plan’s objectives.

The 12 winning ideas fall into two categories, capacity-increasing projects and operational strategies projects, with 6 ideas in each. Here is a list of the ideas. Visit the Horizon website for names of the authors, a brief description of each project, and a list of all submitted projects.

Capacity increasing:

  • Optimized Express Lane Network and Regional Express Bus Network

  • Bus Rapid Transit on All Bridges

  • SMART to Richmond via a New Richmond-San Rafael Bridge

  • Interstate 80 Corridor Overhaul

  • Regional Bicycle Superhighway Network

  • Bay Trail Completion

Operational Strategies:

  • Integrated Transit Fare System

  • Free Transit

  • Higher-Occupancy HOV Lanes

  • Demand-Based Tolls on All Highways

  • Reversible Lanes on Congested Bridges and Freeways

  • Freight Delivery Timing Regulation

The list of winning projects, as well as the brief description of each on the Horizon website, provides a good hint of what each idea entails, but judgment would be difficult. For example, transit express lanes, rapid transit on all bridges, and bicycle superhighways sound good, but what would be left for those who want or need to drive their private vehicle? Free transit needs a lot of explanation as to who will pay for “free.” Demand-based tolls on all highways should call to mind that taxpayers pay to build the highways and then pay once again to ride them.

A Good Idea Not Explored

Congratulations to the 12 winners and to the 488 folks who did not get picked this time around but made the effort.

One idea that could be considered particularly transformative that was not selected by MTC/ABAG was alternative ways to work. Twenty project submissions suggested ideas such as alternate business hours, telecommute programs, staggered work start times, tax breaks and incentives for employers participating in alternative work environments, and tools for designing work schedules.

As in the case of projects that were selected, it is difficult to judge these alternative work scenarios that were not selected by MTC/ABAG without their full descriptions. For example, it might be important to know whether some of these projects involve mandates with which employers and/or employees must comply regardless of burden.

Granted, these alternative work schedules are not directly related to road design or infrastructure policies, but they certainly are related to traffic congestion. MTC/ABAG pride themselves on partnering with stakeholders and working with communities (seems to be their favorite phrases), so encouraging alternative hours for businesses as well as government agencies might be in order. People working from home do not commute back and forth daily, and thus do not help clog the roads.

Here are some reasons alternative working schedules should be considered:

Working from home

* This is the age of working parents who value time to take care of their children’s needs. Flexible days and hours help.

* Millennial workers make up a large percentage of the U.S. workforce. They are known for changing jobs often in search of what suits them best, including alternative work scenarios.

* The Bay Area is a high-cost, high-tax locale, that depends on high earners to pay the region’s bills. Millennial workers are high earners compared to others in the workforce. It behooves employers to keep millennials happy.

* Within the last couple of years, a few large employers with presence in the Bay Area reversed their trend of allowing their employees to work from home. Yahoo, Bank of America, Aetna and IBM reduced or completely eliminating their telecommuting programs. The move was ostensibly prompted by the companies’ belief that innovation has become essential and having everyone interacting in the same place helps innovation. Perhaps these companies were not aware of the plethora of remote conferencing software and hardware now in the market?

Bay Area Companies Free From the 9-5 Ritual

While Yahoo’s Marissa Mayer famously banned working from home, Automattic (the technology company that owns WordPress.com) closed its San Francisco Office. In the words of CEO Matt Mullenweg,

We got an office there [140 Hawthorne in San Francisco] about six or seven years ago, pretty good lease, but nobody goes in it. Five people go in it and it’s 15,000 square feet. They get like 3,000 square feet each.

WordPress has 59.4% market share, with other giant content management systems like Joomla and Drupal training behind, according to Digital.com. Seems like their employees working from home are pretty innovative.

Other large companies with a presence in the Bay Area that allow for alternative work scenarios of one form or another are Deloitte, Glassdoor, McKesson, and Oracle. Other companies such as Google do not have a specific WFH policy, but say they are generous in allowing flextime when employees need it.

The Petroleum Industry in Green California

Jerry Brown’s California takes pride in its quest for mitigation of climate change. Legislators pass laws that encourage everyone to walk, bike, or take the bus; live in efficiency dwellings adjacent to the roar of BART trains; and wipe out the dream of new families ever owning a single-family home with a back yard – all in the name of climate change.

However, clouding this picture are the oil wells in Kern County, San Joaquin Valley, and the Los Angeles Basin

Although California’s energy sectors are in flux, ostensibly moving from reliance on fossil fuels to “renewables,” the state’s petroleum industry is way too big to simply disappear within the time frame envisioned by legislators without draconian legislative mandates and economic upheaval.

How Big is California’s Petroleum Industry?

Let’s consider the significance of California’s petroleum industry. These statistics are from a report produced in 2017 by The Los Angeles County Economic Development Corporation (a private, nonprofit, public-benefit organization).

* Governor Jerry Brown’s administration issued more than 20,000 new drilling permits to oil companies.

* California is the fourth largest oil-producing state in the U.S., behind Texas, North Dakota and Alaska.

* Petroleum industry’s direct output is estimated at more than $111 billion. It generates more than $148 billion in direct economic activity and contributes 2.7% of the state’s GDP.

* The industry generates $26.4 billion in state and local tax revenues and $28.5 billion in sales and excise taxes.

* The petroleum industry is a major employer, responsible for 368,100 jobs, or 1.6 percent of California’s employment.

* User industries of refined petroleum products, like transportation, manufacturing and agriculture represent 1.7 million jobs in California, with an associated $111 billion in labor income. User industries account for 8.4 percent of the state’s GDP.

Moving to Renewables

California legislators have been cranking out climate change bills since the seminal Assembly Bill 32, the Global Warming Solutions Act of 2006. Since then, Californians have been dealing with moving targets in CO2 reduction policies, stack & pack supposedly to reduce miles traveled, proliferating potholes as taxpayer money is diverted to public transit, and irate bird lovers who want a solution to wind turbines shredding innocent birds.

However, it appears that from the woes listed above the only policy that significantly contributed to the decrease in CO2 reported on July 2018 by the Air Resources Board are the wind turbines, which help generate electricity.

Electricity generation had the largest decline among the sectors. Emissions from this sector declined 18 percent in 2016, reflecting continued growth in renewable energy – such as solar, wind and geothermal – as a result of the state’s Renewables Portfolio Standard, and a corresponding drop in natural gas generation. Solar electricity in all forms, including rooftop generation, grew 33 percent, while natural gas fell more than 15 percent.

The transportation sector, the state’s largest source of greenhouse gases, saw a 2 percent increase in emissions in 2016 because of increased fuel consumption.

Emissions from the industrial sector – including refineries, oil and gas extraction, cement plants, and other stationary sources – fell 2 percent from 2015 levels, though emissions from refineries increased slightly. Climate Pollutants Fall Below 1990 Levels for First Time.

One could interpret from the Air Resources Board report that climate change policies had no effect on how people need to travel, but nevertheless success was derived from ways California generates electricity.

Exporting our CO2

The Air Resources Board report mentioned above quotes three especially interesting statistics: emissions from transportation increased, extraction of petroleum products decreased, and emission from refineries increased. This chart might explain the enigma.

California crude oil sources

Foreign oil largely compensated for the decrease in California crude oil extraction. Does this strategy qualify as exporting our pollution while taking credit for greening our state? Or does it qualify as acceptable globalization where countries produce and sell what they are best at producing and selling.

Environmentalists’ Plan of How to Get Rid of California’s Petroleum Industry

Environmentalist and progressives are proud of Green California. They are also painfully aware of the state’s significant petroleum industry, and call for shutting down oil wells. In a May 2018 report, Oil Change recommends ceasing issuing permits for new oil and gas extraction wells, developing a plan for the managed decline of the entire fossil fuel industry, and developing a transition plan that protects workers affected by the decline including raising dedicated funds via a Just Transition Fee on oil production.

To its credit, the Oil Change report does mention oil imports that replace domestic production.

By establishing complementary oil supply and demand transition measures, California can show global leadership while reducing its own oil imports over the long-term. If the state meets its goal of cutting oil use in vehicles by 50 percent by 2030 and enacts the policies described in this report to limit production, California can significantly reduce its imports of oil by 2030 as well.

