How poverty and politics affect the Valley’s housing crisis

This article appeared in the Silicon Valley Business Journal on August 3, 2017

Guest opinion: How poverty and politics affect the Valley’s housing crisis

By Brian Brennan and Erica Wood

For every ten new jobs created in Silicon Valley between 2010 and 2015, we built just one new housing unit.

That is the core of the Bay Area’s housing problem, and it goes a long way to explaining why, as documented in a recent report by our two organizations, Silicon Valley’s median housing price in 2015 was $935,000, while in competitor regions like Seattle and Austin it was $380,000 and $249,000, respectively.

We cannot expect the housing market to moderate until we build more housing at all income levels.  To do that, we need robust action on two fronts:  poverty and politics.

First, we need to dedicate public funds to support housing for the neediest in our region.  The housing crunch affects everyone, but government has a particular role with respect to our low-income residents.  Healthy communities have space for people at all income levels, but the cost of land in the Bay Area means stand-alone low-income housing rarely pencils out.   That is why we need affordable housing funding measures like Senator Toni Atkins’ SB 2, which would establish a permanent funding source of affordable housing, and bond measures such as that proposed by Senator Jim Beall’s SB 3.

Perhaps counter-intuitively, however, addressing the housing needs of the poor means building housing for all income levels.  The shortage of middle- and upper middle-income housing leads to gentrification: buyers at those levels look in markets that used to be for lower middle- and low-income residents.  Thus, not only are we not building enough new housing for low-income residents, but the supply that we already have is being squeezed by inadequate new housing at other income levels.

Building more housing means addressing a second issue:  housing politics.  While new housing is in the interests of the entire region, it makes sense for individual cities to wait for their neighbor cities to bear the costs of building it.  The local politics are all the more challenging because our housing crisis is less of a crisis for those who already own a home.  They might want their kids to live nearby, or be concerned about the region’s economic vitality or the well-being of friends or coworkers – but many homeowners are counting on the steady increase of housing prices as their nest egg.   We don’t talk about this much, but it adds to the complexity of housing politics, and helps explain the opposition to new housing in a region that so clearly needs it.

Part of the answer lies in re-thinking the way we make decisions about housing.  Senator Scott Wiener is making a courageous effort to move the needle with SB 35, which would prevent those local governments not building their share of housing from rejecting new housing projects that have gone through the proper environmental review, community engagement and permitting processes.  We agree with Senator Wiener: “Local control is about how a community achieves its housing goals, not whether it achieves those goals.”

When a region builds just one new housing unit for every ten new jobs, it’s no surprise that housing prices skyrocket.  That is supply and demand.  To address it, we need to focus public dollars on low-income housing while putting in place political structures that are conducive to new housing at all income levels.

Erica Wood is Chief Community Impact Officer at Silicon Valley Community Foundation.  Dr. Brian Brennan is Senior Vice President at the Silicon Valley Leadership Group.  They wrote this piece for the Business Journal.


Computer Science Education: No Time to Wait

By Paul Escobar

Our society is on the cusp of perhaps the most dramatic shift in modern history.  The digitalization of our society and economy—our greater reliance on artificial intelligence, the use of big data and the ubiquity of computers—promises to radically reshape how we live, work and play.  To remain economically competitive and foster a more inclusive society, we must ensure that everyone is prepared for and can be active contributors to this future.  Crucial to this is widespread access to a robust K-12 computer science education.

Currently only about 25 percent of Californian schools offer any CS courses to their students.  In 2015, the Sacramento Bee writes, of the roughly 2 million public high school students in the state, only 35,000 students were enrolled in computer programming or CS courses.  This disparity in education contributes to disparities in the workplace.  As the Silicon Valley Business Journal reported in March, the underrepresentation in the Valley’s tech workforce of women and minority populations is striking: only 2 percent are African American, 3 percent Latinx and 24 percent women.

Momentum is building, however, and equity of access expanding.  With the introduction of the AP CS Principles exam this year, the College Board experienced the largest exam launch in history.  The number of students taking AP CS exams doubled nationwide between 2016 and 2017 (54,379 and 111,262, respectively).  Most heartening, this year compared to 2016, the number of female and underrepresented minority test takers increased their participation by a striking 135 percent and 170 percent respectively.  In addition, though California is not currently among the only 8 states that have developed rigorous K-12 CS standards, our state is taking an important step to join their ranks with the convening this September of the Computer Science Standards Advisory Committee.

