Google Plans New Headquarters, and a City Fears Being Overrun
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> “Our problem is that we have too many good jobs,” said Leonard M. Siegel, a 66-year-old environmental activist who was recently elected to the City Council. “Everyone else wishes they were in our situation, but it’s a crisis for the people here.”
If this person is actually an environmentalist then they should welcome my message of build up, build dense, and build mass transit. Per-capita carbon production goes down as density goes up. Low-density urban living, think suburbs, are terrible at keeping per-capita carbon production low. An actual environmentalist would welcome an opportunity to develop dense urban environments free from a reliance on fossil fuels.
If you want to have a low carbon footprint; live in a place like Manhatten, eat vegan, sell your car and don't travel. In other words, if you claim to want environmental policy, you should be working to make that lifestyle accessible to more people.
> “Nobody wants change,” said Gilbert Wong, a councilman in Cupertino, Apple’s hometown.
I'm sure if I told this person they were a conservative they would take offense. But what other way is there to read this? These people are misappropriating the term conservationist. We're interested in protecting the trees, not your lawn.
Places like Mountain View or Palo Alto could be examples of a new kind of sustainable dense urban living. Instead they're completely wedded to automobiles and a mid 19th century obsession with detached home ownership.
Arlington, VA is an example of a suburb who successfully created a densish environment by building a subway corridor.
That, plus new investments in public transit (and, hopefully, more to come) means more walkable neighbourhoods, more services more accessible to people, and fewer 90 minute commutes on car-clogged freeways to get to a choked downtown core and $25/day parking fees.
Vancouver is trying to be a lesson to the world in sustainable, eco-friendly living, and I'm really hoping that we can make it happen.
Instead, we have Prop 13...
Did you actually read the story? Later, it says:
"Google’s headquarters proposal does not include any plans for housing. But the company has told the City Council that it wants housing, and lots of it. Councilman Siegel, for one, agrees. He wants to amend the city’s plan to allow at least 5,000 new housing units."
Really Sunnyvale should get into the act. MV should build denser. But Google does need to contribute serious $ to MV capital improvement plan
BTW, the old World Trace Center Towers 1 and 2 held 50,000 employees.
The reason for the increasing price of housing has to do with overly restrictive zoning codes and not the demand. The zoning creates artificial scarcity and it is the scarcity and the increasing costs of land that results that is the cause for increasing home prices. Using politics to create artificial scarcity through this "rent seeking" is a means of taking wealth from others as opposed to wealth creation which benefits all.
In an efficient market, there would not be the zoning code restrictions that limit housing density (see Harvard Economist Edward Glaeser's writings for more info).
Ha! Nope. While there has been some datacenter space in the building, the vast majority is office space. (It's way cheaper to build data centers in Iowa and the Carolinas than in Manhattan!)
Google has been taking over more and more office space as leases end, though. It makes for quite a confusing office map to get from floor to floor. (Lots of partial office floors don't connect well to other partial office floors.)
The same thing happened in places like Rockland County, NY - once a small, rural community of primarily Norwegian immigrants, it has seen skyrocketing property taxes, cost of living and population due to the increased population / desirability of NYC over the past say 60 years, as well as the Tappan Zee Bridge making it a viable home for Manhattan-working commuters. The residents (at least some of the old time residents, whose number includes several of my family members) are understandably upset, but you simply don't get to control your community size in this fashion. If you want to live in a small, rural community and find your lifelong hometown increasingly developed, the unfortunate reality is that you are not the only human being who wants her peace and quiet, and you may have to move.
I am equally unsympathetic, but is that statement true? A teacher buys a house in 1982 for $125,000. That house is now worth $800,000, but while her salary has increased according to cost of living (ideally), it has definitely not accounted for the massive increase in property tax that her new values command.
There's a difference of around $500 a month, just in property taxes between her home in 1982 and 2015, and that doesn't even account for the increase in cost of goods and services as the rest of the economy thrives around her.
I'm not saying they have a right to tell anyone else where to live or not live, but I do sympathize with them.
[0] http://dor.myflorida.com/dor/property/resources/limitations....
Property taxes are a controlling factor on house price inflation to an extent. As property values and taxes increase in an area, residents who can no longer afford that (often times lower-income or fixed-income residents) are forced out. While that sucks for them, this ultimately puts more homes on the market and increases the inventory. Increased inventory means a downward factor on house prices. Probably not enough to prevent them from increasing, but it may slow them nonetheless.
