San Francisco’s Absurd Resistance to Change

San Francisco, CA, USAIt’s natural to be unsettled by change, but residents of San Francisco take resistance to change to absurd levels. In 1958, Gavin Elster — the shipping magnate played by Tom Helmore in Alfred Hitchcock’s Vertigo — expressed San Francisco’s deeply engrained ambivalence to change well: “The things that spell San Francisco to me are disappearing fast.” A recent letter to the editor in the San Francisco Chronicle shared the typical modern lament: “Has San Francisco’s economic growth truly made it a more interesting place to live? Or just a place with more shiny but soulless places to spend money?”

Every day, similar hyperbole appears in the press, in social media, and in conversations: San Francisco is becoming a “hollow city” catering to highly paid tech workers. Most job growth has been in the Silicon Valley suburbs an hour or so south, and the “Google buses” ferrying young professionals up and down the peninsula have become symbols of an invasion. Contemporary San Franciscans resent them the way earlier locals resented the influx of Chinese in the 1870s and the gays and lesbians in the 1970s. This time around, it’s the young and well-paid newcomers who threaten the status quo, not the poor or marginalized. We hear that these people aren’t like us, they don’t share our values, and they should go back where they came from.

Paradoxically, in a city famed for new ideas, resistance to change is a cherished San Francisco value. The city’s population is less than one tenth that of New York, yet the San Francisco planning department processes three times more applications than Gotham’s planning commission. That’s because public review — with generous opportunities to appeal — is a cherished sport here. For example, any exterior building alteration to a structure more than 50 years old requires historic review by the city — a process that can easily take a year. Environmental review of a proposal to install bicycle lanes took three years. When a proposal for a cluster of office and residential towers downtown—without any residential displacement and with 40 percent of the housing to be permanently affordable — came before the planning commission recently, protesters chanting “genocide” shut the hearing down.

San Franciscans have easy access to the ballot by petition. In November, residents voted on five initiatives addressing the changing city, including Airbnb regulation, protections for “legacy” shops, and an 18-month shut down of private housing development in the Mission District. This love of process over action shows just how intractable the city’s growing pains are. The city’s political leaders have few real solutions to San Francisco’s real problems, so instead we San Franciscans lash out at symbols: tech workers and the buses that take them to their jobs; chain stores; and fancy new restaurants. By these lights, New York seems more comfortable as a city of ambition. The idea of San Francisco as a place that attracts young people interested in working hard and making money is fairly new. Even in the Gold Rush days, one sought one’s fortune scattered by a streambed, not in the city. In San Francisco, hustle is unbecoming.

New York and San Francisco are both paying the price of gentrification and revival. People get pushed out, or crowded, or have long commutes. But the two cities are different in key ways. In San Francisco, if you want a walkable neighborhood with cafes and bakeries and the amenities that Jane Jacobs championed, you have few choices. San Francisco doesn’t have the equivalent of a Cobble Hill, a Jackson Heights, or a Hoboken, and lacks the reliable, regional public transit system that would make longer commutes bearable. The San Francisco Metro and the regional BART system combined have just 104 miles of track. New York’s subways run 842 miles, not to mention the PATH system, Metro North, New Jersey Transit, and Long Island Railroad that funnel workers into and out of the central city. While San Francisco is a cultural and economic heavyweight, it’s a relatively small city: 850,000 residents within 49 square miles, with water on three sides. Here, the shifts seem tectonic. They feel like an earthquake.

Plenty of solutions for San Francisco’s planning gridlock spring to mind. The challenges are not technical; they are merely a matter of political will. Most development projects should go forward if they comply with planning codes. The arduous, costly, and risky review and appeals processes should be streamlined. The California Environmental Quality Act should be amended so that it encourages smart growth rather than sprawl. Small infill projects should be exempted. But I’m not holding my breath for any of this. What is needed is a radical change in the local culture. San Francisco needs to learn to embrace change without fear and give up its love affair with process.

Los Angeles NIMBYs Fight to Halt Development in City

Los Angeles developmentLos Angeles is in the midst of a housing crisis, plain and simple. The stock of available dwellings can’t sustain a growing population, people are paying a wildly disproportionate amount of their salaries on rent, and building new affordable housing is seen by some developers as a nuisance to be avoided at all costs.

