“Toto, I don’t think we’re in Kansas anymore.” ~ The Wizard of Oz
Since the market crash of 2008, real estate developers, financiers and politicians have been in panic mode. Though it’s clear that the debt fueled hyper-growth of the past decades is gone forever, they remain in deep denial. Like some neurotic gambler who's lost it all but who’s still hitting the tables believing he can get it all back, these powerful interests continue to roll the dice, regardless of the social and community costs (quality of life, infrastructure, traffic, schools, etc.), regardless of the environmental costs, and regardless of the destabilizing economic impacts in the long run. The tragedy is how much damage could be done trying to bring back the “good old days.”
The concentration of wealth and power at the top and the influences of special interests are distorting local planning priorities. As I’ve tried to illuminate in this series, we can’t continue to pursue top down central planning practices or social engineering experiments that have repeatedly failed in the past. And since “the market” has not solved all our problems as promised, and left too many needs unmet, what should we be doing?
I have no intention of wrapping this all up with a simplistic “to do” list. I only hope these articles act as a catalyst for more productive dialog. Solutions can only start in each community, each in their own way. But one thing that is clear is if we want to bring about effective change, our city and county officials are going to have to step outside their historical comfort zones of only looking at issues that are strictly local. We can no longer divorce ourselves from the big picture because it’s what is increasingly driving everything.
It’s true that most city council members are unpaid volunteers and legitimately complain about having too big a workload as it is. So it’s hard enough to get them to cooperate on Marin’s shared concerns much less problems that have state, national or international implications. But then again, planning staff is generally very well paid and could be doing much more. Isolationism has worked in the past but we just don’t live in that world anymore.
What Is the Problem We’re Trying to Solve?
Marin’s fundamental disconnect with the ABAG / MTC / / approach is that the planning challenges in Marin today are in many ways the opposite of what the One Bay Area approach was created to address. , we already have much of what it promises in terms of sustainability and quality of life. And Marin’s affordable housing needs are quite different from most of the other ABAG communities.
In more urban parts of the Bay Area (San Francisco, Oakland, Emeryville, San Jose, etc.) market rate, single family residential homes are more difficult to build profitably and average household incomes are lower, but there are more opportunities to find high density housing sites. So in those cities it makes some sense to promote market rate and 80 percent median income housing development in addition to affordable units. But in Marin the only thing developers want to build is single family detached market rate housing or high end condos so we shouldn’t have to deal with quotas for that (or “quotas” at all for that matter). Our problem is that there is little we can do to incentivize developers to build low and very low income housing and . Marin’s challenges are about more than just the size or distribution of RNHA allocation numbers.
Housing Elements and Land Entitlement
When Marin cities draft their Housing Elements, they typically include a list of designated sites for rezoning for affordable housing. In the past this has been a relatively benign exercise and generally considered an “unfunded mandate.” But that has changed.
Creating a specific list of sites has actually never been a good idea. It arbitrarily skews property valuations and essentially gives entitlement advantages to one property owner over another for no good reason other than one site might be vacant land. It’s inequitable and offers no incentive for property owners who are not on the list to step up and propose affordable housing or mixed use projects. These are some of the reasons why would be better for all. However, even with that aside, in our new regulatory climate the creation of a fixed “list of sites” is now more problematic than before.
Senate Bill 375 has created a link between zoning and the Housing Element sites list. It adds language that creates a legal gray area that could allow a private developer to force a zoning change if their proposed project qualifies by having at least 49 percent affordable units. Now the newly proposed SB226 would remove CEQA protections for “infill” development (a vaguely defined term) and the Transportation Authority of Marin's (TAM) recent “Preferred Land Use and Transportation Scenario” proposes that transit-oriented development sites be entirely exempt from CEQA (California Environmental Quality Act) review. Finally, the proposed SB1220 contemplates a state controlled fund to finance these kinds of projects.
In combination, these laws effectively strip away our Conditional Use and Planned Development (PD) zoning approval protections and eliminate CEQA Environmental Impact Reports, leaving only our Design Review process, which is not adequate and in many cases would no longer be a legal method to stop projects we don't want.
