Housing Element Supporting Details

Updated March 13, 2009

 

1. Portland mixed use TOD produces half the VMT

 

From a presentation by GB Arrington of PB Placemaking on the report: Transit Cooperative Research Program (US National Academy of Sciences research) Report #102, “How to Plan & Design a High Performance TOD (transit oriented development).”

 

At 50 DU/acre (dwelling units per acre) density, auto and non-auto trips are about EQUAL. This represents 3 to 5 story development specifically in Portland with "sensible," locally-serving first floor retail in a walkable, new urbanist TOD with a very high level of transit service. The big point here: everyone is walking and de-generating non-work trips. Transit mode share is small compared to walking. If you build a big TOD correctly, everyone walks around. What makes a good TOD? "The convenience to walk to a pint of milk."

 

At 3-story mixed use, driving is less than half of typical U.S.: (mode share for all trips (errands and commute) is the % shown for auto, walk, transit, and bike)

Land Use Type

% Auto

% Walk

% Transit

% Bike

VMT per capita per day

Autos per HH

Good transit + mixed use

58.1

27.0

11.5

1.9

9.80

0.93

Good transit only

74.4

15.2

7.9

1.4

13.28

1.5

Rest of Portland Region

87.3

6.1

1.2

0.8

21.79

1.93

Parsons Brinckerhoff. 2002. Factors for Success in California’s Transit-Oriented Development: http://www.dot.ca.gov/hq/MassTrans/tod.htm, Page 24, Table 2.1: 1994 Metro Travel Behavior Survey Results for Portland, Mulnomah County, Oregon

 

2. PAUSD Enrollment

 

The PAUSD school district has grown from about 7,500 students in 1990 to about 11,000 in 2007. 11,000 is still very low compared to PAUSD’s 1967 peak of 15,575 students. During the 1990-2007 period, Palo Alto added about 2,000 new housing units. If we use an unrealistically high ratio of .19 students/unit, the new housing would have added 380 new students or roughly 11% of the new students. In short, a surprisingly large portion of new students are coming from families displacing empty nesters in single family home neighborhoods.

 

3. Students per dwelling unit (DU)

 

Adding new homes does not bankrupt the school budget.  Adding new homes with zero kids (via senior housing or studio apartments) is "best" for the school budget, but new condos and townhomes do not generate very many kids per DU. Because of the high property taxes paid by new Palo Alto condo owners, combined with the few new kids entering PAUSD from those condos, new condo development projects provide a surplus to PAUSD budget.    

"Low-driving housing" includes mixed use (close to retail) TOD (transit oriented development – close to Caltrain) and senior housing (retirees do not commute). I characterize high driving housing as “undesirable” and low driving housing as “desirable,” based on climate and traffic concerns. “Dense” TOD housing (stacked units and no backyards) has low student "yields." Hence 800 High is quite low on kids. High-driving Arbor Real (Rickey's) produces almost the same number of students as a single family home. I expect "affordable by design" market rate moderate income housing ($280K-$500K per condo) will generate fewer students than 800 High, because condo size is smaller (but no data is available).

Definitions: “Units” is the number of homes in the project. “BMR” - below market rate (affordable) housing. “mkt” – market rate housing. “assisted” means assisted living. “JCC” is the Taube Koret Campus for Jewish Life at San Antonio and Charleston. “PAMF” is the old Palo Alto Medical Clinic site on Homer. “Yield” is the number of students per home. The projects listed in italics are planned, but not occupied – the city’s demographer forecasts students for these future homes. "SRO" - single room occupancy.

Desirable low-driving housing      
Name Location Units Students Yield = kids/units
Stanford West (incl 10% BMR) Stanford 628 145 0.23
800 High - mkt Dntn 50 4 0.08
800 High - BMR Dntn 10 5 0.50
Summerhill Condos - mkt Dntn/PAMF 66 1 0.02
Oak Ct. Apts - 100% BMR Dntn/PAMF 53 46 0.87
Opp. Center - 100% BMR Dntn 18 17 0.94
Opp. Center - SRO 100% BMR Dntn 71 0 0.00
Hyatt Senior Hsng 600 Sand Hill 454 0 0.00
Sunrise Senior Living 2701 El Cam 81 0 0.00
Alma / Ole's - 100% BMR  Dntn 49 35 0.71
Alma / Ole's - senior Dntn 49 0 0.00
  totals   1529 253 0.17

 

