Palo Alto’s Mayor on Kate Downing, Housing, and the Bay Area’s “Gluttony for Job Growth”

She also made inaccurate assertions or misrepresented the reality. So, for instance, for schoolteachers, not very many schoolteachers that are starting their careers can afford to live in Palo Alto. That does not mean that we are having difficulty in hiring highly qualified teachers. We really discriminate toward the best applicants in each of those categories, and in the teacher category, we have far more applicants than we do positions. We don’t have a shortage of qualified applicants. For police, San Jose, which has far lower housing costs than Palo Alto, is talking about declaring a state of emergency over their inability to fill their police force ranks. So, first, Palo Alto has significantly less of a problem filling our ranks than San Jose, despite San Jose’s housing costs being, I think, less than half of ours, and we actually have higher hiring standards than San Jose does. But the entire region is having difficulty filling vacancies in police departments.

Right now, we’re looking at increasing fees on developers to pay for even more affordable housing. And, interestingly, as a planning commissioner, Downing just opposed that. Her concern, as I understand it, was that it would retard development, but she and others in Palo Alto Forward [Downing is a co-founder of Palo Alto Forward, a community group] have continued to push against additional limits on office development, which is the job creation engine that is the primary driver of our jobs-housing imbalance and housing costs. So actually, the City Council, starting two years ago, began to take some measures to reduce the rate of office growth. She and Palo Alto Forward opposed that. [Downing and the entire Planning and Transportation Commission opposed the cap, while the entire City Council endorsed the idea.] Their vision is continued unrestrained office growth, and then try to have, in my mind, a failed notion that you can keep up with that by building more and more housing and somehow our transportation system can keep up with unlimited job growth and a trailing catch-up of housing growth.

AG: You said in an interview published earlier today that Palo Alto’s greatest problem right now is the Bay Area’s “massive job growth.” Could you talk more about that? In most campaigns, the issue always is that there aren’t enough jobs, that there are too many people who are unemployed. This might be the only area in the country where you find people arguing that actually, there are too many jobs.

PB: That’s right. It is an anomaly. I think it’s both true that that is a real strain on the region and something that most people and most business and public leaders have been slow to acknowledge. That doesn’t mean that we shouldn’t have any jobs; in my mind it means that we need to meter it so our infrastructure and our housing can keep up with it and really it’s a fallacy to think that Silicon Valley has to hold on to every single tech job they possibly can. Silicon Valley’s real strength isn’t being a high-volume tech manufacturer anymore, it’s the knowledge economy and the innovation economy, and we should continue to focus on where our real strengths are, and share the benefits of the tech economy with other regions, who are really desperate for many of those jobs.

AG: You brought up transportation and infrastructure, and a lot of people have cited traffic and transportation as key factors in the housing debate. Palo Alto’s population roughly doubles during the day because there’s a lot of commuting in and out of Palo Alto for office jobs. In my interview with Downing, she argued that building housing inside Palo Alto would reduce traffic because it would reduce these commutes. Do you think that’s a legitimate argument?

PB: No, unfortunately it’s not. There’s a part of the argument that has truth, that most people who live in Palo Alto work outside of Palo Alto, around two-thirds, I think. So as we increase the population of Palo Alto, we assume that it will still be approximately that range, that about two-thirds of new residents will work outside of Palo Alto, so they’ll commute to surrounding communities.

Palo Alto’s job situation is really principally the result of Stanford Research Park having been created in the 1950s and 60s as the founding technology campus of Silicon Valley. It was created as an automobile-centric park in an era when the automobile was king, and Stanford actually initiated that. But at the time, people commuted from surrounding communities, as they do now. First, immediately surrounding communities like Los Altos, Los Altos Hills, Mountain View, and Menlo Park, that were at that time not jobs centers. They were residential communities and Palo Alto was the small city employment center for a group of small towns and cities that were a cluster. Then, as today, we had commuters coming from San Jose. The construction of Interstate 280 occurred in that time frame, and it was driven by this design for the region. Now, fifty or sixty years later, we look at it and say ‘that’s an imbalance.’