The Bay Area seems to be missing this critical market factor. I'm now seeing townhomes in MV list at 1 or 1.1 and go for 1.3. How depressing is that.
In most places, if your $200,000 house now has a value of $1 million, you cannot stay since property taxes will increase. So, you can sell and leave, but staying is often not an option particularly for people on a fixed income.
That said, the 5x increase in property taxes from 200k to 1 mill may really mean going from 2k a year to 10k a year.
That is probably not at the "can't stay" level for most people, not to mention it being tax-deductible
Tax-duductible doesn't cover it for fixed income folks.
The median income California resident (even a dual-income household of such residents) is unlikely to have had a $200,000 home in the 1980s, or, if they managed it, to have its property value increase to $1 million in the intervening 30 years while remaining a median income California resident.
Heck, by a common guideline (reasonable house price = 2.5 times annual household income), a dual-median-income family at the current median level can't afford a $200,000 house today.
// it is a bit off-putting to down vote everyone not up on CA law.
So, given the prop 13 maximum tax rate of 1% and maximum increase in tax basis value of 2% per annum, a property that was fully taxed at a basis value of $200,000 in 1985($2,000 annual tax) that increases in value to $1 million -- or even $10 million -- in 2015 would have a tax basis value of $362,272 and a total annual property tax bill of about $3,623.
It's just another thing that creates artificial scarcity.
Note this also affects commercial real estate!
http://en.wikipedia.org/wiki/California_Proposition_13_(1978...
The problem is not with Prop 13. It's with property taxes at all. I'm not fundamentally against a wealth tax of some kind, or against cities raising income, but if you base this on assessed values of real-estate, a highly illiquid asset for most people, you are guaranteed to generate these problems, not to mention undermining the very notion of property.
The problem is not prop 13. It is that something else should be taxed instead of property.
In many places property tax can increase after you purchase a property without California-style Constitutionally-imposed limits; there's very little evidence that this actually makes it reasonably likely for anyone to actually be priced out of property due to value increases in other-than-highly-unusual circumstances.
Property taxes in the US typically vary between 0.5% and 1% of market value; even in the absence of Prop 13 style limits on increases, that means an increase of property tax of between $4,000 ($1,000 to $5,000) and $8,000 ($2,000 to $10,000) per annum, and, regardless of rate, represents about a 5.5% annual increase in value (and, thus, tax costs for ad valorem taxes.)
With the posited increase having increased over ~30 years (GP's scenario had a house purchased in the 1980s), that's only about double the rate of inflation, so even with no increase in real income over the time, you'd have to have been fairly tight initially to be priced out of the home by tax increases.
Don't ask questions that other people know the answer to.
It's the life-long renters who will be mainly impacted by this negatively. I do have sympathy for them. Many of them rented not because they were opposed to buying, but because they couldn't afford to buy even in the 80s. Granted, you might argue that if you can't buy a home then that's a sign you shouldn't stay in the area long-term, precisely because of this risk. But try telling that to all the new college graduates rushing off to Silicon Valley with incomes that are less than a 10th of home values around them. They'll possibly be subject to the same fate.
Not to mention the people who would normally have bought within the next few years who've just become life-long renters because housing prices have shot up out of reach.
I live in Vancouver, and hey, I even work in tech, but the housing princes here are out of reach. If I'd made ten years ago what I made now I'd own my own home, but now it just seems like an unreasonable course of action.
I'm not sure how true this is. If you're on a fixed income, for example, an increase in the value of your property doesn't do you much good unless you sell it. You could take out a mortgage... but then it's just a matter of time before you have to sell. Meanwhile the overall cost of living in your area is increasing due to the influx of wealthy residents.
EDIT: I think that if I were retired and found myself living in a neighbourhood which I could no longer afford, I would sell my house and buy a nice place in the countryside with the profits. But I can understand why some people might resist moving.
You actually do. If enough residents don't want this to happen (and if the politicians are responsive to their citizens' interests), you deny construction permits. Just look at the various municipalities that have blocked 'big box' retail stores in their boundaries (or in specific areas).
The biggest problems are unforeseen circumstances. No one blocked Walmart when they were up-and-coming, but the objections started rolling in once they saw what effect big-box stores in general, and Walmart in particular, have on the local economy, traffic patterns, etc.
The same is true of tech companies. We'll start to see some towns, counties, municipalities, whatever turning down these companies because it's bad for the community they have already. Not all areas will do so, and not all the tech influx will be harmful for everyone, but it'll still happen in some places and in a lot of cases that might be the best decision.