Undesirable, high-driving housing      
Name Location Units Students Yield = kids/units
Arbor Real Rickey's 138 126 0.91
Vantage 940 E. Meadow 75 44 0.59
Echelon 1101 E. Meadow 75 50 0.67
Sterling Park 3200 W. Bayshore 96 60 0.63
Redwood Gate Elks Lodge 45 41 0.91
Altaire (JCC) 901 San Antonio 103 52 0.50
  532 373 0.70

 

Data source: Jan '09 report from Palo Alto's demographer http://www.cities21.org/DemographersReportPAUSDJan2009.pdf . Pages 10-18 has the students per housing unit info. The demographers' report lists 138 units occupied for Arbor Real and 56 units occupied for Vantage. The current yields were extrapolated to the total number of housing units to be built. The demographer lists Echelon as having a yield of 0.25 students, but it seems more likely that it will have more typical townhome yield of 0.67, so I've provided 0.67 for the yield. The Echelon Townhomes have 2 or 3 bedrooms, in floor plans from 1,100 to 1,600 square feet. Vantage has similar floorplans (1218 to 1605 sq. ft. with 2 to 3 Bedrooms).

 

Two projects were not categorized. These are the 56 housing unit Fabian Senior (100% BMR at JCC) and the 193 housing unit Moldaw Senior - Assisted Living at 899 Charleston. These are both located in an auto-centered area. These two projects will not generate commute trips, but have generate errand/activity trips. Compared to the average US citizen, these could be classified as low-driving (VMT) homes. These units will have 0 students.

 

Likewise, a Bay Area Economics study for Cupertino also shows higher density produces fewer students. 

http://www.cupertino.org/downloads/Pdf/fiscal_analysis_add1.pdf

Table 1: Elementary and Middle School Student Density Analysis

Dwelling units/net acre

3.8

4.9

12.4

22.9

36.8

71.8

Students/Unit

0.49

0.35

0.61

0.13

0.24

0.18

71.8 DU/acre development has a large number of 1-bedroom apartments, so should obviously have fewer students.    

Hence, highrise and midrise TOD condos provide a net fiscal benefit to PAUSD and to city finances.  It could be argued that for a fairer allocation of school impact, the school impact fees charged for new high-density residential should be LOWERED. 

Affordable housing units in new TOD condo developments produce more school kids per DU (dwelling unit) than market rate units. 

 

4. PAUSD School Funding

 

PAUSD Basic Aid School District - See PAUSD Budget Book 2007-2008, http://www.pausd.org/community/about/budget_book.shtml pages 5-14.

  • CA state “Revenue Limit” school district funding per student is about $8,300 per student .

  • "Basic Aid" funding allows affluent cities with high property taxes to fund each student at a higher level.  Palo Alto and Menlo Park are Basic Aid.  There are about 70 Basic Aid school districts in CA, out of 1,000 CA school districts. The rest of the districts use "Revenue Limit."

    • Steve Levy: "Palo Alto raises high amounts of local revenue per student partly as a result of having a strong business property tax base and partly as a result of a fluke in the school funding legislation after Prop 13 passed. As a result we can spend more per student that most other districts, including many with high average incomes but little other property tax base. We are allowed to keep the extra money despite the constitutional obligation in California to provide roughly equal funding for all students regardless of the wealth of local residents. There have been past attempts to repeal this advantage to the few Basic Aid districts including recommendations to do so by the state's independent Legislative Analyst's Office."  

    • The Basic Aid scheme allows affluent suburbs to maintain higher levels of spending per student. This higher spending produces higher test scores. Higher test scores result in dramatically higher housing prices. High housing prices exacerbates the problem of providing affordable housing.

  • PAUSD basic aid funding is about $12,315 per student.  There are some elite school districts in other states that fund up to $21,000 per student.

  • PAUSD revenue sources consist of: (budget book, pg 20)

    • Property tax: 66.2%. Office and retail properties pay this, it's not just homeowners.

    • State income: 12.9%. The current state budget crisis will probably reduce this.

    • 2005 Measure A $493 parcel tax - 6.5%. A 6-year tax that would have to be renewed in the future. Seniors are exempted. Office and retail properties pay this tax, it's not just homeowners.

    • Lease Revenue: 5.9%. If school enrollment increases, some leased properties might have to turn back into public schools.

    • Other sources: 5.4%. This item is not explained, but may include PIE (Partners In Education) donations by parents.

    • Federal income: 3.1%

 

Not all of property tax goes to the schools. Statewide, about 40 cents of every property tax dollar is allocated to school districts, 25 cents to the County, 20 cents to the City and the balance to miscellaneous districts. One report has 46 cents going to PAUSD in Palo Alto.

 

To fund school capital improvements, there are new development school impact fees, $2.63 per sf for residential, $0.42 per sf for commercial. Again, the office and retail lends a helping hand to the school district. 

