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

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

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

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

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

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

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

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

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

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

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

But I wander.

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

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

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

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

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

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

The cost of obstructionism is our economy.

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

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

Santa Clara – A Livable Town

About four years ago, when I interviewed Gary Gillmor for the Weekly, the former mayor described Santa Clara's character this way:

"The personality of Santa Clara is a true middle class community. We cut our city up with the transportation -- Central expressway, Lawrence expressway… We created jobs, we created a tax base. [By contrast] the personality of Los Altos, Saratoga -- they don’t want any industry."

(Cue apoplectic blasts from those who see Gillmor as the evil genie who popped the lid on Pandora's box and let out a swarm of developers.)

Having grown up in one – Brooklyn, NY in the 1950s and 60s -- I'm a big fan of comfortable-for-ordinary-folks communities. And in 2008, what it takes to create or preserve one is different than what it took in 1958.

I've had many conversations on the middle-class-ness of Santa Clara. It comes up whenever you're talking about development – high density or otherwise -- "affordable" housing, or urban planning.

Lots of people pay lip service to this idea, but the pious jaw music is often just a lead in for objecting to whatever project or plan is at hand. I can't help but observe that many who are most hostile to policies and projects that might retain Santa Clara's middle-class quality, wouldn't be here in the first place if it hadn't been that kind of city.

Let me tell you how I came to Santa Clara 25 years ago. (I recognize that some will rest their case against development on this alone.)

It was the tech boom of the 1980s and my new employer, a now-defunct software company, had just moved from pricier real estate in Sunnyvale to brand new – and cheaper -- digs on Mission College Blvd. I rented an apartment 15 minutes away on San Tomas – even in rush hour – and a stone's throw from the Acapulco. My husband and I lived there for three pleasantly affordable years and only moved when we bought our townhouse.

The townhouse was in a new development and within our budget -- unlike the single family detached houses we had looked at. Now, we were hardly struggling at the lower rungs of the Valley economy. My husband was an HR manager for a national retailer and I was a software product manager.

I'm sure there were people then who didn’t want us moving in, as there are people who would prefer not to have my new neighbors moving in. But my new neighbors are the people who make Silicon Valley an exceptionally interesting place.

You know, the kind of place where you might have Dave Packard or the Steves Wozniak and Jobs tinkering in the garage next door, inventing new industries in the process. Way back when ordinary people could still afford to live in Palo Alto and Cupertino.

For example, right next door to me lives Lasandra Brill, author of the Marketing in a Web 2.0 World blog. Brill is not only an evangelist for these new generation ways of bringing things to market, she likely invented some of them, too.

Down the street a bit lives Ivaylo Lenkov, another "Web 2.0" pioneer. You haven't heard his name, but Lenkov is changing the equation for building and operating your website. Lenkov's start-up SiteKreator – also based in Santa Clara -- lets anybody create a professional-looking website by clicking-and-pointing, without any technical knowledge. The price is right, too – the entry level is free.

Another guy you might have found yourself sharing a lunch time walk to the roach coach with is serial entrepreneur Jon Fisher, whose third startup, Internet security company Bharosa, was right next door to the Santa Clara Weekly office. Last year Oracle bought Bharosa and Fisher has gone on to, among other things, teaching the secrets of his success to aspiring entrepreneurs.

They all chose Santa Clara for the same reasons I did – it was a comfortable, affordable town, plus it's easy to do business here.

When I'm having this conversation about livability, I often ask people, "Would you want Santa Clara to be like Los Altos or Woodside?" And sometimes they answer, "What's wrong with Los Altos and Woodside."

Now, I have friends living in both those towns and I don't hold it against them. They made their beds and now they have to lie in them, not to mention paying PG&E and driving 30, 45 minutes to work somewhere else. But by my middle-class barometer, there's plenty wrong with those towns.

First, your neighbors have so much free floating anxiety about the value of their real estate that they will torment you ceaselessly about the color you paint your window frames, the height of your fence or your magnolia tree, your nocturnal escapades in the hot tub, or your kid's friends.

One Los Altos couple I know practically had to put blackout shades on the front of their house to keep the neighbors across the street from spying on their social life to see if they were entertaining "undesirables" -- if you know what I mean and I think you do. My friends, you see, had moved there from San Jose, and you never know about those people.

The deed to their house still has archaic covenants specifying that blacks, Asians and Mexicans will only go to the back door. Santa Clara, on the other hand, was home to one of the county's first black community leaders, William James, and elected him sergeant-at-arms for the volunteer fire department.

Second, those towns are like living in a museum.

Sure your next-door neighbor could be some guy (and it will almost certainly be a guy, and often a shiny new trophy wife) who changed the semiconductor industry, developed the first commercially successful database software or wrote the first online shopping cart program. But these triumphs happened 10, 20, 30 years ago or longer. Learn about it at the Tech or Computer History Museum – it's cheaper.

Right here in Santa Clara I'm next door to people who are doing things today that are changing business and the world now. And that makes it an exceptionally interesting place to be. So my view is, let's make sure that future Brills, Fishers and Lenkovs will always be attracted to this comfortable-for-ordinary-people town.

And for those who disagree? Well there's always Woodside.