Blog: February, 2012
Signs of an Upswing for SF Economy in 2012
As the economy struggles to recover in the Bay Area, what are the prospects for city revenues in San Francisco? City budget staffers and experts on the local economy gathered at the 2012 Annual Economic Briefing, hosted by SPUR's Municipal Fiscal Advisory Committee, to discuss regional trends and projections for the city’s major revenue streams. The upshot: Our experts are starting to see some good news on the horizon. The city trailed the state into this recession and though it is also trailing it out, unemployment has finally begun to decline, and San Francisco appears to be poised for revenue growth.
The value of these annual gatherings is in the cross-sector interaction; experts in Bay Area real estate, employment and economic activity gather to help to ensure that the city’s forecasts are reasonable and reflect the latest trends on the ground. Here's what they reported:
• Property tax revenues are stabilizing. While the city has for the second consecutive year projected a year-over-year decline in property tax revenues, prices have started to stabilize and even to recover. The volume of transactions has started to increase across both residential and commercial sectors. And while property transfer taxes can be a volatile revenue stream, major commercial transactions forecast for the coming year could bring significant revenue to the city’s coffers.
• Sales tax revenues have seen a dramatic increase. In the first quarter of the current fiscal year, revenues were up nearly 13 percent. Revenues resulting from the governor’s plan to realign state services may actually increase the city’s share of local sales tax revenues. Voluntary reporting of sales tax — where individuals voluntarily report the tax due on their online transactions — is on the rise. With the impending collection of all online sales taxes, revenues are projected to increase further.
• Hotel room rates are on the rise, which is good news for hotel tax revenues. While room rates have not yet reached the record levels seen before the recession, they are approaching the peak values seen during the last technology boom in 2001. With healthy projections for convention bookings, hotel tax revenue is projected to increase by at least 7 percent in the coming year.
It’s important to keep in mind that these are preliminary projections and are always subject to change. And, as with any good news story, there are also some outstanding questions:
• How will the heating up of the technology sector affect housing prices in the city? We have all witnessed the dramatic increase of rental prices — the rental market is the hottest it has been in years — but will the combination of historically low interest rates and an influx of technology wealth translate into a recovery in housing prices?
• Can public pension costs be contained? The city’s investment returns and revenue assumptions ultimately impact its ability to provide services. But how will the pension reform approved at the ballot and recent market fluctuations impact the city’s pension expenses? How will the San Francisco Health Service System’s recent investment return reductions — phased in over time — impact the city’s expenses?
• What is the potential impact of a European recession? With continued efforts to structure an austerity program for Greece and others, the implications on public bond markets around the world are still largely unknown. Will a deal ultimately be adopted? How will this instability impact public bond markets and the cost of borrowing for governments?
It’s clear from watching the daily news that local governments have not yet emerged from this recession. In fact, government employment loss may actually be dragging down employment growth overall. It is also true that a number of unknowns remain in European markets and not clear whether recent employment growth can be sustained in the coming year.
However, the Bay Area does appear to be showing signs of life: technology investment and employment are both trending up, tourism and hotel room rates are likewise on the upswing, property tax revenues appear to be stabilizing. And for the first time since the onset of the recession, many of our experts are surprisingly optimistic.
Bay Area Cities Adjust to Life After Redevelopment
Redevelopment agencies across the state closed their doors on February 1, marking the end of an era for planning in California. SPUR has written previously about what the end of redevelopment means for the state. But how are the Bay Area’s central cities — San Francisco, Oakland and San Jose — dismantling their agencies? What’s going to happen to the on-going projects and existing assets held by redevelopment agencies? Is this the last word — or will we witness the creation of other planning tools to do some of the work that was previously done by redevelopment agencies?
San Francisco is, in many ways, the city least likely to be impacted by the end of redevelopment — and the one in the best position to develop tools and strategies to replace it. As both a city and a county, San Francisco will not need to send its redevelopment funding to a separate county government, where it would become one of many jurisdictions fighting for remaining funds. In contrast, Oakland is one of 14 cities in Alameda County (not including unincorporated Alameda County) and San Jose is one of 15 cities in Santa Clara County (not including unincorporated Santa Clara County). Despite this, San Francisco will not emerge unscathed.
San Francisco has developed three main priorities to guide its actions in the face of redevelopment’s dissolution: first, that the three large redevelopment projects (Mission Bay, Hunter’s Point and Transbay) that qualify as enforceable obligations under Assembly Bill 26 (the state law that dissolved redevelopment) continue uninterrupted; second, that the community development functions of redevelopment — including affordable housing production, workforce development programs, and neighborhood strengthening and investment initiatives — be protected; and third, that that programs that receive state or federal matching funds continue to move forward so that matching funding is not lost.