This legal nexus between the Housing Element (part of the General Plan) and SB375 essentially means that putting a site on a list has now become a significant step toward land rights entitlement (financial value) that developers can rely upon and sue to protect even though they may not yet own the property (it can be under option to purchase) and the city has not yet rezoned it.
We should not underestimate the formidable changes these regulations could bring about once there is sufficient funding to aggressively enforce them.
Affordable Housing Demand
There is no question that affordable options in Marin are scarcer than in some other parts of the region. But the existence of high-priced suburban communities like those found in Marin is true in every metropolitan area in the country. It’s the price we pay for a free society. So this fact of life in and of itself is neither discriminatory nor justification for running roughshod over local zoning control.
In addition, often quoted statistics about how many people work in Marin and live elsewhere are not the same as proof of “market demand” for housing. If that were the case, the in Mill Valley would have filled up in 10 minutes instead of 2 years and the Millworks project in Novato would not have resulted in huge financial losses. I wonder how much more “progress” our communities will have to endure before housing advocates accept this truth.
These projects founder because they ignore how markets work. Housing construction cannot logically precede economic growth or jobs growth because the quality of that growth and the kinds of jobs created determine what kinds of housing is needed, not vice versa.
The only real evidence we have of affordable housing demand remains the County’s Section 8 waiting list (something we should be addressing much more effectively). Other arguments about housing our police officers, firefighters and government workers ring hollow. Today, government workers on average make more than comparable private sector employees (salary, benefits, retirement and health care). And just ask a firefighter or policeman about where he or she lives. Our “workforce” clearly understands Given the choice of living in a cramped apartment “project” or driving an hour and renting (or owning) a bigger place with a yard, it’s no contest what they will choose every time.
So who exactly are we trying to help?
Social Engineering at Its Worst
Last week I had the opportunity to sit in on a Town Council meeting in Corte Madera where Mark Luce, president of ABAG, made a presentation defending the value of being an ABAG member city. His boilerplate presentation was unsurprising in that it had only good things to say about the organization and its goals. His “facts” were typically one-sided and his conclusions about the . But what was most striking was when he began to espouse the virtues of social engineering.
Mr. Luce made it clear he believes that it’s socially equitable to provide high density housing next to freeways for our low income “workforce.” But he went on to say that this kind of housing was good for “these people” because if they worked near their apartment (I assume in a low paying service job) they would "spend more time with their children,” inferring that they would therefore be better parents.
Astonishingly, he felt ABAG somehow had the moral authority to pass this kind of judgment on other people’s parenting. But what was even more amazing was how surprised and clueless he was when people on the council and in the audience reacted in shock to his over-reaching and high-handed remarks. He finally admitted that this was perhaps only his opinion but he seemed to have no qualms about enforcing it on others, even though he holds no elected office with the powers to do so (nor does anyone else, thankfully).
I’m sure Mr. Luce would be the first one to be aghast if I told him that he had to move his family from the comfort of their bucolic Napa Valley home to live in Corte Madera next to a highway on-ramp. Yet he saw no incongruity at all in his ringing endorsement of “engineering” that outcome for “our workforce.”
Well-intended housing advocates (who are unwittingly carrying water for development interests in Sacramento) often try to characterize local resistance to affordable housing as a “civil rights” issue or the result of “racism” (in addition to ). But it seems to me that it’s the RHNA quota system, dutifully enforced by subservient ABAG planners, that is promulgating racist or certainly “class-ist” thinking about the needs of “those people” who will live in their beloved high density projects.
In fact I think the entire concept of “workforce housing” is elitist. “Our workforce” is discussed as if working people are second class citizens who don’t need yards for their children to play in, fresh air to breathe, views of something other than a concrete off-ramp, or God forbid to be paid a living wage in the first place. Well, this may come as news to those who sit in high positions at ABAG, MTC, BCDC and BAAQMD, Sacramento politicians, and affordable housing advocates, but “those people” who live in low income housing have the same hopes and dreams for their family and their children’s future that you do. They only live there because they have no other choice. They are not “our workforce." They are our fellow citizens, entitled to want the same things we enjoy, regardless of their financial status, education, ethnicity or lack of luck in life.