California’s petroleum industry is an embarrassment to environmentalists and progressives, and they would like to see the industry vanish.

There is room for concern about air quality, especially in counties where private vehicle usage is high and in counties where petroleum extraction and refining takes place. Residents sharing that concern might want to encourage legislators to focus on the way electricity is produced, since that is what contributed to the state’s reduction in harmful emissions. Such strategy places action where action has proven most effective, rather on efforts that appear to have had no effect on private automobile use.

Your Tax Money At Work: Bureaucrats Against Proposition 6?

Reform California, supporters of Proposition 6, wanted the proposal to appear on the November 2018 ballot as Gas Tax Repeal Initiative. Although the proposal also repeals several vehicle fees implemented by Senate Bill 1 and requires future voter approval of vehicle related taxes and fees, the main point of Proposition 6 is to repeal a significant gas tax increase.

However, what voters will see on their voters’ guide reads “Eliminates certain road repair and transportation funding. Requires certain fuel taxes and vehicle fees be approved by the electorate.” Eliminates road repair and transportation funding, not eliminates a significant raise in your gas tax?

Are Your Civil Servants Fair and Impartial?

The not so subtle change in the title of Proposition 6 sounds like the folks at the California Attorney General’s office, who are charged with assigning titles and descriptions to propositions, are not happy with the proposal.

Actually, supporters of Proposition 6 feel that a lot of bureaucrats are unhappy with the proposition. Reform California this week asked the federal government to investigate whether California public agencies are using taxpayer money to thwart Proposition 6. Carl DeMaio, Chairman of Reform California, said he obtained emails through public records requests and plans to file complaints with local district attorney.

It’s Voters’ Decision

Obviously, should Proposition 6 be approved by voters, legislators are free to place all the taxes and fees implemented by SB 1 on a future ballot. Then voters will have the ultimate say-so on how much they wish to pay for their transportation needs.

California's Transportation Funding Does Need Reform

The Gas Tax Repeal Proposition 6 on the November 2018 ballot has been in the news for a while. Now, from the same supporter of Proposition 6 is a proposal aimed at the 2020 ballot to provide the road repair funds that California Senate Bill 1 – implementer of the gas tax – promised.

On September 25, 2018, Carl DeMaio, Chairman of Reform California, filed with the Initiatives Coordinator at the California Attorney General's Office a Request for Title and Summary for Initiative Constitutional Amendment Citizens’ Lockbox for Road Repairs and Infrastructure Improvements.

The initiative communicates to the public the reason for the proposal: California’s taxpayers already pay some of the highest gas taxes in the country, infrastructure projects cost far more in California than projects implemented in other states, and therefore the people need to impose accountability on the allocation and use of tax funds for road repairs and infrastructure improvements.

Carl DeMaio says on gastaxrepeal.org that the Citizens’ Lockbox for Road Repairs and Infrastructure Improvements is the “third and final phase of fixing California’s roads without raising taxes on struggling working families of our state.” He cites the recall of State Senator Josh Newman and placing the Proposition 6 on the November 2018 ballot as the two previous phases. DeMaio plans to submit signatures for the Citizens Lockbox tax replacement measure by May 15, 2019.

By way of clarification we should emphasize that the proposal by Reform California more specifically indicates where vehicle taxes and fees must go. In contrast, California Proposition 69 the Transportation Taxes and Fees Lockbox and Appropriations Limit Exemption Amendment, approved by voters June 2018, requires that revenue from the diesel sales tax and Transportation Improvement Fee enacted by SB 1 be used for “transportation purposes, including public transportation.” Also, Proposition 69 exempts SB 1 revenue from California’s Gann Limit, which prohibits the state and local governments from spending revenue in excess of per-person government spending in fiscal year 1978-1979, with an adjustment allowed for changes in the cost-of-living and population.

Closer to User Fees than SB 1

As is the case with Proposition 6, reform – not just doing away with taxes – is the real goal of the new proposal by Reform California. The road repair and infrastructure improvement constitutional amendment ballot initiative is intended to do more than create a road maintenance lockbox and replace transportation funds repealed by Proposition 6. Starting with vehicle taxes and fees collected on or after January 1, 2021, the amendment allocates funds in a more equitable manner, closer to the idea of user fees than SB 1 prescribes. Also, the amendment addresses California’s high costs of construction.

Here are the highlights of Reform California’s proposal:

* Taxes on vehicle fuels would go to streets and highways.

* Existing sales taxes on the purchase of vehicles would support traffic research and mitigation measures, non-motorized traffic, public mass transit guideways and their fixed facilities, payment for property taken or damaged, and state administration and enforcement. (Note: The peripheral expenditures nowadays associated with transportation perhaps needed to be addressed; but they are restricted to revenue generated by sales taxes on the purchase of vehicles.)

* Fines and penalties imposed for violation of traffic and vehicle laws and from vehicle fees, including license fees, would go to state administration and enforcement of laws regulating the use, operation and registration of vehicles.

Addressing Costs

As the Citizens’ Lockbox initiative states, California infrastructure projects cost far more in California than projects implemented in other states. Costs are a factor in decisions regarding the scope of a project, whether to start a project at all, and how structurally sound a completed project will be. A major part of this cost challenge is labor. Therefore, the Citizens’ Lockbox initiative attempts to address labor costs in transportation projects by requiring the following:

* State or local funds will not be used in transportation projects that limit contractors or workers from participating because of their union or non-union status.

* State or local governments will not impose pay or benefit requirements regarding employees working on transportation projects, beyond requirements expressly mandated or required by federal law or regulation.

* The legislature shall not enact a law, and stat government agencies shall not take any action, to prohibit or limit the ability of a local government to use competitive bidding or outsourcing as a means of carrying out work on a transportation project.

Declaring California High-Speed Rail Not Ready for Prime Time

High-Speed Rail is popular in many countries, notably China, Germany, Japan and Taiwan. But in California, the HSR project is vilified for being $13 billion over original budget, engulfed in litigation, and abysmally slow. Thirty seven years after California planners first worked with Japanese partners to consider a southern California high speed rail corridor, and ten years after voter approval of the high-speed rail project, the first phase – service between San Jose and Bakersfield – is expected to start in 2025.

Reform California feels that the high-speed rail project needs to end and resources need to be allocated to more realistic and immediate transportation needs. The Citizens’ Lockbox initiative proposes that,

* the governor and legislature end public funding of HSR, except for minimal funds as necessary to effect the orderly and complete termination of the project no later than June 30, 2021.

* unspent High-Speed Rail proceeds received from outstanding bonds issued and sold be redirected to retiring the debt incurred from the issuance and sale of those outstanding bonds.

Bottom Line: Cars or Transit?

high-speed rail

Advocates for each side have been stating their case for quite a while, and each side has good and bad points. Taking a fast, clean and reliable train to work might be more convenient than driving. But not so for the many parents who need to drop off their toddlers in daycare before starting work at 8:00 am, or for those who have difficulty walking or biking to a sometimes not so close transit stop.

Forcing a lower-income family whose most realistic means of transportation is a car to pay for transit the family does not use is as inequitable as Cap-and-Trade money being used to subsidize high-cost electric vehicles.

Transit-Oriented Development as the New Money Tree

 Fruitvale TOD: One of several BART transit villages

Fruitvale TOD: One of several BART transit villages

Transit-oriented development is sold by its promoters as the answer to the housing crisis and to sustainability. The reason for TODs, supporters say, is to build dense mixed-use villages along transit lines that can accommodate more housing, including affordable housing, and to reduce vehicle miles travelled.

Bay Area residents heard a lot about TODs along city transit lines with the advent and demise of California Senate Bill 827, a proposal that proved a bill too far and died in committee. Residents have also heard about transit villages popping up on BART-owned land, not only because of well-designed publicity, but also because of residents’ fears of unchecked expansion of BART TODs as exemplified by the recent Assembly Bill 2923. However, there are other less visible TOD projects in the planning stage, such as those being pursued by Caltrain and by the Santa Clara Valley Transportation Authority. Also, Bay Area cities operating under the mandates of Plan Bay Area are developing within their borders dense projects in Priority Development Areas along their transit corridors.

