Strengthening the Bay Area’s regional governance
Prepared by Egon Terplan, SPUR1
We protected large areas of open space ringing our communities and limited development along the coast. We saved the Bay from being turned into a narrow shipping channel with urban development spreading onto newly reclaimed land. We built BART to connect people in emerging suburbs to the urban core and saved Caltrain when it was threatened with extinction. Imagine the Bay Area today without dedicated open space ringing the Bay, a BART and Caltrain system that may soon carry half a million riders daily, or with a virtually nonexistent Bay, replaced by subdivisions and office parks.
For many of these regional victories we also established a new governance institution to address these issues in perpetuity. The Golden Gate National Recreation Area manages land in three counties. The Bay Conservation and Development Commission (BCDC) manages issues of growth along the Bay shoreline. BART is an agency with an elected board that is responsible for building and maintaining a rail system in four and soon five counties. The Peninsula Joint Powers Board owns and operates Caltrain across three counties.
As we look to the future, there are new and lingering challenges we must address. In fact, some of the biggest threats to the Bay Area’s long-term economic competitiveness are challenges best addressed through stronger or more effective regional governance.
While many of the Bay Area’s 100-plus local cities and nine counties are trying to respond to these important issues, they are not capable of solving them alone. Quite simply, jobs, housing, transit and climate change are regional challenges. By definition, regional issues require regional solutions.
Failing to address these regional problems means risking the Bay Area’s economic standing globally. We face increasing competition. Places like Singapore, Shanghai, Vancouver, and São Paolo are not just cities but city-regions that are acting and working regionally. Within the United States, Portland and Minneapolis have long been held up as models for better regionalism. What can we learn from these places and other metropolitan areas? What are the risks of not working regionally?
This year’s Special Analysis asks and explores the following questions: “What major regional issues could threaten our economic success?” and “How is our current system of governance inadequate to respond to these threats?”
Regions are the scale where we compete globally. The ingredients for successful economic development are found at the scale of a region – access to labor, education, innovation, finance, housing, specialized infrastructure and quality of life. When these inputs are strong, the region’s industry clusters thrive and grow.
Successful regions give residents more opportunities. We are living in an era of increasing divergence among regions. Those who live in economically prosperous regions earn significantly higher wages than those who live in struggling regions. Geography in fact matters more than education. A high school graduate in San Jose earns 60 percent more than a college graduate in Flint.2
Maintaining a successful region requires smart decisions at all levels. Maintaining a strong region requires coordination of major systems – like transportation and natural resources – that cut across jurisdictional boundaries. Planning and preserving key corridors for highways, rail lines, power lines, water pipes and goods movement requires effective regional planning. So too does planning to maintain and preserve natural systems like shorelines, waterways, habitats and air basins. Resources like food, energy and water are also generated and supplied regionally.
At a local level and without intention, cities often thwart regional competitiveness. For example, when cities decide to restrict or curtail the growth in housing, prices rise, workers are forced into long commutes and the region suffers with higher prices, more traffic and demands to build new infrastructure to connect workers to their more remote jobs. Over time, high housing costs act as an overall deterrent to job growth and can dim a region’s economic prospects.
Throughout the Bay Area there are 101 incorporated cities and towns,3 numerous special-purpose agencies, 27 transit operators, nine counties and more than a dozen regional agencies for air, water, open space and other functions.
Each of the regional agencies with a multi-jurisdictional purview has a single or narrow purpose. The Bay Area has no unifying regional government entity whose role is to integrate and balance among sometimes competing values. Instead, our single purpose agencies specialize in specific areas – like improving air quality or limiting coastal development. While born from different moments, these regional agencies were designed to be limited in scope and emphasis and might not have succeeded were they to have begun with a broader focus from their outset.
