The Fight to Save a Silicon Valley Trailer Park
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It's easy to see the cost of allowing the property value to rise to market rates: people will have to find new homes. I'm not blind to the fact that this would be a terrible upheaval in their lives. The places where they might afford to live might be much worse than their current situation.
But -- there are costs to subsidizing their rent (and it is a subsidy -- if the law prevents market pricing, someone is paying for it). These costs are hard to estimate, but they are the cost of rising property prices elsewhere due to artificially low supplies, the cost to property owners who cannot realize the full potential of their assets, and the costs to the construction industry which cannot improve the land.
There is also the cost, maybe most importantly, of all of the money that is artificially tied up in the rent being paid by others that cannot be spent elsewhere. That infusion of spending would mean a lot of new wealth for workers in the service industry, for example.
Destroying wealth so that a lucky group of (perfectly decent) people can live cheaply in one of the most expensive ZIP codes in the nation may sound compassionate, but there is a cost, and there are unlucky people who suffer. Those people aren't all rich. It's impossible to measure the marginal gain in wages and new jobs created if the real estate prices in the Bay Area were deregulated and allowed to float to the market rates. But the gains would be real, and real people would benefit, and there are real people throughout the rest of the Bay Area who do not get to live in Palo Alto and who are really suffering.
It's hard to argue that the prices that exist in Palo Alto are "market rate" in this context, since supply has been so consistently restrained since the 1970s.
Is this an actual problem? Isn't this a desired effect, balancing out the prices, so that the subsidized area doesn't become a prohibitively expensive anomaly?
the cost to property owners who cannot realize the full potential of their assets,
I imagine the property owners in question are doing just fine (just being in the class "property owners" means they are better off than most in the area), again I don't think this is an actual problem.
I appreciate your comment, but it seems to be a lot of handwaving about a vague "destruction of wealth." What number and what type of people would benefit from deregulation/removing subsidies? Would it really be the people that are suffering and struggling? I'm not seeing it.
Frederic Bastiat wrote about this in 1850. It is a foundational concept of the Austrian school of economics. Reasonable people dispute classically liberal economics, but its been thoroughly studied. I'm not hand-waving. Yes, the concept of measuring the wealth that was destroyed seems "vague," that was precisely his point. If you're interested: https://en.wikisource.org/wiki/Essays_on_Political_Economy/T...
You haven't really demonstrated that it's worse than the alternative, let alone how or why. Of course there are unseen costs; there always are, with matters of public policy affecting so many people. I could say the same exact thing about the inverse situation of an unregulated free market - "there are unseen costs that are hard to measure." Is that a strong argument against it?
edit: In other words, how do you conclude that the costs that you describe outweigh the costs of people being pushed out of their homes, the cultural effects, etc? Ultimately it ends up as a subjective value judgment, there are too many factors and human emotions at play to be objective. I don't really believe in trickle-down economics or the magic ability of the free market to correct all social ills, I believe in directly helping those that need it most.
In some cases, "those who need it most" only need it because of the economic environment created by regulation. In many cases, "directly helping" may solve the short-term, immediate concerns of those housing/economically disadvantaged, but doesn't actually serve to fix the problem that's making things the way they are to begin with.
In SF, there's a lot of rhetoric around "market rate housing" and "affordable housing". Presenting it as a dichotomy as such ignores that there are things that could be done to make market rate housing the same price as affordable housing. There wouldn't be talk of "affordable" housing as a distinct thing if "market rate" wasn't so out of whack because of the complex economic and political incentives and setup in California, the Bay Area, and SF.
Another thing that I see frequently glossed over is that "market rate" isn't a single thing. It has different values based the actual quality of the property in question. I'd love to move into a better place at the same rent I'm paying now, because really, my current place is way overpriced considering the quality and I can afford to continue to pay the rate I'm paying. But it's not worth it for me to move because so many places are equal or less quality and equal or more in price. There are no better places coming on the market at this price point. If the economic and political climate was such that the market was able to provide an equal or greater quality place for equal or greater price, that would free up a lesser quality place (because I could move there) and reduce its price to a market rate based on its quality that someone with lesser means could then afford. The availability of residences is a significant contributor to the market rate for residences in SF, so much so that it dwarfs all other possible influences on the market rate.