Accessible, robust K-12 CS is not only a moral and social obligation; it is an economic and national imperative.  Providing equitable access to computing resources and education will allow us to substantively expand and diversify the pool of qualified STEM workers, a vital piece to filling the over 200,000 open cybersecurity jobs and the projected shortfall by 2022 of 1.3 million qualified computational workers.  Given that STEM jobs are the number one source of all new wages in the U.S. as well as the growing reliance on computers in all sectors, accessible CS education could ultimately raise more people of all backgrounds and beliefs into a renewed middle class.  The alternative is to risk American economic competitiveness and stifle innovation.

While the state moves to develop standards, there is still much that the rest of us can do to promote access to K-12 CS education in our local districts.  Parents, teachers, administrators and nonprofit partners can all be a catalyst for a budding new CS initiative or program on at a school site or within a district.  For some ideas as to how you can do this, a great place to start is Code.org’s advocacy page.

Paul Escobar is Director of Policy and Education Programs for the Silicon Valley Leadership Group.

 


In Silicon Valley, the Jobs Keep Coming

California’s job figures for June were released today, and Silicon Valley again was half the story.

The Silicon Valley half was a total of nearly 14,000 new jobs across just four counties:  San Benito, Santa Clara, San Mateo and San Francisco.  Our region is a large part of the reason that the state’s unemployment rate remained unchanged at 4.9 percent — the lowest rate since 2000.  It continues a trend that saw jobs in Silicon Valley increase 24.5 percent between 2010 and 2015.

Yet, despite Silicon Valley’s job growth, California had a net job loss in June, and therein lies the other half of a familiar story:   Much of the state continues to struggle economically.  This is the “Two Californias” dynamic that the California Business Roundtable honed in on some years ago:  a divide that runs east-west rather than north-south, with a wealthy coast and depressed inland regions.   The great challenge for our state legislators:  How are we to think about economic development policies in a state that has both some of the richest and some of the poorest counties in the country?


Why Do We Have a Housing Crisis? This is Why….

SV@Home highlights exactly exactly the dynamic that drives Silicon Valley’s ongoing housing crisis:  A town that has met just 15 percent of its new housing allocation denies a properly permitted and reviewed project that conformed with all city planning documents.   A court has now forced the Town Council to reconsider, but the folks who are desperately scouring the Valley for a place to live won’t have a vote when they meet on the issue.

Democracy means having a voice in matters that affect your community.  A city or town is clearly a meaningful political community in matters of land use, but it is not the only relevant political community.  The impacts of housing do not end at the town’s edge.   In this particular case, the Los Gatos Town Council’s decision will be making a decision that impacts impacts Campbell, San Jose, and a much broader region.  We need to find the right way to see that the region has a greater voice on projects with regional impact.

Senator Scott Wiener’s SB 35 aims to address situations just like this one.  Here’s hoping it makes it to the Governor’s desk, and leaves with a signature.


Mid-Year Progress Report 2017 – Part III

With the last of our three mid-year progress report blogs, we’re looking ahead to California’s legislative home stretch.  The state legislature closes its 2017 year on September 15th, and we’ve got our eye on a number of bills that are making their way through the process.   The issues?  Housing, housing, and housing.   That’s no surprise, given that Silicon Valley produced only about one new housing unit for each 10 jobs created between 2010 and 2015.

If you think we need bold and thoughtful proposals to meet the housing challenges facing Silicon Valley and California, we hope you’ll call your state legislators and voice your support for these bills:

Senate Bill 35 (@Scott_Weiner):   This legislation by Senator Weiner is as bold as they come – so bold that a similar measure proposal by the Governor died last year in the face of considerable opposition.  Senator Weiner has worked hard to construct a broader coalition to back this new version, which would streamline the process of approving new housing.

At its core, SB 35 addresses the collective action problem that characterizes California housing policy:  New housing stock is critical for a region, but it is easier for individual cities to wait for their neighbors to do the hard work of building new housing and providing the accompanying services.   It is a system that stymies even the most forward-thinking local leaders in the Valley who understand the need for new housing.  To address this problem, SB 35 would shift some decision-making authority away from local governments who have failed to meet their regional housing allocation requirements.

SB 2 (@SenToniAtkins):  While builders, regions and local communities will drive creation of most of the new housing we need in California, state funds for affordable housing are critical.  Bonds have provided important funding in recent years – and proposals like SB 3 below still have a role to play – but the permanent, stable source of affordable housing funds that would be provided by Senator Atkins’ SB 2 will allow for long-term planning at lower cost.  That’s just good policy.

