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Woltering-PAPER

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Woltering-PAPER

  1. 1. 1 David  Woltering’s  Abstract  for  Paper to be delivered at 53rd International Making Cities Livable Conference Caring For Our Common Home: Sustainable, Just Cities & Settlements Pontificia Universita Urbaniana Rome, Italy June 13-17, 2016 “Explosive  Economic Growth in the San Francisco Bay Area has Created Significant Job Growth and Opportunity, but at what Cost? How can Elected Officials, their Staffs, and Community Members Manage this Growth to Maintain and Promote Healthy, Sustainable, and Equitable  Communities?”,  David  Woltering,  AICP,  MPA,   Community Development Director, City of San Bruno Abstract: This paper examines the extraordinary economic growth the San Francisco Bay Area has experienced since 2010 and discusses challenges associated with this growth. The paper concludes with a description of specific actions, measures, and/or programs local communities are undertaking or could undertake to help address the challenges and better manage this growth toward maintaining and/or promoting healthy, sustainable, and equitable communities. The paper not only describes the San Francisco Bay Area growth phenomenon and some of its challenges, but offers first-hand experience and perspectives from a local community trying to address these challenges. The San Francisco Bay Area includes nine counties and 101 cities, including the City and County  of  San  Francisco  and  “Silicon  Valley.”    The  region  is  well  known  for  being  a  world   leader in technological innovation and entrepreneurship. Since 2010, the Association of Bay Area Governments (ABAG) indicates that within the region approximately 307,000 new jobs (2010-2013) (and approximately 600,000 by 2016) were created; 270,000 new residents (2010-2014) (and approximately 300,000 by 2016) were added; yet only an estimated 40,000 (2010-2014) (and approximately 60,000 by 2016) new housing units constructed. While the region is clearly experiencing an economic boom, there are many challenges including a significant shortage of housing, resulting in skyrocketing housing costs; displacement of tenants; and extremely long commutes and traffic congestion. Regional agencies and local governments are considering and implementing various measures and programs to better link jobs, housing, and transit as well as to increase the production of housing for all economic sectors to address these challenges. The paper describes and suggests actions, measures and programs to help address the challenges.
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  3. 3. 3 “Explosive  Economic  Growth  in  the  San  Francisco Bay Area has Created Significant Job Growth  and  Opportunity,  but  at  what  Cost?” By: David Woltering, AICP, MPA 53rd International Making Cities Livable Conference on Caring for Our Common Home: Sustainable, Just Cities & Settlements Rome, Italy, June 13-17, 2016 The San Francisco Bay Area and its innovation hub “Silicon  Valley”  have  emerged  from  the   Great Recession of 2007-2009 into a period of explosive economic growth with significant opportunities and benefits for some, but not without some serious costs and challenges for others. In fact, these costs and challenges are so significant that many would say the San Francisco Bay Area and Silicon Valley are in crisis! These challenges range from a substantially worsened housing shortage and skyrocketing housing costs resulting in displacements of people from their homes to periods of near gridlock traffic congestion, and to a growing income and equity disparity among those living and working in the region. The San Francisco Bay Area and Silicon Valley are well known as a hub of creativity, innovation and entrepreneurship. These attributes have largely been associated with commercializing technological advancements for financial success. Examples over time include developing transmission tubes and transistors to create and forward radio communication; developing silicon chips and microprocessors to create personal computers and a broad array of consumer electronic devices; and developing new networking and business platforms to create social media applications such as Facebook and YouTube and sharing economy business models like Uber car share. The region is home to these and hundreds of other technology, social media, and sharing economy businesses including such well-known firms as Apple, Cisco Systems, eBay, Genentech, Google, Intel, and Netflix. These attributes of creativity, innovation and entrepreneurship used widely in the region to generate significant commercial success and prosperity for some for decades, need to be used now to address the significant social and economic challenges and human hardship within the region and help to achieve and maintain a San Francisco Bay Area and Silicon Valley that holistically is a healthy, sustainable, and just place for all to live and work. Moreover, without the broader focus of these attributes to address the social and economic hardships being experienced in the region, the current economic boom will not be sustainable. The focus of this paper addresses a primary social and economic challenge facing the San Francisco Bay Area and Silicon Valley region at this time and for the foreseeable future - the challenge of providing both an adequate supply of housing as well as housing that fits the affordability needs of the various household income groups within the region. Further, this paper describes various aspects of the current explosive economic growth and related opportunities; some of the impacts and challenges of this growth, focusing on housing impacts and challenges; as well as communicate what some local and regional agencies are or could be doing to address these impacts and challenges. The paper concludes with some lessons learned and an important call to action.
  4. 4. 4 San Francisco Bay Area The San Francisco Bay Area (California) includes nine counties and 101 cities, including the City and County of San Francisco and “Silicon  Valley.” “The counties and 2010 populations for each within the San Francisco Bay Area are as follows:  Alameda (1,510,270)  Contra Costa (1,049,030)  Marin (252,410)  Napa (136,480)  San Francisco (805,240)  San Mateo (718,450)  Santa Clara (1,781,640)  Solano (413,340)  Sonoma (483,880) The Nine County San Francisco Bay Area The land area of the Bay Area is approximately 4.4 million acres (1.78 million hectares) (excluding bay waters and large lakes). As of 2010, approximately 17.8 percent of this area is developed with urban uses. The amount of land developed in each county varies from a low of five percent in Napa County to a high of 80 percent in San Francisco County. Approximately 28 percent of the region is identified as protected open space. In 2010, the estimated population of the Bay Area was 7.15 million residents (current estimate is about 7.4 million). The regional employment for all nine counties combined was 3,385,300 jobs in 2010.”1 “The regional supply of housing for all nine counties was a total of 2,750,000 units in 2010 (multifamily: 717,000; attached/townhouse: 508,000; and detached/single-family: 1,525,000);
  5. 5. 5 the projected housing demand from 2010 to 2040 in the region is 489,100 (multifamily); 380,000 (attached/townhouse); and -169,100 (detached/single family) for a net 2010-2040 demand of an additional  700,000  units.”2 The projected demand for housing is anticipating a shift to multifamily and attached housing from single-family detached housing as the region is expected to absorb another 2 million in population generally into its urban centers by 2040. Silicon Valley The Heart of Silicon Valley The San Francisco Bay Area includes the hub of creativity, innovation and entrepreneurship - “Silicon  Valley.”  Silicon Valley is well known for advancements in communications, computer technology, electronics, the internet, and social media. The heart of Silicon Valley is often associated with the cities and areas of and between Palo Alto and San Jose within Santa Clara County. The technology firms and support vendors of Silicon Valley continue to grow and spread so the “Valley” now extends well beyond this core area of Palo Alto to San Jose to nearby Alameda County, San Mateo County, San Francisco County, and beyond. This transformation of Santa Clara Valley to high technology firms was relatively recent. As described by Piero Scaruffi in A History of Silicon Valley 1900—2015, “[f]rom  the  late  1800’s  to   about 1960 the  area  between  Palo  Alto  and  San  Jose  was  known  as  the  “Valley  of  Heart’s   Delight.”    It  was  an  extremely  fertile  agricultural  area,  with  an  endless  expanse  of  flowering  fruit   trees. The introduction of the refrigerated railroad car  in  the  1860’s  made  shipping  of  fruits  and  
