I caught an interesting side discussion over the weekend between two of our commenters. One of them commented that while San Francisco, for example, has generated a tremendous amount of wealth, one reason that it has helped the wealthy rather than the average person is the lack of housing – especially affordable housing.
In fact, some of the data put out by Greater Sacramento bears this out. The cost of living index measures relative price levels for consumer goods and services. They set the national average at 100.
Sacramento rates a 127.5, slightly above the national average. San Francisco on the other hand, rates at 304.7 – three times the national average.
The wealth is there for San Francisco – $104,880 in terms of median income, but the cost of housing prices even people making nearly twice that out of the market. The median home price in San Francisco is a whopping $1.6 million, topping San Jose’s $1.275 million and Los Angeles’ relatively pedestrian $650,000.
According to a Vox article, “the median down payment needed was around $250,000 last year.” On the other hand, in a report by the California Association of Realtors, they found a prospective buyer would need an income of nearly $350,000 to buy in San Francisco or San Mateo counties.
One of the commenters argued that this is a housing supply problem. It is primarily a jobs-to-housing imbalance. Thirty-five to 1 is the ratio of new jobs to housing units in the Bay Area, according to a MTC report in September.
CBS in San Francisco writes, “Much of the housing crunch has been blamed on housing construction not keeping up with job creation.”
They note: “On the Peninsula, the housing / jobs imbalance is even worse. A report by the San Mateo Housing Leadership Council found San Mateo County added 72,000 jobs in the first half of the decade, but permitted the construction of less than 4,000 housing 
units, a ratio of 19 jobs for one new home.”
In 2018, things actually got worse with construction on new homes in San Francisco dropping 41 percent.
The bottom line here is San Francisco has plenty of wealth with a very high median income – in some surveys it is the wealthiest city in the nation, but without the housing-jobs balance, it harms the quality of life for people attempting to live there. With enough housing, San Francisco would be a booming community. Instead, it is a community where, increasingly, no one but the very rich can live.
This is a lesson for Davis as well. Davis is a community that has a lot of jobs, especially through UC Davis. But, increasingly, people who work in Davis have to commute from elsewhere to get to work. That’s one reason why University Research Park’s first project after Fulcrum purchased the research park was to propose workforce housing. It is a key reason why expansion of the downtown contains a mixed-use proposal and the primary reason why ARC (Aggie Research Campus) also has a housing component.
Creating jobs without the housing in the Silicon Valley and elsewhere is leading to a huge imbalance in the jobs-housing balance, which is fueling the housing crisis.
There is another imbalance that has been raised that is also important. In San Francisco, they have added jobs, they have thriving economic development, and yet they have a deficit.
In Davis, we have proposed as one plank of the fiscal solution to generate more revenue from economic development and various taxes.
In the last few years the city has added revenue from the cannabis industry – one hotel is about to open while another has just broken ground, and the city is also looking at economic development.
Meanwhile, the city is looking to renew its sales tax measure permanently because of budget shortfalls and, even with that tax measure, the city is still about $8 to $10 million short on the revenue needed to maintain parks, greenbelts, city buildings, bike paths, sides walks and road pavement.
But, as many communities that generate far more per capita in terms of retail sales and taxes will attest, it is not sufficient to merely generate more income. What we need at the same time is cost containment.
From 2004 to 2008, the city of Davis experienced double-digit percentage increases in property taxes. And yet, the fiscal situation worsened because the city turned around and gave city employees huge total compensation increases. The result was that when the real estate market collapsed, the city was in fiscal difficulty – a situation that it has never emerged from over the following decade.
The city has had to cut its workforce by 25 percent permanently, it needed a sales tax increase, and it has maintained a backlog of infrastructure needs that it simply has not been able to fund.
As Robb Davis put it in 2017: “Our inability, given current revenue, to pay for the maintenance and replacement of critical city infrastructure is a weakness. Over the past 15 years, total general fund revenue has grown by 95 percent while general fund expenditures have grown by 92 percent. Revenue appears to have kept pace with expenditures. However, when we dig into the expenditures — or rather what is not in the expenditures — we see that the picture is not positive.”
The reality is that we need to grow revenue through taxes and economic development, but that is not enough. Without balance, we end up falling further behind – our revenue grows, but our costs increase even more.