SB 3 (@Jimbealljr):  State funding for affordable housing is an important tool for addressing California’s housing needs.  This legislation – from Silicon Valley’s own Senator Jim Beall – would place a $3B housing bond on the California’s 2018 General Election ballot, as funding from previous bonds in 2002 and 2006 dwindles.

AB 1505 (@AsmRichardBloom):  A healthy community includes housing for residents at a broad range of income levels.   Assm. Bloom’s AB 1505 helps the cause, by allowing (but not requiring) local jurisdictions to put in place inclusionary renters housing ordinances, which in 2009 had been disallowed by the courts in Palmer vs. City of Los Angeles.

There is no silver bullet to the housing crisis, but these bills would move us in the right direction.  If you’d like to learn more about the housing challenge in California, check out the California Legislative Analyst’s report on the topic here.


Mid-Year Progress Report 2017 – Part II

Any discussion of Silicon Valley’s health must have the competition for talent at its core.  From a policy perspective, talent is a three-legged stool:  immigration from abroad, migration from other parts of the U.S., and local Bay Area talent.

Few expected 2017 to be a year of thoughtful pro-growth immigration policy.  Of course, it turns out folks in Washington had quite a few thoughts about immigration.  They have left Silicon Valley and other globally networked U.S. metro areas fighting a series of rear-guard battles against clumsy, blunt-force bans.

Those battles will continue, and need to be fought.  But there is a lot that we can do on other fronts.  In the competition for American talent — a second leg of the stool — we continue to lag behind key competitor regions like Seattle and Austin.  And it’s not close.  In 2015, we saw another net domestic out-migration from Silicon Valley, while those other regions added thousands of Americans from other parts of the country.

The cost of housing is a major driver in this trend, of course.  Here again, the comparisons with Austin and Seattle over the 2010-2015 time period are grim.  Yet the latest available housing data from California’s Department of Finance show positive movement more recently in Santa Clara and San Mateo Counties, and in San Francisco.  In each of these cases, the gap between population growth and housing growth narrowed.  That shift was driven more by reduced population growth than new housing, but we know that building housing is tough.  Credit is due to the local officials making hard decisions to increase our housing stock.  Just keep it up.

With respect to the third leg of that talent stool – Silicon Valley’s own local education systems – sweeping policy progress is hard to come by.  When wins come, they are often district by district, or system by system. Here’s one:  An initial meeting between leaders of ten of Silicon Valley’s community colleges and executives from some of the Valley’s largest tech employers earlier this month shows promise for closing the vexing gap between employers and educators.  IBM sees such promise in community colleges that they have announced of an expansion of its partnerships with community colleges across the country to train tech workers.  Are we seeing a trend?

In the third of our three mid-year reports, we’ll take a look at some legislation that we think can move the needle between now and the end of the end of California’s 2017 legislative year in September.


Mid-Year Policy Progress Report 2017 — Part I

High drama.  We’ve seen plenty of it in Washington DC in the first half of the year, generating more heat than light.  At the state and local level, however, the drama’s led to some remarkable policy outcomes through the first six months of 2017.

Today we’re reporting on transportation, where much of the good stuff has happened.  With commute times that are second only to New York City among key U.S. tech hubs, Silicon Valley needs all the good transportation news it can get.

In February, 14 House Members protested the payment of $650M in a federal matching grant for the electrification of Caltrain, in an effort to scuttle California’s High Speed Rail project (though, we should note, Caltrain electrification makes great sense independent of any other projects). The federal funds were critical to the electrification effort, which promises to double Caltrain’s capacity to 120,000 daily trips.

With the project very much in doubt, Senator Dianne Feinstein led an armada of public, private and nonprofit leaders that in May prevailed on U.S. Transportation Secretary Elaine Chao to release the funds, matching more than $1B in local and state funds.

Meanwhile, in Sacramento, Governor Brown and State Senator Jim Beall were struggling to resurrect a desperately needed transportation infrastructure package.  In a politically risky move, the Governor imposed a short deadline for measure’s passage and lobbied wavering legislators hard in the effort to reach the two-thirds threshold required for passages.  In a vote that could define this legislative year, the measure secured the supermajority it needed, to provide an estimated $5.2M annually to improve California’s deteriorating roads and bridges.

Neither Senator Feinstein nor Governor Brown would generally draw comparisons with Oakland Raiders running back Marshawn Lynch, but both leaders ran through multiple tackles and threw some wicked stiff arms this year to secure big, meaningful victories.  There are very few political leaders who could have pulled off either of these wins.