Given such enthusiasm for transit-oriented development, often in the face of opposition from neighborhood residents concerned about either gentrification or a fall in the value of their homes, one question is in order: Are government agencies, especially those whose function is to provide safe and efficient transportation services, really that concerned about the housing shortage and climate change?

Caltrain’s TOD Plans

Let’s take a quick look into Caltrain’s strategic plan.

To consistently deliver excellent services and projects, Caltrain needs financial stability. To achieve this, Caltrain strives to control its own costs and operate as efficiently as possible. The agency can bolster its finances by maximizing the revenues it generates through operations and by exploring new sources of income. In particular, while it may require complex land assembly and can be challenging to execute, transit-oriented development has great potential as a source of revenue for the Caltrain system. Caltrain Strategic Plan: FY 2015 – 2024, published September 2014.

As a note of observation, Caltrain has been plagued with a structural deficit going back several years. It has survived by the skin of its teeth mostly from the annual contributions of San Francisco, San Mateo and Santa Clara counties. Governor Brown has approved placing a sales tax measure on the ballot that would provide a dedicated source of funds for Caltrain, but would not be enough to solve the agency’s fiscal woes. Caltrain has decided that housing on Caltrain-owned land is a solution.

To take advantage of revenue generated by housing, Caltrain developed specific objectives, two of which are particularly interesting. Note: JPB is the Joint Powers Board that governs Caltrain, and is comprised of representatives from San Francisco, San Mateo and Santa Clara counties.

Establish broad “property use” zones based on current, planned, and potential future needs for railroad uses.

Analyze the tradeoffs between preserving JPB property for potential future railroad needs and allowing potential commercial leases and joint-development projects on the property.

What exactly are “property use” zones, and who might be allowed to decide on such zones? At present Caltrain talks about working with local jurisdictions for mutually beneficial results. But in the future, Caltrain might come to the same conclusion as BART – local zoning must be ignored.

Thankfully, Caltrain is aware there is a tradeoff between developing a current revenue source through housing and preserving assets for future railroad needs. Other tradeoffs not clearly listed by Caltrain are those between allocating funds to housing vs. allocating funds to current capital needs; and between choosing a lower level of risk by stick to rail transportation vs. choosing a higher level of risk by embarking in housing development when the market is at the top and perhaps ready for correction.

VTA’s TOD Plans

Santa Clara Valley Transportation Authority (VTA) has similar objectives in entering the housing market as Caltrain.

With an extensive portfolio of real estate assets located throughout Santa Clara County, VTA has updated its Joint Development Policy to reflect the changing needs of Silicon Valley.

The goals of the policy are to generate revenue; to carry out transit-oriented development; and to increase ridership on VTA's multi-modal transit system. Encouraging the development of affordable housing is a priority VTA can accomplish during the process of developing those real estate assets. VTA Joint Development Program.

Again, revenue generation is a significant objective. VTA hopes for new revenues from housing and increased revenue from folks living near the train tracks.

TODs are the New Normal

The California legislature writes bills that alter the zoning laws of cities, including charter cities, by citing housing shortage and climate change as matters of statewide concern. State laws addressing either subject reign supreme over city or county laws. Conversely, agencies’ need for revenue generation would probably not pass muster as a matter of statewide concern.

As housing and climate change dominate the news and legislation, transit-oriented development moves toward becoming a way of life. Cities will increasingly lose their autonomy. Therefore, taxpayers and voters will need to pay more attention at the ballot box as to what they are gaining or loosing with each expansion of TODs.

MTC Gearing Up to Defeat Proposition 6

The Bay Area Metropolitan Transportation Commission is gearing up in opposition to Proposition 6, on the November 2018 California ballot. Proposition 6, a constitutional amendment ballot initiative, would not only repeal the increases in fuel and auto registration fees mandated by Senate Bill 1, but would also require that any fuel or vehicle related tax increase be approved by voters. Here is how MTC views Proposition 6,

Passage of Proposition 6 and the resulting repeal of SB 1 would not only put portions of funding for local streets and roads in peril, but also would imperil plans for replacing worn-out transit vehicles and other basic needs of the Bay Area’s aging transit systems. It also would jeopardize plans for additional capacity for BART and the regional rail system’s extension to Silicon Valley, the electrification of Caltrain in the Peninsula, and the Sonoma-Marin Area Rail Transit (SMART) rail system’s planned extension from San Rafael to the ferry dock in Larkspur, among other projects.

So, what’s wrong with this picture? Retired former Supervisor, State Senator and Judge Quentin Kopp, a regular contributor to neighborhood newspaper the Westside Observer, offered his insight into what’s wrong with SB 1 in his September 2018 column.

The 2017 increase renders California's gas tax the highest in the nation and flaunts the 1922 legislative decision to finance highways, roads, and streets by a "user fee." Such user tax revenue should be deposited in the State Highway Fund, not the General Fund, not used for public transit, the DMV, or California Highway Patrol.

… State politicians have used gas tax revenue for purposes other than highways, roads, and streets, including state general fund spending. Caltrans cannot be trusted with efficiency; California's highway construction costs per lane mile are 62% over the national average, engineering costs 42% more, and maintenance workers obtain a third more than the national average.

In other words,

* Contrary to MTC’s characterization of Proposition 6 as “Pothole Peril,” funds from SB 1 will go towards numerous projects unrelated to potholes or other street and highway disrepair.

* Guarantees by SB 1, as well as Proposition 69 passed by voters June 2018, that SB 1 funds will be used for transportation projects, could be described as meaningless, since the California legislature’s view of “transportation” is exceptionally wide.

* SB 1 funds will surely end up as mismanaged as all the other funds intended for “transportation,” considering Judge Kopp’s view of Caltrans’ costs.

Additionally, Proposition 6 does not place the fixing of potholes in peril, since all the legislature needs to do is place the tax increases of SB 1 on the ballot for voters’ approval. And by the way, the requirement that fuel taxes and vehicle related fees be in the future voter approved is really the crucial intention of Proposition 6.

MTC/ABAG Horizon Initiative: Mission Creep Part II

Horizon Initiative Update

The Metropolitan Transportation Commission and the Association of Bay Area Governments (MTC/ABAG) today thanked the more than 350 members of the public who submitted proposals for “BIG, bright, billion-dollar (or more) transportation ideas through the Request for Transportation Projects.”  

In preparation for Plan Bay Area 2050, the public proposals will help MTC/ABAG’s Horizon Initiative develop projects that are bolder that those possible under the Regional Transportation Plan and Sustainable Communities Strategy (RTP/SCS).  Plan Bay Area 2040 was developed within the RTP/SCS framework.  

Perspective Papers

During 2018 and 2019, MTC/ABAG plans to release a series of analyses called Perspective Papers.  The Papers will identify potential strategies that could be adopted by Horizon and by Play Bay Area 2050.  Here is a list of the Papers and their planned release dates,

Autonomous vehicles & future mobility: date was June 2018
Travel demand management & climate mitigation: September 2018
Regional growth strategies: December 2018
Bay crossings: January 2019
Future of jobs: March 2019
Regional governance: June 2019
Design & better buildings: September 2019

It might help in the understanding of this list of Perspective Papers to be aware of the scope and depth of Plan Bay Area’s framework.  

*  Horizon is the latest development, and each development advances central planning and regionalism one notch above the previous development, leaving a solid trail of seemingly irreversible strategies. The Horizon Initiative intends to promote “the exploration of innovative strategies and solutions for issue areas that have been outside of the scope of past Plan Bay Area long-range planning processes.”

*  Horizon lists the following Guiding Principles, which the Perspective Papers will support:  housing affordability, regional transit connectivity, diversity of residents accessing “the region’s assets and resources,” conservation of the region’s natural resources, creation of quality jobs for all “and ample fiscal resources for communities.”  

* According to Horizon, the Guiding Principles were the result of public responses to the question “What are the most pressing issues we should consider as we plan for life in 2050?”  True.  Although it might be useful to remember that the primary objective of Horizon is to expand Plan Bay Area’s ability to incorporate “outside the box – yet essential – thinking about emerging issues into the RTP/SCS’s policy and project framework."  In other words, the Guiding Principles must 1) fit RTP/SCS’s policy and framework, and 2) grow RTP/SCS’s scope.

