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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.

First, they should take seriously the question of job location and distribution, what we’ve often called “job sprawl.” This means enacting some of the following policy changes:

• 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.

The Bay Area has a lot to gain from pricing its freeways. Two of the major benefits are money for transit and less highway congestion. High-Occupancy Toll (HOT) lanes are a miniature form of road pricing, offering solo drivers the option to buy their way into High-Occupancy Vehicle lanes and bypass the congested, more heavily-subsidized highway lanes.

In 2008, the Metropolitan Transportation Commission (MTC) proposed a plan to expand the region’s network of HOT lanes to 800 miles by 2035. This week, the agency is expected to approve a new plan for submission to the California Transportation Commission (CTC), but it would be scaled back significantly to 570 miles and would fall short of achieving the benefits of road pricing on several levels:

• Much of the planned network will expand highway lanes rather than converting existing ones to use them more efficiently. SPUR’s analysis shows that this will increase vehicle travel demand and CO2 emissions.

• The plan won’t make any money for transit. Regional systems like Caltrain are in dire need of long-term funding solutions, but the cost of building the HOT Lane network, estimated between $1.6 and $6.8 billion, would negate nearly all of the revenue the MTC expects to bring in over the timeline of the plan.

• The plan won’t complete the express lane network for buses that use the highways. Some of the most congested routes, like 280 and 101 leading into the urban core of San Francisco, would be left without HOT lanes at all.

Some sustainable planning advocates like the folks at TransForm fear the MTC is rushing to submit a severely flawed proposal in time for the CTC’s deadline in October, after which final authority over HOT lanes is shifted from the CTC to the more challenging state legislature.

But the MTC is also developing its Regional Transportation Plan (RTP) over the next two years, which is likely to include recommendations more consistent with the region’s sustainable planning goals. Rather than submit a rushed proposal now and go through a more difficult modification process later, the agency should wait to develop a comprehensive plan that provides the Bay Area the kind of road pricing measures it needs to manage travel demand on its highways.

Tomorrow, April 27, the Metropolitan Transportation Commission (MTC) will vote on a final Committed Funds and Projects Policy for Plan Bay Area. This policy mouthful is an important step in defining which regional transportation projects will receive funding and which ones must undergo more thorough analysis. The vote will determine how many transportation projects will be scrutinized for their impact on greenhouse gases, driving, economic growth and other factors. Affected projects in could include highway widening, the Oakland Airport Connector and BART to San Jose.

The issue before the MTC: deciding which projects are so far along that they shouldn’t be analyzed yet again under new criteria. The projects that are not further analyzed are considered “committed” and will be automatically included in the next Regional Transportation Plan. These committed projects will be included in all scenarios projecting the Bay Area’s future growth.

What’s different this year: the next Regional Transportation Plan will be the first one finalized since the passage of Senate Bill 375. That means this plan is supposed to help meet our region’s goal of reducing greenhouse gases from driving by 15 percent per capita. That’s harder to achieve if we don’t evaluate whether or not our investments encourage people to drive.

Wednesday’s vote will set a final policy for how to count a project as committed. In the last Regional Transportation Plan — done in 2009 — 70 projects were designated as committed. This year, if the MTC adopts the recommendation of its Planning Committee, only 14 projects will be considered committed and not analyzed further. Even though the committee made this recommendation in a 5-3 vote, the full Commission has the final say and can select a different approach, which means this is still a very live and important issue.

There are several major options up for consideration. Option 1 (36 projects committed) says projects are committed after they certify their Environmental Impact Report. Option 2 (14 projects committed) says a project is committed only after construction has started. In general, transit advocates like our friends at TransForm favor the later date (i.e., Option 2).

SPUR has endorsed a slightly different — and we think more nuanced — approach to this policy debate. We argued that using just the Environmental Impact Report (EIR) cutoff is inappropriate because many EIRs are old and project cost often skyrocket after they are approved. As the MTC notes in its analysis, after the environmental phase, transit projects typically rise 50 percent in cost and highway projects rise 30 percent.

In a letter to the MTC, we proposed that a project be considered committed if it is either:

1.    already under construction or
2.    has a certified EIR less than 5 years old and the estimated project costs have not grown by more than 5 percent per year since EIR certification.

We didn’t support Option 2 because it would cast too much uncertainty over projects that have spent many years in preparation and are nearly under construction. This is important to project stakeholders — especially agencies who might otherwise not take on the risk of conducting an EIR without certainty in a project’s funding potential.

If MTC commissioners tomorrow reject the Planning Committee’s recommendation, we hope they will adopt the SPUR proposal. Our approach leaves fewer projects in uncertain status but retains some objective standards to re-evaluate out-of-date and over-budget projects.

Co-working studio [Photo by flickr user ahopsi]

According to a piece in Sunday’s Chronicle, tech employment in San Francisco is approaching its dot-com peak:

"The city had an estimated 32,180 tech jobs last year, compared with 34,116 in 2000, according to an analysis of state employment data by real estate consultant Jones Lang LaSalle. In 2004, the number of tech jobs had fallen to 18,210."

The most interesting thing about the growth in jobs is that it hasn’t been accompanied by proportionate growth in office space; while dot-com companies occupied 325 square feet per worker in 2000, today they occupy about 175, and that number has been falling each year. The Chronicle speculates that this is driven by the relative frugality among today’s dot-coms, which is certainly possible. While there are lots of companies out there, venture capital firms have generally been making smaller investments during this cycle.

But according to analysis we're doing here at SPUR, the increasing density of the workforce could also be due to the following trends in Bay Area work:

More telecommuting: Many more are working from home or at non-traditional offices. This is due to an increase in self-employment and to the rise in telecommuting among tech workers. While San Franciscans aren’t necessarily telecommuting more now than in past years, data from the 2005 and 2009 American Community Surveys do show increases in many other Bay Area cities, like Berkeley (where 12% of residents telecommute), Mountain View (7%) and Oakland (6%).

Mobility strategies: Everyone knows that smartphones make knowledge workers more mobile. This means that a lot of work can, and does, happen outside of the office. It also means that at any given moment during the work day, as few as 30 percent of workers are at their desks. Companies see this low utilization and decide to reduce overall private space for workers. This leads them to move to open-plan layouts and shared offices, as Deloitte did last year. Part of the motivation is to cut costs, but the trend also reflects a re-purposing of space as companies forgo private offices in exchange for more meeting space.

Co-working: Particularly among the startups that are adding to that tech-job number in SF, co-working arrangements are popular: firms (or individuals) join together to share office amenities like conference rooms and kitchens. These setups cut down significantly on space needs.

Whatever the reasons, the move to smaller office footprints should play to San Francisco’s strengths. Working in San Francisco usually means being able to commute without a car, which means firms don't have to build the amount of parking needed in places like Silicon Valley. San Francisco also has dense urban districts packed with amenities, which can complement a scaled-down workplace. In some ways, San Francisco makes life hard for a growing firm. But while addressing those challenges, the city should not lose focus on what it has to offer. After all, these young tech firms are in the city for a reason — and it’s not because it’s cheap.