We’re often told that too many workers have to come from Richmond to work in Marin and that this is the reason we need to invest in more affordable housing. But the more obvious question is why aren’t we, as a society, investing in education, jobs and community development in Richmond so people can find high paying work there and have a safe community to live in? Then maybe people in Marin would have to start paying their imported housekeepers, nannies and gardeners a decent living wage and benefits to compete.
Sometimes I wonder whose lifestyle we’re really trying to improve.
But then, even when we do offer low income residents a chance to buy a home here, we deny them the only real value of home ownership: equity appreciation. We cap their upside for 30 or 40 years and deny them the fruits of sweat equity. This is nothing more than a modern version of indentured servitude.
I think the whole thing is absolutely shameful.
What affordable housing advocates forget is that it wasn’t the that ultimately solved the housing shortages of the late 1940s and 1950s. Like it or not, it was the much maligned, privately financed developments like Levittown, incentivized by the G.I. Bill and federally insured mortgages, that filled the need.
That said, I’m not suggesting that markets will solve all our problems or that we should build more Levittowns, quite the opposite. Without government support at all levels, the market will remain incapable of providing housing for those most in need (low and very low income residents). But what I am suggesting is that private investment backed by strong policy incentives can help provide a great deal of the kinds of housing we really need. The blunt instrument of massive quasi-government agencies getting involved in local zoning and planning won’t. The approach attempts to micro-manage everything to death.
We can’t afford to keep sending tax money up to the federal and state level only to have it come back in the form of policies that remove control over local decision making and work against our community planning interests. Likewise, waiting for change to come from the top is pointless. So where does that leave us?
Show Me the Money
Everywhere we look today we’re told there’s no money to pay for anything we need. "Austerity" is the big buzzword. And discussions about the role of government have distilled down to “less government” versus “more government.” This makes long term planning more difficult. But the problem is not whether we need more government or less government. It’s about how to get “better” government and more efficient and productive government for “less” cost. And in the process we have to create more “value” from what we do.
Our national public policy and financial challenges are far too numerous and complex to address in this article. However, there are things we need to understand to make better decisions locally.
The historic lows in interest rates being paid by the U.S. government have a lesson to teach us. At a time when we are “lending” our government money in unprecedented amounts for a negative return (inflation adjusted), the market is telling us that it’s not a lack of money that’s the problem. It’s the lack of confidence that anything is worth taking the risk to invest in. We need to think about how to break that logjam.
Under the circumstances, I would suggest that it’s the federal government’s responsibility to “invest” that money back into the country, and local government’s responsibility to make our needs known to them. It may seem counter-intuitive but when money is almost free and everyone is paralyzed by fear, it’s a good time to borrow and invest for the long term.
But in our post “debt bubble” world our money must be spent more wisely.
Nuts and Bolts and Finance
I think the “bailout” of General Motors has been tarred unfairly. I think it was a smart move. With GM, rather than being the “banker” of last resort, the U.S. Treasury acted as the “investment banker” of last resort and the result so far has been profitable for U.S. taxpayers. The funds GM received were not a gift but an investment in return for an equity stake. Could this be a way to finance planning and housing initiatives?
Grants, bonds and tax incentives will undoubtedly continue to play an important role in affordable housing finance and housing markets in general. And I would argue for the need to expand Section 8 subsidies with new types of vouchers that offer more local control over how they are used. But providing local, state and federal government-backed financing, debt insurance and even equity participation to the mix may be the better way to move ahead than traditional government “hand-outs.” New types of public / private partnerships could also increase financial leverage and provide a backstop for innovative local solutions.