  6. 6. 6 vegetables outside of the area possible and was instrumental in the development and expansion of the fruit packing industry in the area. Approximately 39 fruit packing houses and canneries, including the San Jose Fruit Packing Company, developed in this valley and prospered until about 1960. At about that time, the transformation of the Valley to what it is today, a technology hub, began to take hold.”3 “The  transformation  from  the  “Valley  of  the  Heart’s  Delight”  to  “Silicon  Valley”  resulted  from   the  coming  together  of  a  “do  it  yourself’  philosophy of the technology hobbyist, great engineering schools (e.g., Stanford University), the transfer of technology of information from academia to industry, massive public investment, and massive private investment.”4 The formal birth of Silicon Valley was acknowledged in 1971 in a series of articles titled,  “Silicon  Valley,   U.S.A.,” published in Electronic News by Don Hoefler.5 Piero Scaruffi describes key mottos that  form  the  culture  of  Silicon  Valley  as  “question  authority,”  “think  different,”  and  “change  the   world.”6 San Jose, California (Silicon Valley); source: Miyamoto International A brief overview of the history of Silicon Valley which emphasizes the forces that have come together to make the Valley what it is today is provided in the Appendix of this paper. This brief history  is  given  by  way  of  a  Timeline  excerpted  from  Piero  Scaruffi’s  A History of Silicon Valley 1900-2015.7
  7. 7. 7 Silicon Valley today draws from the founding of Stanford University in 1891 and initial technology start-ups like Hewlett-Packard in 1938-39, Shockley Transistor Corporation in 1956, Fairchild Semiconductor in 1957, and Intel in 1968. Its history is a path of innovation and tremendous job and wealth creation over the past more than 100 years, with significant academic contributions from nearby Stanford University. Enrico Moretti, in his recent book titled, The New Geography of Jobs, states  that  “Silicon  Valley   has remained the innovation capital of the world, and it continues to lead all other metropolitan regions in the breadth and scope of its innovative activity. It accounts for more than a third of all venture capital investment world-wide, significantly more than twenty years ago. Every year hundreds of smart, ambitious innovators move their startups from Europe, Israel, and Asia to the Silicon  Valley.    The  Valley  keeps  its  position  as  the  world’s number-one innovation hub not because those who are born there are smarter than anyone else but because of its unparalleled power  to  attract  great  ideas  and  great  talent  from  elsewhere.”8 Moretti states further  in  his  book  that  “in the world of innovation, productivity and creativity can outweigh labor and real estate costs”. And, more specifically, he refers to three competitive advantages that the San Francisco Bay Area has that has led to its success. He refers to these as the “…forces of agglomeration: thick labor markets (that is, places where there is a good choice of skilled workers trained in a specific field), the presence of specialized service providers, and, most important, knowledge spillovers” (knowledge that is synergistically shared and beneficial because of proximity). He states further that these forces ultimately determine the location of innovative  workers  and  companies  and  therefore  shape  the  future  of  entire  communities.”9 The presence of excellent academic institutions, such as Stanford University, the University of California at Berkeley, and the supporting State and Community College institutions in the Bay Area, support the forces of agglomeration. Moretti acknowledges the critical importance of higher levels of education as well as venture capital investment to the success of innovation hubs. Today, Silicon Valley, is the home of the worldwide leaders in semiconductors (Intel); personal computers (Apple Inc.); and social media (Facebook); as well as countless other firms demonstrating innovation, creativity and entrepreneurship.
  8. 8. 8 Silicon Valley is home to worldwide leaders in the Technology Sector State of the Region – Employment, Population, and Housing Although an impressive hub of innovation, the San Francisco Bay Area, like most other areas of the United States and world, was negatively impacted by the global financial crisis of 2007-2009, known as the Great Recession. The Bay Area experienced its share of job losses, business closures and slowdowns, and residential property foreclosures. “A significant contributor to this financial crisis was the collapse of the housing market leading up to this period of crisis. There was the assumption that housing values would continue to appreciate and, therefore, mortgages were provided routinely to individuals that could only afford the properties if there would be a rapid increase in value and the opportunity to refinance and use the added value to then pay down the mortgage and hold onto the property. Countless numbers of these mortgages were sold and then further sold as securities in the financial markets. When the housing market did not continue to appreciate in value, there  was  a  resulting  collapse  in  the  nation’s  housing and financial markets. This circumstance led to a broad national and worldwide economic downturn, job losses, evictions and foreclosures of properties. The United States Congress passed the American Recovery and Reinvestments Act in 2009 to bail out large failing banks and corporations. A major contributor to the housing debacle was the repeal of the Glass-Steagall Act in 1999 that effectively reversed the separation, a form of check and balance, of investment banks from depository banks. After the crisis, the U.S. Congress passed the Dodd-Frank regulatory reforms to lessen the chance that this type of crisis happening again.”10 As the national and international markets have stabilized, the San Francisco Bay Area has been able to rely on its attributes as an innovation hub and rebound from the 2007-2009 economic
  9. 9. 9 downturn. The rebound has turned into an economic boom in the Bay Area that has been largely driven by the technology sector. Since 2010, new products and services and a worldwide appeal and markets have brought strong expansion and job creation opportunities and record increases in values to companies such as Apple, Cisco Systems, eBay, Facebook, Genentech, Google, Intel, Netflix, YouTube, and so many more that call the Bay Area home. The regional planning agency for the San Francisco Bay Area, the Association of Bay Area Governments (ABAG), recently published an index of  the  Bay  Area’s  economy,  population  and   housing, titled,  “San  Francisco  Bay  Area  State  of  the  Region  2015.” It provides a very useful overview of the opportunities and benefits that have come with the current boom period as well as the related costs and challenges, as summarized below. Region’s  Employment “The  Bay  Area annual average wage and salary employment grew by 9.8 percent between 2010 and 2013 (See Figure 1.1, State of the Region 2015). The  region’s  unemployment rate dropped from an average of 10.6 percent in 2010 to an estimated 5.5 percent in 2014. The total wage and salary jobs grew by 307,000 between 2010 and 2013. Most of this growth occurred in the more urban counties of Alameda, San Francisco, San Mateo, and Santa Clara. The significantly improved economy and related job opportunities were important contributing factors to  the  region’s  population  increase. The  region’s  population  
