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Kaid Benfield’s Blog

Official review finds environmental benefits from additional homes near Silicon Valley jobs

Kaid Benfield

Posted December 15, 2011

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  California's Silicon Valley (via Google Earth)

California’s Silicon Valley is notoriously jobs-rich and housing-poor.  There has been a particularly severe shortage of affordable housing, forcing workers employed in communities such as Mountain View, Los Altos, Sunnyvale, and Santa Clara to live far from their workplaces, driving long distances through severe traffic congestion just to do their jobs.  A detailed 2007 report developed by The Institute for Metropolitan Studies at San Jose State University found that Silicon Valley would need 90,000 new units of affordable housing over the next 20 years to meet growing demand.

This has been a drain on the region’s economy, and also a source of significant environmental damage.   Because an insufficient number of homes have been built within existing Valley communities, the region’s housing supply has taken the form of low-density suburban sprawl in far outlying areas, eating up the California landscape while mandating lengthy car trips that increase emissions of carbon dioxide and other air pollutants. 

Ironically, though, the mechanisms built into environmental law can sometimes stand in the way of smart growth solutions to these issues.  The California Environmental Quality Act (CEQA), in particular, is an important law that is strongly supported by my organization, NRDC, and that has prevented much environmental damage.  Btraffic on Hy 101 in Silicon Valley (by: Richard Masoner, creative commons license)ut it can be misapplied:  if the impacts of building additional affordable homes are compared only with not building them, a strict application of the law’s analytical requirements can result in a finding of environmental damage. 

However, that is frequently not the choice we face in the real world, where worker housing must be built somewhere, and the current pattern of housing development is causing environmental harm.  The more pertinent question is which housing choices will do the most to reduce that harm.  And, generally speaking, we know from experience and a vast amount of research that building walkable neighborhoods with an efficient footprint on the land – condos, apartments, townhouses, and small-to-moderately-sized lots of single-family homes, on close-in sites – are best for the environment.  They also help the economy, by reducing household transportation costs and government infrastructure costs.

That’s why a new analysis under CEQA by the Silicon Valley city of Mountain View, home to Google and other major high-tech employers, is so important.  In examining the city’s new General Plan, Mountain View asked the right questions and reached a realistic conclusion:  the environment will be better off with more, not less, housing within the existing city’s footprint.  Greenbelt Alliance, the San Francisco Bay Area’s leading conservation group, explains:

Google HQ (by: Dmitri Alekseenko, creative commons license)“The draft Environmental Impact Report for the City’s General Plan, one of three important planning documents released on November 30, finds that planning for more homes in Mountain View is the ‘environmentally superior alternative.’  LSA Associates, who completed the draft report for the City, explains that the decrease in environmental impacts is due to the reduction of per capita vehicle miles traveled (VMT).  Simply put, this means people will drive less if there are more homes in Mountain View . . .

“Greenbelt Alliance is thrilled that Mountain View staff found that adding more homes would create real village centers that encourage people to drive less to jobs or stores.  We hope that . . . investigating an ‘Increased Housing Alternative,’ to speak in planner-ese, will become standard operating procedure for Bay Area cities.”

While this may strike anyone who is familiar with the impacts of land use patterns on transportation and emissions as common sense, it is not as common as it should be for environmental impact analyses to examine candidly the benefits of building more homes within easier reach of jobs.  Mountain View is to be commended for being realistic.  Given that between 50 and 60 percent of the city’s greenhouse gas emissions (nearly 500,000 metric tons of CO2 per year) are generated by transportation, realism seems like an idea whose time has come.

Move your cursor over the images for credit information.

Kaid Benfield writes (almost) daily about community, development, and the environment.  For more posts, see his blog's home page.

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Ira KaplanDec 16 2011 03:37 AM

I love that map at the top. It's amazing that with all of the smart, young people there it was built in such an unsustainable way.

guthrumDec 17 2011 10:16 AM

Off-topic comment removed, per NRDC policy (see below).