The city’s approach to the problem has often been to give developers carte blanche, lifting restrictions and amending city codes to facilitate construction of LA’s new iconic structure: the mid-rise mixed-user.

Opposing this development bonanza are longtime residents, the NIMBYs, who decry the new focus on density as a shift in the fundamental values of a city seeking to find its identity and place in the Twenty-First Century.

The battle now looks to be headed to a showdown at the voter’s booth as one anti-development group has turned to a classic California method of change, the ballot measure.

According to the LA Times, the Coalition to Preserve LA has announced plans to push forward the Neighborhood Integrity Initiative ballot measure in an effort to thwart the spread of new developments in Los Angeles.

The CPLA cites Hollywood as a “microcosm” of unrestrained development in Los Angeles. They believe “unlawful favoritism” is being shown to many Hollywood developments seeking amendments to the city’s General Plan in order to skirt zoning restrictions on height, parking, and density.

The upcoming Palladium project in particular is called out as one of the 69 major projects brewing in the Hollywood area whose “piecemeal” amendments to the city code begin to add up and create the “Manhattanization of Hollywood.”

(One backer decries the loss of the parking lot where the project would rise: “Palladium developers are asking the City to amend the General Plan in order to rezone its back asphalt parking lot from industrial land use to commercial use. The City’s General Plan is supposed to preserve the distinct character of neighborhoods and to prevent infrastructure overload.”)

The CPLA wants Los Angeles to stick more strictly to the established city planning guidelines, which in many cases are decades out of date. When the city tried to pass new, more modern planning guidelines in Hollywood, anti-development groups successfully sued to stop the plan.

According to the CPLA press release, the ballot measure would change development rules in four key areas:

(1) Direct officials to halt amendment of the City’s General Plan in small bits and pieces for individual real estate developer projects, and

(2) Require the City Planning Commission to systematically review and update the City’s community plans and make all zoning code provisions and projects consistent with the City’s General Plan, and

(3) Place City employees directly in charge of preparation of environmental review of major development projects, and

(4) For a limited time, impose a construction moratorium for projects approved by the City that increased some types of density until officials can complete review and update of community plans or 24 months, whichever occurs first.

Los Angeles Times Architecture critic, Christopher Hawthorne took to Twitter to eloquently contextualize this unique period of Los Angeles history and challenge both sides of the development argument to bring more to the table.

(Jeff Wattenhofer writes for Curbed LA … where this perspective was first posted.)

When Will Unions Fight to Lower the Cost of Living?

A report issued earlier this year from California’s Office of Legislative Analyst “California’s High Housing Costs: Causes and Consequences,” cites the following statistics:  “Today, an average California home costs $440,000, about two-and-a-half times the average national home price ($180,000). Also, California’s average monthly rent is about $1,240, 50 percent higher than the rest of the country ($840 per month).”

It’s actually much worse than that. Anyone living on California’s urbanized coast, from Marin County to San Diego, has to laugh at the idea that a modest home can be found for anywhere close to $440,000, or a decent rental can be found for anywhere close to $1,240 per month. In most urban areas within 50 miles of the California coast, finding a home or a monthly rental at twice those amounts would be considered a bargain.

These prohibitive costs for housing are mirrored in California’s unusually high costs for electricity, gasoline, water, and, of course, California’s unusually high taxes. The cost of living in California is one of the highest in the nation – along the coast, it’s probably the highest in the nation. For this reason, it’s completely understandable that California’s state and local government unions perpetually agitate for higher pay and benefits for their members. But they’re leaving everyone else behind.

The problem with the oft-repeated mantra “teachers, nurses, police and firefighters need to be able to live in the communities they serve” ought to be obvious. Nobody can afford to live in these communities, unless they’re either very wealthy, or they’re early arrivals whose mortgages are paid off and whose children have graduated from college. Otherwise, if they live on the California coast in a decent home, they’re in debt to their eyeballs.

This is a failure of policy, and the worst possible response is to exempt public sector workers – the most powerful voting bloc in California – from the consequences of these policies. Because the most enlightened public policies that union leadership might advocate – all unions, public and private – are not to raise pay and benefits for their members, but to lower the cost of living for everyone. And the way to lower the cost of living for everyone is to permit competitive development of land, energy, water and mineral resources.