The following are the key single purpose regional agencies in the Bay Area:
The Bay Area regional governance structure has long put locally elected officials in charge of nearly all major regional decisions, in part due to concerns that a regional agency will make decisions against the interests of local governments. MTC, ABAG, BCDC and the Air District consist primarily of locally elected officials – County Supervisors, City Councilmembers and Mayors. While many of the locally elected officials on regional bodies understand the need for regional action, they are often skeptical of giving more authority to the regional agency to respond more forcefully. As a result, our existing regional agencies have limited authority that is often contested.
Individually, all the regional agencies have some authority to say “No,” such as denying an additional permit (in the case of BCDC or the Air District) or limiting funding for a particular transportation project (in the case of MTC). But they have limited authority or impact to say, “Yes,” or to proactively solve major regional challenges.
When the existing regional agencies were established, many expected that they might be able to move beyond their limited focus to deal with multiple regional challenges.9 Over the years there have been many proposals and near mergers of some of the regional agencies.10
In the wake of failures in the 1990s for stronger regionalism, members of the boards of MTC, ABAG, BCDC and the Air District began meeting together bimonthly in 2004 at a “Joint Policy Committee” where board members and executive staff from these four regional agencies talk about overlapping issues.11 But this “Joint Policy Committee” has no authority to prohibit or mandate anything collectively.
Senate Bill 375, passed in 2008, holds promise for better regional planning. By requiring the region’s long-range transportation plan to have a land use component and to demonstrate how the region can grow in a way that reduces pollution from driving, it forces greater collaboration between ABAG, MTC and other regional agencies. But, while it implies the need to target transportation funds in ways that best reduce driving, it makes no changes to existing governance of single-purpose regional agencies and includes no requirement that local governments change local zoning to support regional goals.
Ultimately, the Bay Area today lacks an effective way to integrate land use planning, transportation, natural-resource protection, air quality and climate change adaptation. There is no entity that balances these goals, no plan that proposes solutions that cut across these issues and no new powers that trump the single-purpose goals of the existing institutions. The process to produce Plan Bay Area, the Bay Area’s combined Sustainable Communities Strategy and Regional Transportation Plan, is an important step towards conceptually integrating these various concerns and posing the key tradeoffs.12 Achieving a more concentrated development pattern that reduces greenhouse gas emissions may require the creation of a new comprehensive regional entity with new powers and a mandate to integrate land use, transportation, air quality and climate change.
But this long-proposed goal of a single comprehensive regional entity is only one potential solution to the region’s governance. Understanding today’s big regional challenges in more detail may yield other options that were not considered in prior efforts at regional reform.
Many of the historical challenges of transportation and housing remain as key regional issues. But there are newer and different issues emerging today that were less prominent in prior efforts at regional reform. This analysis highlights five key regional issues that threaten long-term competitiveness and regional performance:
There are numerous other issues of regional concern, each reflective of an inadequate governance system. These include preparing for a major earthquake and drafting a long-term recovery plan post-event, identifying sufficient supply of drinking water for the region’s future needs, or ensuring that the region’s three major airports remain fiscally strong and can effectively manage demand among them to reduce crowding and delays.
The five issues we selected are challenges with solutions from other regions that point a possible way forward for the Bay Area. Solving them requires collaboration across jurisdictions or separate institutions. Addressing them will strengthen the region’s economic competitiveness; ignoring them will threaten it.
During the post WWII years – when regional planning laid the groundwork for our great regional victories around transportation and open space – jobs were more heavily concentrated in fewer centers. San Francisco alone accounted for 30 percent of the Bay Area’s jobs in 1960.13 Today it is about 16 percent.
Increasingly, jobs are spreading out and existing centers and transit areas are not capturing a big share of the growth. While the decades since 1960 coincide with the rise of Silicon Valley and the boom in jobs in Santa Clara County, the pattern of those jobs was a shift from the past. Most new employment took place in emerging office parks and corporate campuses with easy access to freeways and suburban arterials.