LindaDec 18 2011 01:40 PM

Kaid, another great post and timely too. One of our community members has taken it upon himself to begin a campaign to refute the findings of our General Plan Update Task Force committee (which I'm a member of) and today in our local newspaper wrote an op-ed on the need for our city to focus on bringing jobs in, first. Seems some can see the sense in protecting our ridgelines and open space but can't see that smart growth and infill projects will bring vibrancy and health back to our downtown.

Cindy van EmpelDec 18 2011 02:22 PM

Great post, Kaid. I appreciate your not demonizing CEQA. Most folks really don't understand it.

CEQA is simply a disclosure process. And the lead agency (public agency) largely has the discretion to define the universe of the discussion.

The "E" makes the right crazy, and makes the left think it's supposed to do something it doesn't.

Alan CohenDec 18 2011 04:06 PM

Excellent points, and related to a puzzle I've had for a while: Why aren't there more tall buildings in California? If we want to increase the availability of housing (and reduce sprawl) we need to answer this conundrum. Here's a recent unpublished essay I wrote on the subject. Kaid, I couldn't find your email, but please contact me (Alan Cohen, University of Sherbrooke) if you want to discuss more.

Why aren’t there more tall buildings in California?

OK, so here’s a question that’s been bugging me for a while: why doesn’t the California real estate market, exorbitantly priced, rectify itself with the construction of lots of high-rise apartment buildings that would greatly increase the availability of affordable housing?

The question arises from several observations. First, drive through the major population centers of California and you will see very few buildings more than 2-3 stories tall. Most Californians appear to live in houses, or occasionally in low-rise apartment buildings. Sure, there are a few taller buildings in the downtown cores of LA and SF, but we’re not talking about the sorts or numbers of buildings that would really solve the housing crisis.

Second, housing in California is really, really expensive. I spent a month in Davis several years ago (admittedly before the housing crisis), and in leafing through a local paper with real estate listings I didn’t see a single house for less than $500,000. Now Davis is not a major urban center, nor even a suburb of one. To get there from either SF or Sacramento, you drive through farmland. The population is about 65,000. Back in 2000 I applied for grad school at UC-Berkeley, and got an $18,000 fellowship. This would not even have paid for the cheapest 1-bedroom apartment I could expect to find in Berkeley, which is across the bay and a fair distance from downtown SF. Or in browsing real estate listings for Palo Alto, for example, I found a three-bedroom home for $6 million. In other words, poor and middle class people in California must be spending most of their incomes on housing.

Third, other places around the world with high population densities solve the problem by building up. This is why people (even the rich) don’t generally live in single-family homes in Manhattan or central Tokyo. The entire city of Seoul – 10 million inhabitants in the city proper – is pretty much housed in uniform high-rises of apartments and condos, usually about 15-20 stories high.

Fourth, the economics make sense. A developer stands to make a lot of money because there is so much demand for cheap housing. For example, a developer could buy a low-rise building, tear it down and replace it with a high-rise that houses 10-times as many people. Because housing is so expensive, this should be a highly profitable enterprise: each unit in the high-rise could probably rent for at least as much as those in the low-rise, an already-substantial amount.

So why don’t people in California build up? Well, I’ve tried to think of explanations, and shot down most of them, as follows:
Earthquakes make it dangerous: Sure, no one in California would want to live at the top of a 70-story skyscraper built without special protections, but the technology to make earthquake-safe buildings 15-20 stories high has been around for a long while, and seems to work relatively well in Japan. The devastation of the 1995 Kobe earthquake was mostly from old buildings that hadn’t used newer technology. Yes, such construction is much more expensive, but not compared to a $6 million home. If it is economically viable in most of Japan, including areas where housing is much cheaper than the Bay Area, why not in California? Even if many Californians might fear living in high-rises, most of them would probably be willing to overcome their fears for a major drop in the cost of living.