For example, Napa County has a small equity-sharing program that offers interest free funds that buyers can use toward their down payment when they purchase a home. Repayment is due on sale. It helps people who otherwise couldn’t qualify. This kind of incentive could also be accomplished by insuring mortgage debt in exchange for equity. And programs like these scale up well from humble beginnings.
It may take years for housing markets to fully recover and we may see flat home prices with little inflation adjusted appreciation for a decade, but it’s time to plan for the future.
Affordable Housing and Social Equity
There was a saying in the 1960s: “If you’re not part of the solution, you’re part of the problem.” The updated version of that should be: “If you don’t see that it’s all connected, you don't understand the problem.” Social equity is a complex challenge.
Ensuring a quality education, including college, for everyone who’s willing to work hard to earn it is essential for our society’s long term success. But saddling the next generation with $100,000 in debt before they even get their first job is no way to promote household formation or social equity. And where will the jobs come from unless we support the kinds of industries we'll need to live in a sustainable world? Local zoning and planning can play a special role here, nurturing new, sustainable businesses like green technology development and medical research.
We know that investing in our health pays back many times over in increased productivity, lower medical costs, and greater happiness. And happy, productive people have families, buy homes and strengthen communities. But today almost 20 percent of our population has no healthcare coverage and even people with health insurance are just one major illness away from bankruptcy. And with hunger becoming a widespread problem, how can we expect anyone to escape poverty if they have to worry about getting enough to eat every day? Yet local stores and restaurants throw out enough food every week to feed thousands.
Finally, issues like Marin County pension reform and social equity are related simply because our financial resources have limits. Yet we have our county supervisors dolling out taxpayer-funded “discretionary grants” to questionable pet projects, while allowing vital health services like the County Public Health Lab in San Rafael to risk closure. The annual expenditures of our county supervisor’s personal slush funds (which are unique in all of California) greatly exceed the cost of running the San Rafael lab. Yet not a single supervisor has offered to give back those funds to save it.
Social equity is also about getting our priorities straight.
Public Transportation and Growth
We hear a lot of talk from ABAG and MTC about public transportation and building high density housing near “quality” transportation corridors (an oxymoron in Marin, if there ever was one). But here's my question: how did we get to this place where everything is backwards?
Historically, public transportation was built to serve economic growth and population demand, not to create it. Railroads connected distant regions to facilitate commerce. Subways and trolleys allowed people to get around more efficiently in crowded cities. But now we have transportation planners dictating where growth is “supposed to” happen and how we should engineer it.
Thankfully, our cities are already very “walkable,” but it’s true that Marin’s population would be better served by more public transportation options. As it stands, Marin has no significant public transportation other than bus routes. With the topography, street configurations and geographical distances between cities in Marin being what they are, other kinds of public transportation that work in urban areas (subways, light rail, etc.) just won’t work here. And any public transportation system that’s going to work in Marin is going to have to be extremely flexible, adaptive and non-polluting. Still, there are possibilities.
For example, one solution might be a fleet of relatively inexpensive (as opposed to SMART trains) electrically powered shuttle buses monitored and managed in real time by a wireless “demand” sensing system (21st century street cars). Each shuttle would travel on a “flexible” route that can adapt to rider demand. Riders with registered accounts or pre-paid trip cards can “tell” the system that they need a pickup at a shuttle stop by inserting their card in a reader or notifying the system via a smartphone app. The shuttle bus routes and stop locations are predetermined but shuttle drivers know beforehand whether or not there are riders there in need of pickups. So the system offers feedback to adapt the diver’s route to operate at maximum efficiency. The route configurations can also “learn” from experience and adapt to changes in user demand, over time.
Or perhaps we could be promoting car-sharing (like Zipcars, but using only hybrid or electric vehicles) to alleviate traffic congestion and promote a healthy environment. The point is there are many things we can do locally that are relatively inexpensive (and possibly even profitable) and can be implemented quickly. We need to consider all our public transportation options rather than confine ourselves to the traditional thinking proposed by ABAG, MTC and TAM.