In order to see the benefits of economic development, then, we need to do two things to keep the balance. First, we need to maintain the housing-jobs balance so that we do not end up like the Silicon Valley, generating huge amounts of jobs with no place for people to live (or no place they can afford to live).
Second, in order for the fiscal condition to improve, the city must not only generate revenue, but contain costs.
—David M. Greenwald reporting
. . . the city still has a massive deficit (projected to be $644 million in five years from now), as pointed out by the “other” commenter:
https://www.sfchronicle.com/bayarea/article/SF-taking-steps-to-avoid-projected-future-budget-13509714.php?psid=n6OIy
Why is this not surprising?
San Francisco has approved a large amount of market-rate housing in recent years. Areas that were formerly industrial/commercial have been converted to expensive, high rise housing. Displacement of lower-income (primarily “people of color”) has become a major political issue, there.
The reason that housing prices rise have risen so much is due to the pursuit of economic development – particularly the technology industry. This does not benefit everyone, and has also led to the rise of the “supercommuter”, from distant areas that allow sprawl.
One difference between Davis and San Francisco is that there are plenty of cities immediately surrounding Davis that allow sprawl. Including literally thousands of houses recently built, under construction, or planned in south Woodland (aka, “North Davis) alone. There’s already an “imbalance” of commuters to Davis, to reach UCD. Developments such as ARC (which in fact don’t even provide sufficient housing to meet its own demand) will simply increase this trend.
ARC would also increase pressure (“justification”) to develop other lands for housing in Davis, including the site of the previously-proposed Covell Village and the Shriner’s property, located between Wildhorse and the proposed site of ARC.
Folks, pursuing development which then creates its own additional need (while failing to address the city’s fiscal problems, creating additional pressures for sprawl, and leading to an increased number of commuters) doesn’t sound like much of a “plan”, to me. Actually, it does sound like a plan – a “developer’s” plan.
There are other factors occurring in the Bay Area housing market as well, including the impact of investors from other countries:
https://www.bisnow.com/san-francisco/news/capital-markets/share-of-chinese-homebuyers-dropping-in-bay-area-78496
DV ignoring that, as DV and Scott Weiner want all the single-level row houses on the west side bulldozed and replaced with highrise subsidized housing for the poor and homeless, so they have the ocean view they have been denied by the rich who live their now. No fair. NO FAIRS!!!
Clearly the problem is too many jobs. But not just in Davis, all over Northern California. Not only does the University have to stop expanding, but companies need to stop expanding as well, and when companies go out of business, leave the storefront vacant, even demolish the building as otherwise someone might open a business there. It’s time to shrink the economy, leading to fewer jobs and less money in the system overall. This will lead to lower rents everywhere, and that means the homeless will be able to come in under a roof and the poor will be able to live in Berkeley, Palo Alto, Marin County, Davis and San Francisco. No A-fordable housing or government subsidy, just an agreement among every private enterprise in Northern California to shrink or shut down. Think of all the problems this solves!
In service to the the People of Northern California,
Alan C. Miller, Plodopodopolist
If a particular area already has a sufficient number of jobs to meet the needs of its population (and then some – as demonstrated by an influx of commuters), what (exactly) is the purpose of adding even more?
Regarding your other point, Davis is already doing a “good job” of demolishing vacant commercial and social service buildings (and converting such space) to housing. A sign of lack of market demand for commercial space, vs. housing.
Two cats sat on a fence. One is looking at jumping off the fence. How many cats are left?
Oh, THOSE balances. I was hoping this was about the balance between the BUILD EVERYTHINGERS and the NO GROWTHERS, both of whom I consider to be INSANE PEOPLE. But then again, the INSANE PEOPLE think I’M INSANE for wanting a BALANCE between CITY CHARACTER and CITY FINANCES. Pray tell, it’s like being a THINKER or something. I’ll probably get locked up for believing the sun rolls around the moon.
The definition of “balance” (in regard to growth and development) is up for grabs. Some people think that a 4-story Trackside is “balance”.