Today, three quarters of the region’s jobs are within half a mile of a freeway off-ramp. Less than a quarter are within half a mile of the region’s 88 rail stations (a geography that includes nearly every major downtown in the South and East Bay. Even when including frequent bus service in the analysis, only half of jobs are accessible with transit. Fewer are accessible from transit in leading industries like IT and biotech (35 and 27 percent respectively).14
Maps produced by Mark Shorett for SPUR
Less than half of regional jobs are within a half mile of regional transit and a quarter mile of frequent local transit.
Although only 28% of the region’s office space is within a half mile of rail, most jobs are at most a few miles from rail stations. (Maps produced by Mark Shorett for SPUR)
Yet face-to-face interaction that can occur naturally in denser work settings is increasingly recognized as important for the process of innovation.19 And densities are much greater in traditional downtown areas near transit than in newer less transit-oriented job centers and office parks.
As the Bay Area's embraces transit-oriented development (TOD), it is increasingly clear that TOD needs more jobs near transit, not just homes. Studies show that people are most likely to take transit to work if their job is immediately accessible from transit, even if they live further away from transit.20
Further, we design our transportation systems to meet the peak demand. The “peak” takes place at the commute period in the morning or afternoon. If jobs are scattered and too few people take transit to work, there is pressure to add additional lanes on highways and arterials to accommodate the increased demand. Adding new roadway capacity and lanes is costly and has proven counterproductive. Numerous studies show that increased road capacity leads to more people initially driving on the new lanes which over time results actually in more congestion on the overall system, not less.21
Over the past several decades housing prices have continued to escalate, making it harder for new people to enter the housing market and putting upward pressure on wages. As such, housing costs act as a drag on overall economic growth as employers must pay higher wages to keep employees, even if their productivity does not match the wage levels. The recent reset of housing prices has not resulted in prices being affordable to the average housing seeker in many places. Just 35 percent of Bay Area residents could afford a house priced at the region’s median level at the end of 2012.22
This was not always the case in the Bay Area.
From 1950 to 1980, the region added 1.1 million housing units, or about 40,000 per year. Homes were widely available and affordable to the burgeoning middle class. Then, from 1980 to 2010, growth slowed to about 24,000 units per year.
Job growth also slowed after 1980 even as home prices continued to increase dramatically. Prior to 1980, the region added 50,000 jobs per year. Since 1980, that figure dropped in half.
Quite simply, there is a mismatch between where the homes are built and where the jobs are located. In recent years, housing prices dropped at the region’s edges and in communities that are most supportive of new housing (particularly in Eastern Contra Costa and Solano Counties). In contrast, housing prices in San Francisco and the Peninsula are generally even higher today in these strong job market areas where there was little new supply in housing over many years.
So the issue is not only one of the region not adding enough new homes to support a growing economy, but also the fact that too few homes were built where job growth was strongest. The irony is that the places with the strongest job growth are historically least supportive of significant new housing production.
The one system designed to sort out how much housing each jurisdiction should approve (called the “Regional Housing Needs Allocation” process) is often contentious in local politics. Some communities have voted to leave ABAG, the regional agency that administers it.23 At times, jurisdictions are taken to court for failing to fulfill their commitments under RHNA and State Housing Law, including the City of Pleasanton for having a housing cap and Menlo Park for not having updated its housing element in twenty years.24
Local government reaps more fiscal benefits from job growth than housing production. Many cities within Silicon Valley promote and attract commercial development and at times do not permit new housing in or near job districts. This restricts the market from providing the housing that is demanded.
When one community in Silicon Valley does not add housing to match nearby job growth, the homes do go somewhere. As noted earlier, often this is further away or in the faster growing cities like San Jose.
But even with evidence that higher density residential development brings in significant revenue,25 housing does not provide as much in funding to local government as jobs or retail uses and local residents expect more in local services than do workers. As a result, housing-rich cities like San Jose are more cash-strapped than some of their neighbors. For example, Palo Alto has about two and a half jobs per employed resident while San Jose has 0.85 jobs per employed residents. Yet both cities are a part of the same labor market and essentially one housing market. The fiscal outcome of the location of jobs relative to homes is quite stark.