  10. 10. 10 grew by 270,000, or 3%, to about 7.4 million between April 1, 2010 and January 1, 2014. While employment and population gains were robust, the production of housing was extremely low during this same period, with fewer than 40,000 new housing units added. This is less than one- half of the number of housing units that had been added in recent periods. The lingering impacts of the housing market collapse, including tightening of credit, loss of financing, and developers and contractors leaving the industry, have negatively impacted the ability to produce the needed number of new housing units. Important sectors of new jobs created during the period of 2010 through 2013 were in Health and Social Services; Professional and Technical Services; and Information. The largest numbers of net new health and social services and professional, scientific and technical service jobs went to San Francisco County between 2010 and 2013. Nearly all of the job growth in the information sector went to Santa Clara, San Francisco, San Mateo, and Marin Counties. Alameda County saw the largest gains in manufacturing jobs. The jobs in the Professional and Technical Services and Information sectors require higher levels of education and experience which the workforce needs to satisfy to sustain the type of growth the region is experiencing. The workforce in the Bay Area as compared to the State of California and the United States overall has a relatively higher education attainment level,  with  larger  percentages  of  individuals  with  Bachelor’s  degrees and Graduate and Professional degrees. “Even with the relatively higher education attainment levels, providing adequately educated and trained workers is a challenge in the region, as it was reported that 73% of the professional engineers employed in Silicon Valley are foreign born, many of whom were educated abroad.”11 Not only is educational attainment very important to providing the needed skills in the workforce to support economic expansion, it also relates directly to income expectations. Generally, incomes in the Bay Area for those individuals with a high school education or less is under $40,000 annually; with  a  Bachelor’s Degree generally between $60,000 and $80,000 annually; and, with a Graduate or Professional Degree $100,000 or more annually.12 Jobs were added during this recent expansion period in the High Skill/High Wage (Scientific/Information); Middle Skill/Middle Wage (Sales); and Low Skill/Low Wage levels (Food Service). These levels translate into Tier 1 (High), Tier 2 (Middle), and Tier 3 (Low) in the 2016 Silicon Valley Index. In terms of incomes, these tiers roughly correlate to the educational levels noted above. “In 2015, in Silicon Valley and the Bay Area as a whole, median wages for Tier 1 workers were about 4.6 times more than for Tier 3 workers. The gap between Tier 1 and Tier 3 in terms of actual wages in Silicon Valley was $95,014 compared to a range of $52,686 to $87,663 elsewhere in the Bay Area. Between 2013 and 2014, the share of low- income (<$35,000 per year) households in Santa Clara and San Mateo counties declined from 19% to 17%, while the share of high income households (>$150,000 per year) increased from 29%  to  30%.”13 The above information suggests substantial employment growth, but with incomes of significant disparities based on occupation, education attainment levels, and locations. It is noteworthy, that even  with  this  significant  economic  expansion  and  job  growth,  “nearly  30%  of  the  region’s  
  11. 11. 11 population does not make enough money to meet their basic needs without public or private, informal  assistance.”14 Region’s  Population The Bay Area has added 270,000 new residents since 2010, reaching a population of 7.4 million by 2014 according to the California Department of Finance (DOF). During this period, the San Francisco Bay Area has grown at a more rapid rate than California as well as the United States overall.15 (See Figure 3.1) “This new population has generally been drawn to the areas of the Bay Area with the most jobs. As an example, approximately one-third (32 percent) of  the  region’s  population  increase   occurred in Santa Clara County.”16 In  terms  of  population  composition,  “Santa Clara became the County with the lowest median age in 2009, because of the shares of working age population and children. San Francisco County has the largest population between 20 and 29 years old (28 percent), and smallest population under 20 years of age (15 percent). As of 2013, Marin County has the highest percentage of population over age 50.17 “The region is becoming more ethnically diverse as it grows. The non-Hispanic white population, which had represented 52 percent of the population in 2000, dropped to 41 percent by 2013. In contrast, the Hispanic and non-Hispanic Asian populations have each increased and account for approximately 24 percent of the regional population as of 2013, growing 5 percent and  9  percent,  respectively,  since  2010.”18 “Within  the  region, 30.2 percent of the 2013 population was foreign born, up from 27.4 percent in 2000 and 30.1 percent in 2010. The region
  12. 12. 12 has among the largest shares of immigrants in its population nationwide. Within the region, Santa Clara County has the largest percentage of foreign  born  at  38  percent.”  19 “Overall,  the  City  of  San  Jose  in  Santa Clara  County  has  accommodated  more  of  the  region’s   population growth than any other city in the Bay Area since 2000. Between 2010 and 2014, San Jose has received approximately 20 percent of  the  region’s  population  growth,  an  increase  from   14  percent  between  2000  and  2010.”20 Region’s  Housing “The location and wage characteristics of employment being created in the region, the growing regional population, and transportation facilities to move the population around will all influence the amount and location of housing demand. The population is generally locating in more urban areas, closer to jobs and transportation facilities. San Jose, Santa Clara County (20%); San Francisco, San Francisco County (12%); and Oakland, Alameda County (5%) combined have accounted for more than one-third of the growth in the region since 2010.”21 The increasing population and employment rates and lagging production of housing and increased housing costs in the region have resulted in a significant challenge for the region to provide the quantity and type of housing necessary to meet the range of household income needs of the growing workforce. “Between  April  2010  and  January  of  2014,  the  California  Department  of Finance (DOF) estimates that the Bay Area added 38,300 housing units, an average of 9,600 units per year. This production is significantly less than in prior periods: 2000 to 2010 (total of 231,600 units/23,300 per year average) and 1990 to 2000 (total of  187,500/18,700  per  year  average)”22 This combination of a lag in construction of new units and the increased population coming to the region has created a classic supply and demand condition, with the cost of housing escalating dramatically given the inadequate supply to meet the demand. “The type of housing being constructed is also changing. From being well under 50% of the housing type being permitted in 2000, the proportion of multifamily housing units being permitted in 2013 is over 70% as compared with single-family units.”23 (See Figure 4.5)
  13. 13. 13 “The higher shares of multifamily housing are being permitted in the counties that are more urban, with strong job and population growth: Alameda, San Francisco, and Santa Clara Counties.”24 “Seventy percent (70%) of these multifamily residential units were permitted in Priority  Development  Areas  (PDAs),  areas  that  ABAG,  the  region’s  planning  agency,  has   identified as being close to transportation facilities, jobs, and services and, consequently, preferred for new growth and the reduction of vehicle miles traveled and greenhouse gas emissions.”25 Housing Need “The State of California Department of Housing and Community Development (HCD) forecasts the total number of housing units needed statewide and disperses these housing production goals to the various regional governments for assignment to the counties and cities within regions. These numbers and process are referred to overall as the Regional Housing Needs Allocation (RHNA) process. These housing goals are to accommodate the projected jobs and housing growth. Not only are the total number of needed units projected, but a breakdown of the number of units by the household income level as well. The income levels are as follows: Very Low; Low; Moderate; and Above Moderate. Generally, housing is considered affordable if the households do not spend more than 30% of their annual income on housing costs. The four household income levels used by California are based on Area Median Income (AMI): very low income households make from 0 to 50 percent of AMI; low income households make from 50 to 80 percent of AMI; moderate income households from 80 to 120 percent of AMI; and above moderate income households make  more  than  120  percent  of  AMI.”26 “During the RHNA period between 2007 and 2014, Bay Area jurisdictions permitted 49 percent of the total projected