Along with permitting private interests to compete, California needs to change how public money is invested. California’s biggest infrastructure project in decades is the high-speed rail project, which was originally sold to voters as costing $9.5 billion. According to a 10/24/2015 report in the Los Angeles Times, here are the latest projections:

“After cost projections for the train rose to $98 billion in 2011, vociferous public and political outcry forced rail officials to reassess. They cut the budget to $68 billion by eliminating high-speed service between Los Angeles and Anaheim and between San Jose and San Francisco.”

The L.A. Times report goes on to describe how high-speed rail is again over-budget. If it’s ever built, it’s likely to cost approximately $100 billion. Using an online mortgage calculator, you will see that a 5 percent, 30 year fully amortized $100 billion loan will require total payments per year from taxpayers of $6.4 billion. That’s over $1,000 per year from each of California’s taxpaying households. Don’t count on ridership revenue to help pay capital costs – it is highly unlikely ridership will even cover operating costs.

The opportunity here, however, is that California’s high-speed rail project may never be built. Because one of the conditions of the project is attracting a percentage of matching funds from private investors, and these commitments are not pouring in. Unions who are currently fighting for high-speed rail will need to find new projects to support. Regardless of what you may think about unions, as long as they have the political clout they’ve got, their support for new projects could be good, if they modify their criteria.

California’s unions need to support competitive resource development and they need to advocate public/private investment in revenue producing civil infrastructure that passes an honest cost/benefit analysis. These policies would not only lower the cost of living, they would create millions of jobs. The problem with high-speed rail isn’t that it doesn’t create jobs, the problem is destroys more jobs than it creates. High-speed rail would be a parasitic economic asset dependent on taxes and subsidies to exist, while not even making a dent in California’s overall transportation challenges.

Unions in California need to return to the core ideals of the labor movement, which is to care about ALL working families. And if they care about those ideals, they will make hard political choices. They will take on California’s super-sized environmentalist lobby, along with their powerful friends, trial lawyers and crony green capitalists. They will challenge the biased studies that claim California cannot solve its land, energy, water and transportation challenges without what is essentially rationing. They will recognize that policies that create artificial scarcity only empower the rich and the privileged. They will participate in a new dialogue aimed at identifying measured and decisive ways to unlock California’s abundant resources; aimed at identifying infrastructure projects that are financially viable enough to attract private investment. They will get out of their comfort zone, confronting old allies, and finding new friends.

*   *   *

Ed Ring is the executive director of the California Policy Center.

Why the SF Chronicle is Wrong on Prop. 13

http://www.dreamstime.com/-image14115451The San Francisco Chronicle wants to raise property taxes on homes. That has to be the conclusion from it editorial that criticizes Gov. Brown for saying he will not support a “split roll” taxing businesses differently than homes. The Chronicle calls this a “primary” reform. Clearly, the editorial writers have in mind a secondary reform: changing the property tax formula for homes.

The proof of the Chronicles’ position is the argument that Prop. 13 “masquerades” as a homeowners’ friend; that poor sap voters “believe” the measure saves money and prevents jumps in taxes. Look for one shred of evidence to back up this foolish statement that Prop. 13 has not been a tax saver for voters and you won’t find one.

Here’s the truth. If the property tax system reverted to what it was prior to Prop. 13 passing, property would be taxed at full market value at 2.7 percent. Even if the property tax rate remained at 1 percent as prescribed by Prop. 13, the increase in market values, especially in San Francisco, would send a shock to the system of property taxpayers. Yes, the people’s belief is correct — Prop. 13 does save money and prevents jumps in taxation.

As to the fairness question raised by the editorial – that has been dismissed by both the California and United States Supreme Court. Property taxes are not a fee for service tax. Different properties have always paid varying amounts for the services they receive from local government. The Proposition 13 formula did not change that fact but it did for the first time give certainty to the taxpayer instead of the tax collector.

Proposition 13 not only protects taxpayers from runaway property taxes but also has made the property tax the most stable of all California revenue sources, increasing at a steady pace above inflation and population growth ever since it passed.

