Developing Palo Alto is worth $1T

This argument assumes that we can destroy Palo Alto, rebuild it anew into something completely different, and preserve the value people ascribe to Palo Alto. This is not how it works.

If it worked this way, why do it to Palo Alto? Why not do it to Eureka, CA, or, even better, some unincorporated land with no zoning rules to speak of? Just buy it for pennies on the dollar, slap midtown Manhattan density construction on it, and reap the profits. Why are Bay Area VCs throwing billions at stupid startup ideas, yet won't stoop to pick up trillion dollars from the zoning gutter?

What the hell is going on with this article?

The article posits that NIMBY-ism is a myth, and to prove it, they do a thought experiment that shows that building more density in Palo Alto would yield more value, and hence it would be the rational thing to do. But why use an unrealistic thought experiment when you have real world examples of NIMBY-ism in action?

This article makes no sense at all.

I own a house worth single digit millions in a neighboring town to Palo Alto.

The thing is, the life is exactly the way I want it. There's no dysfunction or riffraff like you see in San Francisco. I will vote against development because I simply don't want development. I was exactly the opposite before I bought this house, now that I put over 100% of my net worth into the house I am on the opposite side of the table.

My net worth is under $10 million but I would not accept a $30m check to live in a condo on the 35th floor directly over the land that I inhabit today.

Yes, you'll expend resources to protect resources, but that's not the issue.

NIMBY is always an argument about character, not price.

You live where you live -- meaning you can't avoid the influences around you.

So you pick a place with good influences, and protect them.

High density requires defenses against the combinatoric explosion of risk of bad faith actions by others. Defenses are emotionally and financially costly.

Low density - being influenced by people within the Dunbar limit of 150 people you can know - means those defenses can be shared. Every actor is disciplined by the fact that everyone knows what others are doing.

But depending on your needs, there should be enough social variety to be interesting without being threatening. It's unlikely in a monoculture town (of factory farms or government jobs), but possible in a university town, or an area of high economic diversity - Palo Alto or Manhattan.

For those with the courage and the blinders to live in the city, their neighborhood can be a kind of small town. But I suspect this can change with a traumatic experience, or if you are responsible for people who are more attacked/less defended (young, old, female, discriminated...). So people move to the suburbs, or to gated communities or to buildings with a doorman. This is just as true of the ultra-wealthy on Aspen mountain-tops as it is for the homeless who prefer certain doorways.

If home is your castle, your neighborhood is your moat - worth defending.

“ let’s say we build 30 miles of subway, about what Manhattan has in that area.”

Public transportation that connects to nothing is not useful. The NY metro area has a massive public transit set of systems that extend out for a hundred miles in every direction. That’s why you can support such density.

edit: It's 665 miles of MTA track, 14 miles for PATH, 700 miles of LIRR train tracks, and 385 for Metro North tracks. Plus Amtrak and the regional buses (the new depot alone for those will cost $10 billion).

So many things are wrong in this blog post.

- Palo Alto isn't in San Francisco ("Palo Alto in San Francisco")

- The value of Manhattan is because there's a large pool of people who can commute there using mass transit, while Palo Alto isn't even connected to Bart. If you ignore that, then even a random plot of land in Wisconsin could be worth one trillion

- Large scale development requires a critical mass of employable people and employers; it's unclear whether building a ton of skyscrapers and apartments would induce enough demand on both sides to make things work. This is the same problem that the new city in Solano county has.

- Since development would happen over time, there's a lot of value for a plot holder to maximize their gains by holding on as long as possible since their land value would go up as the surrounding area increases in value; if every plot owner does that, no development happens, and no increase in value is to be had by anyone. This is why the land in Solano county had to be acquired before announcing their plans to build a new city there.

Palo Alto has slowly gone from being a college town to almost a retirement community. Some years ago the city government asked residents when and if they intended to move. 80% said they'd stay for the rest of their life. Turnover isn't quite that low, but it's low.

It's also 36% Asian now.

Menlo Park is a little more willing to build. East Palo Alto is very willing to build. The Whiskey Gulch problem ("Murder City USA") was solved by leveling the area and putting in a Four Seasons hotel and an office building full of lawyers. I used to live in Menlo Park near there, and heard automatic weapons fire most weekends. Which is why I don't own a house a mile from what's now Facebook HQ.

City census stats: [1]

[1] https://www.census.gov/quickfacts/fact/table/paloaltocitycal...

I encourage the author to spend an afternoon and evening in Palo Alto as well as in SF and SJ downtown. Please tell us afterwards where you and your family would rather live.

Why does everyone need to live in Palo Alto? There's housing elsewhere. If we built more housing in Palo Alto, it wouldn't be such a nice place to live.

I wonder if the main obstacle is the ability for a few obstructionists to stop everything. Maybe there should be some kind of imminent domain system.

Ok, but who cares?