I'd love to live nearer the Googleplex, but I wouldn't move into Mountain View.
Disclaimer: I work for Google, but I had this opinion of MTV far before joining them, and I have no voting rights in MTV politics. I live in Santa Cruz and much prefer it.
Boo-hoo.
Also, I think it's ironic for an "environmental activist" to defend the existing suburban wasteland status quo. More development could make places like Mountain View less car dependent, and reduce how many schlep too/from SF on a daily basis. If these folks really cared about the environment, instead of prohibiting growth they would ban these sprawling office parks miles away from public transit and push tech companies into high-density development near the Caltrain.
Do you have evidence that Leonard M. Siegel supports "sprawling office parks miles away from public transit" other than the fact that office parks exist and Leonard M. Siegel exists?
Having too many jobs in Mountain View means many commuters, and super high housing prices meaning most workers (even Google employees) must commute from different places. So it's not making anyone less dependent on the car.
However, the situation for long-term resident (especially home owners) is not that bad because if they don't care about the tech industry and just want a quiet place to live, they can easily flip their house for a couple millions and buy a small castle somewhere else.
In fact almost all the candidates were pro-growth, pro-housing - the only real fight was where in the city the housing should go.
There are quite a few high-rises in the financial district but are they vacant?
Just to put things into perspective: the two blocks bounded by Evelyn, Franklin, Dana, and Bryant near the Caltrain station in Mountain View, which is currently just nondescript strip mall, is 8.5 acres. We're not talking about SF or NYC where it might be hard to find that much contiguous space.
Rent for 2-bedroom apartment in those new buildings was around $4k last time I checked.
http://www.bizjournals.com/sanjose/news/2014/11/06/mountain-...
Also: "“If you brought 5,000 people in and they all work for Google and they said, ‘We want you to vote for this candidate,’ they can own the town.”" - that is how democracy works, e.g. attracting welfare earners to vote for those who will give them more welfare.
You might be surprised to hear that a significant number of Google employees in Mountain View were recently moved to a new campus outside of the city, and it wasn't exactly an opt-in affair.
No one is so beholden to their almost indistinguishable south bay suburb that they wouldn't venture across the border to go to work -- these towns are 20 square miles at best.
That would be pretty sweet if a giant tech company like Google packed up and left Silicon Valley. It's going to take big moves like that to get a real exodus rolling.
I also understand the fear long-term residents of Boulder have for a change like this. From their point of view the town has grown from a hippy little mountain town into a very expensive yuppy enclave. Housing prices are extremely high for Colorado, and unless you have a high paying job you usually end up commuting in from the surrounding towns on increasingly congested roadways. Adding >1000 highly paid engineers into the mix certainly won't help to alleviate that.
It's not without it's advantages - cheaper access to a tech society and it's trappings. OTOH, businesses and institutions that we've come to know as friends have been annihilated.
I'm really starting to get tired of it...
Now if you can figure out how to decentralise corporations, imagine the amount of time, space and resources you could save.
hint: why do digital companies still require a workforce to all meet at one physical location, every day?
One possible way to short-circuit those pricing increases is for an employer to lock down a very large tract, and never let parcels in it exchange ownership again. Structure an ownership model where employees still buy into their parcel under a co-op style or leasehold ownership, with all such proceeds minus operational expenses (property taxes, insurance, maintenance, repair, etc.) dumped into a total market index fund/fund-set (with communally-voted percentage of gains allocated to improvements and/or expansion) or at employee discretion into a money-market fund, and when employees leave employ and residence, their share of proceeds they put in plus their share of gains (if any) are returned to them. This locks in the underlying price basis to inception year which all future employees' residential costs are biased towards, retards real estate inflation in the tract's parcels to just imputed value assigned for property tax purposes by the municipality, captures and redirects overall real estate inflation effects upon wages into salaries and the fund, which ends up as real inflation-adjusted income in employees' hands when they leave.
Employers like Google who want the accompanying productivity benefits of ancillary services like on-campus dining get manifold benefits from structuring a residential community right around the office. Including but not limited to: 10 minute commute for everyone leaving more time to enjoy life and work, no cars inside the tract with only biking/walking/PRT delivering increased health benefits and lower healthcare costs, coordinated massive volume purchasing of residential services in a single geographic location making possible even more time saving services like landscaping/housekeeping/childcare/laundry/handyman/insurance, etc. In an already-developed community like MV, cultural/entertainment/shopping venues are sure to sprout along the borders of such a tract to give variety, if such venues are not already woven throughout the community.