If the Chronicle wants to take out its ire it should do so against the public employee unions who convinced friendly legislators to kill a reform bill that would have reined in the few businesses that game the system to prevent property tax increases when the businesses are sold. The unions didn’t want that small fix; they wanted big property tax increases with a split roll — and if the Chronicle has its way, more property taxes from all kinds of property.

Originally published by Fox and Hounds Daily

A shorter version of this article was published in the San Francisco Chronicle.

CA Supreme Court Forces Affordable Housing on Developers

affordable housingMany Golden State developers must now include so-called affordable housing units in their sales plans. The California Supreme Court sided against the builders, who brought a contentious, high-profile suit against municipal policymakers.

“At issue was a 2010 San Jose law that requires some new residential developments to set aside 15 percent of their units for sale at below-market rates,” noted the San Jose Mercury News. “The California Building Industry Association said the city failed to justify the 15 percent requirement and should base any such quota on an assessment of possible negative effects of the market-rate housing.”

But the impact of the ruling went far beyond San Jose city limits. “The League of California Cities and California State Association of Counties estimate more than 170 municipalities have some kind of ordinance on the books,” according to KQED. Officials in Sacramento have also brought attention to the diminishing quantity of less costly urban housing. As the Los Angeles Times observed, the state’s Legislative Analyst reported months ago that California’s housing is among the nation’s most expensive.

Given the court’s protection of the laws, their continued expansion became all but certain in liberal-leaning urban areas. “The decision clears the way for Los Angeles and other cities to require developers to sell a percentage of the units they build at below-market rates as a condition of a building permit. Developers also could be given the option of paying into a fund for low-cost housing,” the Times reported.

In a statement, the Times added, L.A. mayor Eric Garcetti applauded the ruling. “This gives Los Angeles and other local governments another possible tool to use as we tackle our affordable housing crisis,” he said.

A hands-off approach

Describing California’s paucity of cheap housing as a crisis of “epic proportions,” Chief Justice Tani Cantil-Sakauye went well beyond the bounds of San Jose’s set-asides to endorse broad municipal regulatory powers. Cities, she wrote, should “regulate the use of real property to serve the legitimate interests of the general public and the community at large.”

Rather than seeing itself as indulging in judicial activism, however, the court embraced city attorneys’ contentions that its powers simply didn’t extend to pricing rules. “There is no basis for the courts to second-guess the City Council’s considered judgment in adopting an inclusionary housing ordinance as a means to comply with its affordable housing aims,” they argued, according to the Associated Press.

Judicial gymnastics

Behind the hands-off approach, however, the court followed a complex line of legal interpretation. Plaintiffs claimed that San Jose’s “inclusive housing ordinance,” or IHO, amounted to an unconstitutional “taking” of property. Previously, the U.S. Supreme Court had ruled that the possibility of such a taking triggered heightened judicial scrutiny, a stricter standard of interpretation than the city’s attorneys wanted the California Supreme Court to use.

Under heightened scrutiny, a so-called “exaction” imposed by an IHO can only pass constitutional muster if regulators “can establish a reasonable relationship between the amount of a city’s need for affordable housing and the portion of that need attributable to a particular development project,” as the National Law Review noted.

The city admitted that it broke new ground in the aggressiveness of its housing regulations. As KQED noted, “the city side-stepped the usual study showing a relationship between the development of for-sale housing and the city’s need for affordable housing.”

But the court, the Review continued, ruled the set-aside in San Jose’s IHO was not an exaction at all, “because it did not constitute the payment of a monetary fee but rather simply placed a limit on the way a developer may use its property.” Rather than requiring developers to pay money or turn over its property to the public, the IHO placed “a restriction on the property by limiting the price for which the developer may offer certain units for sale.”

Originally published on CalWatchdog.com

Redevelopment Agencies Poised for a Comeback

Redevelopment agencies would once again have the power to seize private property for big developers under a bill that passed the California State Assembly earlier this month.

Assembly Bill 2, authored by Assemblyman Luis Alejo, D-Salinas, would give local governments the power to create new entities that would have the same legal authority as redevelopment agencies. These new Community Revitalization Investment Authorities would have the power to issue bonds, award sweetheart deals to businesses and “acquire and transfer property subject to eminent domain,” according to the legislative analysis of the bill.