Mission Creep Part II

We recently wrote about California Assembly Bill 2923 being a prime example of mission creep – a phenomenon that causes projects or missions to expand beyond their original stated goals. In the case of AB 2923, BART has gone from wanting to be a rapid transit system to being a landlord.  

Now enter MTC/ABAG’s greatly more ambitious mission creep.  MTC/ABAG via the Horizon Initiative and in preparation for Plan Bay Area 2050 wants to be not only a planning department, but now also an economic development, diversity, and price control department.

Ask Yourself the Question Too

MTC/ABAG’s question “What are the most pressing issues we should consider as we plan for life in 2050?” should be considered by every Bay Area voter and taxpayer, since it appears that MTC/ABAG might be getting ready to come up with ways to reach into everyone’s pocket in order to support Horizon’s Guiding Principles.  Some voters or taxpayers might object to Horizon’s mission creep, and not only question the legal basis for the expanded mission, but also simply vote no on tax proposals intended to support the Guiding Principles.  They might also start wondering what would be left for city and county planning and development departments to do.

Regional Planning at Work

                                    Horizon Peer Exchange

                                  Horizon Peer Exchange

This video is on the Horizon Initiative section of the MTC website, and is a good example of how the planning process works these days:  collaborative efforts, lots of visuals, and formulation of scenarios.  As expected, the scenarios do not deviate from the officials assumptions of MTC/ABAG. 

Jane Fonda Not The Only One to Need an Economics Workout

Steve Frank’s newsletter California Political News & Views is a treasure trove of alerts and insights garnered from a variety of news sources.  On August 22, the newsletter included an article by Kyle Permann, titled Jane Fonda Needs and Economics Workout, which originally appeared on August 14 in Capital Research Center.

Jane Fonda’s Pronouncements

 Fonda speaking in opposition to the Vietnam War

Fonda speaking in opposition to the Vietnam War

The “economics workout” to which the article refers is recommended to actress Jane Fonda, famous for her numerous Hollywood movies, as well as for her immensely successful workout videos that intended to level the playing field of the 1980s when gyms were mostly for men.

The left-leaning public takes Ms. Fonda’s pronouncements seriously, and she has pronounced her support for Washington DC’s Initiative 77, an initiative that makes tipped workers subject to minimum wage laws.  Voters approved Initiative 77 in June, but DCs City Council is now challenging it with repeal.  The principal problem with Initiative 77 is that tipped workers -- mostly restaurant employees -- don’t want it, since, unlike Ms. Fonda, they experience the economics of the situation first hand.  Restaurants will have to increase prices to cover their labor costs, some patrons will no longer afford to eat out and others will tip less given the increase in the workers’ wages and in prices, some restaurants will simply close, and workers will make less money in the end.

How do proposals that are blatantly counter-productive from an economics standpoint consistently become law?  They are framed not as economic issues, but as social issues!  This from Mr. Permann's article,

The voices of Hollywood’s elites are drowning out the truth, an unfortunate cycle that seems to repeat itself time and time again.  Even more painful is Hollywood’s effort to re-frame economic issues as social issues and framing Initiative 77 as a policy to help servers, when in fact, it hurts them.

Passing off Economic Issues as Social Issues

Mr. Permann’s article discusses Hollywood’s outsized political influence on the public, and uses Jane Fonda’s support for Initiative 77 as example.  However, framing economic issues as social issues is the essential ingredient in menus listing such fares as the minimum wage, universal healthcare, free college, all-encompassing rent control, or housing for all.  Such framing is necessary in order to shift attention from those who either pay or forego income, to those who need.  In a progressive-leaning state like California, it is more likely, for example, that the public will empathize with the working poor needing a roof over their heads, than with landlords who might be taking home 7-figure incomes.  

Here at the Nine-County Coalition our focus has been on land use, rather than on other economic issues such as minimum wage or healthcare.  We have discussed how current land use laws can only succeed with forceful legislation because such laws are often economically unfeasible.  In California, forceful legislation has a better chance of success if framed as social issues.

A Proven Strategy Can Sometimes Backfire

A particularly interesting twist on the social issue approach is the demise of California Senate Bill 827.  An article in the Los Angeles Times describes a rally in front of San Francisco’s City Hall, where YIMBYs showed up to support SB 827, and lower-income renters showed up to express their concern over displacement.  YIMBYs made the tactical error of shouting down the lower-income renters, and the rest is history.

When Chinese, Filipina and black tenant activists spoke to fears that expanding housing this way [with SB 827] will displace residents of their communities, supporters of the measure drowned out their voices with chants of "Read the bill."

The scene of predominantly white protesters shouting over people of color fed a criticism that has dogged backers of recent legislative efforts to boost home building. In a twist on the term "NIMBY," these mostly twenty- and thirtysomethings with white-collar jobs are referred to as "YIMBYs," or "Yes, in my backyard." Organizations like these have sprung up across California and the YIMBYs argue their efforts will benefit low-income people of color statewide.

Many don't see it that way, and instead worry that developers would build housing catering only to wealthier, white residents, leading to higher prices that would force out those living in poorer communities now.

This divide was one of the primary reasons for the failure last month of Senate Bill 827…

In other words, the sight of white folks with high-paying jobs shouting down lower-income renters of color was the nail that shut the coffin of SB 827 for good.  Never mind the economic defects contained in the bill’s strategy.

SB 1333: California's Fight Against Charter Cities

By Carol Gottstein
Alameda, CA

Many new bills have been introduced in the State Legislature to address the alleged "housing crisis". Although this crisis is always described as statewide, coastal cities, where the population is already quite dense, seem to get the most pressure to build more housing. Realizing the strain this will put on existing infrastructure and public services, some cities have fought against the state imposition of housing.

Huntington Beach Fights Back and Wins

One of those cities, the charter city of Huntington Beach, after losing at the trial court level, on appeal won the right to downzone its RHNA (Regional Housing Need) allotment. It won because Huntington Beach is a charter city, and in California, charter cities have the right of plenary authority over municipal affairs. Municipal affairs are not defined in the state constitution, but the determination of whether a given activity is a municipal affair or a statewide concern has always been done by the courts, on a case-by-case basis.

SB 1333:  Work-Around a Court’s Ruling

California Senate Bill 1333, now in committee, is specifically tailored to attack the Huntington Beach decision, so that other charter cities will think twice about asserting their rights to local control. It's another one-size-fits-all approach which ignores the diverse needs of California cities and counties.

SB 1333 also explicitly provides no reimbursement, assuming that new local fees and assessments will cover any program mandated by this Act. Thus, it is an unfunded mandate to benefit “the state” at the expense of local impacts.

Charter cities and counties should oppose SB 1333, to preserve what few rights they have to land use and zoning determination at the local level. Let the courts continue to decide these issues on a case-by-case basis for the individual cities, as concerns arise. Only municipalities can measure new demands on their resources and need the rights to use their land accordingly, not have the state tie their hands!

Source:  https://www.law.berkeley.edu/files/Albuquerque3_-_Foundational_Aspects_of_Charter_Cities.pdf

BART Transit Oriented Development AB 2923 Hearing

AB 2923, Bay Area Rapid Transit District: Transit-oriented Development, is currently in the California Legislature’s Appropriations Committee, and scheduled for a hearing on August 13, 2018.

The Nine-County Coalition described this bill’s mandates and forcefulness in AB 2923: Mission Creep Forges Ahead.  We noted AB 2923 is a good example of expansion of original missions – expansions that do not stop until all goes wrong and systems collapse.

As a reminder, AB 2923 would require BART to adopt by ordinance new transit-oriented development (TOD) zoning standards that establish minimum local zoning requirements for height, density, parking, and floor area ratio for TOD housing projects.  Eligible TOD housing projects would be located within ½ mile of any existing or planned BART station entrance within the BART district.  Projects would contain a minimum of 20% affordable units, and would meet the following requirements

*  Be located is an infill site.

*  Was not acquired through eminent domain on or after July 1, 2019.

*  Forms a contiguous area of at least 0.25 acres and is located both within one-half mile of an existing or planned district station entrance and within an area represented on the board.

*  Has been owned by the district since on or before July 1, 2020.

*  For a TOD project relating to a district station that existed on July 1, 2018, the district’s TOD zoning standards applies only to the parcel owned by the district on that date.