There are secondary cost savings from choosing to plan on the decades-long timeline of such a development built as a single project. For Google specifically, heat co-generation from data centers can be redirected for use in the residential areas. All residences can be constructed to say something like PassivHaus standards to use 1/5 to 1/10 of normal energy, and simultaneously mount solar PV everywhere there is a roof or shading desired. These energy savings drop straight to the bottom line as decreased compensation inflation pressure over time. Cooperation and integration with the wider community's educational and healthcare institutions can accommodate exception cases like special needs education and high-end healthcare, without blowing out costs or compromising quality of on-campus schooling and healthcare. The entire tract's property taxes can be negotiated on a commercial (commonly given more leeway in most municipalities) basis in a single negotiation more likely to yield lower individual property taxes per residence.
The cost is reduced location choice for the employees who voluntarily choose to live in the tract, and when to move away; but real estate inflation has generally economically segregated most metro areas and already reduced choices, and residential moves already commonly accompany job changes as increased traffic congestion in most metro areas make all but the most short geographic distance disparities between old and new jobs very grueling. There are also many cultural costs to address commonly associated with "company town"-type issues; homogenized and boring (though others have pointed out boring is a feature not a bug for many though not all when raising a family) milieu, stifling social setting, etc. Many possible trade offs and solutions for these challenges, though.
There are variations of this kind of company town development around the world. The largest and most comprehensive ones I know of are Kiruna in Sweden and the various towns run by Saudi Aramco in Saudi Arabia. They aren't a panacea, and there are more drawbacks I haven't covered, but they are very effective at controlling direct and indirect COL costs that put upward salary pressure on a company that are out of most companies' control, without significantly compromising quality of life for median employees.
There is enormous cultural pressure against this sort of tactic, however. Not least of which is the tremendous buy-in of the general public (including tech industry participants) to the sales story of ever-increasing housing prices as an integral part of every family's financial planning. If you are in any industry outside of real estate and its related sibling industries, it is to your ultimate advantage to treat most real estate and its related operational costs (that is, virtually all price increases past inception of land purchase) as a straight deadweight loss. Aside from real estate and related companies, real estate is a large factor typically in companies in trouble (like Sears or Radio Shack) or in commoditized industries (like McDonalds), but only because of real estate's unique asset characteristics due to many economic/tax/financial/legal structural factors that no other asset possesses in the same combination. If you are a Google or a GM, you want your investors/customers/employees to know you for what you innovate and do, not your real estate holdings, because that is where the big growth multipliers are to be consistently found in the future.
Wow. As a non-Googler, Mountain View resident who owns a home, I can say that the vast majority of the commenters mischaracterize problem, Lenny Siegel and the MV City Council, Google and everything.
I should also add that I regularly attend CC meetings,etc.
Basic background:
1) Google until recently basically ignored Mountain View south of 101. Until recently Google didn't own anything south of 101.
2) Google is not going anywhere. Mountain View is right next to Moffett Air field. This is where Larry and Sergey park their 767 ( http://techcrunch.com/2011/12/11/googles-3-top-executives-ha... ) - Maybe Sunnyvale would be an alternative but I really doubt there are too many spots where L and S can be in walking distance of their 767. Furthermore Google is leasing a shit ass land from NASA to expand on.
3) Its not just Google: Google, LinkedIn, Intuit, Symantec, all have HQs here. Microsoft/Nokia also have their research centers here.
4) Google, et.al. subsides all services at their HQ as a result outside retail/restaurants have pretty much died north of 101. This results in local business owners/voters complaining to city council.
5) Google woke up to the political problem when MV CC told Google that they were not going to be allowed build a connection bridge across Stevens Creek Trail for buses. ( a trail that MV residents worked 25 years to create )
6) Google land purchases have resulted in increases in real-estate taxes, however Google generates NO sales tax revenue for the city. (same problem with the other companies)
7) Land in North Bayshore has gotten so expensive that there is serious talk about putting a building on top of the VTA North County Maintenance Yard.
8) Mountain View renters have seen Y/Y increases of about 20-25%. A 2 bedroom/2 bath apartment goes for $3300.
9) The city planners have gotten so many building requests that the city has no staff to deal with the requests.
10) The school districts have real problems keeping teachers - turnover for some schools runs 6-10%.