Local Voices Equal Better Solutions
Marin’s unique housing and planning challenges are a strong argument for a Marin Council of Governments (COG). Corte Madera has proposed that a Marin COG or a North Bay COG that includes Marin, Napa and Sonoma, would have many advantages. For one thing a Marin COG would allow us to develop our own criteria for our Sustainable Communities Strategy (SCS) and our Housing Needs Analysis. These would be based on our own job and population growth projections and our unique community assets, not a generic formula foisted on us by Sacramento. Working together, we would have the critical mass to deal with the state directly regarding our Regional Housing Need Assessment allocations (RHNA) and more effectively argue for .
The “party line” response to this idea is that a Marin COG is bad because we’d just end up fighting amongst ourselves, city against city, about how to divide up our RHNA allocations instead of fighting with ABAG. Wow, talk about cynicism! With that attitude and that complete lack of faith in the judgment, intelligence, creativity and motivations of our neighboring cities, no wonder there’s so little cooperation or innovation at the top. Seeing challenges like this as opportunities instead of obstacles is called “leadership.” It’s the fundamental ability required to be an effective public servant. And I think anyone who espouses this simple-minded objection has given up on democracy and should be voted out of office.
But there is another reason to have a seat at the table in Sacramento via our own COG. It involves our ability to lobby for or against some of the regulations that are headed our way. Having a Marin COG that promotes an agenda that serves our communities, rather than development and financial special interests, could be an important step toward shaping how new laws like SB375, and potentially SB226 and SB1220, are administered. A Marin COG could support the kinds of solutions that are best adapted to our local needs.
Leadership and New Directions
So where will leadership come from? In addition to forming a Marin or North Bay COG, I think the Marin County Council of Mayors and Council members is a good place to start. This sleepy organization could quickly reinvent itself as a force for collaboration and change. They already have the platform to hold countywide forums on major issues, do countywide assessments of public opinion, and study alternatives. They only need to act.
Another interesting approach would be the creation of a hybrid nonprofit / for profit “venture philanthropy fund” that focuses on financing local planning and affordable housing initiatives.
As it is now, on one side we have traditional stand-alone nonprofit foundations that often have agendas that are not necessarily aligned with the goals of all Marin cities. And on the other side we have for profit investors and nonprofit housing developers that find it hard to make the numbers work to build the kinds of projects Marin really needs or to incorporate our big picture planning goals into their plans. In the middle are Marin cities that lack funding for full time staff dedicated to project finance. So housing and planning decisions end up being made through a mish-mash of competing financial interests or available grants, which rarely result in positive community outcomes.
A hybrid venture philanthropy fund might offer a way to help facilitate better solutions and have advantages over traditional philanthropy or housing trusts. It can potentially attract more money because it can work on countywide initiatives that have a larger scope and a longer time horizon, and it can source funds from both donors and investors. With a hybrid fund, for profit corporations and individual investors collaborate side by side with foundations, individual donors, donor advised funds, non-governmental organizations (NGOs) and local and state government, with each receiving the kinds of investment returns or public benefit outcomes they require. This financing model is being used successfully at the nonprofit organization I currently manage and extensively by others for medical research and technology development.
With a hybrid entity, every type of financing option is available and investment sources need not be local. For profit investors can retain equity, provide loans, participate in revenues, and use return enhancing financial leverage. Nonprofit participants can provide grants, low cost loans, loan guarantees, and participate in financial upside through the use of program related investments. And local governments can participate through the issuance of bonds or participation certificates. All these methods can be brought together a single initiative or spread across a wide variety of projects.
A venture philanthropy fund could also work closely with a Marin COG to analyze and finance planning and housing solutions. And its involvement could include promoting Marin’s funding opportunities to the national investment / donor community, and Marin’s financial interests in Sacramento. This kind of hybrid funding approach might be particularly applicable for financing privately owned infill, second unit, building conversion, renovation, and mixed use development. The kind of development that is scattered and not built by major developers but is most suited to our "built out" Marin cities.
A complete discussion of this is beyond the scope of this article. But it’s an intriguing idea.