Sales taxes also reflect divergence among cities. Sales taxes per capita in 2011 were $25 in Redwood City, $102 in Fremont, $130 in Sunnyvale and $250 in Menlo Park. Cities that successfully pursue increasing amounts of retail development – particularly highend retail – capture a larger share of retail sales relative to their neighbors. This approach has been long dubbed “the fiscalization of land use” as cities often make land use decisions to maximize revenues (more retail that brings revenues and less housing that has demand for local services). This approach also fails to acknowledge negative externalities such as the traffic and road impacts of a retail development in one city on a neighboring jurisdiction.
Differences among tax revenues also has a particular impact on education funding since the cities that add housing are also the ones with greater demand for schools. Fees stacked on top of new housing development to pay for such services can also make it more difficult to build housing in the new areas, leading to less overall housing production, a key regional issue.
The Bay Area has an extensive transit system with 3,200 buses, 1,200 rail cars, and 1,200 miles of rail.26 Each day, the region’s transit operators carry 1.4 million trips, compared with 17 million daily automobile trips in the region.
Yet the Bay Area’s transit system is more fragmented than transit systems in similarly sized metropolitan areas around the country. The “system” is really 27 separate and poorly coordinated agencies, leading to inefficient duplication of some services and fragmentation across jurisdictional lines. Of those 27 systems, seven (BART, Muni, Caltrain, SamTrans, AC Transit, Golden Gate and VTA) account for 93 percent of all riders with the largest operator being Muni.
Compared to the transit systems of other metropolitan areas the Bay Area’s largest operator carries a far smaller share of passengers. In other regions with similar yearly ridership, the biggest operator carries upwards of 85 percent of users. The costs per rider of the seven biggest Bay Area operators is nearly double that of similar regions.
This will be an increasingly critical issue given the growing fiscal crisis in transit, with agencies across the country facing quickly increasing capital and operating costs. The Bay Area operators are projected to face a combined $17 billion capital deficit and an $8 billion operating deficit by 2035.30 Some agencies, with sizable and stable sales-tax funding schemes, are better prepared to weather this storm than others, who rely on government transfers or farebox revenues for an outsize portion of their budgets. Every budget cycle, Caltrain in particular is vulnerable to the vagaries of the financial situations of its three voluntarily contributing agencies, which supply about a third of the commuter service’s operating funds.31 The service lacks a dedicated source of revenue such as from sales taxes.
Riders have trouble navigating the region’s fragmented system with uncoordinated schedules, distinct fares. Despite a lot of transit, the fragmentation of the Bay Area’s system makes it much harder for riders to navigate and results in less ridership.
Forty-nine percent of Bay Area commuters cross a county line to get to work,32 but potential long-distance transit commuters face a number of barriers in the Bay Area:
A technology worker’s theoretical transit commute from San Francisco to the SR-237 corridor, the heart of the Silicon Valley, illustrates how critical these problems can be. The fastest such trip can include transfers between four different transit systems. Given the issues outlined above, it is easy to understand why many workers drive alone to work and why technology companies feel the need to provide private commuter shuttles to try to minimize such behavior.
Additional issues rooted in the system’s fragmentation, like the complicated and expensive trip between Caltrain and the San Francisco Airport on BART, add to these issues.
For the Bay Area, climate change will bring rising tides and seas as well as more frequent major storms that will produce significant flooding.
Sea levels are predicted to rise, no matter what we do to curb emissions. Some experts estimate that sea levels will rise 16 inches by 2050 and 55 inches by 2100, while others peg increases at 6 to 9 meters by the end of the century. Measurements from the Golden Gate show that rising waters have already been a trend for 50 to 100 years.
Sea level rise is compounded by a reality of more frequent storms. More frequent storms means additional rains. Given that 40 percent of California’s land drains into the San Francisco Bay, storm floods last longer here than in higher elevation places. With a major storm during high tide, the region’s natural water armaments will not be enough to hold rushing waters away from thousands of homes and jobs as well as major pieces of critical infrastructure.
