Steve, your central planning (I would say Stalinist) analysis model won't work. Central planning economics and housing models have failed, and millions of people have been stifled/murdered in order to enforce them.

Just allow the free market to work, Steve. People will move to where they can afford to live. Companies will adjust according to their own needs. If Palo Alto (or the entire Peninsula) creeps up in expensive housing, that means it will attract high earners, thus the top minds in industry and academia and government. That is a good thing.

@ Jon

The regional RHNA planning targets have nothing to do with so called "central planning".

They merely ask all local jurisdictions to zone for enough housing to be built if market demand is there.

The RHNA acknowledges that cities do not build most housing and does not ask cities to do so.

It does ask cities to remove barriers that could restrict enough housing to be built to support job and population growth.

There are parts of Plan Bay Area, the regional land use, transportation and housing vision that identify areas that are better for housing in terms of transportation planning and environmental considerations but these suggestions are purely voluntary.

If cities zone for sufficient housing and no one wants to build as happened in the recession, there is no mandate that forces housing to be built.

Far from central planning, the RHNA target is to enhance the ability of the market to provide sufficient housing.

@Jon - I completely agree that the free market would be more efficient here. However, the RHNA model is a bandaid meant to address heavy city-level intervention in the housing market.

Cities up and down the Peninsula have applied heavy-handed zoning regulations that limit how large buildings can be developed, and require home builders to subsidize free parking for every renter or condo owner. There\'s no way these would exist in a free market - even one that put a price on street parking or traffic.

If you want to get rid of zoning and let developers build what the market will bear (lots and lots of condos and apartments buildings in areas near jobs and services), it\'s perfectly reasonable to reject the RHNA.

If not - if you want cities doing central planning through the zoning codes - how do address the market distortion caused by cities putting density restrictions that restrict multi-family housing to under 5% of their land area, in a market where multi-family housing is now the natural form of housing to develop?

@downtown worker

There are two parts of the RHNA process--the regional determination that is made by the State Department of Housing and Community Development described above and the planning allocation to communities within the region made by ABAG.

I was describing the regional part here and hope to discuss the community allocation next.

You are correct in the sense that states like Texas that have minimal or no zoning rules and virtually no impediments to building homes and apartments are less likely to need regional and community planning targets.

Personally I think cities should have some control over where and what kind of housing is permitted in various locations.

The problem as you point out is if the region needs housing and each/mist cities would prefer that the housing goes elsewhere, then this interference with market demand results in the need for regional targets.

When we get to discuss Palo Alto choices in the next blog, I look forward to your comments on choices in our city.

"The regional RHNA planning targets have nothing to do with so called "central planning".

They merely ask all local jurisdictions to zone for enough housing to be built if market demand is there."

No Steve, the regional planning bureaus are DEMANDING that that our cities zone for increased density. They are not "merely asking". This is a power takeover by the state, and you are willingly supporting it.

Neither Palo Alto nor any other Peninsula city should have to suffer these Stalinist dictates. The market is quite capable of adjusting to supply and demand, according to the zoning that each city decides to impose on itself, without outside dictates.

ABAG should be abolished, along with the dictatorial state mandates.

To readers who want to disagree with the post or comments, take a look at Jon's comments. He disagrees strongly but it is about content and not personal comments.

@Jon

The post is descriptive but yes I do support the determination of regional planning targets for housing.

Downtown worker has pointed out the challenge for your thoughts.

Cities as a group in the region plan for and allow more jobs and job growth than they plan for housing growth. So there is no free market solution possible to provide sufficient housing.

The free market, when left to be actually free or with sufficient zoning, is building medium and higher density housing. And it is selling very well when built. This is the free market solution.

Cities restricting zoning, which sometimes can make sense but not usually, is what is causing housing challenges in the region, not actions by the state or regional planning agencies.

Please answer downtown worker's questions before more railing about Stalinist policies.

Hi Steve. A quick question for you. To better understand the motivations for your writing, can you please let us know if you have received compensation from ABAG now or at any time in the past? The reason I ask, is that you seem to defend their actions regarding the forced zoning of high density residential in the beautiful small cities on the peninsula, despite the fact that many residents wish to maintain the character of their environment. I'd just like to know if there is a potential conflict of interest here in your writings.

Steve, I am looking forward to the next few months. For example,

1. Will all factions of this housing debate step forward eloquently in the upcoming Comp Plan Summit on May 30? Is it possible that this type of one-time, intense, all-day community input is more of an opiate than stimulant. No matter what?. Now is the designated time for residents to speak up at the all-day Palo Alto Summit. May 30 8:30am-6:00pm Mitchell Park Library.