Palo Alto has significantly more jobs than residents, and are there ways that we can correct or reduce a historic pattern. But it’s not that Palo Alto in recent years has been clamoring for more jobs; that’s not why we have them. It’s decisions from sixty-plus years ago. They weren’t problems at the time, so that’s a red herring to use that. It is what it is. For over fifty years, we have had similar imbalances in jobs and housing, and Palo Alto is one of the few communities that has been trying to restrain the rate of job growth to not exacerbate that problem.

AG: Something that you and Kate Downing would probably agree on is that this is a Bay Area — wide issue of contention. Do you think that there is a role for the region or the state government to play in this debate, or should this debate primarily be conducted at the city-by-city level within the Bay Area?

PB: Well, I would say it’s actually somewhere in between, and we recently have been moving more that way and that is sub-regional solutions. Cities can’t solve the problem themselves, and most cities have not really recognized the problem — we’re seeing cities approve millions of square feet of new office development, up and down Highway 101, principally, without a concern for highway capacity or housing being built. They’re so enamored with the jobs — that’s another claim that Downing made, that somehow the city is motivated to increase jobs because it makes money for the city. [In my interview with Downing, she argued that California’s Proposition 13 incentivizes cities to build out office space over housing infrastructure.]

We’ve had independent, third-party consultants look at this and the result is that we have a near — net zero benefit from workers versus residents coming into the city, and in part because Prop 13, today, is much more of a tax on residences than it is on commercial buildings. When Prop 13 went in in the late 70s, most property tax came from commercial buildings. Today, it actually comes from residences. [The California Legislative Analyst’s Office states, “There is little statewide information regarding the composition of California’s property tax base over time. Based on the available information, however, it appears that homeowners may be paying a larger percentage of total property taxes today than they did decades ago.”]

So I would say that cities are not yet individually tackling the problem well enough, but we in Santa Clara County, for instance, have created an informal affiliation of North and West towns and cities that is working more collaboratively on transportation and even sharing initiatives on how to deal with housing and job growth. The subregional solution is a good one; I’m really hesitant on the state level because, frankly, most people in Sacramento can barely tell you where Silicon Valley is. They really don’t have an understanding of the Valley’s economy, its culture, its problems, and so I’m really hesitant about a one-size-fits-all or a top-down approach from the state level.

But I do think that regional and subregional solutions are the right way, and there needs to be three parts to it: solutions to transportation problems, which actually I’m becoming more optimistic about; increases in housing supply; and a moderation of the rate of job growth.

AG: Do you think that other cities in the Bay Area should focus a lot on reducing job growth, particularly in the South Bay?

PB: Yes. Not every city is going to be the same, so Palo Alto may want to reduce the rate more aggressively than they do, but yes, the cities have all kind of developed a gluttony for job growth, and they need to recognize that it’s not healthy in the long term for themselves and the region. It’s not really a sustainable growth rate, and it doesn’t lead to sustainable communities, meaning that changes at that pace can’t occur without degrading the livability of those communities for future generations.

AG: Do you have any final comment to people who are critical of Palo Alto’s housing policies?

PB: They need to understand what the policies are. Downing made some odd claims that, for instance, we don’t allow two stories of residential housing in mixed-use development. [Palo Alto Municipal Code 18.16.060b does not mention a ban on multiple stories of residential in mixed-use development, and 18.16.090 contains examples of mixed-use housing with multiple stories of residential.] That’s just not true, and in fact, we are looking at a new mixed-use zoning that will not allow any commercial, it will only be retail and housing. She claimed that we don’t allow secondary units. [In 2015 articles, Downing and Palo Alto Forward do acknowledge that they are allowed, and also argue that restrictions on secondary homes are too strict.] We actually presently allow them, and last year, the city council forwarded to the planning commission a directive to pursue expanding the permissibility of secondary units. And we’re still waiting to get a recommendation back from the planning commission, where she sat, a year after we put that request in. It was really an odd set of claims and assertions that she made. Most of them were just factually not true or they’re exaggerations.

The city has a whole series of initiatives coming up. We’ve actually given directive and we’re now receiving our first proposal for housing in our downtown areas that will be smaller units that really aim for younger tech workers, principally. They will be units with transportation and demand management measures that will really mitigate the traffic impacts of that development. We are trying to reduce the rate of the job growth while still allowing a moderate amount, and we’re trying to increase both the rate of housing growth and the types of housing growth so that we can, to the degree that we’re able, help support residents who represent the diversity of our community and not just highly paid tech professionals.