September 12, 2019 — The Globe and Mail
Silicon Valley’s motor city
Photo credit: Tamsin McMahon
The San Francisco Bay Area may be the economic engine of the United States, but the skyrocketing cost of living has left thousands of people homeless. As big tech adds fuel to a housing crisis, poorer residents live in RVs.
Mountain View, California — In a quiet residential neighbourhood near Google’s headquarters, Francisca Ramirez has finished the dishes and is sweeping the kitchen floor while her nine-year-old granddaughter naps.
A few doors away, William Adolfo Yac has his tools out and the generator going, readying to start some home repairs. His neighbour Norma Ruiz is preparing to run errands. Her ex-husband, who lives on the same street even though the couple has been separated a year now, will watch their two children while she’s out.
These could be the scenes from any typical American suburb. Except that every one of the residents in this neighbourhood is homeless. They have assembled a makeshift community made up of row upon row of recreational vehicles (RVs) – small, dilapidated motor homes and travel trailers – along with parked cars and trucks that line the main arteries running through the heart of Silicon Valley.
The San Francisco Bay Area – a sprawling region of 101 cities and nearly eight million people – is the geographic centre of Silicon Valley. It is an economic marvel and the envy of communities the world over for its ability to churn out a dizzying array of new technology and a seemingly endless supply of well-paying jobs. But that success has a dark side: It has helped create a housing shortage so severe that nearly everyone agrees the region is in a crisis.
Silicon Valley rents have risen 50 per cent since 2011, with studio apartments going for US$3,000. Home prices have doubled. In Palo Alto, home to Stanford University and many of the region’s largest venture-capital firms, the median home price topped US$2.8-million in July.
The people paying the heaviest price for the housing crisis are the minimum-wage service workers who cater to well-paid tech employees by staffing restaurants, painting homes and caring for children. The escalating cost of living has pushed many of those workers onto the streets. Homelessness in Silicon Valley has surged 30 per cent in the past two years to more than 30,000 people, mainly because more people are living in cars and recreational vehicles.
“It’s not a luxury to live in an RV like this, it’s a necessity,” says Jose Reyes who lives with his wife and two children in a motor home with no water, lights or air conditioning on the edge of a city park in Mountain View, Calif. “I can either go to work and pay the rent, or I could live in an RV and get food and clothes for my kids.”
Mr. Reyes has lived in Mountain View – home to the sprawling campuses of Google, Microsoft, LinkedIn and many other tech firms – for 20 years. Two years ago, his landlord renovated the building, raising the rent from US$1,300 to US$3,000 a month, more than he could afford busing dishes at a local Italian restaurant.
Like Mr. Reyes, many of the more than 200 people living in RVs in Mountain View are undocumented immigrants who say that while they earn good money working in the city’s shops, restaurants and hotels, they can no longer afford even modest accommodations.
The rise of RV living has put California in an unwelcome national spotlight. U.S. President Donald Trump frequently calls out the state’s increasing homeless population as proof of the failure of the Democratic state government’s policies. The White House sent a group of officials to Los Angeles this month to study the city’s homeless crisis, ahead of the President’s planned visit to the state next week. “What they’re doing to our beautiful California is a disgrace to our country,” Mr. Trump told a rally in Ohio in August. “It’s a shame. The world is looking at it.”
Partisanship aside, Silicon Valley’s housing crisis is raising a vexing question for state and local governments in California: What happens when an economy is so successful that it churns out thousands more jobs than homes?
Business leaders worry that the housing crisis will eventually imperil the region’s innovation economy. State lawmakers have pushed for a variety of solutions – and even Big Tech admits it needs to do more to solve the housing shortage.
But those pro-housing forces are coming up against a powerful “not-in-my-backyard” movement.
The dilemma is a cautionary tale for other cities that are chasing high-tech jobs, including many in Canada, of the consequences of not planning to manage such economic growth.
“I would say it’s our number one concern,” says Russell Hancock, chief executive of Joint Venture Silicon Valley, a non-profit research group funded by local businesses and governments. “If Silicon Valley were a Greek god, then housing would be the Achilles heel.”
In the last decade, the region has created eight new jobs for every home construction permit issued, says Matt Regan, senior vice-president of public policy at the Bay Area Council, a business association whose members include most of Silicon Valley’s largest tech companies. A healthy ratio is 1.5 jobs to one home. In some Bay Area cities, the ratio is as high as 25:1.