Property rights advocates warn that the bill’s language contains no restrictions on eminent domain and could resurrect the abuses made possible by the Supreme Court’s controversial Kelo decision.

“It brings back the right of governments to exercise eminent domain against some private parties in order to resell their property to other private parties,” cautioned Howard Ahmanson, Jr., a property rights advocate and founder of Fieldstead and Company. “Only new and wealthy suburbs would be potentially spared from ‘redevelopment,’ the lower middle class and poor would not.”

12 Assembly Republicans back redevelopment, unrestricted eminent domain

In 2005, the U.S. Supreme Court ruled in Kelo v. New London that government agencies have the power to seize property for economic development. The decision was widely criticized across the political spectrum and inspired states to pass tougher laws limiting governments’ eminent domain powers. Here in California, the momentum for property rights reached its zenith in 2011, when Gov. Jerry Brown pushed through a plan to end redevelopment as part of his plan to balance the state budget.

Kristin_Olsen_PictureNow a decade since Kelo, the horror stories of small businesses being seized to make way for strip malls and condo complexes have faded from public memory. During the state Assembly’s floor debate on the bill, not a single member – Republican or Democrat – spoke in opposition to the bill, which passed by a 63-13 vote.

Surprisingly, a dozen Assembly Republican lawmakers, including Assembly GOP leader Kristin Olsen, joined the Democratic majority in backing the bill. Olsen’s office refused to comment on the bill or explain how the bill fit with the Republican Caucus’ position on property rights. One GOP lawmaker defended her vote by arguing that redevelopment agencies are an important tool for economic development.

“I ran for Assembly to help create jobs,” said Assemblywoman Young Kim, R-Fullerton. “RDAs give us another tool to do just that while turning around poor and disadvantaged areas.”

Redevelopment focused in areas with high unemployment, crime

Under the bill, a Community Revitalization Investment Authority could be created by a city, county or special district if certain conditions are met. The first requirement is that the area have an annual median household income that is less than 80 percent of the statewide median. Additionally, three of the following four conditions must be met:

  • Unemployment that is at least 3 percent higher than the statewide median unemployment rate;
  • A crime rate that is 5 percet higher than the statewide median crime rate;
  • Deteriorated or inadequate infrastructure such as streets, sidewalks, water supply, sewer treatment or processing, and parks;
  • Deteriorated commercial or residential structures.

“It’s redevelopment with a kinder, gentler twist,” explains Steven Greenhut, the state’s foremost expert on eminent domain and author of the book, Abuse of Power: How the Government Misuses Eminent Domain. “If AB2 passes, agencies will take property by eminent domain and use public dollars to fund private projects. Localities will run up debt without a vote of the public. As always, the plans of residents will give way to the edicts of the planners.”

There’s overwhelming evidence that redevelopment agencies harm small businesses, while failing in their mission to stimulate economies. That’s most evident in the landmark Kelo case, where a Connecticut town offered a corporate welfare package to the pharmaceutical giant Pfizer, Inc.

“While Ms. Kelo and her neighbors lost their homes, the city and the state spent some $78 million to bulldoze private property for high-end condos and other ‘desirable’ elements,” the Wall Street Journal observed in 2009. “Instead, the wrecked and condemned neighborhood still stands vacant, without any of the touted tax benefits or job creation.”

Those abuses extended to California’s application of redevelopment, property rights advocates say.

“California has rightly earned the reputation as one of the nation’s largest abusers of eminent domain, given that Redevelopment Agencies routinely abused their power of eminent domain to seize homes, small businesses and places of worship for private development,” wrote the California Alliance to Protect Private Property Rights, the state’s leading property rights group. “Time and time again, these obscure agencies diverted taxpayer dollars from core government programs to finance professional sports arenas, luxury hotels, golf courses and strip malls.”

Alejo: Bill needed to help disadvantaged communities

Nevertheless, supporters of AB2 say that blighted areas are a problem that demand government action.

“There are many areas in the state where the streets are broken and old water and sewer pipes lurk below,” Alejo said of his legislation. “In these areas, businesses do not open up shop. This leads to high unemployment, high crime rates and a hopeless community. This bill will work to tackle issues facing our state’s most disadvantaged communities.”