11) Non-tech workers are being forced out - you know people like teachers, waiters, security guards. The MV Building inspectors have found entire families living in a single room ( http://mv-voice.com/news/2013/07/26/high-cost-housing-create... )
12) The 3 new city council members are all pro-housing. The anti-housing candidates were rejected. Therefore comments along the lines of : stop whining and do something - well the new city council is doing something. Specifically, demanding that more housing gets built and less office space. We are trying to make room for the new people. In many cases these are our children.
13) Google to its credit is starting to throw some money at Mountain View Capital Improvement Project list to help out.
14) Google, Mountain View are working out a traffic management plan to reduce solo drivers - the whole of north bayshore is only accessible by 3 roads. Residents who live in north bayshore right now cannot get to/from their house between 8:30 and 10 and 4:30 and 6.
I might add more to this list but I think this is a good start.
What does the city exactly fear?
What to do about it? Sell out, move I guess. Google wants your land after all.
Even so, the other fear, which I distill to a sentiment of fear that Mountain View will become a city that is more business and less residence/public space, is one that has more merit.
The horns are used to try to get people to not get killed.
There are remarkably few good ways out for humans in our society, so this kind of spectacle is often what they end up resorting to.
If you don't up the supply, the demand is just going to keep getting more intense.
Basically, they are afraid the majority of the people they represent may actually make their voice heard in government.
What's next, complaining that if we build too much senior living, the old people might vote for what they want?
A "Google voting bloc" is just a codeword for "people who live and work here". Trying to keep people out of your city because you don't like their politics or the company they work for reeks of discrimination.
I find it equally preposterous that the mass of Google employees operate as some sort of a hive-mind too, abandoning their own personal politics in favor of their employer's, but at the same time, would be foolish not to acknowledge that Google employees are likely going to favor Google-centric endeavors like Google Fiber, self-driving cars and that sort of thing at polling stations.
Right now, I can't be arsed to even read the minutes from the meetings of my city council. I would much rather spend that time keeping my technical skills current. Mountain View politics will, like most local governments, still largely be controlled by smallpond-bigfish, loud activists, and retirees, unless it becomes a noticeable problem that requires fixing.
The one thing you do not want to do in a community of technically-minded people is to be categorized as a problem.
Denying building permits for the 5000+ units of housing that will be required--that's a problem. Not building schools, crime and fire protection, utility corridors, and roads to service that housing--that's a problem. Not building commuter infrastructure for the employees who can't live in town because you won't let them--that's a problem.
There are plenty of communities outside of the silicon valley area who would kill--literally commit multiple murders--to get Google to relocate headquarters there, while also offering zero local taxes on the business for a decade or more. Those communities would also complain loudly about all the young people coming in with no investment or engagement with the existing residents. But then they would float some bonds, up the mill rate, build like crazy, and immediately start pitching to other technology-intensive businesses. Money may not solve all the problems, but it is one heck of an analgesic for the ones that it can't solve.
Just cash the check, Mountain View. Cash the check and get to work.
The new council members (e.g. Lenny Siegel) are _all_ in favor of adding new housing near Google. The City Council is now 6-1 in favor of building new housing, whereas it was 4-3 against prior to the 2014 election. The person who was afraid of a "Google voting bloc", Jac Siegel, is a former council member is no longer on the council and no longer represents the views of the council or the citizens.
As for the people, while there are a certain set of long-time Mountain View residents who don't like change, most seem to accept that change is inevitable (which is why we now have a 6-1 majority in favor of new housing).
(Long-time Mountain View resident, voter and homeowner here, FYI).
Sure the business owners and landowners are loving it - but those are the minority. In MV, even Googlers are showing up at housing meetings complaining about the high rent.
The average worker at Target is benefiting by continuing to get paid at all. They're also benefiting from the continued level of funding to city services from the tax revenue of tech.
The tech industry is one of the big reasons that SF didn't suffer economically as badly as many other big cities did.
A good sign that you should check what comes next. Because it probably is callous.
> The average worker at Target is benefiting by continuing to get paid at all. They're also benefiting from the continued level of funding to city services from the tax revenue of tech.
Yeap, you are right: callous.
> The tech industry is one of the big reasons that SF didn't suffer economically as badly as many other big cities did.
One little problem with the hypothesis: non-tech workers have stagnant wages. So non-tech workers would have been better off with the tech industry shrinking so that housing prices would drop ( or at least flatten out ).