I could see a long time ago that “smart growth” was ultimately an avoidance technique (to avoid addressing the issue), and creating its own problems. Certainly an overall “environmentally friendlier” technique, if one wants to continue pursuing development. Even if it screws the immediate neighbors, regarding quality of life issues. (Probably makes their own property more valuable though – which might be “helpful” if they reach a point that they no longer want to be there, due to highrises next door to them – and the resulting impacts.)
https://www.sacbee.com/news/business/real-estate-news/article232979792.html
(Bad news for Newsom/Weiner, but good news for those who don’t believe that pursuit of growth/development is sustainable – socially, fiscally or environmentally.) (Why is it that I almost always “misspell” Weiner’s name, before correcting it?)
Worse news for you. Everyone believes it’s a blip and the underlying problem remains.
Haven’t seen anything which indicates that it’s a “blip”.
Regarding the underlying problem – we likely don’t agree on what that is, let alone the solutions. However, the market itself will ensure some solutions, such as the mass migration out-of-state for lower-income workers that’s occurring (especially from the Bay Area).
Some are ending up in the Sacramento region, while others are leaving for points beyond. (Some decidedly “worse” than the Sacramento region, and some decidedly “better”.) But most providing a better income/housing cost ratio.
Others will continue commuting from areas that allow sprawling developments. (Including those which have already allowed it.)
Here’s a good piece on the underlying problem
https://www.latimes.com/opinion/story/2019-08-02/housing-crisis-permits-california
This article is incredibly vague. What does the recommendation ” we need to maintain the housing-jobs balance” actually mean in terms of a goal jobs/housing ratio for the city? Davis already has a jobs/housing ratio that is out of whack–tilting heavily toward the jobs side of the ratio. SACOG regional planning documents, in fact, call for Davis reduce this ratio for better balance within the region.
It should also be noted that recently-approved housing projects in Davis don’t actually address the underlying purpose of a jobs/housing balance, which is to balance housing for the workforce against jobs. The student-only Nishi project and seniors-only WDAAC project do nothing to address this.
But they did get stupid people to vote for puppies, flowers & children!
This guy keeps telling us he’s an expert, and yet I really see no evidence of it or common sense.
What I do see is a bunch of assertions he puts out. For instance, that projects don’t address the housing/ jobs balance. Well Nishi-1 was supposed to provide jobs and housing but Rik and his cadre voted it down. The second one, addressed a critical problem – student housing.
So we’re supposed to not address student housing needs because we also have other needs? Is that what his expertise tells us?
Second, WDAAC. He put forth his argument to the voters, they disagreed with him. Sorry dude. Too bad, so sad. The reality is that if people downsize to WDAAC, it opens up housing in the city.
He tried to argue against that view but the voters disagreed with him.
The problem in Davis is we need housing for the people with jobs at UCD and jobs for the people who live in the housing in Davis.
That’s not a personal shot?
His cadre, consisting of a majority of those that voted? That’s quite a cadre feat!
So first he has a cadre that votes down Nishi, then he puts forth an argument, and “the voters” disagree with him. You realize those are two opposite arguments, right?
That’s one interpretation of reality.
Not if they live elsewhere.
Not if they have a job elsewhere.
“The need for balance in economic development”
“With enough housing, San Francisco would be a booming community. Instead, it is a community where, increasingly, no one but the very rich can live.”
I find discussing “balance” very much like discussing “fair”. We all seem to like the concepts of “balance” and “fair” but the devil is always in the details. Fair to whom and under what circumstances? What precisely do we mean by either of these words? First, the second quote seems to negate the concept of balance completely. “Booming” here seems to imply desireable. But is rampant growth really an unmitigated good? I find that doubtful.
In these discussions, we always seem to come down to a false dichotomy. We seem to see “booming growth” or stagnation as the only two options. I believe there could be a third way truly balancing jobs with housing with the knowledge that the confines of the city of Davis are never going to match these two needs exactly. UCD came into existence as an ag outpost of UC. When we have needed to branch out from Davis for logistical reasons as in relocating the Medical School in Sacramento where the hospital was located, we did not bemoan it, nor pretend the need didn’t exist, we accepted this as the best solution. I believe we are again at an inflection point where we need to stop pretending we will meet everyone’s need & consider letting the university grow beyond our boundaries.
Atherton has a huge jobs/housing imbalance. As in — all housing, no jobs.