In short, the 50-year flood could become a yearly event in 2050.
Source: Jeremy Lowe, ESA PWA, Environmental Hydrology (2012)
Sea level rise plus flooding will have an outsize impact on the region, given the low-lying and water-adjacent nature of many Bay Area communities. About 330 square miles of land around the Bay is vulnerable to the rates of sea-level rise outlined above over the next half-century. Dozens of leading Silicon Valley firms – from Facebook to Oracle to Cisco are within this area, along with 270,000 residents. Sea-level rise could directly impact as much as $62 billion in development.
Map produced by GreenInfo Network
It does not even take rising sea levels to put Silicon Valley in danger – some areas are below sea level already. The right kind of earthquake could send a 10-foot water surge across Silicon Valley tomorrow.34 The formations that currently function as the area’s protective levees are simply piles of mud that were designed to separate salt ponds of different salinity levels, not engineered structures designed to provide flood protection. They could all fail in a seismic event, coupling with a tsunami-driven flood of extra water to cause major damage in the area.
Resource-use and development patterns over the last 100 years have made our resilience to natural disasters even more tenuous in many Bay Area communities. Two hundred and forty square miles of landfill rests along the Bay’s shore, land that was “reclaimed” to be just above current, not future, sea levels. And development has encroached on the Bay’s natural tidal marsh barriers, reducing their effectiveness to keep waters out by absorbing the energy from storm surges.
Current regional bodies – BCDC and the California Coastal Commission – do not have sufficient authority to respond to this issue. The areas affected by rising seas are far larger than the jurisdiction of these agencies.
The two key decisions – about funding and development – require new regional governance. A mechanism for resource pooling and funding for coastal protection and managing sea level rise—whether armoring, barriers, elevated, floating or floodable development, living shorelines or managed retreat—is essential to the region’s long-term survival.35 Additionally, there is the need to make tough decisions about what should be built in inundation zones and how it should be built. While some adaptation to sea level rise can be very localized – impacts will vary property by property, depending on how houses are structured and how high quality their construction – systematic solutions which require analysis and ultimately protection on a broader, regional scale.
The Bay Area has responded to big threats with new regional governance in the past. We can do so again. In this section of the Special Analysis, we explore a possible regional future, based on creating new governance systems to respond to the challenges of the day. Each idea is grounded in a governance solution found elsewhere. Here is what we might accomplish:
Regionalism in the Bay Area has a long history of partial successes. Too often we see ourselves more as residents of a single communities or as belonging mostly to a subregion (South Bay, East Bay) and not as part of the whole. What is sometimes missing is the sense of interconnectedness or an understanding that what happens in one part of the region matters in a big way to another part.
This may be changing and therein lies the opportunity.
Silicon Valley is arguably no longer a geography that ends at the San Francisco county border. Important parts of the labor force reside in San Francisco and commute south just as growing firms and important parts of the technology sector’s value chain take root in buildings near transit in San Francisco and parts of the East Bay traditionally home to other industries. The geographic changes further connect us economically.
At the same time, major events like Hurricane Sandy are a wakeup call to leaders worldwide of the vulnerabilities of all coastal regions. Flooding cuts across city borders and can damage lifeline systems like roads, transit, energy and drinking water.
But if we acknowledge that we are more interconnected and need a different governance system, what are the best options going forward? We identified individual actions above as part of a possible future. Ultimately, strengthening our regional governance is more about degrees of regionalism. As a conclusion, we offer the following three options:
To achieve any of these options will require turning more of our local residents into Bay Area citizens who recognize our shared fate and interests. Regionalism is not all or nothing and can involve incremental changes. But only keeping what we have and assuming it will serve us for the future is no longer a viable option. Our needs are more interconnected now. Our governance should reflect that.
The Silicon Valley Index is published jointly by Joint Venture Silicon Valley and Silicon Valley Community Foundation.
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