Do people want Palo Alto to look like Manhattan? There will always be ways to make the number go up. Finding them might make getting a loan possible, but it doesn't mean they're good ideas. Usually, the fact that they haven't been done yet is an indicator that they're bad ideas in ways that a one-dimensional number-go-up model fails to represent.

Has the author ever spoken to a resident of Palo Alto? This article is completely bizarre.

Yes if a God himself came down to Earth and gave every Palo Alto homeowner 30 million dollars, sure they would be completely irrational to take it. But if you could guarantee me that over X years, I could double my money, by simply raising a fund to pay 10x over market for every homeowner, then why is this a substack article? Go out and do it.

If you think through the logistics you would find, in our current regulatory framework, that Palo Alto homeowners are acting rationally. If you build a ton of midrise apartments in a suburb, the homeowner has to guess when to exit at the right time to sell their home. For every new apartment that goes up, the marginal cost of their home decreases. In other words that "30 million dollars" of value that is created isn't guaranteed to the marginal home owner. Some will get more, and a lot will get less.

This article is just an exercise in back of the envelope math. There’s no coherent point to it. “If we just assume that Pablo Alto was as desirable as Manhattan and could justify building the same infrastructure…”

It’s not. You can’t.

It'd be cool if the vocal-on-twitter-urban-planner-community expanded their imagination a bit and explored this kinda stupid thought exercise with some different locations. Obviously this is tricky because it seems this crew has only ever been to NYC (but never the Bronx) and Bay Area suburbs. But I'm here to ask: what if Naples, Florida was built more like Philadelphia?

Nothing of the sort will happen unless we start taxing suburbanites for the externalities of their lifestyles. As the daytime cost of electricity production goes to 0, hookup costs need to be higher for SFH. Road maintenance and such should be paid for by fixing prop 13. Mileage surcharges for cars.

NIMBY = Not in my backyard

Since I couldn't find it in the article or the tweet it linked to, maybe someone else needed this too. https://en.wikipedia.org/wiki/NIMBY

Developing expensive areas seems like an effort in refinement, not as an actual monetary investments.

Some people choose to live in dense cities. And that's great. Other people would like a bit more space. And that's great also. Still others want a rural life. This world is big enough to accommodate all of it. I for one feel people would benefit from having a bit less noise and a bit more space in their lives (both mentally and physically). If you want to live in a dense place, go live in the downtown of any major city. I fail to understand the urge to increase density outside city centers that have the infrastructure to support it.

This is an absurd article with a ridiculous premise not worth discussing.

“What if Palo Alto had the density of Manhattan?”

Manhattan has had 400 years to get to where it is today, the Dutch established a trading post there in 1624.

I feel like I'm nuts but I think everyone in this thread is misreading this article entirely. He is not saying "NIMBYism is a myth" in that it doesn't exist. He's saying the premise the NIMBYism is a way to protect property value is wrong. Hence, if NIMBY's are really motivated by economics, they'd be advocating for massive increase in density. And yes, the post is all napkin math and glosses over the actual process of converting suburbs to urban, but the point is still pretty clear and he's almost certainly correct. I don't think he expects the Palo Alto government to approve 800 building permits tomorrow, but resetting people's expectations is certainly possible. Silicon Valley thinks we can extend life indefinitely, upload our brain to the cloud, colonize Mars, create intelligent machines, but not build big apartment buildings and trains? Of course we can. We broke the climate in 100 years without even trying.

In the world of pure fantasy thought experiments, I want to redevelop San Francisco one block at a time by taking blocks in an area like the sunset (lots of low rise housing) and redeveloping it in to high density high rises. The trick is you do the following: whichever block you’re going to redevelop, you offer relocation cash to the residents and some other compensation to owners. Then you let each block vote on which one wants to accept. If none pass the threshold, raise the offer and repeat until one does.

Then remove all the housing and build super dense. You might need to start by big roads so maybe something around Sloat. Gotta build out transit too of course.

Anyway that’s never gonna happen but I want to see Hong Kong levels of density in SF, and if I were Housing Stalin that’s what I’d want to do.

Ah yes. NIMBYs do not exist because a blogger can conjure the image of somebody with a trillion dollars cash to buy the town in their imagination. Check mate

Yeah I don't really understand the nimbys who think that building more housing will make their house prices go down. Nearly everywhere in the world, house prices are way higher in densely populated cities than in the sparsely populated suburbs. Perhaps the Bay Area is more of an exception (expensive suburb).

Why not just leave Palo Alto alone? There is nothing special or desirable about that area, and it’s populated by weird, quirky, or even insufferable people. The world does not need more Palo Alto.

Some people choose to live in dense cities. And that's great. Other people would like a bit more space. And that's great also. Still others want a rural life. This world is big enough to accommodate all of it. I for one feel people would benefit from having a bit less noise and a bit more space in their lives (both mentally and physically). If you want to live in a dense place, go live in the downtown of any major city. I fail to understand the urge to increase density outside city centers that have the infrastructure to support it.

A person living in UK teaching us how to manage our land.