San Francisco: A Preview of Boston?

Over at Tech Crunch, Kim-Mai Cutler has a new article on the insanity that is trying to live in the San Francisco Bay Area.

The problems over there are every bit as bad as one might think. According to Cutler, Californians born in 1990 spend 50 percent of their income on housing and commutes for low-income workers are lengthening:

Since [the 1970s], a new generational land cartel has emerged with Californian Baby Boomers protecting entitlements and higher property values for themselves in the form of land-use restrictions and Proposition 13.

As a result, Apple is planning to add 13,000 employees to its Cupertino headquarters, but the city will only allow 1,400 new housing units over the next two years and they have to build public housing for their entry-level teachers making $55,000 a year.

California’s fragmented, post-war suburban model, which was created for a more even wage distribution in a mass industrial economy, is clearly becoming more dysfunctional by the year for a knowledge-and-services economy with a wider level of income stratification.

Not only are we not building enough housing overall, we have scarce sources of funding for supporting those on the lower-earning ends of a rapidly widening income spectrum. So we end up politicizing and extracting funds out of new construction even though we are 40 years deep into a largely self-imposed housing shortage.

It’s gotten so bad that one group of activists is planning on suing suburbs to allow more housing construction.

But San Francisco could be just a preview of things to come for Boston.

Boston and San Francisco are very similar cities: built on penninsulae, with a highly educated population thanks to numerous major universities, dense and compact by American standards and dependent on rapid transit. The metro areas are also similar, featuring a highly fragmented landscape of municipalities which include bedroom communities and former industrial centers. Both are seeing a lot of economic growth driven by the technology sector and both have caps on property tax increases (Proposition 13 in California and Proposition 2 1/2 in Massachusetts). In addition, people in both areas are great believers in government action and community activism and have NIMBY groups that border on being BANANAs (Build Absolutely Nothing Anywhere Near Anyone).

There are important differences, to be sure. San Francisco is only the fourth largest city in California and is, in fact, only the second largest city in the Bay Area while being one of several major cities in California. Boston is far and away the largest city in Massachusetts (and New England) and is the capital of the state.

But conditions in Boston are already bad. The region is among the top five in annual rent increases and while Mayor Martin Walsh has been very forthright about the need to build more homes, his plan to add 53,000 new units by 2030 is unique in the region, instead of being part of a broader effort.

According to the most recent Greater Boston Housing Report Card, “Almost 172,000 people moved into the region between 2010 and 2014, yet only 15,000 new houses, condominiums and apartments were built.”

A great deal of the reason supply has lagged so far behind demand is regulatory, according to the report:

We have failed to meet housing production targets because there is no way to do so given the high cost of producing housing for working and middle-income households. In part, this is because of the extreme barriers to new construction, especially in the form of severely restrictive zoning at the local level across much of Massachusetts. The cost of developing new housing requires a price point or rent beyond the pocketbooks of such households and therefore developers only produce such housing, in quite limited numbers, when they are required to do so by so-called “inclusionary zoning” regulations or when they are able to secure limited public funding and subsidies to support affordability. The very high cost of land and site preparation, major contributors to prohibitive total development costs, will not come down until zoning restrictions are relaxed.

Efforts to reform zoning laws have been stalled for about a decade, with the result that despite efforts at promoting renewable energy, smart growth, public transportation and mixed-use zones, what does get built is still largely car-dependent. The situation has also not been helped by urban residents who believe that being able to park on the street in front of their home for free is a God-given right enshrined in the Constitution and the United Nations declaration on human rights and not a failed public policy-turned-entitlement and who therefore demand that far more parking be built than is needed or wise.

The state’s disinterest in public transportation is also taking a toll. The “Reform before revenue” mantra is a non-starter, not with ridership on the MBTA alone going up 15 percent over the last few years, not with a $7 billion state of good repair backlog and not with a commuter rail system that’s slow, frequently delayed, with long times between trains and track congestion from single-tracking and the lack of a North-South rail link.

The inability of the MBTA to add buses, to complete the Green Line Extension on budget and to run commuter rail trains quicker and more often represent a huge increase on demand in those areas that are well-served, as well as contributing to traffic congestion and greenhouse gas emissions. It doesn’t make sense to move to Lowell to save a few hundred dollars on rent if it’s going to be eaten by high commuter rail ticket costs and a commute time so long you have no leisure. Improvements to public transportation would allow demand to spread more evenly in the region, especially if they were combined with zoning reform.

Fragmentation is also just as much a problem in Boston as it is in San Francisco. It hardly will make a difference if the state reforms its zoning laws, but leaves the implementation up to cities and towns. They’ll have even less incentive to reform their own. After all, if they wanted Blacks, Hispanics and college students in them they could have already permitted more housing.

Thankfully, Boston does have one advantage over San Francisco: we have their example to avoid.


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