Several GOP lawmakers that opposed the bill dispute Alejo’s arguments.

“Private property rights are a foundational principle declared by our founding fathers,” said Asm. Scott Wilk, R-Santa Clarita, who opposed the bill. “Eminent domain is used by the government to trample on private property rights and as an individual property owner, there are legal protections in place to prevent government encroachment.”

Assemblywoman Melissa Melendez, R-Lake Elsinore, one of only 13 members to oppose the bill, said that she understands her colleagues interest in redevelopment, but can’t back legislation that undermines property rights.

“Stripping away property rights in the name of economic development isn’t the answer,” said Melendez, a former member of the Lake Elsinore City Council. “I think it has become more fashionable to allow the government to take over instead of allowing the free market to do so.”

Originally published by CalWatchdog.com

An Economic Win-Win For California – Lower the Cost of Living

A frequent and entirely valid point made by representatives of public sector unions is that their membership, government workers, need to be able to afford to live in the cities and communities they serve. The problem with that argument, however, is that nobody can afford to live in these cities and communities, especially in California.

There are a lot of reasons for California’s high cost of living, but the most crippling by far is the price of housing. Historically, and still today in markets where land development is relatively unconstrained, the median home price is about four times the median household income. In Northern California’s Santa Clara County, the median home price in October 2014 was $699,750, eight times the median household income of $88,215. Even people earning twice the median household income in Santa Clara County will have a very hard time ever paying off a home that costs this much. And if they lose their job, they lose their home. But is land scarce in California?

The answer to this question, despite rhetoric to the contrary, is almost indisputably no. As documented in an earlier post, “California’s Green Bantustans,” “According to the American Farmland Trust, of California’s 163,000 square miles, there are 25,000 square miles of grazing land and 42,000 square miles of agricultural land; of that, 14,000 square miles are prime agricultural land. Think about this. You could put 10 million new residents into homes, four per household, on half-acre lots, and you would only consume 1,953 square miles. If you built those homes on the best prime agricultural land California’s got, you would only use up 14 percent of it. If you scattered those homes among all of California’s farmland and grazing land – which is far more likely – you would only use up 3 percent of it. Three percent loss of agricultural land, to allow ten million people to live on half-acre lots.”

So why is it nearly impossible to develop land in California? The answer to this is found in the nexus between financial special interests, who benefit from asset bubbles, and powerful environmentalist organizations who apparently view human settlements as undesirable blights that should be minimized. In the San Francisco Bay Area, to offer a particularly vivid example, the Santa Cruz mountains are being targeted to be cleansed of human habitation. Instead of creating wildlife corridors, they are eliminating human corridors. Is this really necessary?

20141203_Ring

If you are familiar with the San Francisco peninsula, you will see that the area proposed for the “Great Park of the Santa Cruz Mountains” encompasses nearly the entire mountain range. A coalition of environmentalist organizations and government agencies are proposing to create a park of 138,000 acres, that’s 215 square miles, in an area that ought to make room for weekend cabins, mountain dwellers, and vacation communities. Why, in a region where homes cost so much, is so much land being barred to human settlement? The pristine stands of redwoods in Big Basin and Henry Cowell State Park were preserved a century ago. There is nothing wrong with preserving more land around these parks. But do they have to take it all?

This is far from an isolated example. Urban areas in California, primarily Los Angeles and the San Francisco Bay Area, have been surrounded by “open space preserves” where future development is prohibited and current residents are harassed. Ask the embattled residents of Stevens Canyon in the hills west of the Silicon Valley, if there are any of them left. Once you’re in a “planning area,” watch out. Backed by bonds sold to naive voters, endowments bestowed by billionaires, and the power of state and federal laws that make living on any property at all increasingly difficult, the relentless land acquisition machine continues to gather momentum. Anyone who thinks there isn’t a connection between setting aside thousands of square miles in California for “habitat” and the price of a home on a lot big enough to accommodate a swing set for the kids needs to have their head examined.

