Town Hall on Housing

January 21, 2024 – Lucie Stern Community Center, Palo Alto

Hosted by Lydia Kou, former Mayor, Palo Alto

Presentations by Eric Filseth, former Mayor, Palo Alto; Michael Barnes, former Mayor, Albany; Pam Lee, Attorney, Aleshire & Wynder; Anita Enander, former Mayor, Los Altos


Are housing construction costs a CA problem only? What do other states do?

Lydia:  Cost for construction has increased in many states that have “build baby build” and trickle down housing ideologies. The state regulations demanding hyper construction require a huge construction workforce and that fuels the increase of building costs. In general, increased cost of living is felt all over the world.

Eric:  Housing and construction costs are high in most major western cities nowadays.

Are there sources of housing other than commercial developers? What about public-funded housing?

Eric:  I think public-funded housing can work if done well.  The money must come from somewhere.

Do you think the zoning changes will result in more housing even if not affordable?

Eric:  Potentially yes, though only a relatively little.

Developers are financial investors, so pretty sensitive to small changes in costs, and upzoning can produce that.  So I think we will indeed see some big projects on San Antonio for example.  It’s just hard to make a case that they’ll build anywhere near enough to reduce rents.  The business model of “save a few percent via zoning” only works if market-rate rents stay high.  So my own expectation is they’ll build a little.  But it won’t be any less expensive, and I doubt if many developers will pass the couple percent savings on to tenants.

Demand matters too of course.  People are leaving the Silicon Valley.  But if that ever reverses and we get a big influx of high-wage people, I think we’ll see construction ramp back up to accommodate those new people, under any zoning (as long as Google/Meta/Apple/etc continue to pay well).  But only as much housing as those new folks use, and no more.  Developers are not charities.

Incidentally, Joint Venture Silicon Valley polls people who are leaving as to why, and the over the last few years the top reasons have been consistently:

  1. Cost of living and housing
  2. Quality of Life
  3. High taxes

Adding new housing that doesn’t cost any less, and then only as fast as new high-income people arrive here, isn’t likely to do much for #1.  If #2 and #3 get to be more of a burden while #1 doesn’t change, it might be some time before a lot more people move here.

Lydia:  There will be more market rate and luxury housing units built because state regulations have deregulated land use and zoning, including state legislators shutting down any input from neighbors. Moreover, international corporations and Wall Street are buying and investing in sunny California to make money, not build affordable housing.

Do we have a list of the legislators and which of the 150 housing bills they voted for?


ASM Marc Berman: voted for SB-828, SB-35, SB-423, SB-330, AB-SB-10, SB-9 are just some

Senator Becker: voted for SB-9, no showed on SB-10, SB-423

Do you have a chart for construction and costs of development of townhouses and single family residences?

Eric:  I don’t.  They’re more expensive though, and there are fewer of them, so less impact on the most housing-burdened people.

Lydia:  I don’t have a chart, but here is something to get an idea,can%20range%20from%20%24500%20%2D%20%24800.

What is your solution to these compounding issues? How do you propose to stabilize our communities from climate collapse, eliminate VMT numbers, Right? without dense infill housing? Thank you for your consideration.

Eric:  Well, this is the issue of our time, isn’t it.

On the housing front, Sacramento has convinced everybody that if we just get rid of urban planning, we’ll get lots of infill development, and that will have a big impact on climate.  But neither the economics nor the actual results show that we’ll actually get that infill development, because developers refuse to lose money building it.  The Legislature, Scott Wiener etc, did what they did (1) in order to score political points; (2) because zoning bills don’t cost anything except to communities; and (3) and because Big Real Estate likes zoning bills.   Alas, these bills don’t work, so it’s just empty virtue-signaling; and worse, they’ve distracted everybody from looking for things that really would make a difference.  “Every little bit helps” isn’t true if (a) it helps so little that its costs outweigh its benefits; or (b) it distracts people from doing things that might be harder but could help a lot.  And the lack of results suggests the State Legislature is guilty on both counts.

All of this is completely aside from whether infill housing actually is a big help or not; which there’s debate on too.  Heat islands are real, and lifestyle is a huge factor.  A vegetarian who lives in suburbs and drives an EV may well have less climate impact than a wealthy urbanite driving an F-150.

Other than just money, what would make a difference on Climate?  I personally liked Bill Gates’ book on this topic a couple years back, which I think cut through a lot of the nonsense and political performance and tried to produce an analytically defensible plan.  We need more thinking like that.  But it will still be hard.  If I had to pick one thing first, I’d go with decarbonizing electricity, which we’ve already done in Palo Alto and which Biden is trying to move towards nationwide.

Since the collective housing laws created "an increased level of service or new program for local government, has a city or county filed a reimbursement claim for state mandated costs?

Eric:  if you read these bills, certainly all of Scott Wiener’s, they have this legalese boilerplate at the end that says essentially, “if this costs communities anything, it’s not an illegal unfunded mandate, because communities can always tax themselves to cover it.”

What concrete solutions for the need of more housing are you ready to fight for?

Eric:  what really works?  Money.  If you want housing that costs less than $945K for a condo, then somebody must pay the difference.  Palo Alto established a tax on large businesses last year, primarily oriented towards Tech, with 2/3 of the proceeds intended for affordable housing and transportation.  In my own opinion, the region needs to do more of that if we’re to solve this.

People don’t realize viscerally how much money the Valley has made in the last quarter-century; it’s staggering.  The market cap for Bay Area corporations is $14 trillion; that’s more than many countries are worth.  It looks to me, as a former corporate manager, like we’ve done the same thing too many shortsighted corporations do, which is fail to invest enough of our profits in our future.  It’s late, but I think not too late, yet.

Lydia:  Revisiting redevelopment agencies which used to fund affordable housing, including building hospitals for the mentally ill, MAT centers separately.

Do you think or believe that a constitutional amendment is the only way to change Sacramento?

Lydia:  Absolutely! 100%!

What about the empty high priced apartments on San Antonio?

Lydia:  Vacant high priced apartments are all over, Mountain View, Palo Alto, San Francisco. Facebook and other tech companies would lease a large number of apartment units for their visiting or short stay executives and employees, but many of these tech companies have had massive layoffs.