The fear is that Silicon Valley’s shortage will drive large tech firms to expand elsewhere or even move their headquarters out of the region. Many have already announced office expansions in cheaper locales such as Austin, Tex.
For now, however, they continue to churn out most of their new jobs in the Bay Area, with salaries to match the escalating cost of living.
Those most affected by the housing shortage have been middle-class and low-income workers.
Silicon Valley saw a net loss of more than 23,000 people last year, driven mostly by households making less than US$75,000. Storefronts and restaurants are filled with help-wanted signs, while local newspapers report on teachers commuting from two hours away. “We’re losing the people that are the life-support network of any society,” Mr. Regan says. “They’re finding it very difficult to hang on.”
Some of those who do remain have increasingly turned to living in vehicles.
Francisca Ramirez moved to Mountain View from Galveston, Tex., after Hurricane Harvey hit the city in 2017, drawn by family members who live in the city and ample job opportunities.
She and her husband lived with her brother for a while, crowding into an apartment along with three of her brother’s friends. (Many RV residents say they must choose between sharing a room with strangers in overcrowded rentals for as much as US$1,000 a month, or living in an RV.)
The couple eventually saved up US$4,000 to rent their own apartment. But landlords also wanted a US$3,000 security deposit and the last month’s rent up front, along with a credit check that requires a social security number, which many undocumented workers don’t have. “My brother said get an RV just like everyone else does,” she said.
It was uncomfortable at first. The couple have to ration water and power, travel to dump their sewage and have paid countless parking tickets when they failed to move their RV within the 72 hours that local bylaws require.
But they’re getting used to it, she says. And the opportunities to earn money makes it worth it. Ms. Ramirez makes US$15.65 an hour as a house painter, more than twice what she earned in Galveston.
She understands local residents aren’t happy that their streets are filled with RVs, but doesn’t know what else to do. “I know that the houses don’t want to see us here,” she says, gesturing toward the residential subdivision across the road from where she is parked. “I wish there were places we could go. We feel like nomads.”
Many here blame the tech industry for engineering the region’s housing crisis, arguing that companies have been allowed to expand too quickly and create more jobs than communities here can handle.
The lack of housing in Silicon Valley has also pushed tech workers into the region’s major cities of San Francisco and San Jose, which have become bedroom communities to the jobs-rich suburbs.
California’s property-tax system has encouraged cities to compete for new tech office parks, even as they shun housing projects.
A 1970s-era ballot initiative known as Proposition 13 limited the ability of cities to increase property taxes, the majority of which are ultimately siphoned off by other levels of government. So they have turned to development projects that bring in the lucrative sales and businesses taxes that fund a large share of city budgets.
By contrast, cities complain that new housing developments are often a drain on municipal budgets, with the cost of providing services to new residents exceeding the additional property tax revenue. That has helped spur a commercial property boom, even as housing production has stagnated.
While the tech expansion has filled city coffers – Silicon Valley cities posted a combined surplus of US$751-million in 2017 – it has also led to a growing resentment among many long-time homeowners that tech firms have reaped enormous profits, while doing little to solve the housing crisis.
“I think there needs to be an enlightenment, an awakening, by some of our businesses who are really benefitting from the folks who … live in an RV because they can’t afford to live here,” Mountain View’s vice-mayor Margaret Abe-Koga told a council meeting in June during a discussion about how handle the surge in RV residents. Local officials say they pressed Google and other businesses to allow RVs to park overnight in their office parking lots without success.
Tech companies are starting to get the message. A week after that council meeting, Google announced it plans to invest US$1-billion over the next decade to build as many as 20,000 homes. Facebook founder Mark Zuckerberg pledged to help raise US$500-million through his personal charity toward housing.
Google’s announcement came amid negotiations between the tech giant and the City of San Jose over a planned new downtown Google campus that drew protests from low-wage workers. “Our goal is to help communities succeed over the long term, and make sure that everyone has access to opportunity, whether or not they work in tech,” Google CEO Sundar Pichai wrote in a blog post announcing the US$1-billion housing investment.
Increasingly, housing analysts point the blame for the housing crisis at opposition by neighbourhood activists.