2. What do you mean ?Personally I think cities should have some control over where and what kind of housing is permitted in various locations.?

3. I am alarmed by irrational propensity of cities and their citizens to independently create tens of thousands of jobs via developer-driven office investments. But this bias for office space (aka new job opportunities) seems to create city budget deficits as cost of services outpaces property tax receipts. Therefore, city councils, city staff and we citizens are willing accomplices in the devastating social impact of job/housing imbalance.

4. As an economist, do you see any limit in capital available to build more and more office space? Please ask a banker to post an informed opinion.

5. So the $64k question is what housing control should any city not have?

Thanks Neilson,

I think May 30 is a great opportunity for for diverse voices to be heard on housing and other Comp Plan issues. It is a beginning to be followed by citizen participation in more detailed working groups. So I encourage people to attend.

By "some control" I mean exactly what the council is planning to do after the summit and workshops--explore options for rethinking where are the best places to plan for housing in PA. The Housing Element, adopted unanimously, commits PA to plan for at least 2,000 units in the next eight years. I think there are substantial choices as to location and type of housing informed by changing demographics and market forces and the city has a role in making these choices.

Actually thew companies are creating the jobs and the cities are not planning for enough housing. The only irrational part is the refusal of residents to allow cities to plan for the housing to match the jobs.

Of at a regional level, putting Palo Alto aside for a moment, you are arguing that cities should actively deter companies from expanding here, I disagree and you have lost that vote.

There IS a devastating impact of not building enough housing for the people who are already here, forcing rents and prices up more than otherwise would happen and forcing people to double up.

Job growth will slow dramatically after 2016 or 2017.

Moreover, office space is a market and will correct at some point if there is over building, which I suspect may happen.

Office space does not create jobs, it houses them. In addition companies like Google and Facebook have control of their destiny and can add a good deal of space under current rules. So I do not fear endless expansion of office space. We are near the end of a cycle in terms of speculative building.

This post is about the limits of local control under state law. I think planning for sufficient housing to meet job and population growth is a good idea but it is also legally required. It is one of those situations like requiring drivers to have licenses and insurance and having everyone pay taxes makes sense for the common good even if some individuals see their personal self interest otherwise.

My hope is that we can concentrate on the best locations and types of housing within the region and work as hard as you have done with the RPP to combine the growth that is occurring with policies to offset the impacts.

@neutrality

I help regional planning agencies throughout the state develop long term job projections. I have done this for 40 years and in the last planning cycle was asked by ABAG to work with them.

There is no conflict of interest both in theory and fact. As the blog states the current regional housing target from HCD was developed prior to and apart from any work on the current ABAG job projection. Actually the current regional job projection is more than 500,000 LESS than the prior one and one of the reasons I was retained was to make the methodology and forecast consistent with best practices.

ABAG and other agencies have access to a wide variety of economic forecasts all of which now recognize strong regional job growth since 2010 and expect the region to grow at least somewhat faster than the nation.

ABAG and HCD as the post points out are simply complying with state law.

In terms of city by city allocations I have nothing to do with this for any agency I have worked with.

You may recently have seen the desire and plans by Facebook to facilitate a lot of housing near their offices and the same for other companies. Again, this has nothing to with ABAG or HCD.

Not sure when you say regional what is the area that encompasses? Please define the are included in "regional".

Facebook is going to help build additional housing in Menlo Park / San Mateo County. SU is building low cost housing on El Camino. North San Jose has a huge building boom in process, as well as Mountain View / Sunnyvale / Moffatt Park. Menlo Park is planning new housing on El Camino. Redwood City, San Mateo County is in a huge building boom in the downtown / Caltrain corridor. Apple in Cupertino.

Each city is already working to increase the amount of work / living space.
Let's assume that we are not taking on the responsibility to increase housing for Google in Mountain View.

My suspicion is that the amount of job and housing growth is accelerating in the surrounding cities because they have the available open land. We do not have a huge amount of job growth in PA - if you do not include Stanford Research Park which is SU's private property. Yes - we have a lot of small start-ups but they are not producing income and paying taxes.

Can we assume that the companies that pay taxes are the criteria here - not a lot of people stuffed into a garage.

SU is a business besides being a University. It has hospitals, a shopping center, sports events which draw a lot of people. But it is private property that is responsible for the growth on its campus.

Anytime I read about ABAG I think of the CFO for the organization that made off with 1.3M. I view it as a large washing machine for transfer of funds with no clarity as to how those funds are used or allocated. Since ABAG was created by a vote then maybe it is time to have another vote that says we cannot effort to proceed with the required building because we have no water.