As an aside, given that July 1, 2019 and July 1, 2020 are a few years away, perhaps we all should keep an eye on BART’s land acquisition plans between now and then. 

If you are concerned about BART’s encroachment on cities and counties ability to set their own zoning standards, you might want to call or email your legislators before the Appropriations Committee hearing of August 13.

Costa-Hawkins Repeal on November Ballot - It's Complicated!

California voters will see Proposition 10 on their ballots on November 6, 2018.  Proposition 10, The Affordable Housing Act of 2018, a voters’ initiative, aims to repeal the Costa-Hawkins Rental Housing Act of 1995.  Costa-Hawkins was sponsored by Senator Jim Costa (D-Fresno) and Assembly Member Phil Hawkins (R-Bellflower), became Assembly Bill 1164 which passed both chambers of the California Legislature, and was signed into law by then California Governor Pete Wilson.

Proposition 10 is the latest battle in the ongoing war between California renters and landlords.  The 1970s were plagued with “stagflagtion,” stagnant wages in the midst of inflation.  In response, cities passed rental controls in an attempt to keep housing prices down.  Then came Proposition 13 in 1978, and the hope that landlords would share their property tax savings with renters thus significantly lowering rents.  When that did not happen, renters started to organize in earnest. But so did landlords, and the result was Costa-Hawkins, which prohibits imposing rent controls on new construction, single-family homes, condominiums, and vacant housing units.  Controls were thus limited by Costa-Hawkins to rental buildings in existence at the time cities passed their rent control ordinances, and limited to the period of time each tenant occupies each unit.

The animosity between renters and landlords over rent control is especially remarkable because at present there are only 15 municipalities (cities and towns) out of California’s 482 with some form of rent control.

Immediate Benefits and Long-Term Costs

Both sides of the rent control debate have plenty of arguments.  Here are a few.

As an immediate stop-gap solution, rent control benefits current renters who cannot afford to pay market prices for their homes.  

Leveraging new data tracking individuals’ migration, we find rent control increased renters’ probabilities of staying at their addresses by nearly 20%. Landlords treated by rent control reduced rental housing supply by 15%, causing a 5.1% city-wide rent increase.”  The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco, January 2018.

In other words, the imposition and expansion of rent control does provide immediate benefits to current renters whose landlords stay in the market by preventing significant and sudden rent increases that lead to unpredictability, and could lead to displacement or homelessness.

But, landlords may not want to stay in a rent-controlled market, thus over the long term rent control makes housing less affordable by discouraging the supply of rental units.  Unable to charge what the market will bear, existing landlords will leave the rental market and potential landlords will find investments other than rental property.  

Rent control is a form of price ceiling, and price ceilings lead to scarcity and misallocation.  Milton Friedman said,

We economists don't know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can't sell tomatoes for more than two cents per pound. Instantly you'll have a tomato shortage.

Here is an example of misallocation.  A young couple with young children moves to a large rent-controlled apartment with plenty of space for the kids.  Years later, the kids are grown and on their own, but the couple is still living in the same now oversized apartment.  It is cheaper for them to stay put in an apartment too big for their needs than to move and pay market price for their dwelling.  The new families with young children that need space for their kids are not in the older couple’s sphere of interest.

Incentives and Punishments

Human nature tends toward the seeking of benefits (and yes, benefits include spiritual and emotional benefits sought by some, but not others).  The track record shows that in the case of renters, they will seek immediate lower rents for the kind of dwelling they want, and in the case of landlords, they will seek the highest return on their investment.

Under the rent control scenario pictured in the section above, landlords would need either incentives or punishments to stay in the market.  Incentives could come in the form of tax breaks, zoning alterations, or “affordable housing bonus plans” (a form of zoning alteration).  Punishments could come in legal costs to prove “just evictions.”

It would follow that rent control expansion, likely to occur in the populous progressive areas of the state should Costa-Hawkins be repealed by voters, would necessitate greater incentives and/or greater punishments to maintain landlords in the rental market.

Politicians might opt for incentives so as not to alienate landlords that are willing to work within the bounds of controls, or that might be a positive presence in re-election campaigns.  Renters’ advocates might have a more jaundiced view of landlords and prefer punishments.

 This image from the MTC website shows number of permitted housing units declining since the 1970s.  Incentives or punishments are necessary with each new regulation.

This image from the MTC website shows number of permitted housing units declining since the 1970s.  Incentives or punishments are necessary with each new regulation.

Proponents and Opponents

California is full of renters, especially in the more populous coastal cities where home prices can easily top $1 million.  46% of households rent statewide.  Several cities have more renters than home owners.  RentCafe provides these 2016 percentages of households renting in California cities:  Los Angeles 61%, Oakland 58.9%, San Francisco 56%, Stockton 54%, San Diego 53%, Fresno 52%, Sacramento 50%.

Therefore, California has powerful renters’ advocacy organizations that lobby for implementation and expansion of renters’ protections.  For example, Tenants Together is working hard to repeal Costa-Hawkins.

Obviously, landlords of all types, as well as the real estate industry, including developers and construction unions, are opposed to the repeal of Costa-Hawkins.  Those are the folks who have made or are thinking of making investments in rental property, and prefer, 1) a return on their investment such as the market would bear, and 2) a market less fraught with risks of sudden legislation unfavorable to their investments and their livelihood.  

California politicians and policy makers facing disgruntled renters in their cities might feel they have no choice but to take action on immediate relief.  

For example, Eric Garcetti, Los Angeles mayor and hopeful presidential candidate, supports the repeal of Costa Hawkins on the grounds repeal would restore cities’ authority to address their housing crisis. Given the generally progressive nature of the state, as well the state’s high percentage of renters, it is likely that a number of cities will choose to expand rent control.

On the other hand, California Lt. Governor and aspiring Governor Gavin Newsom opposes the repeal indicating repeal “may have unintended consequences on housing production that could be profoundly problematic.”  

California U.S. Senator Kamala Harris prefers tax credits for renters, and introduced on July 19, 2018, Senate Bill 3250 Rent Relief Act of 2018, which would give tax credits to anybody who spends more than 30% of income on rent and utilities (House companion bill is HR 3670 introduced in September 2017 by Congressman Joseph Crowley D-NY).

So What To Do?

We recommend that voters consider who really wins or loses with the repeal of Costa-Hawkins, because the campaign will surely be laden with extreme rhetoric from both sides.

For example, as of March 2018, according to figures quoted in the Mercury News, 78% of landlords renting single-family homes owned only one or two properties, 12% owned 3 – 10 units, and 9% owned 11 or more units.  Yet Tenants Together chooses to focus on the institutional investors:

Since the 2008 crisis, Wall Street has snapped up tens of thousands of single-family home rentals across the state and nationwide. Thanks to Costa-Hawkins, Wall Street landlords can hike rents by thousands of dollars overnight.  

Opponents of Costa-Hawkins repeal can be equally hyperbolic.  Understandably, the California Apartment Association and its members are concerned about taking a hit should Costa-Hawkins be repealed and cities expand rent control.

In reality, returning extreme forms of rent control to California would bring construction of rental housing to a halt while driving many existing landlords out of the rental housing market.

Although the populous progressive coastal cities in California will likely expand rent control should the repeal of Costa-Hawkins occur, they could also provide sufficient incentives to avoid bringing construction of rental housing “to a halt.” Dialing down the current focus on construction might actually be helpful to residents not happy with all the stacking & packing going on. Hopefully, city leaders will comment between now and November.

Voters opposed to state-wide mandates such as the recently demised Senate Bill 828, could consider capitalizing on all the talk about repealing Costa-Hawkins in order to bring decisions on rent control back to the cities.  The downside of that approach is that if those same voters are also opposed to expansion of rent control, it will take some effort to prevent expansion in their cities.

Burlingame and The Metamorphosis of Cities

Commercial Rents Too High and Parking Too Scarce

The San Mateo Daily Journal carried an article last Friday noting that many of the small specialty stores that give Burlingame its distinct character and make the city a shopping destination for Bay Area residents are closing or moving elsewhere.  And “…in the wake of businesses departing Burlingame Avenue due to frustrations over high rents and parking problems, a recent uptick in vacant storefronts is concerning local merchants and officials.”