That being said, I do believe that the market needs to be able to provide a wide range of quality — just building high end housing isn't going to be as fast or as solid of a fix as building housing for many different kinds of economic classes. This is part of the problem around mandates to build "affordable housing" or "subsidized housing" (usually as a percentage of total building): these are, by definition, below market rate, but someone is paying for the difference between "affordable" and "market". That spread needs to be reduced, rather than subsidized.
Agreed. In this case, the problem is that a lot of people with money want to live in SF now and there just aren't enough places to put them. I do agree with the consensus that the NIMBYs need to accept that and allow construction of more units, at all price points.
that would free up a lesser quality place (because I could move there) and reduce its price to a market rate based on its quality that someone with lesser means could then afford.
Maybe, but that is basically a trickle-down assumption. It's also possible that there is a near-inexhaustible supply of rich people who would buy a second or third or fourth home, or foreigners looking for pied-a-terres, and then this expensive low-density new construction has left everyone else exactly where they were, except market rates may have actually increased.
The reason I lean towards subsidized housing is because (yes, in the short term), it directly helps the people that are struggling, rather than relying on the playing out of complex economic theories that coincidentally give justification for rich people to not actually care about poor people ("just let us do our thing, and eventually it will work out for everyone else...we promise").
Invoking Reaganomics is a red-herring. It's used as a response to the kinds/quality of buildings built in the short term (or currently are being built) as if that's the only kind that need to or will be built (however, it is the only kind that is and will be built without policy change and getting rid of NIMBYism). That's not the case. As I said, there needs to be a glut of all kinds of buildings being built. There is no reason to build anything other than high end currently, because availability is limited.
The reason I lean towards subsidized housing is because (yes, in the short term), it directly helps the people that are struggling, rather than relying on the playing out of complex economic theories
This is not an either or proposition, however it is often presented as one (and you just did with the use of "rather"). It is possible to subsidize those who need it in the short term and open up the market for a wider range of building with effects to occur in the medium and long term. Both should be done. Once the market forces take effect, the subsidizes won't be as necessary. Or alternatively, if you're completely right that the market won't fix any of this, the subsidizes will already be in effect and useful and they can continue and we'll have a larger set of housing stock.
Supply and demand is not a "complex" economic theory, and presenting it as complex is disingenous. What we have now, with perverse incentives, taking everything to the voters with propositions at election time, NIMBYism, subsidizies, uninutitive zoning, is what is complex and leads to unintended consequences. Make no mistake: we are where we are now specifically because of decisions made over the last twenty years (although, one can argue that where we are now is exactly where NIMBYs want us to be).
Directly building more residences is not the only thing that can be done to lessen this pressure either. There are huge swatches of the city that are undesirable specifically because of lack of accessiblity and transportation. Public works projects that directly benefit all economic classes need to be considered, and perhaps forced through.
However, none of these things can be done overnight and if we were to start today on any of them we wouldn't see any significant movement for a few years and the end result for perhaps a decade. That's part of the problem too: there's a desire to see the effects immediately, but there is literally nothing that can have effect immediately. But doing what we're doing now, restrictions on building, moritoriums for research (which is really just a delaying tactic—I don't believe any "impact study" in California is a sincere concern for whatever is being studied), isn't helping anyone and only serves to push prices higher in the shorter term.
Solely subsidizing housing doesn't address the fact that the spread between what lower income backets can pay and what is available is going to keep increasing, which is only going to serve to make subsidies more expensive over time. And continuing to increasingly pay more for something when there are other things to at least try to reduce the cost is a losing proposition.
Anyway, I think I'm making a substantive point, so I don't get the accusation of "hand-waving." Accusing someone of ignoring complexity is not an argument against the points they did make.
if we're going for soundbites, how about "current super prosperity at the top was created by destroying wealth of the middle class" :)
It is the same as groups or governments buying open space to preserve it.
Expecting a high-rise development on this property is fanciful. Expect 2,000 square-foot townhouses, selling for $2 million. That's what they built across the street.
https://www.google.com/maps/@37.4142855,-122.129379,3a,75y,2...
You can't just drop a 40 story building onto a residential street, even apart from it being illegal due to city ordinances. The infrastructure is not here (and you can't build it in 19 days). If somehow you got it built it would only make everyone miserable. This street already gets kind of whack during the school year since it terminates at Gunn High School (which I guess they would simply make twice as big).