It doesn’t end with open space that is actually purchased, cleansed of humanity, and turned into government ran preserves for plants and wildlife, however. Acquiring permits to build on any land is nearly impossible in California. Land developers who fight year round to try to build housing for people shake their heads in disbelief at the myriad requirements from countless state, federal and local agencies that make the permit process take not months or years, but decades. And it isn’t just farmland, or wetland, or special riparian habitats where development is blocked. It’severywhere. Even semi-arid rangeland is off limits for housing unless you are prepared to spend millions, fight for decades, and have the staying power to pursue multiple expensive projects simultaneously since many will never, ever get approved.

What is the result? Here is an aerial photo of a subdivision in the Sacramento area, one that every hedge fund billionaire turned environmentalist in California – especially one who runs cattle on his own special 1,800 acre fiefdom in the Santa Cruz mountains on a property that just happens to be in a “non-targeted area” – might consider living in for the rest of his life in order to understand the human consequences of his ideals – cramped homes on 40′ by 80′ lots, at a going price in October 2014 of $250,000. Notwithstanding being condemned to a claustrophobic existence at a level of congestion that would drive rats in a cage to madness, $250,000 is a pittance for a billionaire. But for an ordinary worker, $250,000 is a life sentence of mortgage servitude. And even this, the single family dwelling, is under attack by “smart growth” environmentalists and public bureaucrats who prefer density to having to divert payroll and benefits to finance infrastructure. The excess! The waste! Stack them and pack them and let them ride trains!

Priced to Sell at $250,000 – Housing for Humans on 40′x80′ Lots

201402_Sacramento-500px

When public employee union leadership talk about the importance of paying their members a “middle class” package of pay and benefits, they’re right. Government workers should enjoy a middle class lifestyle. But they need to understand that the asset bubbles caused by high prices for housing are not only making it necessary to pay them more, but are also creating the inflated property tax revenue that they rely on for much of their compensation. They need to understand that the phony economic growth caused by everyone borrowing against their inflated home equity is what creates the stock market appreciation that their pension funds rely on to remain solvent. And they need to understand that all of this is a bubble, kept intact by crippling, misanthropic land use restrictions that hurt all working people.

There is another path. That is for public employee union leadership to recognize that everyone deserves a chance at a middle class lifestyle. And the way to do that is not to advocate higher pay and benefits to public employees, but to advocate a lower cost of living, starting with housing. One may argue endlessly about how to regulate or deregulate water and energy production, essentials of life that also have artificially inflated costs. But as long as suburban homes consume less water than Walnut orchards – and they do, much less – build more homes to drive their prices way, way down. There’s plenty of land.

Ed Ring is the executive director of the California Policy Center.

Downtown Los Angeles: About to Become the Cultural Epicenter of the West Coast

Thirty years of commercial real estate experience in New York and around the country have taught me a few things, including this: what’s old is new again. If you’ve lived in Los Angeles long enough, you might remember when Abbott Kinney in Venice was a rundown stretch of homes. Today, it’s an upscale shopping and dining district.

You might also remember when downtown Los Angeles faded into an urban ghost town in the early 1990s, as commercial real estate values dropped sharply from the 1980s when Japanese real estate investors went on a buying spree that unraveled after the country’s stock market crashed in 1987.

Almost a quarter of all office space was vacant, entire buildings in the financial district were empty and office buildings in Glendale were commanding twice the rent of downtown skyscrapers. It was only a matter of time before smart developers would recognize the untapped potential of downtown’s booming daytime population, hidden architectural jewels, and ideally priced parcels of land. (For reference, a recent article in the Los Angeles Business Journal announced the purchase of a tower on Figueroa Drive for $175 million, a 67 percent premium to what was paid 11 years ago.)

My beliefs were confirmed when Brookfield Properties announced in 2011 that it was planning a $40 million facelift to the FIGat7th property and that Target would be the new anchor. When an iconic brand that is on the forefront of design and great brick-and-mortar experiences agrees to join a project that has been in the doldrums for decades, it makes a statement. It says, “We acknowledge the history and failures here, but we’re going to bet on downtown and we’re betting big.”

We’re witnessing an incredible movement of urban revitalization and renewal and it’s not showing any signs of slowing down. This is great news. Leasing activity is high, and new-to-market brands are streaming in trying to make their mark. Infusing a once-neglected market with new retail and restaurants is a win-win for any city and its residents.

