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Interview: Silicon Valley lawmaker says don’t build, ‘accept limits on growth’

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Eventually people will leave, claims Sunnyvale councilperson, arguing that there’s no real way to drive housing prices down

Trees lining the Murphy Avenue area. Photo by Scott Schiller

Michael Goldman, a Sunnyvale councilperson, appeared at a Cupertino town hall meeting on housing on Sunday, arguing among other things that increased housing density won’t drive prices down. He went on to say that cities like Sunnyvale should encourage big employers to move new jobs elsewhere.

Sunnyvale is the headquarters of such companies as Yahoo!, NetApp, AppliedMicro, and Ariba, just to name a few.

By way of Twitter, TechCrunch writer Kim-Mai Cutler, who attended the town hall, rechristened the event “NIMBY-Con, South Bay” and chided Goldman and other panelists for being out of touch. Goldman, however, insists that real economics support his policies.

We contacted Goldman for his side of the story and to tell us more about Sunnyvale’s growth and future.

Curbed SF: At a debate last year you claimed that people feel ignored by the city council. What do you hear from people now?

Michael Goldman: Well, there’s no unanimity. Basically what I hear is mostly people saying, “Hey, we’re full, I can’t get out of my driveway, there are too many businesses cramming people into offices.”

There is the other side too—people who say growth is great and we’re so lucky to have Apple here. But people I talk to say that, very overwhelmingly, growth has simply become too much and that it doesn’t make any sense.

These are people with MBAs and PhDs, but they’re living in places that are modest. They think, “I did all the right stuff and I got all of this education, I’m not seeing the results. If I were living in Raleigh or Portland I’d have a mansion.” And they see it as, “Why here? What did we do to deserve this?”

It’s here because Silicon Valley is a major economic center, right? Even if we got rid of all of those jobs, wouldn’t that be trading one set of problems for another?

What people are saying is that it’s nice we have jobs here, but this is not a great place to put them. If Apple is going to build a world-class headquarters, put it where the people can get to it. Highway 280 is a pit. You can put all the buses in you want, but people aren’t going to want to live on those bus routes. You’re soiling your own mess.

Meanwhile, Chappie Jones from San Jose was at that same town hall. He would love to have [more job growth], he really would. San Jose is short on money and they really would like more business. They don’t understand why they aren’t getting the big office expansions that Mountain View and Cupertino are getting.

And the building people are always saying build, build, build. When jobs come they say build more housing, when jobs go away they say build more offices to get jobs back. But this is a bubble we’re in—a very big one—and it will pass. At one point Detroit was the place to be. I’ve been to Detroit now, it was once a very beautiful, busy city.

You know if we tell people, “Just wait it out, someday we’ll be like Detroit,” they probably won’t walk away too happy with that.

All I’m saying is, this too will pass. It’ll eventually become so expensive here that it can’t grow. New York City hit its peak in the 1950s, and it’s been going through good times and bad times ever since with around 8 million people. Nothing grows forever.

Photo by Cool Caesar

On Sunday you cited examples like Lower Manhattan and Downtown LA to argue that housing gets more expensive as cities become more dense. But a lot of things make Lower Manhattan different from Sunnyvale than just density.

You’re right, it’s not the only thing. I was trying to simplify and I oversimplified. But the land is the expensive part. When you build up you get either really crowded pleasant places or just really expensive places.

There was a mobile home park here that closed and I said maybe we could buy the land and make it low-income housing. But they told me each one of these little spots is $800,000. And it was a run-down place. Add high income people there and it’s going to get worse.

What’s the solution? The competing point of view says build more housing and prices will come down. If we all decided together that won’t work, what should we then do instead?

You’ve got to remember, everything is tied together. If you want to cut the cost of housing in half, then every house is suddenly going to lose 50 percent of its market value. And then all the builders who took out loans to build those apartments are going to turn the keys over the banks and go out of business. No one really wants to see prices go down.

But what if we did want that? What if we said we want to cut prices in half and we don’t care if it’s bad for everything else because we’re riled up today. What should we do? Start a depression?

That would do it.

Oh.

And the last time that happened was not so long ago, back in 2007 it all dropped like a rock.

So you’re saying we actually can’t drive prices down, we can just wait until it happens naturally and hopefully contain the fallout of whatever caused it?

We can’t make them go down, but we can make them not go up. They can go sideways. And to do that companies would have to say, it’s awfully hard to hire in the Bay Area, let’s expand to Portland or Denver or Austin. And that’s what’s happening.

You make the academic argument for this on your blog, and it may make sense the way you explain it. But if we called up someone who favors more density they could cite their own experts and make that sound sensible too.

You won’t hear any economist who has done anything in urban economics say building more makes prices go down.

NetApp’s headquarters in Sunnyvale.
Photo via Wikicommons

Really, nobody?

No degreed academic in urban economics, no. And when you find someone who claims to be an expert who says that just ask them, show me where and when building higher and denser made rents go down. They will not find one example.

And people are going to end up doing what’s best for them, which is what Adam Smith called the invisible hand. Like, for example, those people when the mobile home park closed down. I felt awful for them. They showed up in tears to the city council meeting saying they can’t afford to live here. But all I could think was, then why are you here? And when enough people leave the pressure will go down.

At Sunday’s town hall, you said we have to accept that there are limits on growth. But how do we know when we’ve hit a limit?

We could build higher, no question. But if we put 2.3 million people here, how are we going to get them in and out? If this was Star Trek and you could just beam anywhere then you could live anywhere, which tells us we’ve got a transportation problem rather than a housing problem.

Talk all you want about automated cars and traffic circles, at some point you cannot fit in one more car. So where’s the limit? I wish I knew. I’ve asked city planners. I’m afraid we’ll find out the hard way.

I suspect if we told anyone who had to move from their home, “You can stay but your commute will take 25 minutes longer,” a lot of them would take that deal.

Yahoo!’s headquarters.
Photo by Wonderlane

Looking at transit, what we find is that the average person would like about a 15-minute commute. If you ask them what they’re willing to put up with, they say half an hour or—

But what if you asked them what they’re willing to put up with if the alternative is eviction and having to leave the city. Wouldn’t that change their answer?

People will have different responses. It depends on the commute, if it’s driving in stop-and-go traffic versus sitting on BART reading the paper. But public transit is not the answer here; VTA has a fare recovery of 10 percent. I asked them, can we make it higher, and they said [our streets] have these little curves and cul-de-sacs to slow down traffic. Short of bulldozing all that and putting in a grid, more buses won’t work. Meanwhile, have you seen the 280 at rush hour? It’s a nightmare.