Second of all -- cut a deal with who? Not just Buena Vista residents, the whole city. Nobody wants that. A developer would have to be insane to even try.
A few years back in a nearby neighborhood they tried to replace a community orchard with new housing. Not even displacing people, just trying to develop affordable housing on top of peoples' PLANTS. It was pushed to a referendum and Palo Alto residents rejected it. The developer had already bought the land and had to sell it.
Of course, you'd need do some infrastructure upgrades. It takes years to build high rise buildings. That is more than enough to add streets, buses that run to the nearest caltran stop.
>Second of all -- cut a deal with who? Not just Buena Vista residents, the whole city. Nobody wants that. A developer would have to be insane to even try.
That's sort my point. The whole bay area has a Luddite view on developing their cities. Zoning and permitting processes are designed to manage growth, but in California they are there to prevent it.
You say if the city were smart it would tear it down and build high rises on the site. But does it make sense? There's a big park nearby with donkeys, sheep, and chicken coops. There's a community orchard nearby as I said. On the other side of Foothill Expressway you've got huge estates and vinyards. But the much higher density housing in Buena Vista must be razed?
I think you're making a larger argument here which is independent of what's going on in this neighborhood. It's certainly a valid point. But you need to separate it from the Buena Vista issue. The controversy is not about growth, it's about whether the people there deserve to live in Palo Alto.
And I understand fully that it's going to take a sea change in local sentiment before that can happen.
You need to move a bit east, friend. There _is_ going to be an earthquake.
Let's revisit this after the next big earthquake to see which buildings survived the event in a habitable condition and monitor which areas are without utilities the longest.
Anyway, we don't need to go to 40 stories to be "vertical". The vast majority of residential structures around here are 1 or 2 stories. Even 8-story buildings would start to make a difference.
Of course, they would add to traffic...
Also, I am not familiar with the area in question, but isn't it quite susceptible to earthquakes? I am not saying don't build a multistory building, but 40 stories?
I fully expect they'd rather live in a cheap apartment in Palo Alto over a wherever the nearest empty lot large enough and cheap enough to host a trailer park. I'd imagine that's pretty far away.
What will actually happen is that they will get evicted and 2 million dollar mini-mcmansions will get built there instead.
http://www.trulia.com/real_estate/Palo_Alto-California/marke...
good point. a home with a private yard for the kids to play, no shared walls, a porch to sit on while you wave to neighbors on their evening stroll -- these things aren't possible in high-rise apartment buildings, which by comparison might feel like confinement.
also, many people who've never lived in a trailer park, or don't know any manufactured homeowners, might not understand the sense of community that a lot of trailer park residents feel.
i'm not saying that a sense of community is not possible in a high-rise apartment building, but in my experience, high-rise apartment buildings have a much different atmosphere than gated communities.
> Also, I am not familiar with the area in question, but isn't it quite susceptible to earthquakes? I am not saying don't build a multistory building, but 40 stories?
SF and san jose have lots of high-rises, as do other big cities near fault lines :)
Apartments are a very different living situation than living in your own building on land. One has a lot more open area for projects, playtime, vehicle maintenance, outdoor cooking and gathering, etc.
I live in apartments because I do not want a yard to have to maintain. And I know many people who do not live in apartments because they want a yard to use for projects and enjoying. It's ridiculous to assume that these people would want to live in apartments without asking them.
And it's inhumane to suggest that people with fewer resources should live in the space that someone else chose for them, merely because they have fewer resources.
That would delay the project.
http://www.theguardian.com/world/2015/apr/30/chinese-constru...
It was here in HN a while ago.
Years ago, “anyone could live in Palo Alto,” says Saul Bracamontes, 30, Ms. Escalante’s boyfriend and the produce leader at the local Whole Foods market. “Now people are getting separated because some make less than others.”
People aren't really "getting separated because some make less than others" in this instance—they're "getting separated" because the entire Bay Area makes it incredibly hard to increase housing supply: http://www.citylab.com/housing/2015/07/whats-the-matter-with.... The Bay Area has an entirely self-inflicted housing crisis that primarily benefits existing owners. Matt Yglesias describes more in "The Rent is Too Damn High" (http://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0...).
