This is a time of significant flux in the Bay Area’s regional planning landscape.
First, there is a serious proposal in the California State Legislature to change the way the Metropolitan Transportation Commission (MTC) is governed. MTC is the main funder of transportation in the Bay Area. The proposal, Assembly Bill 57, would add seats on this commission for the cities of San Jose and Oakland. It would be the first change to the allocation of seats on the MTC since it was formed in 1970.
At the same time, the MTC and the Association of Bay Area Governments (ABAG) are leading the Bay Area’s implementation of Senate Bill 375, which mandated that every region in California come up with a plan to reduce greenhouse gas emissions by changing land uses to reduce driving.
Finally, as the Bay Area continues to face slow job growth, there is increasing talk about whether the MTC, ABAG and other regional agencies can play a stronger supportive role in economic development.
In early December, SPUR was asked to testify at both a state senate hearing and at the Bay Area’s Joint Policy Committee, which represents the four regional government agencies: the MTC, ABAG, the Bay Conservation and Development Commission (BCDC) and the Bay Area Air Quality Management District (BAAQMD). We answered questions about how economic development happens, the role of regional agencies in fostering it and the challenges specific to the Bay Area. Here’s a recap:
How does economic development take place?
We started by describing some basic theory about local economic development policy. It’s important to keep in mind that local and regional policy tools to affect the economy are in some ways very limited. Many “fundamentals” of the economy — such as how expensive your currency is, the cost of credit, the structure of patent law and the number of immigrants who are allowed to move into a region — are beyond the control of local or regional government. And of course, the vast majority of economic decisions take place in interactions between firms and consumers, and these can only be indirectly influenced by policy of any kind. But keeping the limits of economic development policy in perspective, there are still some important steps that we should take:
Our first task is to produce an analytic description of what drives our economy (what we export, how competitive our industries are).
Second, we need to understand what local and regional factors shape this competitiveness. This includes our systems of education finance, infrastructure and local policy, as well as our general quality of life.
Third, we bring leaders in business, government, and higher education together to shape a forward-looking economic strategy. This process cannot be entirely led by the public sector, but it must have strong government support and backing.
SPUR argued that it is not appropriate for the Joint Policy Committee to be the lead entity in producing a regional economic strategy. The best economic development efforts bring firms, government agencies, educational institutions and other stakeholders together to shape a strategy. We suggested that the Bay Area should move toward the creation of something like a regional economic development commission with both public and private leadership, whose role is to produce, manage and continually update a regional economic strategy.
What are the Bay Area’s key regional planning and economic challenges?
The region faces three daunting challenges that affect both economic competitiveness and environmental sustainability:
1. Slow job growth
2. Increasing job sprawl and declining density of employment
3. High reliance on car commuting
SPUR thinks that the future requires a change in how we go about regional planning and economic development.
Our competitors — urban areas around the world such as Shanghai, Seoul, Hong Kong and Singapore —differ from the Bay Area in two important ways. First, these other metropolitan areas are better coordinated regionally. They have forward-thinking economic development strategies and local and regional government structures that foster collaboration, prioritization and investment. Second, they have high employment density. That is, many of their workers are in dense settings where they can share ideas and collaborate. Sure, those places still envy the Silicon Valley idea-generation machine, which continually spins out successful companies. But our key advantages (education, research, infrastructure) are increasingly threatened. In the past, the economic benefits of agglomeration (dense groupings of complementary companies, suppliers and industries) did not require urbanism or urban places. In the future it will.
Given this, we think future Bay Area competitiveness will require locating more jobs in denser urban centers — places like downtown Palo Alto, Berkeley, San Jose, Oakland and San Francisco — as well as increasing the density in suburban job locations such as office parks and corporate campuses. In fact, SPUR will be releasing a major study on these ideas in January 2012.
What is the role of regional agencies in fostering economic development?
We argued that there are two key roles for the regional agencies.
- Pursuing tools to make dense and densifying job centers more attractive financially (e.g. changes to tax policy or air quality rules for indirect emissions)
- Changing the region’s transit expansion and transit-oriented development policy to reward or require jobs near transit (current rules only require planning for housing near transit)
- Pricing on highways in order to raise needed funds for new infrastructure (current plans for road pricing do not raise any additional revenue for transit)
- Block grants focused on transit-served dense places (this is a live proposal at ABAG and MTC)
Second, they should look more closely at the economic impact of their plans, policies and programs. In short, MTC and other regional agencies ought to consider how their investments and policies will affect local and regional economic growth. For our purposes, this is broader than simply assessing how a decision might affect the regulatory environment for firms.
How does this all relate to regional governance and the distribution of seats on the MTC?
The question of regional governance is related to how the Bay Area can best improve its economic competitiveness. SPUR has been looking at this question specifically around the current allocation of seats on the Metropolitan Transportation Commission. Assembly Bill 57 would increase the total number of MTC commissioners from 19 to 21 and the number of county seats from 14 to 16 (three each for Santa Clara and Alameda, two each for San Francisco, San Mateo and Contra Costa, and one each for Marin, Napa, Sonoma and Solano).
Objectively, there are legitimate reasons to change MTC’s allocation of seats. A lot has changed since MTC was formed in 1970.
Santa Clara County today has 25 percent of the region’s jobs and people but only 14 percent of the seats (two of 14 seats allocated by county). Alameda has more than 20 percent of jobs and people but only two seats. San Francisco has two seats, 12 percent of the people and 17 percent of the jobs. When looking at representation for our three biggest cities, there is even greater underrepresentation today: San Franciso, San Jose and Oakland only have two seats among them (i.e. San Francisco’s) yet combined they have 35 percent of the population and 30 percent of the jobs. In short, the current allocation of seats does not fairly distribute power among the counties or cities.
The proposal outlined in the State Assembly Bill 57 calls for adding an additional seat for San Jose and another for Oakland. That would change the allocation of seats and make a slightly more even distribution.
Yet, we also question whether or not changing the allocation of seats will lead to dramatically different results. Few votes at MTC are close, and even fewer are won or lost by one vote. Some have noted that both Alameda and Santa Clara counties have had a third seat over the years (as the seat representing ABAG).
Ultimately, what matters most for MTC and the region is the perception of fairness and the ongoing willingness of leaders in the various cities and counties to collaborate. Santa Clara sees the mismatch in seats and thinks this harms the legitimacy of MTC. San Francisco and other areas have their own critiques and grievances about aging transit systems and other investment needs they do not think get sufficient attention. But to bring it back to economic development, what we should mostly focus on in how San Jose, Oakland and San Francisco can collaborate on the big needs of the day:
- Getting high speed rail built
- Putting transit systems on stronger financial ground and better connecting them to each other
- Locating more employment in dense urban settings
We have no choice but to work on these and other challenges — no matter how the MTC seats are allocated. What we must avoid is letting the current disagreements over MTC seats affect our ability to collaborate. There is too much at stake.