  14. 14. 14 housing need: 214,500 (RHNA need projected); 105,904 (Housing Units permitted) = 49%). This compares with 92 percent during the prior RHNA period of 1999-2006. The primary reason for the reduced performance in not meeting the RHNA targets was the slowdown in production of housing related to the Great Recession.”27 (See Figure 4.10) Historically, jurisdictions have been most successful at permitting above moderate income units; it has been very challenging for them to facilitate the permitting and subsequent construction of housing units for lower income households. Dissolution of Redevelopment Agencies The dissolution of Redevelopment Agencies in California in 2011 by the State government, without a replacement funding source, has resulted in a loss of approximately $250 million annually for the production of affordable housing in the San Francisco Bay Area. This circumstance creates further challenge to not only housing production, but the production of the type of housing (i.e., lower income units) that meets the needs of the population. Preservation of Existing Affordable Housing Preservation of existing affordable housing is another challenge to meeting the housing needs of the population. Housing units that have been deed-restricted for lower-income households typically have sunset or expiration periods for the restrictions at a specified future date. In a market that has a shortage of housing, these units, generally, are expected to adjust to prevailing market rates when the restrictions expire. The new rates would, typically, be much higher than the deed-restricted rates,  and  beyond  the  affordability  of  the  current  occupants.    “There  are  
  15. 15. 15 currently 6,888 affordable housing units in the Bay Area that are in this category and at risk of conversion to market-rate housing in the next five years. Most of these units are located in San Francisco and Santa  Clara  Counties.”  28 Housing Tenure Whether housing units are owned or rented (housing tenure) is also an important consideration in this discussion. “In 2013, of the total number of housing units in the Bay Area, 45% were rental units. The number of owner-occupied units decreased by approximately 7,600 units during the period of 2010 to 2013.”29 “Vacancy rates for combined tenures have dropped in most counties from 2010 to 2013, except Napa and Marin Counties. The median range of vacancy rates dropped from about 5%-11% to approximately 4%-8%. However, when considering only homeowner vacancy rates, in 2013 all counties  in  the  Bay  area  were  less  than  2%.”30 During this period of increased demand and reduced supply of housing, prices for both rental and for  sale  housing  have  increased  dramatically.    “From 2010 to 2014, the counties with the greatest growth in employment in technology-related fields experienced the largest percentage increases in average rents. Rents increased by 44 percent in Santa Clara County, 43 percent in San Mateo County, 36 percent in San Francisco County and 34 percent in Alameda County. In 2014, average monthly asking rents were highest in San Francisco County ($3,105), followed by San Mateo  County  ($2,367),  and  Santa  Clara  County  ($2,213).”31 “Between  2010  and  2014,  the   median sales price for homes sold in the nine-county Bay Area increased from $410,000 to $610,000, a 49% increase during this four year period. In 2014, San Francisco County had the highest median sales price at $975,000, followed by San Mateo County at $843,000. In 2014, Solano County was more affordable with a median sales price of $292,000”  32 “On average, for homeowners, between 2010 and 2013, their median monthly costs decreased by approximately 9%, likely because they could refinance their existing mortgages to lower interest rates or older homeowners were  able  to  pay  off  their  mortgages.”33 Housing Affordability “Typically,  housing  costs  are  considered  to  be  affordable  when  they  are  less  than  30  percent  of   household income; households paying 30 percent to 50 percent of their income on housing are considered to be cost burdened; and households paying 50 percent or more of their income on housing are considered to be severely cost burdened. In the Bay Area, homeowners generally have substantially higher household incomes than renters. In 2013, the regional household income for homeowners was $104,000 and $52,100 for renters. In 2007, 43 percent of owner households (647,000) and 47 percent of renter households (474,000) had housing considered to be unaffordable, based on typical affordable housing costs standards. By 2013, 32 percent of owner households (496,400) and 49 percent of renter households (585,000) had housing that was considered  to  be  unaffordable.”34
  16. 16. 16 Opportunities and Challenges Opportunities The economy of the San Francisco Bay Area has rebounded exceptionally well from the Great Recession of 2007 to 2009 - breakthrough technological innovations, creation of wealth, extraordinary regional investment, substantial growth in new jobs, and enormous professional and personal growth opportunities! The region added 307,000 new jobs between 2010 and 2013. This economic boom has been largely driven by the expansion of technology firms within and related to the innovation hub know as Silicon Valley. The growth of firms like Apple, Cisco Systems, Facebook, Genentech, Google, Intel, Netflix, YouTube, and so many more in the Bay Area has fueled this expansion. Examples of the creation of wealth are as follows: Apple was reportedly valued (see Timeline) at $205 billion in 2010 and as of November of 2015 valued at $674 billion (CNBC.com); Google was valued at $180 billion in 2010 and as of November of 2015 valued at $514 billion (CNBC.com); and, Facebook as of November of 2015 valued at $306 billion. Further indicators of this expansion and opportunities relate to patent registrations and venture capital investment. “Silicon  Valley  patent  registrations  continued  to  rise  in  2014,  reaching   19,414, up from 16,975 in 2013. The largest share (40.5%) of the patents were in Computers, Data Processing and Information Storage, with a large share (25.6%) in Communications. The number of patents in Computers, Data Processing and Information Storage more than doubled between 2009 and 2014 to 7,857. Venture capital investments in Silicon Valley and San Francisco increased by $4.7 billion from 2014 to 2015, reaching $24.5 billion. The breakdown of this investment is $11.13 billion in Silicon Valley and $13.34 billion in San Francisco. This amount of venture capital investment in the Bay Area is the highest number since 2000. The region’s  share  of  California  and  U.S.  venture  capital  funding  increased  between  2014  and  2015   from  67%  to  73%  and  from  39%  to  42%,  respectively.”35 Challenges The explosive economic growth in the San Francisco Bay Area since 2010 has resulted in significant job and population growth distributed unevenly through the region. While approximately 307,000 new jobs were created between 2010 and 2013 and the population increased by 270,000 between 2010 and 2014, fewer than 40,000 new dwelling units (approximately 9,600 annually) were permitted for construction during this period. This housing production level is less than one-half of the average of recent period production levels. And, even these higher past production levels did not provide an adequate housing supply to meet the region’s  needs. Projecting forward, it is anticipated the population of the Bay Area will increase by 2 million by 2040 and that another 700,000 housing units will be needed to satisfy that demand. An annual production level in excess of 23,000 units would be needed to meet that demand. The challenge is not just supply of housing, additionally, it will be important to address the “fit” of the housing provided. Type, tenure, location, and affordability are all important fit factors. The workforce of the Bay Area has a broad range of occupations and wage levels. Employment
  17. 17. 17 centers are dispersed. Transportation infrastructure has improved but needs to be expanded to meet the needs of the growing population. There is a general shift to more urban locations for both employment and housing. It will be important to provide more high density, multifamily housing within urban areas close to employment centers and transportation facilities, a mix of rental and for-sale housing, and housing that is affordable to the full range of household income categories that comprise the Bay Area. To date, not only has providing an adequate supply of housing been difficult to achieve, but fit has been a significant challenge as well. During the 2007-2014 Bay Area RHNA housing cycle, only 49% of the number of overall projected housing units needed was realized, with only 27% in the Very Low household income category and 24% in the Low Income category. The total unit shortfall during this period was 108,596 units Bay Area wide. Housing Crisis? As population and employment increased in this environment of a shortage of housing supply and an inadequate housing fit in the Bay Area, both rents and sale prices for housing units have increased dramatically. Between 2010 and 2014 rents increased by 44% in Santa Clara County and median home sales prices increased by 49% in the Bay Area overall. In 2014, San Francisco County had the highest median home sales price of $975,000. Other challenges in this housing market relate to the dissolution of redevelopment agencies in California in 2011 and the resulting loss of about $250 million a year for