I happen to agree with much of what Jon says, but I go several steps beyond. ABAG is a non-elected body whose board consists of left-leaning (ultra progressive)politicians intent on central planning. Furthermore, the state requirements of FHEA and RHNA have been hijacked by these same folks to push their own agendas which are NOT free-market friendly. I suggest we all ask our local representative to ditch FHEA and RHNA.

Local cities and towns will continue to struggle with these mandates until the citizens force a change.

Sorry John Galt. It is an interesting theory bur dead wrong.

The board of ABAG are city council members and county supervisors all of whom are local elected officials. They serve on the ABAG board at the request of their local elected councils and boards.

So if you want to accuse city councils and boards of supervisors of appointing left leaning hijackers, I cannot stop you but you have a weak case.

Downtown worker and I are arguing correctly I believe that there is no free market as it is restricted well below what builders would like to produce in terms of housing and what is needed to match past and future population growth.

If you would like to explain your "not free market friendly" assertion, please answer downtown worker's question. If you call local zoning restrictions and environmental lawsuits to restrict housing growth "free market" friendly, we have a serious disagreement about what free market means.

The free market would produce more housing than the regional planning targets so I suspect you are not really in favor of a free market as they have close to in Texas.

As long as enough housing for all groups gets built I think cities should have a say in where and what type they would like.

@ resident 1

I use region to mean the nine county Bay Area. I think some housing in cheaper adjacent counties is probably a good idea also.

Lots of cities are planning new housing but added up it is not enough yet. Between 2007 and 2013 the region fell short of meeting the demand from population growth by 73,000 housing units. And job growth is continuing for 2014, 2015 and 2016 at least.

I am purposely not talking about individual jurisdictions in this post (may do that later) so we can have a discussion of the serious regional housing shortages.

If ABAG were to disappear the lead staff at HCD would make the local allocations. He patiently explained that a couple of years ago in a public meeting to some angry marin County residents who were up for withdrawing from or ending ABAG.

That is why I started the blog by quoting the state law that requires regions to plan for sufficient housing.

If all of the cities would plan for and allow sufficient housing to be built, I would be happy. But as yet this is not happening and for many years parts of California have been short of housing except in some places for very expensive housing. That is why there are laws about regional housing and local housing elements.

Deleted--posters need to respond to how they would solve the regional housing challenges.

I get that some posters do not like the law.

So take the law away and propose solutions to the many regional housing challenges.

Or come clean and say you do not really care about meeting regional housing challenges and not providing enough housing is okay with you.

Stay at the regional level.

We can discuss implications for local cities next.

Crescent Oark Dad

Thanks for your post. I took it down because as you noted it was about Palo Alto and I am concentrating here on the regional housing supply issue.

But I have saved the post and will put it up when I do a PA housing choices blog.

"The market is quite capable of adjusting to supply and demand, according to the zoning that each city decides to impose on itself, without outside dictates."

Steve, that is the core of my argument, which you seem to have ignored. It also answers "Downtown worker's" arguments.

Just as the Silicon Valley is no longer a major manufacturer of consumer electronic chips, it is becoming more of a brain trust for the future design of high tech approaches, which will not be manufactured here. Elon Musk did not put his high-tech battery factory here, he put it in Nevada...yet his top brain jobs remain here. The bottom line is that higher income levels by the brain trust will find affordable housing in this area.

The displaced workers can either find a job in their displaced areas, or they can form commuter pools to work here.

We don't need Stalinist (statist) mandates.

@ Jon

The question you are not answering is that under your solution

"The market is quite capable of adjusting to supply and demand, according to the zoning that each city decides to impose on itself, without outside dictates."

1) more than 75,000 fewer units were built than needed to match existing population growth since 2007 and

2) city zoning for all cities combined is not allowing enough housing to be built so your claim that the free market works is wrong on the facts and strange on logic as zoning restrictions are the opposite of a free market solution.

So your alleged solution has not worked with the result that we have doubling up in homes and rapidly rising rents and home prices.

How are restrictionist policies consistent with your free market ideas?

I do favor city zoning as long as it is about place and type and provides enough housing, not just policies to limit housing opportunities.

The last ABAG housing numbers I saw for PA showed over half were for 'very low income' and 'low income' units. I guess that assumes that it will allow service workers, gardeners, clerks, domestics, and low paid office staff to live here and not have to commute long distances.

The current downtown problems, traffic and parking, are due to high tech workers driving into PA every day, many alone in their cars, and some probably coming from long distances. They come to fill up offices. Developers want to build more offices, not housing for the tech employees. It's a better deal for them, more profitable. So, more workers but not enough housing for them. That is the dilemma. Will the ABAG mandates help? I doubt it. The other two categories of housing are 'moderate income' and 'above moderate income'. Do the high tech workers fall into either of those categories? I doubt it. They have high incomes which would exclude them. I've tried without success to get anybody...someone...anyone to give income ranges for the four ABAG categories.