I want to thank all those throughout Marin, in and out of government, who have stepped up and spoken out for local control in spite of considerable pressure and criticism. And I want to thank all the long-time community activists who’ve fought lonely battles for decades to preserve our environment and demand better government.
I want to thank Linda Pfeifer of Sausalito, Jeanne Macleamy and Denise Athas of Novato, and Larry Chu of Larkspur for asking hard questions. And special thanks to Bob Ravasio, Diane Furst, Carla Condon and the entire Corte Madera town council for leading the effort to form a Marin Council of Governments. And thanks also to some of our county supervisors, who have finally started questioning ABAG’s job and population growth projections that form the basis of the RHNA housing allocations.
But far too many people still continue to live in their own little worlds, falling back on the excuse that they are just too “busy” to get involved. But if you don’t participate, if you don’t make your voice heard, you will get what you deserve. However, what worries me is that if you don't speak up, I may also get what you deserve. So please join in. Those leading the call for new approaches and greater government transparency need your support. So write letters, send emails, attend meetings, meet with your representatives and make some noise so you’ll be heard over the relentless din of special interests.
If we want sustainable solutions, that’s where it all starts. And Marin cities need to work together on housing, planning and social equity challenges, while change is still possible. This is an instance where self-interest and common interest are one in the same. We need to get ABAG and Sacramento to understand that the unique characteristics of our communities are our strengths that can inform unique locally-driven solutions rather than obstacles to their simple-minded goals from the top.
At the beginning of this series I talked about . We look back at those times as a gilded age of robber barons and hard times. But the sad truth is that what we do today in terms of helping low income workers doesn’t come close to measuring up.
Employment at Pullman was a sought after and prestigious position. The single family homes offered to employees were a big step up from what the average family lived in at the time, and it came with family health care, clean streets, good schools and a safe neighborhood. Henry Ford offered his workers the highest average pay of any company in the country so they could afford to buy his cars, without concern that his stock would lose half its value or he’d lose his year-end bonus.
Today, corporations sell us planned obsolescence, bankroll protective legislation and bankrupt themselves to avoid pension obligations, while worker pay and benefits plummet. Meanwhile, young billionaire CEOs and hedge fund traders congratulate themselves on their brilliance, forgetting the century of hard work that laid down the infrastructure of the society that made their insignificant moment in the sun possible.
Historically, we’ve always defined “solutions” in terms of economic solutions. But as we approach the limits to our growth (at least under our current methods), our attention will need to turn to other qualifiers like the environment and quality of life. It’s a conversation we’ve never really had to have before.
It would be a mistake to characterize our challenges as a simple Republicans versus Democrats or liberal versus conservative story. It’s much more than that. Our predicament is the result of an unchecked public and private sector that’s been steadily falling deeper and deeper into debt for decades. It’s about waging wars we can’t afford and accumulating mountains of fanciful “stuff” on credit that we can’t afford to pay off. It’s about inefficiencies everywhere we look and shoveling money into “wasting assets” instead of making long term investments. And as a result, we find ourselves unable to do the things we really need to do. But that doesn’t diminish our need to do them.
Today we find ourselves besieged from all sides by special interests trying to deconstruct decades of environmental protections and much needed social safety net programs. And it’s all in the name of “jobs” or “processing efficiency” or “boosting the economy” or some other short term fix. But it’s just more of the same thing that got us where we are and it won’t work.
I wonder why it’s so hard for us to do the right thing for the long run. Is shortsightedness programmed into our hunter-gatherer brains? Yes, providing affordable housing opportunities and achieving more social equity will probably mean higher progressive taxes. But few remember that in the 1950s, the decade that built the backbone of our economy, marginal tax rates on high earners approached 90 percent. So if you make a lot of money and you have to pay higher taxes, why not just be grateful that your parents and grandparents did the heavy lifting that made it easier for you to become as wealthy as you are?
Social equity and sustainable solutions will require sacrifices. I think it will be worth it.
Thank you, to everyone who has taken the time to follow this series.
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Restoring the Balance (Jan 1)