affordable housing in the Bay Area. Another concern is the expiration period is near for approximately 6,888 housing units currently deed-restricted to be affordable. Once those deed restrictions have expired, the units are likely to move to market rate and not be affordable to the intended household income groups. Another factor that is affecting housing availability is the short-term rental business model that is being forwarded by firms like Airbnb, whereby long-term rental housing stock is being acquired and used for vacation rentals. Finally, prior to the dramatic escalation of rents and mortgages during the last three to four years, market rate rents and mortgages were more in reach to typical renters and home buyers. In the current market, it is not uncommon for rent increases to be 15% to 50% or more, forcing individuals from their homes with limited options, other than paying well above 30%, perhaps 50%, 60%, or more, of their total household income for housing costs, moving in with others, leaving the area, or in a worst case scenario moving to their cars or streets. The regulatory environment of cities, counties, and State agencies is attempting to address this situation, but it is extremely complex, with many interests involved, and the private sector actions involving significant rent increases and even, in some cases, forced evictions to facilitate substantial rent increases for the next group of occupants, happen more quickly than the ability to put adequate protections in place. Although this current economic boom in the San Francisco Bay Area has come with significant job growth and opportunity, it has contributed  significantly  to  the  “housing  crisis” and related challenges the region is experiencing.
  18. 18. 18 A worst case scenario is depicted below of a homeless encampment below a 13th Street highway overpass in downtown San Francisco. Homeless encampments become housing of last resort in the region.
  19. 19. 19 Local, regional, and State officials have been holding Town Hall meetings to discuss the housing crisis and to work with citizens, both property owners and those subject to potential substantial rent increases and displacement, to determine solutions. Plan Bay Area 2040 Meeting, Oakland, California, February 20, 2016 Plan Bay Area 2040 Meeting, Oakland, California, February 20, 2016
  20. 20. 20 Town Hall Meeting, San Mateo, California, February 22, 2016 Town Hall Meeting, San Mateo, California, February 22, 2016 Many perspectives were shared at the Town Hall meetings on the “housing  crisis”  in the San Francisco Bay Area. Many individuals described having limited incomes and receiving substantial rent increases, well in excess of 15%, sometimes as much as 50% or more, that made
  21. 21. 21 it difficult for them to continue to occupy their residence and/or be forced to leave (i.e., displaced). It is clear that particularly tenants face significant uncertainty about their ongoing financial and home security. As stated previously in this paper, by 2013, 32% of home owners and 49% renters were occupying housing that was considered not affordable to them, based on their income and housing costs. Given the inability to adequately produce and the difficulty protecting housing for the lower income households as described earlier, these households are particularly vulnerable. The escalating rents and mortgages worsen this circumstance, increasing displacement and hardship. At the Town Hall meetings, not all comments were from tenants. There were some landlords that spoke about the costs to properly maintain properties, increasing rents reasonably and fairly over time, and being opposed to formal regulatory constraints on how much or how often they could raise their rents. They indicated distain for those landlords that arbitrarily and excessively raised rents. Individual Stories There have been countless personal stories shared over the past several years in newspapers, periodicals and at Town Hall meetings about the housing crisis in the Bay Area. A representative samples of these stories is provided below. Husband 83 years of age and Wife 70 years of age, Palo Alto, Santa Clara County, California: Husband and wife are given an eviction notice and asked to leave their $800 a month apartment in Palo Alto in 60 days. The  couple’s  combined  income  was  only  a  few  hundred  dollars  a  month   more than their rent. They moved out, after a six-week extension, packing most of their belongings into a storage unit and began living out of their car. The husband was undergoing kidney dialysis treatments. This circumstance began back in July of 2012. At that time, the City of Palo Alto had a homeless population in excess of 157 people and only about 15 shelter beds. A 2013 census showed Santa Clara County having more than 7,000 homeless people, the fifth highest homeless population per capita in the country and among the highest populations sleeping outside or in unsuitable shelters like vehicles. After about a year and one half of living out of their car, the husband passed away; about six months later the wife was able to find a room in a home to rent that required about 80% of her income. A county social worker was able to assist to locate the room. During the period of living from their car, the couple showered at public gymnasiums and obtained food at local food donation centers. (Dispossessed in the Land of Dreams, New Republic, December 13, 2015, by Monica Potts) Father of Three Children, San Mateo County, California: A father and his family received an eviction notice and were without housing for several months. He was paying $1,040 a month for rent for a one-bedroom apartment; after he and his family left, the rent was increased to $2,100 per month. During a several month period before he and his family were again able to find affordable housing in the area, he received permission from the owner of the auto repair shop where he was employed for him and his family to sleep in the shop. Otherwise, during this period, his children were in school or with family and friends
  22. 22. 22 during the day when he worked. (Town Hall Meeting, San Mateo, California, February 22, 2016) Husband and Wife, Belmont, San Mateo County, California: The husband is a Middle School teacher in Foster City, San Mateo County, and his wife is a nurse. The couple have three young children. Their landlord doubled their rent and they expected to be displaced from San Mateo County. Fortunately, they found an accommodating landlord who rented them a three-bedroom home they could afford in the City of Belmont, San Mateo County, for $3,100 a month which they could afford. They were able to avoid displacement, retain their jobs and community connections. (The San Mateo Daily Journal, December 28, 2015) 80 year old Woman who owns Three Rent-Controlled Units, San Francisco County, California: The woman indicates she has owned the three housing units for many years and the rents are rent-controlled at approximately $600 a month each, substantially under market value. The rents are so low that she is not able to properly maintain her properties. (Town Hall Meeting, San Mateo, California, February 22, 2016) Single Mother with Adult Daughter, San Mateo, San Mateo County, California: This past year the mother received a $1,100 monthly rent increase at her two bedroom San Mateo apartment. She is now forced to spend nearly 60% of her monthly income on housing. She is a single mother of an adult daughter and reluctant to seek a roommate because her daughter also is struggling to afford rent in nearby South San Francisco. (The San Mateo Daily Journal, December 28, 2015) French Nuns Operating Soup Kitchen Face Threat of Eviction, San Francisco, California The sisters of Fraternite Notre  Dame’s  Mary  of  Nazareth  House, who operate a soup kitchen in the  Tenderloin  District  of  San  Francisco,  can’t afford a monthly rent increase of more than 50% from $3,465 to $5,500.  “It  is  very,  very  hard  to  find  a  place  for  a  soup  kitchen  where  people can feel  welcome  and  where  we  can  set  up  a  kitchen  for  a  reasonable  price.”36 “Faith-based organizations throughout the city are struggling to pay rent while providing social services to the needy.”37 (The Press Democrat, February 10, 2016) Options The explosive economic growth that has occurred in the San Francisco Bay Area since 2010 has brought both significant job and population growth to the region. Unfortunately, the production of housing in terms of the number of units needed and the fit of those units in terms of factors such as type, tenure, location and being affordable to the full range of household incomes within the region has lagged substantially behind. During the last RHNA housing cycle, 2007-2014, in the Bay Area only 49% of the identified needed housing units were permitted for construction overall, and only 27% of the identified units needed for very low income households and 24% for low income households. Thirty-two percent (32%) of homeowners and 49% of renters occupy homes that are technically not affordable, based on their household incomes and housing