We hope you’ll give them a shout out @JerryBrownGov and @SenFeinstein.

Oh, and by the way, the new Warm Springs BART station opened in March, another key step in the steady march toward connecting BART with Caltrain in San Jose and Santa Clara.

It’s been a banner year for transportation in Silicon Valley.

Coming up:  In the search for talent, it’s one step forward and two steps back….


2017 SVCIP Forum – Public Policy Proceedings

Background                                                                     

This blog entry summarizes key themes and discussion points shared during the Silicon Valley Competitiveness and Innovation Project 2017 Public Policy Forum, held at Microsoft’s Silicon Valley campus in Mountain View, California on March 3, 2017.  More than 190 participants attended the forum, including C-level executives, elected officials, education leaders and other community members.

Overview Of Silicon Valley Competitiveness and Innovation Project

Now in its third year, the Silicon Valley Competitiveness and Innovation Project (SVCIP) is a research initiative co-managed by the Silicon Valley Leadership Group and Silicon Valley Community Foundation. SVCIP tracks multiple economic and quality of life indicators to assess and evaluate Silicon Valley’s business and innovation competitiveness against other national and international “innovation regions.” Designed to coincide with the beginning of California’s two-year legislative cycle, the 2017 public policy forum is convened to engage community leaders and obtain feedback on best strategies for SVCIP advocacy.

Forum Structure

Leadership Group CEO Carl Guardino and SVCF Board Chair Samuel Johnson, Jr. opened the forum with a welcome and provided an overview of the event. SVCF’s Chief Community Impact Officer Erica Wood and Leadership Group Senior Vice President Dr. Brian Brennan then presented a data-based update on report indicators. California Lieutenant Governor Gavin Newsom provided a keynote discussion on public policy opportunities. The Lieutenant Governor then joined a panel moderated by Carl Guardino to discuss the region’s innovation and competitiveness with Silicon Valley Bank CEO and Leadership Group Board Chair Greg Becker, Genentech Vice President Carla Boragno, Microsoft Corporate Vice President and SVCF Board Member Dan’l Lewin, and Education Trust-West Executive Director Ryan J. Smith.

Participants then engaged in breakout conversations to address one of seven policy areas in which they had indicated interest during their registration. Participants were specifically asked to identify two to three attainable and realistic policy approaches that could be accomplished within the next 18 months. The event ended with a brief report out from each conversation and organizers’ commitment to capture and disseminate discussion content. The following section summarizes the approaches identified within each discussion group, and do not necessarily reflect the policies or priorities of SVCF or the Leadership Group.

Breakout Session Proceedings

  • Housing
    • Sacramento needs to implement an incentivize affordable and accessible housing. (AB 71, SB2)
    • Pass legislation to secure $ for affordable housing (AB 71(Chiu) and SB 2 (Atkins)
    • Find way to revenue share property taxes
    • State needs to pass local accountability measures – by-right and requiring building planned for in housing elements and RHNA.
  • Education
    • Teacher shortage:
      • Create streamlined pathways into the profession for new teachers and mid-career
      • Use tech to facilitate teaching and delivery
      • Differential pay to incentivize
      • Improve the narrative around teaching
    • Early childhood development
      • High quality early childhood education for all
      • Align to k-12 system
    • Funding
      • R&D funds for local education innovation
      • Restructure tax (Prop 13) and funding distribution
      • Pension reform
    • Clearinghouse for public-private partnerships
  • Transportation
    • Electrify Caltrain
    • Transit Agency Coordination
    • 9-County Transportation Measure
  • Workforce/Higher Education
    • Summer program that brings together a task force to solve issues of affordability, access, and curriculum alignment with industry needs – with members from industry, community colleges, 4-year institutions, and K-12 entities.
    • Summer program – Professional development that links professionals in industry with educators, makes it easier for talented industry folks to teach, and provides opportunities for teachers to work in industry temporarily (like Ignited).
    • Make sure that the first two initiatives are industry-led, so that it can define the skills needed, and inform and fund the process.
  • R&D/Innovation
    • R&D:  increase funding, focus on supply chain
    • STEM initiatives
      • Replicate Genentech models of hands-on learning
    • Focus on addressing the skills gap in the high tech manufacturing workforce
  • Entrepreneurship
    • 6 entrepreneurship challenge events, outreach with/to local community colleges, innovation challenges, friendly competition and create inclusive tech ecosystem
    • Workforce development and training for emerging leaders (students)
    • Policy-specific:  housing, immigration
  • Tax/Regulation
    • Prop 13 reform (how property is valuated)
    • Debt forgiveness for teachers in STEM
    • Incentives for students to have access to STEM and the treatment of computer science as math.