 Gymboree, along with J. Crew, Anthropologie, Kara's Cupcakes, Baby Couture, and Aida Opera Candies have left Burlingame.

Gymboree, along with J. Crew, Anthropologie, Kara's Cupcakes, Baby Couture, and Aida Opera Candies have left Burlingame.

Mayor Michael Brownrigg says he understands the affordability challenges.  He notes that Burlingame is also a destination for “corporations seeking to fill bigger storefronts, creating a disadvantage for smaller or independent companies.”  Presumably, Mayor Brownrigg is stating the obvious – larger corporations are able to pay the high rents along Burlingame Avenue and other main shopping corridors.  He suggests that smaller local merchants locate their stores on side streets, rather than vie with larger corporations for prime shopping spaces.

Mayor Brownrigg and other city officials also understand the parking problem.  He notes that councilmembers recently approved shorter time limits in downtown parking meters -- “The idea is to promote more frequent turnover of the spaces closer to most of the shops and restaurants, while encouraging merchants and employees to take the spaces further away.”  

It appears form this article that Burlingame is changing, and will continue to change if or when the planned construction of “Village at Burlingame” starts.  This planned development is a 5-story workforce (78 units) and senior (54 units) housing complex, and a parking garage, on what is now Parking Lots F and N downtown.  Mayor is Brownrigg says it is too early to decide what gets built first, housing or parking.

It remains to be seen whether Burlingame retains its present charm, as well as its high-end shoppers that look for unique items in the city’s locally-owned boutiques.  Or in the absence of their favorite shops along Burlingame Avenue, these shoppers will vote with their feet and shop elsewhere.  The latter seems the more likely scenario.  City officials hope that old-time shoppers will be replaced by foodies looking for yet another unique dining experience.

Additional View on the Subject:  The Burlingame Voice

The Burlingame Voice blog has some pretty good stuff.  A take on the merchant flight from Burlingame:
“I'll bet there are more than a few business owners who also think adding a big chunk of new housing will only exacerbate the business-available parking.  They may be feeling the political-correctness pressure to not say so, but I bet they are thinking it.”

We at the Nine-County Coalition suspect those business owners know high-end shoppers don’t take the bus.

Howard Jarvis Taxpayers Association Files RM 3 Lawsuit

The Howard Jrvis Taxpayers Association on July 5, 2018, filed a lawsuit in San Francisco Superior Court against the Bay Area Toll Authority and the California State Legislature claiming Regional Measure 3, approved by voters on June 5, 2018, as well as enabling legislation Senate Bill 595, should be invalidated. HJTA claims that SB 595 was proposing a tax not a fee and therefore 2/3 approval from legislators should have been required. 

HJTA's suit also claims that Regional Measure 3 is also a tax proposal and should have required 2/3 approval by voters.  The measure passed with 55 percent voter approval.  You can access the court filing in the Superior Court of California website (you need to prove you are not a robot to view the case).

The lawsuit states that both SB 595 and Regional Measure 3 violate Section 3 of article XIII A of the California Constitution, which reads,

The State bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.

Obviously the above paragraph does not describe RM3, since money taken from bridge crossers will be allocated to BART, ferry, bus, and bicycle riders.

The Mercury News carried a good article on the HJTA lawsuit on its July 9 edition.  The article quotes  interviews with Tim Bittle, Director of Legal Affairs Howard Jarvis Taxpayers Association, Jim Wunderman, president and CEO of the Bay area Council, and Randy Renschler, spokesperson for the Metropolitan Transportation Commission.

Tim Bittle explained that Proposition 26, approved by voters in 2010, codified what is a fee and what is a tax.  What may have slipped in as a fee prior to 2010 should not do so after Prop 26.

Jim Wunderman provided an interesting version of a “fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.”

Getting commuters and others out of their cars and into mass transit, including BART, Caltrain, local buses and ferries, provides a direct and powerful benefit to everyone who uses the region’s seven state-owned bridges.

Randy Renschler was quoted as saying,

We oppose their path of obstruction as our highways and transit systems must be maintained and improved in order to support the Bay Area’s high wage economy that benefits Bay Area families.

Perhaps Jim Wunderman and Randy Renschler are indeed trying to solve a problem, but doing so by ignoring laws and hurling invectives will bring on a free-for-all in the public arena.  Opposition to RM3 does not represent a “path of obstruction.” It represents a desire for lawfulness.

Frederick Douglass.jpg

Contra Costa County Grand Jury Not Happy With JPAs

A mission of the Nine-County Coalition is to look with an extremely jaundiced eye at all types of agencies staffed by non-elected officials.  Joint Powers Authorities (JPAs), as the Contra Costa County Civil Grand Jury says in its 2017-2018 report,  are “a flexible, easy to form, cost-effective means to carry out specific functions.”  But they are also not in voters’ radar screen.  Therefore, until we all miraculously come up with a more accountable way to deal with inter-agency, inter-city, inter-county functions (think BART or water systems), we can try to ensure that our JPAs abide by their intended purposes and observe fiscally responsible ways.  

Joint Powers Authorities

JPAs were created by the California legislature way back in the 1940s.  Cities and counties in need joint action can form JPAs for a wide range of functions, such as transportation or construction projects.  Inter-county, inter-city, and inter-agency projects have proliferated since the 1940s, and so have JPAs.  Here are a couple of examples of recently-formed Joint Powers Authorities.

In May 2018, participating public water agencies formed The Delta Conveyance Design and Construction Authority (DCA) as a Joint Powers Authority.  This JPA will be responsible for final design and construction of facilities that are part of the California plan to upgrade its water systems.  The JPA will be empowered to incur debt and acquire real and personal property.

In April 2018 The California State Association of Counties Finance Corporation (CSAC Finance Corporation) established the California Cannabis Authority (CCA) as a Joint Powers Authority to help cities and counties deal with regulations and taxes in the cannabis industry.  One objective of the CCA is to gather data on regulatory and tax compliance in order to provide detailed information to financial institutions interested in working with the cannabis industry.

We are talking about a lot of JPAs serving innumerable functions, and in some cases having the power to accumulate substantial liability for which ultimately taxpayers are responsible.  The Contra Costa County Civil Grand Jury Report Joint Powers Authorities:  Transparency and Accountability lists the findings and provides recommendations.

Findings

The Contra Costa Grand Jury focused its study on Financial JPAs, and addressed transparency and accountability.  Here is a brief summary of the findings.

*  Certain JPAs with a single controlling entity, such as a city council, can avoid legal debt limits and provide limited disclosure to taxpayers.

*  In Contra Costa County there are 12 JPAs created by Redevelopment Agencies that no longer exist, and these JPAs are also attached to the new Successor Agencies.  Thus these JPAs can take on new debt while still servicing the debt incurred under the now defunct Redevelopment Agencies.

*  Cities that created the 12 JPAs referred to above, do not provide JPA-specific information, making it difficult for voters and other interested residents to evaluate JPA performance.

*   The Contra Costs County Auditor maintains  information only on JPAs in which the County is a member, and nothing on JPAs in which the county is not a member.

*   LAFCOs (Local Agency Formation Commission) are not responsible for oversight of JPAs.  They act only as a repository of information that JPAs voluntarily choose to file.

Recommendations

Grand Jury reports explain issues, enumerate findings, offer recommendations, and ask for responses from those the Grand Jury deems responsible for the difficulties described in the reports.  Grand Juries are not responsible for directly implementing changes. 

In this report, the Grand Jury makes several specific recommendations, requesting evidence that JPAs are complying with California codes governing JPAs (Gov Codes Sections 6505), suggesting that the Auditor-Controller review JPAs especially in regard to their connection with Redevelopment Agencies and Successor Agencies, indicating that the Auditor-Controller should post on its website financial and organizational data received from JPAs, and indicating that cities with JPAs should communicate JPA debt decisions and audit reports to the public.

Such recommendations are just that.  However, they are useful in raising public awareness and hopefully eliciting corrective action.

                                                                  A sample of Bay Area JPAs

                                                                 A sample of Bay Area JPAs

Plan Bay Area 2050, Open Spaces, and Choices

In a previous article, the Nine-County Coalition discussed the next iteration of Plan Bay Area, Plan Bay Area 2050.  One of the Five Guiding Principles of PBA 2050 is ensuring everyone has affordable housing.