California’s unique political system, which gives special consideration to grassroots groups, has empowered neighbourhood associations to block housing developments through referendums and efforts to recall elected politicians who support home building. State-mandated environmental reviews have also allowed opponents to launch lawsuits that have tied up projects for years.
The neighbourhood preservation movement began in the Bay Area in the 1970s as a way to protect diverse and middle-class neighbourhoods from gentrification. But today it has morphed into a political force that effectively shuts off many neighbourhoods from all but the most affluent, argues Randy Shaw, executive director of San Francisco’s Tenderloin Housing Clinic and author of last year’s Generation Priced Out: Who Gets to Live in the New Urban America.
This, he says, helps explain why some of the most progressive cities in the country have struggled the most to build more housing.
“We enshrined this sense that homeowners should have the right to decide who lives in their neighbourhood,” he said. “We don’t let homeowners decide whether you get health care or not, or whether you get food. Why are we letting them decide who can build housing?”
Mr. Shaw points to the city of Cupertino – population 61,000 and median home price US$2.1-million – as emblematic of the problem.
Residents enthusiastically supported Apple’s plans to build a headquarters for about 12,000 employees in Cupertino in 2013. But they have spent more than a decade blocking a proposal to redevelop an empty shopping mall into a large mixed-used community that would include 2,400 homes – half of them affordable housing.
“Wouldn’t you think they’d be dancing in the streets that some guys are going to come in at their own expense and create 50-per-cent affordable housing in a vacant shopping mall?” Mr. Shaw asks. “But they’re not dancing in the streets.”
Neighbourhood preservation groups say they are working to protect their hometowns from what they see as global corporate elites looking to destroy communities for profit.
“There is so much benefit to be gained from those people already in high-wealth positions, in corporations or in global real estate, or in development, that have reasons to keep pushing an agenda that furthers their profit margins,” says Susan Kirsch, who founded Livable California, a slow-growth advocacy group that has actively campaigned against pro-housing policies throughout the state.
“They don’t really care so much about community, or history, or historic places, or neighbourhood bars and unique places.”
A retired educator, Ms. Kirsch lives in Marin County, a region just north of San Francisco made up of quaint towns, rolling farms and redwood forests largely protected from major developments. She became involved in the slow-growth movement more than a decade ago when she helped successfully block plans to construct a 20-unit building at the end of her street.
Many housing advocacy groups that have sprung up in Silicon Valley in recent years have been funded through donations from tech giants, Ms. Kirsch argues, while local taxpayers end up being the ones most burdened by the costs of developments that block beautiful vistas, clog roads with traffic and drive up the cost of city services.
“NIMBY has been around a long time,” she says. “And I think it has always been the kind of pejorative term around those people who are really acting as stewards for what’s happening in their backyards.”
Recently, however, there has been a movement at the state level – spearheaded by Scott Wiener, a senator from San Francisco – to wrest control from local governments.
A former president of his neighbourhood association, and a lawyer who did pro bono work for low-income renters evicted from their apartments, Mr. Wiener says he understands the concerns of groups who fear what new housing will mean for their communities. But, he argues, the situation has gotten out of hand. “Our system of almost pure local control over housing has failed,” he says. “It has led to a race to the bottom, where very few cities produce nearly enough housing.”
Mr. Wiener has introduced several efforts to overhaul California’s land-use planning rules with mixed results. He drew national attention last year for proposing to allow multi-family housing along transit routes and in neighbourhoods near urban job centres and suburban office parks – including in cities where local councils objected to such developments. But that bill quickly died in the state’s legislature amid widespread opposition. He introduced a retooled version of the bill this year that he hopes will be voted on as early as January, and this week the state’s legislature passed a bill that would limit rent increases on some types of housing.
RV residents aren’t optimistic that the stalemate over housing will end any time soon.
Jose Reyes points out that Mountain View’s city council has spent the past four years debating whether to open a single lot where RV residents can park overnight capable of holding just 60 RVs, likely not enough for the city’s estimated 212 vehicle residents.
“They can’t even find a small place for us to park our RVs,” he says. “And we’re supposed to expect them to build affordable housing?”
He wants to stay in the community. But with escalating rents and the local government still weighing a ban on RV parking on city streets next year, he worries that eventually he may be forced to leave. “My wife loves it here. So do my kids. It’s where they grew up,” he says. “But if we have to go, we have to go.”