Of course, there are critics of all this revitalization downtown. They argue that neighborhoods lose their distinct, historic character when commercial interests invest in them, long-time residents can’t afford rents anymore, and “gentrification” happens.

You can’t fight progress, but it does come with a cost. Without government grants and non-profit assistance, many of the district’s artists in residence will move to other neighborhoods close by. But sometimes, that’s the nudge it takes to bring attention and money to underserved markets. Retailers and artists alike move to a more affordable area out of necessity, and create the foundation for a new district. Suddenly Boyle Heights, the birthplace of the Chicano movement, is the next market poised for gentrification after property values jumped 18% from last year.

I direct the naysayers to the High Line in New York City, a 1.45-mile public park built on a historic rail structure. Some say that because of the High Line, Chelsea has lost its character and that this once quaint artist colony has been corrupted, but that’s not the case. The High Line is a wonderful example of brilliant urban planning that mixes modern designs with a functional “product” that lubricates the flow of people going in and out of the West Village, Meatpacking District, Chelsea, and New York’s newest emerging market…Hudson Yards, a $20 billion development project.

So how does an urban real estate market, especially one that had fallen on hard times like downtown Los Angeles, catch on, take hold, and then capture the hearts and interests of its residents?

From my point of view, the true measure of success for downtown or any urban market is how well it establishes a sense of connectivity across all of the mini-districts within its borders (as the High Line has accomplished). Connectivity is the way people get from Point A to Point B, whether it’s by foot, automobile, bus, or rail. In Los Angeles, those mini-districts include the Financial District, Fashion District, Koreatown, Arts District, South Park, and LA Live, but connectivity also applies to any city that is a car ride away.

When I am in Manhattan, I can walk from my office on Fifth Avenue to any market in any direction. There’s never a lull and never a city block without something on it. In downtown Los Angeles, sure, it’s possible for someone to walk from their office in South Park to the Ace Hotel to meet friends after work. But you’re not walking past retail or dining, you’re walking past parking lots and unlabeled buildings that do nothing to invite a pedestrian in. Connectivity occurs when markets start to merge together and there are ways for people to move between them that are interesting and meaningful.

This is something that simply won’t happen, and doesn’t need to happen in other markets in Los Angeles. No one associates connectivity even with communities as close together in proximity as Santa Monica and Venice. No one is going to walk from the Third Street Promenade to Abbot Kinney.

Nor is anyone is going to walk from Brentwood Gardens to the Brentwood Country Mart down San Vicente Boulevard, past a country club and residential areas. I’m confident that Los Angeles’ impressive mass transit initiative will also serve as a vital piece of connectivity between communities that once seemed impossible. If the staggering number of USC football fans riding the Metro from Culver City to the Coliseum on game days is any indication, then it’s a great sign that Angelenos are already embracing public transportation.

But to capitalize on this unique urban environment, downtown Los Angeles must also continue to expand its culinary and cultural offerings, which are ultimately what attract visitors and new residents, and keep the existing ones happy. We already have the Staples Center, LA Live, and the Walt Disney Concert Hall, in addition to the Broad Museum coming in 2015 and a growing list of restaurants and luxury hotel venues; but it needs to grow from there.

As an example, nobody needs a reason to spend a weekend in Manhattan. You could go on forever naming all of the exciting museums to visit, restaurants to try and stores to shop at. But for downtown Los Angeles to reach that undisputable status, it also needs to create an area that makes it conducive to do business, and for investors and developers to spend capital and be confident that their projects can be executed. Creating a pedestrian-friendly downtown area also means addressing safety issues, like infrastructure improvements, cleaning up Skid Row, and helping the homeless population.

In Los Angeles, we’re only in the first inning. Downtown Los Angeles may experience a few setbacks and changing market conditions may affect future developments. We’re still 20 years away from boarding the proposed “Subway to the Sea.”

The critics and naysayers will always be around. But clearly, with more than 80 proposed projects and developments in the works according to city records, we are on the right track for the near future, when downtown Los Angeles can take its rightful place as the cultural and culinary epicenter of the West Coast.

Again.

Robert Cohen is President of Southern California, RKF and has 30 years of retail real estate experience; he led RKF’s expansion into Southern California in 2007. This column was posted first at the excellent ZocaloPublicSquare.org  … connecting people and ideas.