Affordable: All Bay Area residents and workers have sufficient housing options they can afford—households are economically secure.

This “principle,” mandating outcome rather than opportunity and backed by numerous pieces of California state legislation already in place, provides additional understanding that PBA 2050 will limit consideration of projects to those that do not depart from the Plan’s already prescribed approach to planning.  Unfortunately, basic laws of nature and of economics render Plan Bay Area’s approach to making housing “affordable” difficult at best.

The Prescribed Approach

Plan Bay Area, as unveiled back in 2013, rejects the traditional organic growth of cities in favor of central planning that mandates dense housing along transit corridors as well as ample open space. 

Environmentalists, such as the Greenbelt Alliance, and other stakeholders interested in dense development within prescribed corridors have succeeded in encouraging legislators and bureaucrats to declare 27% of the Bay Area land space permanently protected from development, 55% protected from 10 to 30 years, and only 18% open to development. 

Bay Area Land

The 7% protected from 10 to 30 years is in environmentalists radar screen as land “at risk” of development and ripe for declaring out of bounds to new housing.  These figures and concern for land "at risk" come from a comprehensive report issued by the Greenbelt Alliance.

293,100 acres of farms, ranches, and natural lands are at risk of development in the next 30 years.  Of that land, 63500 acres are likely to be consumed in the next 10 years.  These lands are at risk, but there's still time to speak up and save them.  At Risk, by Greenbelt Alliance

If the majority of residents wish to relegate 82% of Bay Area land to open space, great! Let’s do it!  However, under the present Plan Bay Area scenario residents need to choose between high density along transit corridors that supports the housing demands of a growing workforce locating in cities; or fighting to keep demand and housing prices at current levels.  Choice number two would need to assume lower economic growth, since a significant increase in production of goods and establishment of services necessitates influx of new workers that need a roof over their heads.  Choice number one is tricky, because high-density housing is more expensive to build than single-family homes; therefore, a lot of those dense abodes would have to be subsidized (paid for) by somebody!  Here are two good quotes from New Geography,

Casual and investigative observers seem to agree that housing costs do rise with city compactness. A recent report on the effects of compactness determined that housing costs increased by 1.1% for every 10-point increase in the compactness index. Other researchers have come to similar conclusions, using only population density as an indicator.  What Price Urban Density

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?

Who Really Wants 82% Open Space

The motives of bureaucrats seem often obscure.  Does the majority of Bay Area residents truly want that much open space, and bureaucrats are only responding to what residents desire?  Is pressure coming from a strong minority, and bureaucrats are responding to that?  Maybe both?  Here is an excerpt from the Greenbelt Alliance website.

An urban growth boundary (UGB) separates urban areas from the surrounding natural and agricultural lands … they serve the same purpose of stopping sprawl development and encouraging sustainable growth practices...We work with residents around the Bay Area to help them create, renew, and strengthen urban growth boundaries for their cities and towns. Thirty-eight cities across the Bay Area have voter-approved urban growth boundaries.  Urban Growth Boundaries, by Greenbelt Alliance

"Voter-approved" are key words here.  We must assume that residents of the 38 cities (the Bay Area has 101 cities) mentioned in the excerpt want a lot of open space, but whether they want high housing costs and/or density along prescribed corridors the Greenbelt Alliance does not say.

Besides the “sustainable growth” mentioned above, there is another argument made by advocates of density:   Sprawl is expensive to taxpayers because each new development needs new infrastructure, such as roads, sewer, and water lines.  It is also expensive to residents who need to pay for long commutes to job centers.

Multiple studies show that sprawl is more expensive than infill growth within cities. A 2015 study found that sprawl costs America over $1 trillion, and can increase per-capita land consumption by up to 80% and car use by up to 60%. Providing water, sewer, roads, and other services to far-flung neighborhoods is very costly for local governments. Smart growth allows more affordable housing types at increased densities, reduces land requirements per household, has lower public service costs, and reduces transportation costs. The higher housing prices that residents may pay will be offset by lower transportation costs, energy costs, and better access to jobs, services, and amenities in more centralized locations.  At Risk, What is Sprawl, by Greenbelt Alliance

True, sprawl requires new infrastructure, and a wide base of taxpayers pays the cost (assuming Mello-Roos property taxes or developer impact fees are not imposed).  However, under Plan Bay Area, individuals pay exorbitant rents or mortgages and/or taxes arising from taxpayer-subsidized affordable housing.  Regarding transportation costs, yes, sprawl does increase the cost of commuting to jobs in central locations; however, a family needing to buy or rent a home in San Francisco or Silicon Valley might worry more about paying for housing than it would about transportation costs.  And, by the way, why are jobs so centralized?

So Are We Stuck?

Given all the challenges mentioned above, are we stuck with what we have?  It appears that researchers and commentators have found some holes in Plan Bay Area’s approach to planning.  We described some legal holes in our article on Post-Sustainability Institute vs. ABAG et al.  We have noted some economic holes above. 

However, it seems that Plan Bay Area and its transit-oriented development have the support of some heavy lifters.  This excerpt is from the Bay Area Council website, and refers to Senate Bill 680 signed into law by Governor Jerry Brown in July of 2017.

Legislation the Bay Area Council sponsored that could bring 20,000 units of new housing to the region got Gov. Brown’s signature last Friday (June 21). SB 680 authored by Senator Bob Wieckowski extends the radius within-which BART can pursue transit-oriented development (TOD) projects from ¼ mile from BART stations to ½ mile. The legislation garnered broad support by various groups across the Bay Area, including The Non-Profit Housing Association of Northern California, SPUR, North Bay Leadership Council, SAMCEDA, Transform, among others.

The folks mentioned above apparently have the ears of our legislators.  If we are not entirely happy with Plan Bay Area, perhaps the only way to achieve significant modifications to the Plan might be to withhold tax money intended for the Plan’s expansion and/or acquire legislators with different ears.

SB 1333: Charter Cities Zapped Again

   Indomitable Lucy of Charles Schulz Peanuts fame seems to be saying, "Sorry, the rules changed again."

Indomitable Lucy of Charles Schulz Peanuts fame seems to be saying, "Sorry, the rules changed again."

A Crisis is Always Valuable to Someone

One of California’s many crises is housing, according to the inexhaustible number of housing-related bills generated by our state legislators.  The principal objective of these bills is to override city and county zoning rules.  The argument goes, California has a housing crisis, the crisis is the fault of NIMBYs that refuse to build, build, build, and therefore the state needs to step in and zap local zoning rules – in some cases, regardless of what the state Constitution or court decisions say.

 

Charter Cities – Worrisome Sources of Blowback

In Article 11, Section 5, the California Constitution vests powers on charter cities to conduct their own municipal affairs as they see fit.  However, nothing is that simple.  Here is an excerpt from the opinion of California Supreme Court case California Fed. Savings & Loan Assn. v. City of Los Angeles (1991),

Since the addition of the "home rule" provision to our Constitution in 1896, the organic law of California has granted charter cities [54 Cal. 3d 6] sovereignty over "municipal affairs." Although this court and the Court of Appeal have parsed that cryptic phrase in literally scores of cases in the 95 years since the adoption of what is now article XI, section 5, subdivision (a) of the Constitution, what an early member of this court called those "wild words" have defeated efforts at a defining formulation of the content of "municipal affairs.

In other words, legislators push the envelope and it is up to cities to sue in court to invalidate the bills.

Senate Bill 1333

Let’s look at Senate Bill 1333, introduced in February 2018 by state Senator Bob Wieckowski and presently in committee process.  The bill aims to neutralize the Constitutional authority of charter cities by amending the government code.

Government Code Section 65700, Applicability of Chapter 13, Local Planning, says “This chapter shall not apply to charter cities…”   SB 1333 changes that to “This chapter shall apply to charter cities…”

Government Code Section 65803, applicability of Chapter 4, Zoning Regulations, says “Except as otherwise provided, this chapter shall not apply to a charter city…”  SB 1333 changes that to “This chapter shall apply to a charter city.”  The changed rule comes into effect July 1, 2018, “Notwithstanding Section 65803, a development agreement entered into by a charter city before July 1, 2018, shall not be required to comply with this article.”

Legislators’ concerns about their bills being unlawful are present; however, their contention that things need to be fixed in order to ameliorate a crisis takes precedence in their minds.