In late January, the city adopted a resolution that laid out the plan for meeting these priorities. The resolution took four steps:
- It identified the city as the “successor agency” to the San Francisco Redevelopment Agency, meaning that the city itself will control the former assets of the redevelopment agency.
- It transferred the redevelopment agency’s affordable housing funds to the Mayor’s Office of Housing and transferred all other assets to the City Administrator’s Office.
- It required payment and performance on “enforceable obligations,” or approved redevelopment projects that will be allowed to go forward. These include Mission Bay, Hunters Point Shipyard, portions of Bayview Hunters Point and Transbay.
- It created a new oversight board to oversee the management of these enforceable obligations.
In addition, the city also rescinded the Treasure Island Development Authority as a redevelopment agency. The city has opted to convert the Treasure Island project into an Infrastructure Financing District (IFD) as opposed to a Redevelopment Area. The IFD will create a source of tax increment financing to support bonds necessary to pay for some of the infrastructure costs. By doing this, the city clarified that Treasure Island is not subject to any of the post-redevelopment constraints imposed by A.B. 26.
The upshot for San Francisco is that some of its affordable housing funding and existing major redevelopment projects are well positioned to be protected. However, some of the other work of redevelopment not considered enforceable obligations — such as economic development and project development in areas such as Visitation Valley — will require more creative approaches to move forward.
Additionally, the future of the redevelopment agency’s roughly 100 employees remains unclear.
In Oakland, the loss of redevelopment will be devastating to the capacity of the city to develop underutilized properties. Projects like the Broadway Auto Row project and the funds to build a new stadium for the A’s could be substantially reduced or eliminated. In addition, Oakland will not be able to rely on tax increment financing to fund affordable housing; roughly 25 percent of redevelopment funding in Oakland were used to fund affordable housing.
The loss of redevelopment has also taken its toll on other aspects of Oakland’s government: Redevelopment funds are deeply intertwined into more than 160 city positions in 11 departments. Rather than deliver pink slips to those employees whose jobs were funded by redevelopment, city leaders instead proposed overhauling all city operations to more efficiently provide services while retaining some redevelopment staff to help wind down current projects. On January 31, the Oakland City Council approved an amended budget accounting for the $28 million gap from redevelopment funding. The city will eliminate 105 positions, resulting in 80 layoffs. Consolidations include combining the Office of Parks and Recreation and the Department of Human Services. Oakland will also move key administrative functions for several departments into a single Administrative Services Department, according to the city administrator. The Community and Economic Development Agency, which housed most of the city’s redevelopment activities, will be dissolved into four new offices: Planning and Neighborhood Preservation, Housing and Community Development, Economic and Workforce Development, and Neighborhood Investment. The City of Oakland has also identified itself as the successor agency and will prioritize projects like the Oakland Army Base that have enforceable obligations to move forward. The City administrator's office will manage the remaining assets from the elimination of redevelopment.
Established in 1956, the San Jose Redevelopment Agency (SJRA) invested billions of dollars in four program goals:
- Creating jobs and expanding business through investments in projects such as Cisco’s campus in North San Jose and Adobe’s headquarters in the downtown,
- Building public facilities such as the Repertory Theater and the 4th Street Parking Garage,
- Developing and preserving affordable and market rate housing and
- Strengthening neighborhoods through the Strong Neighborhoods Initiative and Neighborhood Business Districts.
The agency used the tax increment from its roughly 19,000 acres of designated redevelopment areas to borrow against and reinvest in other areas. In doing so in an arguably overly robust way, they became the state’s second largest redevelopment agency as measured by tax revenue, and the City of San Jose’s “go to” for funding and approval of almost all major projects in the last several decades.
The SJRA began planning for its own shuttering a few years ago when the state began withdrawing funds from all redevelopment agencies. With the realization that it was overleveraged and would be unable to continue even if the option to “pay to play” was made available, the agency began reducing its workforce from 119 employees in 2009 to 10 employees today — just enough to manage its obligations on $3.8 billion of remaining debt. The San Jose City Council took its final action to end the agency in late January by:
- Creating an official successor agency to manage the majority of the remaining debt,
- Naming the city manager as the executive officer of the successor agency and
- Creating the Successor Agency Fund, which allows the city to take over the debts of the affordable housing assets and activities that had been funded by the SJRA.
Because of the SJRA’s debt obligations, it will be decades before any tax increment is available to Santa Clara County or the state.
The end of redevelopment in San Jose will have far-reaching and likely yet unknown impacts, and there are many questions still to be answered. What happens to the Strong Neighborhood designations and areas of investment? How will the San Jose Department of Housing replace the 20 percent of its budget that came from SJRA affordable housing funds? How will the City of San Jose continue to provide the necessary infrastructure in downtown and offer incentives for future development?