Housing affordability is primarily a political / legal problem. It can be solved relatively easily, if and when voters (and by extension politicians) want it to be solved.
It can be solved relatively easily, if and when voters
(and by extension politicians) want it to be solved.
Homeowner voters won't support increasing supply. Voters in rent-controlled housing will be indifferent, or might oppose increasing housing density on the basis of traffic/school capacity/neighbourhood character/whatever.
I think there are plenty of people who want it to be solved - just not much overlap between people who want it to be solved and people who can solve it.
Call in army, put a gun to Larry Page's head and say "relocate to Ohio, or else"?
There's a very simple reason all the programmers come here: because this is where all the jobs are.
There's a very simple reason all the companies come here: because this is where all the potential employees are.
You build a few skyscrapers on very valuable land and then what? The area gets even more popular, congestion gets worse further decreasing the viable area in terms of commuting, some of those people would want to start companies close to where they live and now there's even more demand for that area.
No, it's not about relocating to Ohio. It's about doing what a lot of growing cities have done with success. Promote other areas. Paris, New York, London etc. all went through phases where one area was after another was gentrified. Those are of course not cheap cities, but they are also much bigger. Locate the central business district somewhere else. London built it's business district in the former dock area, Paris business district is outside the city etc. Increasing public/semi-public transportation. Good transport takes some time, but that a multitude of companies already did this (just not in a very helpful way in terms of housing) shows that fairly quick change is possible.
Most of this is just money problems. Promotion, incentives, transport, image. You said it yourself, people go there for the opportunities, it doesn't matter to them if those opportunities start to show up in a wider area.
For most cities around the world, throughout history, this has their definition of success. Cities grow and change, and deal with the complications of that growth, or they stagnate and decline as economic development moves elsewhere.
Paris and London built new high-rise business districts in their suburbs to protect their historic urban cores. This can help relieve demand pressure that otherwise can't be satisfied in a city largely protected from development by regulation. The application to the Bay Area, however, would be to protect San Fransisco by building high rises in places considered less architecturally and historically significant - like trailer parks in Palo Alto.
I think sales like this (and SROs) should be permitted so long as only higher density with enough units set aside to replace the displaced previous residents on-premises. That would be a win-win, I think, but it would mean that the residents would need to be displaced for some amount of time, which is hard to do when you don't have any available units to absorb them.
This particular location is relatively well served by public transit. It's not terribly close to caltrain (~1 mile) and it's right off of El Camino.
The alternative it seems is to let these residences languish and decompose while people live in them. I suppose this isn't quite as big of a problem in a trailer park as residents can attempt to get a new trailer, but I suspect their land rental will go up so much that even that becomes impossible. I think that sucks.
There are trailer parks all along the coastal area of the bay on the SF peninsula, dating from when that area was used as trash dumps. Google HQ is next to a former trash dump; Shoreline Park is a landfill, and in its early days had methane fires. Because no one wanted to develop that property, it came with a permanent tax exemption, which SGI exploited when they built there. Menlo Park had a dump too; that's now a park. Palo Alto recently closed the last section of their coastside dump and turning it into a park. (All the local trash is being sent to a huge canyon east of San Jose.)
Here's the trailer park nearest to Google HQ: [1] That big square thing in the background is the air intake for NASA's wind tunnel.
[1] https://www.google.com/maps/@37.4172537,-122.0736559,3a,75y,... [2] http://www.pausd.org/registration/proof-residence-requiremen...
https://www.google.com/maps/@37.4170873,-122.0747489,3a,75y,...
I am not saying we should force companies to move headquarters, I am just pointing out that Silicon Valley has huge, one might claim unreasonable, concentration of wealth. This concentration of wealth really shifts perceptions. For instance, 4 years ago or so I visited a friend in SF. We were to meet in a restaurant. An Uber car pulled out and he got out. I asked him about how it worked. His reply: "It's awesome, I order it on my phone, it picked me up and dropped me off here (~3 miles away) for ONLY $40! Isn't that awesome!" I am sorry, but for me at the time $40 was a lot of money, I would have walked the damn 3 miles for that money.