 

5. Jobs/Housing & smart growth

 

Stanford West Apartments are the lowest-traffic example of providing housing for local workers.

Part of Governor Schwarzenegger's housing vision encompasses balancing jobs/housing: "each community should house its own." This specifically means that the Governor wants Palo Alto to house teachers, gardeners, and baristas who work here.

Jeffrey Tumlin, Principal at Nelson Nygaard Associates, says, "The most cost-effective traffic reduction... is to provide housing for workers. Matching housing and jobs creates a profit. This is a traffic reduction measure with a 'negative cost'." Jeffrey made this comment in the context of his previous work at Stanford’s Transportation Department.

 

Says Councilmember Peter Drekmeier in the large June 21, 2006 Weekly climate change article, "PROXIMITY is more important than the efficiency of a vehicle. Our biggest impact on climate change is driving."

 

Says Councilmember Pat Burt in the Feb 20, 2009 (pg 3) Weekly, "We don't live on islands." We have to consider "external impacts."


Carl Guardino and SVLG are sympathetic: "An increasing number of Silicon Valley workers have been forced to live farther and farther away from their jobs, with thousands having to commute two to three hours a day, one way, to get to work. This underlines the importance of creating housing in the Silicon Valley not only to improve workers' quality of life but also to cut down on traffic and air pollution" - Carl Guardino, quoted in Portsmouth Herald, March 2001.

 

An EPA study analyzed the 17 largest suburban Bay Area job centers, encompassing 590,000 jobs. These represent the gems of Bay Area innovation, but they are also the source of jobs/housing imbalance and long commutes. Palo Alto's Stanford Research Park (SRP) is one such job center. SRP features some of the highest income workers. SRP has had above average success in promoting commute alternatives, though SRP still has very high SOV commute mode share: 79.6% SOV, 11.7% rideshare, 2.0% bus, 0.9% rail, 2.8% bike/ped. 16 out of 17 of the office parks have SOV mode share between 74% and 84.8%. SRP has some of the longest commutes, with a one way "crow flies" median commute distance of 14 miles (roughly 18.2 driving miles). 18.2 driving miles really stands out, compared to commute surveys reporting median Santa Clara County commute distance of about 14 driving miles. The data source for this study, Year 2000 Census Transportation Planning Package, provides the largest sample size and the most reliable sample. This may point out that the high income workers in job centers live farther away than typical suburban workers. Out of all of the job centers, the one mild success that stands out is Stanford University. VTA defines this job center as Stanford campus, hospital, shopping center, and downtown Palo Alto. 16.8% of commuters bike or walk to work. The other 16 job centers clump between 4.9% and 0.6% bike/ped. Once again, the success of Stanford's programs to put housing by jobs is shown as a singular success in the high-mileage world of suburban job centers. For more on this study, please see: http://www.cities21.org/BABPC/ .

 

Oct 21, 2007. "Technology alone won't tame climate-change juggernaut," Tom Steinbach, Mike Howe (Greenbelt Alliance).  SF Chronicle.  Makes the point that reducing travel is more important than driving a Prius. http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2007/10/21/INMQSQD8A.DTL .

 

Oct 26, 2007. "A Nation of NIMBYs," http://www.planetizen.com/node/28003 "Recent polls show that anti-development sentiment is stronger than ever, with 75 percent of Americans opposing new development in their communities. Opposition to development has become a growth industry. First came the so-called NIMBYs (for "not in my backyard"), who are usually homeowners that oppose sprawling mega-malls and factories and plants near their residences. Now they've been joined by two other acronyms, according to Patrick Fox, president of Saint Consulting Group, which helps steer developers through the approval process. They are BANANAs ("build absolutely nothing anywhere near anyone") and CAVE people ("citizens against virtually everything").  According to a new poll by Saint of a thousand people nationwide, 78 percent of Americans oppose any new development in their communities, up from 73 percent last year. One in four respondents said they actually took a part in some action against a project."

 

Oct 28, 2007. "It isn't easy being green," PA Daily News editorial: http://www.paloaltodailynews.com/article/2007-10-28-10-28-07-edit.  "While it's in vogue for local officials to talk about how important it is to go green, it seems a lot harder to back that up when faced with politically perilous high-density housing projects. Despite their unpopularity, such projects can address the long Bay Area work commutes, which contribute to global warming. Both the Palo Alto and Menlo Park city councils struggled with this version of the inconvenient truth recently, a reminder that we still face difficult choices if we truly want to protect our environment. Promoting solar energy and hybrid vehicles is not enough when people are commuting from far-flung places to work here. They are not all going to be able to ride Caltrain or drive electric cars. It's hardly fair to expect other cities to continue to house our workers and it's hard to argue that the community is truly green when we make it next to impossible for many of our workers to live here. The answer is higher density housing near major transit corridors and commercial areas where people shop and work."