 

 

 

 


Poverty, Wealth and California’s Migration Flows

By Brian Brennan

The primary takeaway from the immigration data in the 2017 Silicon Valley Competitiveness & Innovation Report – released last week at Microsoft in Mountain View – is that people keep coming to the Valley.  Despite demoralizing commutes and onerous housing prices, there is a steady stream of newcomers from abroad – nearly 2,800 a month in 2015.

The domestic migration dynamics between Silicon Valley and the rest of the United States are more complicated.  Net domestic migration to the Valley is negative (-832 in 2015), but that number itself masks a larger narrative that is revealed in a report earlier this week from the Sacramento Bee about California’s migration patterns – two narratives, in fact.

The first is about geography:  Domestic migration to California between 2000 and 2015 was driven by movement from states east of the Mississippi – primarily the Mid-Atlantic states and New England, as well as Michigan, Florida, Illinois and Alabama.  Those moving away from California over that same period tended to stay in the west, heading in largest numbers to Texas (155,343), with Oregon, Nevada and Arizona not far behind.

The second narrative involves income. The Bee’s data reveal that the poor are leaving California while those with means are drawn to the state:

All told, California lost about 260,000 economically disadvantaged residents to the 10 states with the lowest cost of living (from 2000 to 2015), compared to a net gain of about 40,000 from the 10 states (other than California) with the highest cost of living.

These dynamics have consequences.  They mean a more socioeconomically segregated region.  They mean a hollowing-out of a middle and working classes that are essential to any community.  And they mean additional pressure on even successful companies to consider growing outside of California.

They are also not inevitable.  They are driven by many things, not least policy constraints on housing supply.  Our policymakers are facing many pressing challenges, but when Silicon Valley’s employment rises nearly 25% and population rises 6.4%, as it did between 2010 and 2015, while housing stock increases by only 2.6%, the outcomes are predictable:  an elite, segregated region with an unbalanced economy that drives too many away.

 

Dr. Brian Brennan is Senior Vice President at the Silicon Valley Leadership Group.


How Does Silicon Valley Compare With Other Global City-Regions?

By John Melville

Most would agree that Silicon Valley is one of the world’s leading innovation regions.  But what do the numbers say?  Unfortunately, comparable international measures are still not available in many issue areas covered by SVCIP.  That is why we have been able to develop comprehensive comparisons only across selected Innovation Regions in the United States.  However, we do recognize Silicon Valley competes in a global innovation economy, and should be measured against global regions whenever possible.

Here is what we do know: As we reported in the 2016 SVCIP Update, the Compass’ Global Startup Ecosystem Ranking of 2015 placed the region first based on a composite measure incorporating venture capital investment, start-up company exit valuations, talent pool, and entrepreneurial supports and networks. At the same time, other regions like Berlin, London, Tel Aviv, Chicago, and Boston scored higher on the Growth Index, meaning they are making up ground on Silicon Valley in these areas.

The Brookings Institution has just released a comprehensive analysis of the 123 largest metropolitan areas in the world (see Redefining Global Regions, 2016).  On a variety of indicators, the San Jose and San Francisco metropolitan areas rank among the top regions in the world.  In short:  Silicon Valley has the largest share of publications in the top 10% of cited papers (2010-2013), and generates the most patents per capita.  It is the most productive region, and attracts the largest venture capital investment per capita of any metropolitan area in the world.  It has among the highest percentage of people with bachelors’ or higher degrees, only exceeded by Singapore, London, and Washington D.C.

Despite being the birthplace of many founding internet technologies, one of the measures on which the region performs poorly is average internet download speed.  Silicon Valley is actually well behind several regions across Asia (e.g., Singapore, Tokyo, Osaka, Nagoya, Seoul, Hong Kong), Europe (e.g., Paris, Stockholm, Amsterdam, Barcelona, Copenhagen, Zurich), and the United States (e.g., Austin, Seattle, Boston, New York City, and Los Angeles, as well as Baltimore, Philadelphia, Kansas City, St. Louis, and Riverside).

Stay tuned for the 2017 SVCIP Update which will be released in February.

John Melville is Co-CEO of Collaborative Economics.