My point is, sometimes I think the entire Silicon Vally is in the bubble of affluence, and might be slightly delusional about what other people, outside the bubble, might think is or is not reasonable. The solution isn't giving the poor people free money, the solution might be to grow (geographically) and spread the bubble around, making lot's of people better off by reducing housing strain in the valley, and economically improving other communities throughout CA or even the grater USA. Just an idea, I might be wrong.
The best companies are here because this is where the greatest number of good programmers is.
Good programmers come here because this is where all the best companies are.
It's a virtual cycle for the industry but vicious cycle for housing, especially when confronted with SV's housing politics (Seattle is also experiencing a boom but is dealing better with it by building more tall buildings).
This is almost a power law in play. It's not about SV having 2x more programmers than elsewhere. It literally has hundreds (if not thousands) times more than, say, the entire state of Ohio.
For that reason Apple can't just move to Ohio because they won't be able to hire good programmers at scale.
Moving elsewhere might work for small companies that never intend to grow a lot because you can find one or two good programmers that haven't yet moved to SV but that won't move the needle.
And even small companies start here because this is where all the VC money is to give you a start and this is where all the programmers are when you start growing.
Let's say, for instance, Apple was to open a campus in Eureka, and offer some of it's employees to relocate there and continue to get the same paycheck and work on the same projects. Don't you think a lot of employees might take them up on that offer. I am not saying everyone would, but people with families, who wish to have a house and a back yard, and a dog, and a nice home life, and wish to not have to pay 3/4 of their paycheck to the bank for the privilege, would take Apple up on that offer.
Further more, if you think about it, it might be to Apple or Googles advantage to actually open some remote, out of the way, campuses. This way they can recruit developers who like the out of the way life style (yes there are some) and those developers might be less inclined to jump ship. Maybe they can make 10% more at company X in SV, but they have a nice life, cheep housing, and no traffic, why bother. It could be a good retention tool, and possibly a good recruitment tool.
Basically, any place outside of the Bay Area (within California, that's can be North, South, or East of the areas immediately surrounding the Bay.)
Isn't it strange, and not very efficient for
such a large number of very prosperous
companies to be located all in one area.
http://kalw.org/post/affordable-design-fight-save-one-silico...
I'm starting to feel like we should crowdfund a WSJ subscription for HN, or something similar. How much traffic does WSJ get directly from here?
1. Have a "site subscription" where links referred from your site are not paywalled. And you would pay a subscription fee to be referrer-whitelisted on the paywall; the subscription rate could be highly debated.
2. Have a "multi-subscription package" where I pay one organization, and they take my payment, slice it up, and distribute it to several dozen news companies. The administrative fee for doing this would come into question.
I agree that writers, webhosts, and other employees of these news companies should get paid; this isn't a product that's made for free. I don't really want to have to track a handful of inexpensive subscriptions. And the subscription path for NYT and WSJ is unclear - I haven't found the page where I can simply buy a 1-year subscription; only the "12 weeks for $12" deal.
Or am I missing something?
(It's a corporate locked-down Chrome on a corporate network without plugins installed)
> his appraiser had valued the property in 2013 at $14.5 million with the mobile homes and at $29.2 million as a vacant lot.
He might sell for $29 million and distribute $8 million equally among the 400 tenants. That's $20,000 per person, which could be more-than-decent compensation for having to move, and the seller still keeps a large portion of the difference in value: 29 - 8 - 14.5 = $6.5 (million).
Certainly it would be a nice thing to do and would ease the blow. And I wouldn't fault the owner for selling. But I don't know if distributing that amount would really make it up to the tenants.
The landlord put a note on my door saying, I paraphrase, that I either pay or get kicked out in a few days.
Do you think that before kicking me out they should have given me $20k to ease the pain and suffering I would endure due to not having a place to live?
Are the rules for those people different?
I'm merely saying, if you evict these people (which may be an entirely reasonable and justified action) then $20,000 isn't necessarily going to go very far in making it up to them.
As to whether they deserve more, or less, or anything, I don't know. You'll probably want to take that up with the parent comment.
http://la.curbed.com/tags/village-trailer-park
there's one in malibu as well, but malibu is basically anti-development so that one will probably stay for a while. units also regularly are up for sale so if you want ocean view property in malibu, it can be yours for only slightly less than than $insane.