Many ideas have been offered on how to solve the traffic and parking problems. They all relate to getting people to stop driving their own cars to work. I'm a little skeptical. I think people love their cars and the independence and flexibility it allows them. That might be false thinking.

Most of the housing solutions I've heard proposed, outside of ABAG's mandate, are based on most of the tech workers being young and single and only needing studio or one bedroom apartments. Has there ever been a study made of that? Aren't there any marrieds or marrieds with families working in those offices? Yes, a high paid single tech employee would be able to afford $2900 a month rent for a single bedroom apartment, but how about a married couple or family who would need much more space? Could they afford it and where would those larger units be built. Maybe they would actually like to own a home on a lot here.

It's interesting that with all the debate (and I presume eventually there will be some action taken), it might sound like the best solutions will be reached at this time, but as I've learned in living in PA since 1961, dynamics come into play. Times change and today's best solutions might very
well be the worst ones for our future.

Steve, I support local zoning. I don't support regional or state zoning mandates. A town like Atherton can decide on setbacks, density, etc. Palo Alto can decide on density/height limits and so forth. Our peninsula cities should not be seen as massive housing developments, unless those cities volunteer for such designation.

Your presumption appears to be that 'all these jobs are coming, so we must build housing'. I don't see it that way. I see more high end jobs coming, and they will buy out existing properties. Some additional growth, within local zoning rules, but not more. Basically, Palo Alto will become a more elite town, going forward. And I am fine with that.

Jon, Gale and others

The Bay Area has added roughly 400,000 jobs, 340,000 residents and 80,000 housing units since 2010.

There are roughly 2.8 people per household, which has gone up with the under building despite a drop in the number of births and children per household.

Clearly local zoning and whatever other restrictions are in place like lawsuits is producing a shortage of housing. Jon, these are not future jobs or people. They are already here.

Gale, they can't all buy or rent existing housing because there is not enough.

Companies recognize this. The state recognizes this. A story on the front page of today's Mercury News recognizes this.

I am beginning to think you just do not want to acknowledge there is a housing shortage under current policies and zoning.

I get that some residents wish that the housing shortage would disappear magically or all the people would live elsewhere but the facts are pretty clear.

forget Palo Alto for purposes of this regional discussion.

Solve the housing shortage by something other than just telling people to move away.

give it a try. Jon's solution has failed.

Steve, no, my solution has not failed, as you suggest. It has been attempted to be bulldozed by state mandates, that you eagerly (apparently) support.

If it is too expensive to do business on the peninsula, then there will be a selection among all the new start-ups and existing businesses. Many of them will move out of town (Texas, Nevada, Salinas?). However, some will stay and pay the incomes necessary to stay here. Those that stay will probably be the top end, with very solid financials.

>If it is too expensive to do business on the peninsula, then there will be a selection among all the new start-ups and existing businesses.

What you say "will" happen is wishful thinking, completely ignoring what actually is happening today; more workers packed into existing office space, more working homeless, more subletting and dividing of existing housing, more people commuting from further and further out, etc...

Steve: No worries. Don't bother saving - I'd rather write to the blog's content when the subject comes up. Thanks for the feedback.

Stephen, please. I know there's a shortage of housing. I already acknowledged that, made that point clearly I thought. No disagreement on that so I don't understand your response. Who will provide it and who will pay for it? That's my question, andi who will be able to afford it? Those are easy questions but the answers are difficult. Please try your best to answer them so we can continue this discourse.

I forgot to mention, the state law that triggered these mandates via ABAG ,et al,, was a very bad illl conceived idea, and it can be undone. Have you counted the number of amendments to our Costitution lately? Do you remember Prohibition? Like it or not we live in a capitalist society/country where the free market economy reigns, or tries to.. I don't always like it. Now I offer this,, and this is a strictly a hypothetical. situation...assume I really wanted to live in Atherton or Manhattan,...could I? Hell no! I couldn't afford it. Should I expect others to help me out so I could live there? Also, hell no! People will live where they can afford to live and companies, the supplier of jobs, will set up business where they can make the most profit and still get skilled workers. We don't need manipulation to try to change things that our Palo Alto citizens dearly love.

The problem with trusting market forces is that buildings are involved that will last a very long time and are not equally suited for different uses. In nearly every market, office buildings reap higher profits so other uses that support a residential community get supplanted or are added at a significantly slower rate.
The market just doesn't create the balance between uses that most communities desire.