  23. 23. 23 costs. Thousands of individuals (estimates of 6,000 in San Francisco County by Jennifer Friedenbach of the San Francisco Coalition on Homelessness and another 7,000 in Santa Clara County by Monica Potts, author of Dispossessed in the Land of Dreams) are completely without homes. And, it is estimated that 700,000 additional housing units will be needed to support the expected 2 million additional residents to the region by 2040. “What’s  the  vision?    Housing, housing, and more housing, choices to meet the broadest of needs, available to all, affordable to all, secure to all.”      How do we get there? By when? These are some of the objectives and thoughts that come to mind as the people of the San Francisco Bay Area consider and address options to address the housing crisis in the region. Preserving, protecting, increasing, and rethinking also come to mind in terms of addressing this housing need. Urgent, Short-term, and long-term also are part of the thought process. This situation is not just about sustaining the general prosperity the region is experiencing, even with this on- going crisis, it is about addressing a fundamental need for shelter and creating a San Francisco Bay Area and Silicon Valley that holistically is a healthy, sustainable, and just place for all to live and work. State, regional, and local governments as well as non-profits have undertaken many planning efforts and have or are taking action to implement a variety of measures and programs to meet the housing needs of the Bay Area. These measures and programs generally attempt to link jobs, housing and transportation facilities; facilitate the construction of more housing for all household income groups; preserve existing housing, particularly affordable housing; protect the rights of individuals to have housing; facilitate the construction of more housing; and, more efficiently use existing housing. Examples of some of these planning measures and programs are provided below.  Specific Area Plans/Master Plans guiding the location of jobs and housing in proximity to transit facilities;  Zoning Regulations to encourage mixed-use development patterns and increased residential densities at appropriate locations, linking jobs, housing, and transit facilities;  Inclusion/Below Market Rate Policy to require that market-rate developments include a certain percentage of affordably priced residential units for income-specific households;  Residential and Commercial Impact Fees on market-rate residential development and commercial development that are used to develop or preserve affordable housing;  Secondary Dwelling Units to create additional residential units on individual properties;  Density Bonus Programs to allow greater density to incentivize the assembly of parcels and the inclusion of more affordable housing units;  Streamlined Permitting Processes as an incentive for projects that meet specified housing goals;  Condominium Conversion Ordinances to regulate conversion of rental apartments into for sale condominiums and to generally provide tenant protections;  Just Cause Eviction Ordinances to allow evictions only for legally delineated circumstances;  Rent Stabilization Ordinances to regulate the percentage of annual rent increases;
  24. 24. 24  Home Sharing Programs where extra capacity, i.e., an extra bedroom, in an existing home can be offered in exchange (e.g., HIP Housing, San Mateo, California) for home services or payment or some combination of the two; and,  Housing First Programs to provide a housing accommodation as a base for stabilizing those transitioning from homelessness and oftentimes physical, emotional, and psychological challenges. Lessons Learned There has been a tremendous amount of work completed over time to address the housing needs, present and future, in the San Francisco Bay Area. The Plan Bay Area 2040 effort by the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC) has been particularly comprehensive and useful to guide development in a pattern to link jobs, housing, and transportation, with concentrations of jobs and housing near transit facilities. Addressing the housing needs, particularly for those of greatest need, ranging from low income households to the homeless, is extremely complex, costly, and controversial. It is evident from looking at the RHNA history of permitted housing in the Bay Area that the private sector is capable of satisfying the housing needs for above moderate income households and moderate income households, but not the needs of lower income households. There is a clear and long-term deficiency in meeting the housing needs of these lower income households which existing measures and programs are not meeting. The level of housing production needed to address current and projected demand for housing in the Bay Area is in excess of 23,000 units annually. Recent production levels have averaged less than 10,000 annually. Present measures and programs are not achieving the housing production levels needed. The uncertainty for tenants, resulting from real or potential evictions without cause and well- above reasonable rent increases, displacing them from their homes, community associations, and familiar surroundings has become a frequent occurrence in the Bay Area. The economic, social, and health impacts of this circumstance needs to be more fully addressed with appropriate protections. The impacts of housing need on people can be immediate and urgent, short-term, and long-term. In this current environment of an economic boom, with rapidly escalating rents and large increases in employment and population, there are deficiencies in all three areas. Measures and programs are needed to support people in the immediate circumstance of loss of housing, to support  people’s  ability  to  continue to have housing, and to address anticipated long-term housing production needs. Call to Action There is significant human hardship and need being experienced in the San Francisco Bay Area, even during a period of economic expansion, because of an inadequate supply of housing and the fit of the housing primarily in terms of being affordable to the broad needs of the population. This housing supply and fit deficiencies must be addressed. Additionally, providing basic
  25. 25. 25 protections for people to retain housing as well as support during periods of housing transition is needed. Current programs and measures related to housing policy and practice need to be re- evaluated. There is a need to be willing to think differently and disrupt or retool old processes that are not producing the outcomes or meeting the housing needs of the region. Comprehensive approaches that are adaptable to local and regional circumstances need to be developed to address the housing concerns mentioned related to the following:  Housing Supply;  Housing Fit;  Housing Protections; and  Housing Transitions. Additionally, and very importantly, reliable and dedicated funding sources need to be secured to ensure, in particular, that the housing needs of the lower income households are met. The attributes of creativity, innovation and entrepreneurship used widely in the region to generate significant commercial success and prosperity for decades for some, need to be used now to address the significant social and economic challenges and human hardship associated with this housing crisis and help to achieve and maintain a San Francisco Bay Area that holistically is a healthy, sustainable, and just place for all to live and work. The region needs to solve its housing crisis and, in the process, potentially be a model for how this is done to the wider society and world. With the tremendous wealth being created by the leading technology firms in semiconductors, computers, and social media in this region, there are resources and mutual interests for partnerships among the governmental, business, and non-profit sectors with beneficial “knowledge  spillovers”  to  address  the  region’s  housing  needs. A broader, deeper, more inclusive, authentic, and sustainable prosperity is possible for the region as these partnerships successfully  address  the  region’s  housing  challenges. There is no question the resources are available within the region. On March 19, 2013, at his inaugural Mass, Pope Francis made concern for the poor the key line of his homily, insisting  that  “authentic  power  is  service,”   especially service to the poorest, the weakest, and the least important (i.e., disenfranchised).”     Let the San Francisco Bay Area be about authentic service and truly prosper!!!