It remains unclear how cities in California will fare in the wake of redevelopment’s disappearance. Some of the tools that might replace redevelopment, such as Infrastructure Financing Districts, are complicated to use and don’t fund all of the things redevelopment used to do. SPUR is committed to figuring out what should be next now that redevelopment is gone. We are going to need new tools if our cities are to thrive.
Join us February 29 for a SPUR forum: The Death of Redevelopment >>
Making a Living as an Urban Farmer
Can you make a living selling what you grow in a city?
That’s a question a number of urban farming entrepreneurs have been working to answer in the past few years, and initial numbers are beginning to become public.
The short answer is … maybe. For many new urban-farming businesses that have started in the past couple of years, it may be too soon to judge — just as it would be with any small business getting off the ground. It’s also a question of what level of income you consider livable. A recent article from the two co-owners of Little City Gardens and a study in Vancouver provide some initial data.
Little City Gardens grows a variety of vegetables on a three-quarter acre plot in the Mission Terrace neighborhood of San Francisco. During the past year — their first of intensive production and sales — they marketed their produce to restaurants, caterers, CSA subscribers and to the public through a farm stand. In a blog post reviewing the past year, the co-owners reported that their revenue from 2011 allowed them to cover costs, set aside money for the coming year, and pay themselves $10,000 each. As the Little City owners put it, “Of course we acknowledge that we cannot sustain this type of salary for too long. This is not considered a living wage in San Francisco, and if we tried to pay ourselves by the hour, our wages would be embarrassing. We also acknowledge that this salary absolutely would not be adequate for anyone responsible for supporting a child or other family members, repaying loans or medical bills.” At the same time, they are hopeful that their second year will include increased sales, greater efficiency and the ability to pay themselves higher wages.
The numbers in Vancouver, British Columbia, paint a similar picture of urban farmers earning relatively little income. A study by University of British Columbia researcher Marc Schutzbank of eight commercial urban agriculture projects revealed that city farm owners earned an average of $8.64 per hour in 2010 (the figure was reported in Canadian dollars but is essentially the same in U.S. dollars at the contemporary exchange rates). The report notes that this is slightly less than what rural farm owners earned in British Columbia during the same period, but that urban farmers have the potential to grow and increase profits with higher yields, efficiency and sales.
Other notable commercial urban agriculture operations in areas of the country with high costs of living may soon provide more data about their commercial viability. Dig Deep Farms, for example, grows produce in the Ashland and Cherryland areas of Alameda County and sells its harvest through a CSA. Brooklyn Grange and Gotham Greens in New York City have taken to roofs for growing space. Proponents of a model of intensive small plot cultivation called SPIN Farming have hosted workshops in the United States and Canada promoting the viability of urban farms on less than one acre of land.
Urban agriculture as a business is a young industry. Initial numbers indicate that urban farming, like rural farming, often has low-to-no profit with the added burden of city-level costs of living. As with any young industry, though, it will take a number of years before it is clear which business models can support the livelihoods of urban farmers.
Ocean Beach Master Plan Key Moves - Translated in Chinese
在過去的一年，三藩市規劃及城市研究協會(The San Francisco Planning and Urban
Research Association, SPUR) 正與公共機構、社區人士、權益關注者和其他持份者一同
重要舉措 1 改變位於動物園後Great 高速公路在Sloat 大街和Skyline 街之間的路線
重要舉措 2 引入多用途海岸保護/修復/入口系統
重要舉措 3 為管理設施的用地而減少Great高速公路的寬度
重要舉措 4 中段海灘沙丘的收復
重要舉措 5 為金門公園通往海灘提供更好的連接
重要舉措6 改善Balboa 街以北的自行車道及行人道
要閱讀整個Ocean 海灘的總體規劃，可瀏覽網頁: http://www.spur.org/ocean-beach。
http://www.spur.org/ocean-beach 查看相關的指示。請將您的意見在2 月29 日之前提
Walk the Bay Area with SPUR
Members-only walking tours are one of the great benefits of joining SPUR. Tour leaders such as planners, architects, elected officials and other insiders spend a few hours with us, sharing their expert lens on our region. Want to know what's in store for 2012? Our new calendar of spring tours and other events is now online.
For a peek at the kind of insight SPUR tours offer, check out William Leddy, principal of Leddy Maytum Stacy Architects, showing us Berkeley's Ed Roberts Campus in this short film by SPUR's video intern, Michael Waldrep. The mixed-use project integrates advanced strategies for universal and sustainable design in a campus for organizations serving the disabled community:
We hope you'll join us for these upcoming SPUR walking tours:
Sneak Preview: Bi-Rite Market’s New Store >>
A Forest in the City: Tenderloin National Forest Tour >>
Urban Menagerie: Raising Animals in a City >>
Pop-Up City: Tour of Proxy >>
Redirecting a Railway: Oakland's 16th Street Station >>