Supply and demand for housing suggests that high housing costs would lead to more housing but that ignores that credit, which finances housing and offices, tends to flow and not flow to each at the same time. So when credit is available, offices tend to be built disproportionately to housing. City policies can change this, but it takes councils with knowledge and guts to ensure the usual complaints (overcrowded schools) are addressed.

On the regional basis the surrounding cities are out pacing us regarding the addition of new housing. That in part is because they have the available land to do it. San Mateo is building on a race track - land conversion. San Jose is filling in the open land with extensive building of housing. Palo Alto does not have available land so that leaves us with tearing down existing buildings and rebuilding with more stories.

Redwood City is building extensively along the Caltrain tracks with buildings that are in excess of four stories - they have six stories above the ground level - still too soon to see how that is going to turn out.
We have created a limitation on number of stories - that limitation is exceeded in other cities.

On the regional basis the building is going on as fast as possible. That is not open to dispute. What companies are doing - if successful - is creating subsidiaries in other cities - Google and Yahoo, etc in Los Angeles and other cities. Successful companies do not put all of their eggs in one basket - they maximize the use of other cities when their growth level maxes out at one location. I am not concerned about successful companies since they already know their limitations in any one area.

At some point you have to accept that you are built out. The companies that are successful will fan out and do just great.

& market forces and resident 1,

Good observations. Yes, there is very little open land to build new on in PA. Just for the heck of it, if you haven't already, take a drive from 237 all the way to Montague on 1st St. and Zanker. Huge complexes and there is still more open space to build on. For anything to happen to house the PA office workers it will take strong will E463Vfrom our planners and city council, and willing developers. Do you know any of them?

I worked in the buildings on Montague and Zanker. They tore down the Sony Building and put up a huge apartment complex that has some commercial on the ground floor. Older buildings that were put up in a few days are going down and being replaced.
If you help at Second Harvest Food Bank on 1st off 237 you can see the whole area growing at top speed. In part that is open land and in part it is older buildings put up very fast that need to come down and be replaced with higher spec buildings. That whole area is growing at top speed.

That is the whole North San Jose development and Moffat Park is replacing very fast.

Moffet Field is a super fund site that has EPA problems and many of the older buildings in that area were partially contaminated and need to come down.

"Actually thew companies are creating the jobs and the cities are not planning for enough housing. The only irrational part is the refusal of residents to allow cities to plan for the housing to match the jobs."

What is rational about permitting unlimited job growth?

Counter clockwise - do not agree with your assessment - the number of apartments going up is fast and furious in the North San Jose area and Moffet Park - Fair Oaks area. There is a huge plan that the cities are working to. I think this is a very well thought out area.

The growth is in process. Have to laugh - the thorn in the bush is the Zanker Land Fill - that is a huge operation. People need to look at the infrastructure elements that go with major development - one is electricity / power / trash. You have to allow those processes to exist.
PA is in part using the trash dump in that location which is maxing out its capability to support the area.

resident 1: I didn't ask whatever question you may have answered.

How about it, Mr Levy? What is the rational basis for permitting unlimited office growth?

@Counterclockwise

Quite frankly I find it disturbing that anyone would think the government has any business restricting the number of jobs in the area. Would it be fair to ask you to stop working because your commute is contributing to traffic or demand for office space, or do you assume this doesn't apply to you?

Steve.

You say there is a shortage of housing in the Bay Area: "Clearly local zoning and whatever other restrictions are in place like lawsuits is producing a shortage of housing.

Gale, they can't all buy or rent existing housing because there is not enough."

So, I can infer that you would like us to change local zoning and maybe legislate against lawsuits(?) to cause a surge in additional housing.

So, my question to you...is how much new housing is enough? Please tell me how many units it would take to add to the area so that everybody that wants to move here can afford to.

I would contend that adding enough housing (supply) to reduce prices (demand) would ruin the livability of the area and the top talent will leave for "greener pastures." (greener meaning more trees, parks and less tower blocks). The top talent-driven companies that have moved out of silicon valley would flourish and employment, salaries in the valley would depress and all spiral down into a local depression.

Sorry to be NIMBY, but NO THANK YOU!

" Please tell me how many units it would take to add to the area so that everybody that wants to move here can afford to."

This may come as a shock but people don't usually choose to move somewhere simply because there's housing they can afford, if that were the case people would be moving to rural and small town areas, rather than fleeing them in droves.

You are right, Robert, the government can be a huge nuisance and impediment to progress. Can you believe the City of Palo Alto won't let me build nuclear bombs in my garage or test them in my back yard? Please help the cause of freedom from government interference and sign my petition on SurveyMonkey.com.