  26. 26. 26 CITATIONS 1 Dyett & Bhatia, Urban and Regional Planners, in association with ESA and AECOM, 2040 Plan Bay Area, Public Review Draft EIR, April, 2013, p. 2.3-2. 2 Dyett & Bhatia, Urban and Regional Planners, in association with ESA and AECOM, 2040 Plan Bay Area, Public Review Draft EIR, April, 2013, p. 2.3-5. 3 Scaruffi, Piero. A History of Silicon Valley 1900-2015. 2015 ed. Amazon CreateSpace, 2015. Print. p. 4. 4 Scaruffi, Piero. A History of Silicon Valley 1900-2015. 2015 ed. Amazon CreateSpace, 2015. Print. p. 432. 5 Scaruffi, Piero. A History of Silicon Valley 1900-2015. 2015 ed. Amazon CreateSpace, 2015. Print. p. 4. 6 Scaruffi, Piero. A History of Silicon Valley 1900-2015. 2015 ed. Amazon CreateSpace, 2015. Print. p. 432. 7 Scaruffi, Piero. A History of Silicon Valley 1900-2015. 2015 ed. Amazon CreateSpace, 2015. Print. pp. 448-470. 8 Moretti, Enrico. The New Geography of Jobs. Boston: Houghton Mifflin Harcourt, 2012. Print. p. 85. 9 Moretti, Enrico. The New Geography of Jobs. Boston: Houghton Mifflin Harcourt.2012. Print. p. 124. 10 Wikipedia.org, Financial Crisis of 2007-08. 11 Proceedings  of  the  State  of  the  Valley  Conference,  Silicon  Valley’s  Annual  Town  Hall  Meeting,  City  of  San  Jose,   Print. Presented by: Bank of America and Joint Venture Silicon Valley. 12 Massaro, Rachel, 2016 Silicon Valley Index, for Joint Venture Silicon Valley, Institute for Regional Studies, , p. 29. 13 Massaro, Rachel. 2016 Silicon Valley Index, for Joint Venture Silicon Valley, Institute of Regional Studies, pp. 26-28. 14 Massaro, Rachel. 2016 Silicon Valley Index, for Joint Venture Silicon Valley, Institute of Regional Studies, p. 28. 15 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 40. 16 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 40. 17 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, pp. 42-43. 18 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 44. 19 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 45. 20 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 48. 21 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 48. 22 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 52. 23 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 55. 24 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 56 25 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 57. 26 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 58. 27 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 59. 28 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 61. 29 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 62. 30 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 54. 31 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 63. 32 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, pp. 65-66. 33 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 67. 34 Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, p. 71. 35 Massaro, Rachel. 2016 Silicon Valley Index, prepared for Joint Venture Silicon Valley, Institute for Regional Studies, pp. 34-36. 36 Har,  Janie.  “Nuns who feed homeless face eviction”,  The  Press  Democrat,  10  Feb.  2016,  Section  B:  1-2. 37 Har,  Janie.  “Nuns  who  feed  homeless  face  eviction”,  The  Press  Democrat,  10  Feb.  2016,  Section  B:  1-2.
  27. 27. 27 REFERENCES Association of Bay Area Governments (ABAG). Housing Data Release, 2015. Rep. Print. PowerPoint Presentation, ABAG Regional Planning Committee, February 4, 2015. Association of Bay Area Governments. State of the Region 2015: Economy, Population, Housing, Executive Summary. Rep. Print. Baker, David R. "Has the Tech Bubble Already Burst...and We Just Haven't Heard the Pop Yet?" The San Francisco Chronicle 24 Jan. 2016: A1+. Print. Bay Area Council Economic Institute. A Roadmap for Economic Resilience. Rep. Bay Area Regional Economic Strategy. Print. Presented February 26, 2016. Boyce, Dave. "Report: Housing Costs Push Students from Low-income Families out of Local Schools." The Almanac [The Hometown Newspaper for Menlo Park, Atherton, Portola Valley and Woodside] 20 Jan. 2016: 5. Print. Cabanatuan, Michael. "Huge Blow to Transit Projects." The San Francisco Chronicle 10 Mar. 2016, sec. A: 1+. Print. Callahan, Mary. "Homeless Head Count." The Press Democrat [Santa Rosa] 30 Jan. 2016, sec. A: 1+. Print. Closing the Jobs/Housing Gap Task Force. Rep. County of San Mateo Board of Supervisors. Print. Online Resources, accessed 19 Nov. 2015. Dannenberg, Andrew L., Howard Frumkin, and Richard Jackson. Making Healthy Places: Designing and Building for Health, Well-being, and Sustainability. Washington, D.C.: Island Press, 2011. Print. David, Paul A. "Path Dependence: A Foundational Concept for Historical Social Science." Cliometrica 1.2 (2007): 91-114. Web. Dyett & Bhatia, Urban and Regional Planners, in association with ESA and AECOM, 2040 Plan Bay Area Public Review Draft EIR, April 2013. Fram, Alan. "State of Union: Strong Job Market, Middling Economy." The Daily Journal and the Associated Press [Peninsula Cities] 11 Jan. 2016: 7. Print. Fuller, Thomas. "San Francisco Tent City Remains as Deadline Passes." The Press Democrat [Santa Rosa] 27 Feb. 2016, sec. A: A1+. Print. Har, Janie. "Nuns Who Feed Homeless Face Eviction." The Press Democrat [Santa Rosa] 10 Feb. 2016, sec. B: 1-2. Print. Hart, Angela. "Renters Languish in Poor Living Conditions." The Press Democrat [Santa Rosa] 24 Jan. 2016, sec. A: 1+. Print.