Comments on The Senate Rules Committee Analysis of SB 1333 state,

1 ) Housing affordability has reached crisis levels in California… Last year, the Legislature enacted a series of measures intended to increase housing affordability, including giving HCD [Department of Housing and Community Development] authority to review local actions for consistency with approved housing elements. But a recent court case [Kennedy Commission v. City of Huntington Beach] threatens to undermine the state’s efforts to ensure that affordable housing is available statewide by allowing charter cities to adopt specific plans that permit many fewer affordable units than required by their HCD-approved housing elements. SB 1333 closes this loophole by applying state planning and zoning laws to charter cities, thereby ensuring that charter cities’ zoning ordinances, specific plans, and development agreements are consistent with their plans for affordable housing contained in their housing elements.

2) The California Constitution vests charter cities with substantial authority over their municipal affairs, and voters choose to adopt charters in order to take advantage of that greater control. Land use is a prototypical example of a municipal affair—the permitting or prohibition of certain types of uses within the boundaries of a local government principally affects the people that live within that community, and zoning in particular has been recognized by courts as having limited statewide effects. The flexibility afforded by adopting a charter allows cities to make the best decisions for their citizens based on local conditions, even if generally applicable state law provides otherwise. SB 1333 runs contrary to these principles by subjecting numerous charter city land use actions to regulation by the state.

The Kennedy Commission vs Huntington Beach case is addressed in one paragraph as a mere loophole to be fixed. But the authority of charter cities is regarded in the second paragraph as a significant obstacle to forceful mandates that include charter cities.  

Push the envelope and see who reacts seems to be the strategy of our times.   In the case of SB 1333, it might be questionable that a piece of legislation can stand above what the state Constitution and court decisions say about the authority of charter cities.

Smart Pavement and a Little More Temporary Safety

Recently a Nine-County Coalition participant posed the rhetorical question whether in the future Plan Bay Area might insist on monies to build “smart pavement.”  Our guess would be “indubitably.”  A perusal of the Metropolitan Transportation Commission website yields the following announcements, which look like groundwork for smart roads that could include smart pavement.

*  Intelligent Transportation Systems (ITS):  Bay Area transportation is getting “smarter” — and MTC is leading the way.  We guide the ongoing development of the Bay Area ITS Architecture, a blueprint for integrating and coordinating various technologies collectively known as intelligent transportation systems, or ITS.   ITS is all about harnessing technology to make our streets, highways and transit systems smarter, safer and more efficient.

*  As part of the Freeway Performance Initiative, several freeway corridors are slated for a full range of smart roadway improvements.  These include:
   Interstate 880 between San Jose and Oakland
   Interstate 80 in Alameda and Contra Costa counties
   U.S. 101 in San Mateo County

As nothing in life is free, the response to the question whether Plan Bay Area might soon be looking for money to pay for smart pavement as part of the development of intelligent transportation systems is “yes.”

Why Smart Pavement, and What Is It?

The roads listed above are federal highways.  The Federal Department of Transportation (DOT) is working with states and private industry to develop and implement intelligent technologies that promise significantly to increase highway safety.  Immediate goals are the development of automated and connected vehicles, that can provide real-time data to government agencies (first responders in case of emergencies or highway maintenance for example), and to drivers themselves (alerts of road construction or entering a school zone for example).  Such connectivity can be achieved with cell-phones and with sensors.  

Smart pavement consists of blocks of concrete produced in factories that can contain whatever sensors are needed to support the functionality of automation and connectivity.  

Asphalt Magazine provides fascinating information on the subject:

Smart pavement is an exciting concept that could revolutionize the building, usage and funding of asphalt roads everywhere.   To be specific, smart pavement refers to roadways that have been specifically engineered and built to support a wide range of 21st century IT-enabled features; making them “smart” in the process.

The magazine article lists some IT-enabled features:

*  Radio-connected sensors embedded in a road to constantly monitor and report pavement conditions.
*  Two-say WiFi transmitters in the roadbed for enhanced broadband services.
*  Charging electric cars as they drive along.
*  Remotely control and coordinate all the WiFi enabled self-driving cars in a coverage area.
*  Reduce accidents and fatalities by coordinating traffic flow, reducing traffic slowdowns, and eliminating the stop-and-start behavior of individually-controlled vehicles.  

Has Anybody Started to Use Smart Pavement?

The state of Colorado Department of Transportation Road X Program serves as an example of projects that aim to transform traditional roads into smart roads.  The program has an attractive, fact-filled website that describes the program’s goals.

RoadX will use 21st century technology and ingenuity to solve our current infrastructure challenges. Bold thinking and bold actions drive progress. That means smarter roadways with more informed drivers and, eventually, self-driving cars that can communicate with the roads on which they travel.

A component of Road X technology will be smart pavements, and CDOT has partnered with Integrated Roadways to implement the smart pavement project.  A press release by Integrated Roadways provides insight into the possibilities of smart pavement:

Integrated Roadways is developing "smart pavement" technology that would not only help increase roadway safety but could also serve as the platform for Wi-Fi for cars and other future mobility services.

The road system uses high-resolution fiber-optic sensors and other technologies inside the pavement to detect vehicle position in real time, as well as roadway conditions. This technology would detect crashes as they occur, for instance, and automatically notify emergency responders to those crashes.

Integrated Roadway's smart pavement is about to be put to the test. The company announced this spring that the Colorado Department of Transportation has awarded a $2.75 million contract for a five-year smart pavement project on U.S. 285 near Fairplay, Colo., south of Breckenridge.

The Downside

Among Benjamin Franklin’s many words of warning is his admonition against purchasing “a little temporary safety.”  Purchased safety often proves to be temporary, as it tends to bring its own perils.  Here are perils inherent in intelligent transportation systems.

*  In March 2018 security professional association ISACA published its global survey on smart cities.  The survey identified this major security threat to smart infrastructure:  vulnerability to malware, ransomware, and denial of service attacks.

*  Critics of smart technology claim smart cities lack privacy safeguards.  Albert Gidari noted his concerns in an article published by The Center for Internet and Society (CIS):  1) In President Obama’s $160 million Smart Cities Initiative of 2015, there are over 4000 words of new grants, proposals and collaborations with local communities, but “the word ‘privacy’ was mentioned in the document exactly once in that hortatory preamble.  In short, it was an afterthought, not the predicate for the program.”  2) Cities are collecting a vast amount of data, but regulatory agencies are not addressing privacy implications in such collections.

*  Surely we are all aware about business as well as government’s thirst for data.  Businesses want information on you specifically for their targeted marketing, and government wants to keep you safe.  Smart appliances, smart devices, smart infrastructure, and smart cities yield an incredible amount of information of interest to businesses and to government.  Who owns all that information?  Who can monetize it?  

The website IoT Innovation (IoT stands for Internet of Things) says there are opportunities for intelligent technology service providers to monetize smart cities.

Because service providers are at the heart of all smart cities, these companies face a massive opportunity for growth and increased prominence in the industry – but only if they can figure out a sustainable way to monetize their offerings.

One of the ways IoT suggests monetization is to “Sell data, demographics data, and analytics generated by smart city projects.”

*  Increasingly, people have been favoring the “safety” – laced with convenience -- side of Ben Franklin’s equation.  Our busy schedules, as well as a complex world, prompt us willingly to opt for convenience and safety.  A NASDAQ article speaks of the potential for “decentralized data” to power smart cities.

These days cities are becoming increasingly open to the concept of sharing. Starting with Airbnb, now we share cars, rides, and bicycles, even basketballs and handbags can also be shared, at least in China.

The obvious next step is to share data, and all the better if you can monetize data in the same way that you can monetize your spare bedroom or the spare handbag.

Conclusion

Potholes

Technology, as any other product or service, is as beneficial and effective as are their providers.  Will smart pavement sensors bring maintenance crews faster than does a call by an irate driver now?  Will data collected be used as intended? 

The frog in slowly boiling water realizes too late that he is doomed.  It is naïve to believe that the enormous amount of data collected by smart infrastructure such as smart pavement will remain Big Data devoid of lucrative personal information.  However, as the NASDAQ article points out, we the people increasingly chose to share data.  We willingly choose safety and convenience.