People like living in houses: Sure, everybody likes living in houses. Most people in Manhattan, Tokyo, and Seoul would prefer to live in houses too. But the economic reality does not allow it. Most Californians would surely choose to live in high-rises if there were big enough savings.

Local regulations prohibit building high-rises: Let’s say that residents in Palo Alto decide that they don’t want their city invaded by lots of tall buildings, so they pass laws prohibiting construction. Sure, this may work for Palo Alto, but some mayor somewhere is going to realize that if he allows construction of high rises in his town, he can increase the population, increase the tax base, increase business for local shops, and generally make the town better off. So economic forces should strongly pressure localities to change regulations and allow construction of high rises.

Property owners successfully pressure governments to discourage construction of high-rises: The only people that would stand to lose from wide-spread construction of high-rise housing are property owners who would see a sharp decline in values as housing becomes more available. This is the most likely explanation I can think of. Property owners are likely to be richer and more politically influential than renters, and there are now a lot of them. But developers are also generally rich and politically influential, and they stand to make a bundle.

Statewide regulations prevent or discourage such construction: Matthew Yglesias recently had an interesting piece on how California environmental regulations may do more harm than good by inhibiting construction and driving people to live in other places where the climate is less hospitable and the average person’s environmental impact is substantially worse. One could certainly imagine all kinds of statewide regulations that might have the unintended consequence of discouraging most high-rise construction: a prohibitive building permit approval process, environmental regulations, and so forth. This is also possible, though given the huge consequences of the exorbitant housing costs for California’s economy, you’d think smart policy people would have identified the problem and worked to correct it. (Unless, of course, there is political pressure from current property owners…)

I’m sure someone knows the answer to my question. If that is you, please let me know!

Cindy van EmpelDec 18 2011 05:39 PM

Alan, there are a lot of reasons why California doesn't have more highrises. I can't give you a discussion of relatively proportionate reasons, but let me see if I can address a few of your points. While I'm no Kaid, I have lived in California most of my life and have been involved in development on both the public and private sides for my entire career.

House prices are an interesting place to start. Proposition 13 is a good place to begin, because among its many charms, you probably know that it restricts property taxes. Since 1978, property PRICES in California have soared, while property VALUES (including taxes) I would guess are more consistent with the cost of living. So the total price of a house has remained roughly proportional, but the price has shifted to allow the taxes paid to the state to be driven down severely, allowing the sales price to float.

There has also been litigation on condominiums that has made developers very unwilling to construct attached for-sale product, which is detrimental to the provision of varied housing, but also, of course, to the efficient provision of transportation.

Getting back to commercial property, the severe downward spiral in property tax has also affected commercial real estate. When you consider how little property tax is paid for a greenfield site, there is little incentive for a developer to maximize his revenue on a per-acre basis and the cost of extending infrastructure is lower than the cost of rebuilding infrastructure on an infill site, making the lower cost of developing at the fringe of the city an incentive.

In the absence of public policy that requires dense development, sprawl is incentivized. Local agencies do not typically budget infrastructure on a lifecycle basis and there is an awful lot of state and federal matching funds that are available to municipalities, so elected officials (and department heads) have no reason to consider the lifecycle costs of infrastructure, as that relates to types of development (say, sprawl v density).

Just the camel's nose under the tent, but you can see how financing and financing distortions might influence public policy.

You can find me on line if you like.

Alan CohenDec 18 2011 07:53 PM

Thanks Cindy! I knew there would be smart, concerned people who could answer my question, at least partially.

I say partially because I think you clearly address why the property tax system eliminates most governmental incentives to increase housing density, and why developers would prefer greenfield development to re-development, all else equal. What I still wonder about is the fact that not all else is equal. Greenfield developments tend to be far from jobs, thus involving long commutes and lower desirability. A high-rise closer to the jobs could charge a lot more per unit, and I'd still think developers would have a substantial incentive to want to pursue such projects (perhaps outweighed by litigation risk and other factors). But I assume that there are similar factors to explain this too...