 

6. Broken Housing Market

 

Drawbridge Zoning:

A summary of a paper is provided by former Berkeley Professor Martin Wachs: "Jonathan Levine’s research, for example, shows that more conservative Americans often assert that it is 'market forces' and 'personal preferences' that lead us to prefer low-density single-family homes in areas characterized by single land uses. He disagrees, pointing out that often market forces and household preferences actually would lead to higher densities and communities consisting to a far greater extent of mixed land uses except for the fact that they are excluded by zoning and subdivision regulations prohibiting those land uses and requiring the traditional American suburban land use patterns. Those regulations were in many cases put into place decades ago to keep residences away from heavy industries. Today they inhibit rather than enhance our ability to achieve more current versions of appropriate land use mixes that support sustainability." Reference: Levine, J., A. Inam, and G.-W. Torng. 2005. A Choice-Based Rationale for Land Use and Transportation Alternatives: Evidence from Boston and Atlanta. Journal of Planning Education and Research, Vol. 24, No. 3, pp. 317–330. See also Harvard Professor Edward Glaeser’s Zoning’s Steep Price.

 

Mortgage Interest Deduction (very popular but harms the climate):

By subsidizing single family homeownership, the Mortgage Deduction encourages homebuyers to buy a bigger house than they normally would. NY Times writer David Brooks (from his 2004 book, On Paradise Drive) finds that the average home square footage per American is 770 square feet. Australia comes in second at 550 square feet, but the rest of the developed world requires far less square footage. Japanese take the least space, 136 square feet. The Mortgage Deduction also creates artificially high demand for homeownership. Developed countries without such a deduction have a much higher percentage of renters. 

 

Proposition 13:

Proposition 13 is wildly popular, but very distorting to the housing market. Without Prop 13, my dad's (midtown) property taxes would have gone way up, and he and many others would have been priced out of PA homes as property values increased. Proposition 13 creates an illiquid real-estate market. Homeowners are incentivized to hold onto their homes for longer duration that would naturally occur, because the longer the home is held, the lower the property taxes are in comparison to other people. Further, with Prop 13, "economically rational" homeowners, acting in their own self-interest, will fight new proposed housing in their city. Prop 13 motivates such rational homeowners to restrict housing supply to increase the asset value of their homes while they do not receive a proportional increase in their property taxes.

 

Without the distortion of Prop 13, existing residents would not have been motivated to restrict housing supply in order to better their financial situation at the expense of new residents. It's a bit hypothetical to think through what PA would be like without Prop 13, but there would probably have been lobbying for higher density (lower cost) PA ownership housing for folks to "move down to." My opinion is that PA's drawbridge would have been lowered in a world without Prop 13, resulting in a Palo Alto that is more economically and racially diverse. Warren Buffet made an accurate (and unpopular) comment early in the Schwarzenegger Gubernatorial campaign that California residential property taxes are unfair because of Prop 13.

 

From the Palo Alto Weekly's Town Square chat board by an anonymous poster: "Prop. 13 is a 'subsidy'... folks may not like this term but when you live in equivalent properties and your neighbor pays 15X what you pay...one person is subsidizing the other. Just because your taxes go up 2%/yr does not mean you're paying your fair share. Believe me I don't believe in tax and spend...but I do believe in more equitable distribution of the tax burden. It's not just the pre-1978 homeowners who are benefiting from Prop. 13...but anyone who has seen their property value skyrocket. My neighbor bought 12 years ago and pays 1/3 what I do. And don't say I should be happy 30 years from now...that I should be happy shifting the burden to the next generation like social security does." 

 

Subprime Mortgage Crisis:

The subprime mortgage crisis is an example of distorting, poor regulation. The policies and lax oversight leading to the crisis encouraged vast overbuilding of single family homes that an efficient market could not support.

 

 

Negative Externalities:

  • If the negative economic externalities of buying a home with a really long commute were priced according to true cost, then there would be less constant outward expansion of human settlement patterns, so less sprawl.

  • As human settlements continue to expand on earth, gobbling up more and more land, agricultural land is transformed into housing, and wildlife habitat is transformed into agricultural land. The negative economic externalities of this outward expansion include loss of wildlife habitat, threats to water quality in watersheds, species extermination, and loss of biodiversity. Drawbridge zoning causes sprawl and sprawl causes human settlements to expand. If the negative economic externalities of human settlement expansion were priced according to true cost, then there would be less sprawl. One popular way to understand pro-sprawl arguments is that such arguments usually assume the earth has only one species: humans.  When the needs of other species are considered, sprawl is much harder to justify. 