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  29. 29. 29 Silverfarb, Bill. "Agency: Cities Evading Affordable Housing Law." The Daily Journal [Peninsula Cities] 15 Feb. 2016: 3. Print. Stanford University Communications, Stanford Facts. An Introduction to one of the great American universities. 2004. Print. Talen, Emily. Urban Design Reclaimed: Tools, Techniques, and Strategies for Planners. Chicago: American Planning Association, Planners, 2009. Print. Twenty-one (21) Elements. Affordable Housing Nexus Study. Rep. San Mateo County, 2015. Print. PowerPoint Presentation to the City of San Bruno City Council, 27 Oct. 2015. "The Birth of Silicon Valley." NPR. NPR, 4 Apr. 2012. Web. 21 Feb. 2016.Starting up: Silicon Valley's Origins. Walsh,  Austin.  “Hard  Lessons  of  the  Housing  Crisis.”  The Daily Journal [Peninsula Cities] 28 Dec. 2015, 114th ed.: 1+. Print. Weigel, Samantha. "City Pursues Affordable Housing Plan." The Daily Journal [Peninsula Cities] 7 Mar. 2016, 174th ed.: 1+. Print. Wunderman, Jim. "Bold Action Needed to Fix Housing, Transit, Climate Ills." The San Francisco Chronicle 17 Jan. 2016, sec. E: 6. Print. Zarroli, Jim. "A Look at the Wealth and Income Gap, by Zip Code." NPR. NPR, 25 Feb. 2016. Web. 27 Feb. 2016.
  30. 30. 30 APPENDIX: A Timeline of Silicon Valley A  Timeline  of  Silicon  Valley,  excerpted  from  Piero  Scaruffi’s  A History of Silicon Valley 1900- 2015, is provided immediately below:  1891: Stanford University founded  1938: Two Stanford University graduates, William Hewlett and David Packard, working in a garage in Palo Alto produce their first product, a precision audio oscillator  1939: Hewlett-Packard becomes a company  1946: The Stanford Research Institute is founded  1951: The Stanford Industrial Park is conceived  1955:  Private  investors  or  “angels”  (including  John  Bryan,  Bill  Edwards  and  Reid   Dennis)  establish  “The  Group”  to  invest  in  promising  companies  1956: William Shockley founds the Shockley Transistor Corporation in Mountain View to produce semiconductor based transistors to replace vacuum tubes  1957: Rockefeller Brothers invests in Fairchild Semiconductor, the first venture-funded start-up in the San Francisco Bay Area  1961:  One  of  Santa  Clara  Valley’s  first  venture  capital  firms,  Davis  &  Rock,  is  founded   by Tommy Davis and Arthur Rock  1963: Syntex, a pioneer of biotechnology moves from Mexico City to the Stanford Industrial Park  1964: Syntex introduces the birth control pill  1966: Hewlett-Packard enters the business of general-purpose computers with the HP- 2115  1966: There are approximately 2,623 computers, with about 1,967 of them in the Defense Department  1968: Intel (Integrated Electronics) is founded by Philip Noyce, Gordon Moore, and Andy Grove to build memory chips  1973: Vinton Cerf of Stanford  University  coins  the  term  “Internet”  1976: Steve Wozniak and Steve Jobs form Apple Computer and build the first microcomputer  in  Jobs’  garage  in  Cupertino  1976: Biochenist Herbert Boyer and venture capitalist Robert Swanson found Genentech, a major biotechnology company  1977: 27,000 people are employed in the semiconductor industry in Silicon Valley  1980: The Arpanet, which was initially developed by the United States Department of Defense, and the technical foundation for the Internet, has 430,000 users, who exchange almost 100 million e-mail messages a year  1980: Apple goes public for a record $1.3 billion  1984: Apple introduces the Macintosh, which revolutionizes desktop publishing  1985: The Arpanet is renamed the Internet  1990: Between 1970-1990 the population of San Jose almost doubles, from 445,779 to 782,248
  31. 31. 31  1992:  Intel  becomes  the  world’s  largest  semiconductor  manufacturer  1994:  The  “Band  of  Angels”  is  founded  by  “angels”  to  fund  Silicon  Valley start-ups  1994: There are 315 public companies in Silicon Valley  1995:  Steve  Kirsch’s  Infoseek  pioneers  “cost-per-impression”  and  “cost-per-click”   advertising  1998: Two Stanford students, Larry Page and Russian-born Sergy Brin, launch the search engine Google  1998: Pierre Omidyar founds eBay, an Internet location to auction items  1999: Marc Benioff founds Salesforce.com to move business applications to the Internet, pioneering cloud computing  2000: 32% of Silicon Valley’s  high-skilled workers are foreign-born, mostly from Asia  2000: There are 417 public companies in Silicon Valley  2000: 10 billion e-mail messages a day are exchanged over the Internet  2001: Apple launches the iPod  2004: Mark Zuckerberg founds the social networking service Facebook at Harvard University and relocates to Palo Alto  2005:  San  Jose’s  population  of  912,332  has  exceeded  the  population  of  San  Francisco,   and San Jose becomes the 10th largest city in the United States  2005: More than 50% of all jobs outsourced by Silicon Valley go to India  2005: Yahoo!; Google, America Online (AOL) and MSN (Microsoft Network) are the four big Internet portals with a combined audience of over one billion people worldwide  2005:  52.4%  of  Silicon  Valley’s  high-tech companies launched between 1995 and 2005 have been founded by at least one immigrant  2005: Former Paypal employees Chad Hurley, Steven Chen, and Jarwed Karim launch YouTube  2006: Jack Dorsey creates the social networking service Twitter  2006: The Bay Area is the largest high-tech center in the Unites States with 386,000 high tech jobs  2006: YouTube is bought by Google for $1.65 billion  2006: Tesla Motors introduces the Tesla Roadster, the first production automobile to use lithium-ion battery cells  2007:  48%  of  Apple’s  revenues  come  from  sales  of  the  iPod  2008: Apple launches the iPhone  2008: Google owns 70% of the Internet search market  2008: Venture capitalists invest $4 billion into green-tech start-ups, which is almost 40% of the U.S. investment in this area of high-tech  2008: 20% of the smartphones in the world use an operating system made in Silicon Valley  2009:  Google’s  market  value  is  more  than  $140  billion  2009: Facebook has 150 million users in January and is growing by 1 million users a day
  32. 32. 32  2010: Google is worth $180 billion  2010: Apple is worth $205 billion, third in the U.S. after Exxon and Microsoft  2010: Apple introduces tablet computer, the iPad  2010: Facebook has 500 million users  2013: 92% of smartphones in the world use an operating system made in Silicon Valley  2013: Worldwide sales of smartphones exceeded one billion units  2014: Facebook has 1.3 billion members, Google owns 68% of the searches in the U.S. and more than 90% in Europe, and LinkedIn has 300 million members.

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