More importantly, however, is what can be done about this. Given the strong economic forces that should push toward denser housing in urban California, a few minor changes in policy might unleash a whirlwind of development. This would be good for environmentalists, (some) developers, enterprises and industries seeking to attract good candidates from elsewhere, and anyone seeking housing. I imagine a relatively powerful political coalition could be formed. It's a high bang-for-buck issue. So my next questions are: (1) how precisely do we know what aspects of public policy are inhibiting such development? (2) are there currently a lot of people working at removing them, and is this seen as a major goal of environmentalists? and (3) if not, what can be done to make it so?

Anyway, this is far outside my field of expertise, but I'm happy to lend support in any way I can.

Cindy van EmpelDec 18 2011 10:14 PM

What we've seen in Modesto over the last 15 years is a complex series of actions and reactions. Modesto was once the stand-alone regional center of an agricultural country. What it has become is that and a bedroom community for the drive-til-you-qualify folks.

Fortunately, Modesto didn't see the same magnitude of boom that some cities in the northern San Joaquin Valley did or we'd have been more desperately devastated by the "bubble." As of the 2010 census, Modesto was reporting 5,937 vacancies on a total housing stock of about 74,400 units. The mix of existing units is about 75% single family detached and 25% multi-family. I don't recall off the top of my head how the vacancies broke down by type, but 7.9% vacancy is striking compared to the hot housing market we experienced until 2007-8, when the market flattened ahead of the crash and then was further exacerbated by $4.50/gal gas during the summer of 2008.

We never had good O-D data for work trips, so it's not clear exactly how far people drove to buy a single family detached house in Modesto. What is very clear is that they were overextended and when gas prices spiked, it was more than their household budgets could handle and they left--anyone living in Modesto must drive to work if their job is at any distance. I understand from Bay Area planners that the rental market there (actually here, I live in the East Bay weekends) has tightened significantly. No longer is the single family detached house the "American dream."

For factors affecting the actual development of density you could cite all the problems I mentioned in my prior email, PLUS, in no particular order: lack of infrastructure for alternative travel modes, NIMBYism, investor adherence to supposedly proven development types, heavy public investment in roads, low gas prices, and probably a few other things.

Never in this list would I include CEQA. I'm a bit of a CEQA wonk and the law actively encourages cities to develop their own "significance thresholds"--the point at which time-consuming environmental review and possibly expensive mitigation is required. I liken CEQA to a gate whose hinges can be placed to swing either way. The fact is, that significance thresholds can be easily crafted to facilitate a more densely developed city or very low density. Not many practitioners--or anyone else, for that matter--seems to understand that.

But to respond to your questions even more directly:

1. Reviewing a city's comprehensive plan (we call them general plans in California) can give you a good idea which local policies prevent density. And remember, not every agency wants density. Questionable financial judgment, in my opinion.

2. There are people working to remove some of these barriers. I'd point to the Congress for the New Urbanism and individuals such as Peter Katz in Virginia and Chuck Marohn in Minnesota, who are both working the financial angle. There are lots of other individuals, but these two work the angle I think will be most productive. Also, agencies like the Association of Bay Area Governments and the Sacramento Area Council of Governments are trying to reduce vehicle miles traveled in their regions. I'm forming a committee whose work will assist local governments in determining what kinds of significance thresholds can help them achieve compliance with California's two greenhouse gas laws (AB 32 and SB 375). (If any committee member reads this, I beg your patience.) I believe denser development is seen as a goal of environmentalists, which is probably not a good thing.

3. It might be good to avoid. These days, we're hearing a lot of demonization of "smart growth" using Agenda 21's support of these principles as "evidence" of a global conspiracy to force people to live closer together and tear them out of their cars. Really.

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