 

7. Taxonomy of Housing Project Types, Impact, and Feasibility (this table is very preliminary)

 

If this project was to be built in 2009, what would the impact be?    
  Benefits PAUSD Benefits city budget Will developers build it? Meets current zoning, pkng ratio, FAR, density, fire code, etc Helps regional CO2 goal Project description (should include #DUs, sf, affordable %, etc
800 High St. y y y y y 3 story TOD condos, 15% affordable
JCC  y y y y y  
801 Alma (Ole's)       y y  
SPUR 65' y y y n y condos, 60% mkt rate, 40% moderate (133% AMI)
Zibbibo as SPUR 65' y y y n y  
250 sf $279K  y y y n y sardine can condos in SF
             
Generic Apt Bldg ? ? n y y non-luxury apts are 100% affordable
Alma Place y n n y y 100% affordable
Opportunity Center y? n n ? y  
Tree House            
Oak Court            
             
Elks Club y y y y slightly  
Rickey's y y y y slightly  
East Meadow y y y y slightly  

8. Actionable Housing Element Implementation Notes

Given an adopted housing element with a target mix of market rate, moderate income, low income, and very low income housing, how does a city ensure that this planned housing mix turns into reality? Most Bay Area cities adopt housing elements with a prescribed housing mix, but only a small portion of the affordable housing target is produced. Once a parcel is upzoned, greedy, capitalism-loving for-profit developers can often muscle out affordable developers to buy the parcel and produce luxury housing.

It is difficult for cities to set quotas on the number, affordability, and types of homes built, so it is not easy to ensure that the target mix is produced. It is difficult for a city to change a parcel's zoning to dictate exactly what gets built there. Setting a city-wide quota of "X market rate senior homes" is not easy to do legally, there are "Fair Housing Act" issues involved. A city may be able to specify the size of housing units, so it may be possible for a city to guide development into innovative new housing products, such as 250 square foot sardine can "affordable by size" condos.

Cities help produce affordable housing by working closely with affordable housing developers. Cities that invest considerable staff time expense towards producing affordable housing produce more affordable housing than other cities.  City staff often works with affordable developers to help arrange project financing, through Community Development Block Grants (CDBG), funding from 15% inclusionary zoning, etc. Cities with strong political constituencies for affordable housing produce more affordable housing than other cities. In Palo Alto, the clout of the advocates that helped bring about the Opportunity Center was unusual. 

There are a two strategies for Palo Alto to control the housing mix and most closely meet the RHNA affordability targets. :

A) A city may buy up parcels or obtain development control over parcels (by buying an "option" to purchase the parcel at a later date for a set price). Once such control is obtained, then a city may a) upzone the parcel to allow for higher density development, b) issue a Request for Proposals to developers to obtain exactly the mix of housing units that the city desires for that parcel. With such control, a city could very prescriptively transform an entire city block such as Zibbibo or Nut House. Within such a process, it would be helpful for the city to develop a Specific Plan for the area with a Master EIR (SB375 streamlines CEQA EIR for TOD projects with 200 or more DUs and exempts smaller projects). This serves to expedite development approvals. This strategy takes Council leadership. The city funds such advance planning efforts and then is paid back at a later time by developers who pass the cost on to new residents.   

If Palo Alto had a track record of enthusiastically embracing denser TOD housing, then developers would be willing to quietly obtain options on parcels on the speculative notion of proposing upzoning to create such housing. Palo Alto does not have such a track record. "You'd have to have a big legal war chest. It's not worth it." - anonymous developer.

B) A city may develop a Specific Plan with a Master EIR (streamlined by SB375) to encapsulate new, higher-density TOD housing. With this strategy, the city bears the brunt of the neighborhood opposition. This saves developers time and money. The Palo Alto public process tends to wear down developers who prefer to work in cities with less vocal opposition. Further, by the city leading the process, developer risk is lessened. (There is less chance of community uproar downsizing a project. There is less chance of time-consuming neighborhood group lawsuits.) Once a clear path to developing a project is created, then developers are more likely to step in. The challenge of keeping greedy for-profit developers out at this point still exists. The city may regulate the size of housing units, and small units by for-profit developers could still reach the moderate income market.

Once a parcel is upzoned by the city, the landowners can reap a windfall by selling the land, harming the affordability of resulting residential development. As an antidote to this problem, developers may offer the landowners an "owner participation agreement," where current landowners and developers partner in bringing about a successful project.