Climate Change hits San Francisco
No single event can be clearly attributed to climate change, but last winter's erosion events at Ocean Beach are as close to a bellwether as we've seen in San Francisco. In January and February, nearly 40 feet of bluff collapsed onto the dwindling beach south of Sloat Boulevard, leaving the southbound Great Highway closed and, more ominously, threatening the Lake Merced tunnel, a 14-foot-diameter sewer transport pipe that lies under the road. An emergency was declared, and Department of Public Works crews placed rock revetments—a form of coastal "armoring"—on the beach to prevent further damage. Parts of the 1940s-era seawall that had been buried under undulating sand dunes in the central part of the beach remain exposed even today.
An emergency, perhaps, but hardly a surprise. Episodic erosion and armoring had occurred several times over preceding decades. Two citizen task forces studied the problem and warned that even more erosion was coming. Local environmentalists and surfers, then and now, have fought emergency declarations and rock placement, arguing that "temporary" armoring has a way of becoming permanent, and results in the loss of the beach.
This conundrum—when and where to armor the coast to protect expensive property and infrastructure, and when and where to let nature take its new, more threatening course—is our fundamental climate adaptation policy challenge. Along the coast and the shoreline of San Francisco Bay, it is a basic city-planning challenge as well.
Late last year, international climate talks foundered in Copenhagen, while at the U.S. federal level, the House passed a relatively ambitious climate bill that died in the Senate and was buried by the November election.
The upshot? States, regions and cities have to become leaders on both fronts of global warming: trying to stop it and dealing with its effects.
Fortunately for us, California continues to lead the way on climate policy, with voters this year decisively rejecting a challenge to Assembly Bill 32, the state's landmark climate protection law. Regional agencies such as the Metropolitan Transportation Commission and the Association of Bay Area Governments have begun the process of developing Sustainable Communities Strategies under Senate Bill 375, which will guide future development to transit-rich locations to reduce carbon emissions from driving. Finally, the state pulled together a multiagency Climate Adaptation Strategy, meant to guide state agencies in planning for the health, air quality, water, agricultural and sea-level implications of global warming. The San Francisco Bay Conservation and Development Commission has been proactive about studying and planning for future sea-level rise in the Bay.
SPUR also is working on both of these fronts. We are actively involved in shaping the region's first Sustainable Communities Strategy, a document that will propose a land-use vision and policy tools to achieve the region's target of 15 percent per capita reduction in greenhouse gases. The SCS will constitute part of the Regional Transportation Plan, and plan for enough housing to accommodate the region's population growth. This year, we successfully advocated for the MTC to adopt a stretch goal of 15 percent for its emissions-reduction target.
Since 2009, we have been running a climate adaptation task force to study the effects of global warming and to recommend adaptive strategies. This work will wrap up early this year with recommendations for local governments, including San Francisco, on every aspect of adaptation planning, from sea-level rise to public health and water resource management. Recently, we commented on BCDC's proposal to amend its Bay Plan to include new findings and policies on climate change and sea-level rise (read our thoughts at spur.org/bayplan). While commending BCDC for being a global leader on planning for sea-level rise, SPUR recommended that BCDC work with other agencies, and especially local governments, to identify long-term regional flood protection strategies and ensure consistency with SB 375.
Finally, SPUR is leading an ambitious climate change adaptation effort in the city's own backyard. The Ocean Beach Master Plan, funded by grants from the California Coastal Conservancy, the San Francisco Public Utilities Commission and the National Park Service, is convening a wide range of public agencies, advocates and community stakeholders. The goal is to create a great public landscape in the context of a moving coastline and an uncertain climate, while balancing the needs of beach users, a fragile ecosystem and critical infrastructure. If the project is successful, the next erosion episode won't be an emergency—it will be an expectation fulfilled, triggering a set of agreed-upon actions. We can no longer plan for a fixed state, an imagined equilibrium. It is a strange and discomfiting kind of stewardship, but one that will be essential in our new, uncertain age.
—Benjamin Grant & Laura Tam
The tortured progress of California high-speed rail
Transformational infrastructure projects require public will, political courage and lots of money. But throughout history, they have created the society that we enjoy today. When we think of the last century, we may think of the University of California, the freeways and the State Water Project. A hundred years ago, our great-grandparents delivered the transcontinental railroad and the state's early flood control projects. Modern California is unthinkable without those expensive and at times controversial projects—and today nobody disputes their value, importance or necessity.
SPUR is convinced that our grandchildren will value high-speed rail the same way Bay Area residents value BART or the bridges today. But, like every other transformational project in the state's history, the high-speed rail project is contending with critics, cynics and naysayers. How we listen and collaborate with the doubters is important for a project that is going to be built incrementally over many years. We need quick wins and more consensus, and we need to work quickly to settle controversies and move on. Too much is at stake to lose, and that might happen if the complaints of a few overwhelm the needs of the many. In 2010 we started with many quick wins, several big disappointments and a few big question marks.
San Francisco was at the forefront of the quick wins this summer. The Transbay Transit Center, after 10 years of planning, broke ground and included the all-important "train box." This occurred because the Transbay Joint Powers Authority, working with the City and assisted by SPUR (and our decade-long involvement), managed to secure $400 million in high-speed rail funds that were included in the federal stimulus package. The end result for San Francisco will be a new regional transit center that is home to the region's transbay bus fleet, a new icon for the City and the region, and a new anchor to a neighborhood of more than 2,500 residential units and 6 million square feet of office space (enough space for about 25,000 office workers).
For the high-speed rail project, the Transbay Transit Center becomes the objective —geographically, economically and aesthetically. By building the terminal first, San Francisco is challenging the rest of the state and the region to embrace high-speed-rail and is showing the good things that happen when we invest. With $150 million in local sales tax money and almost $200 million more in local redevelopment tax increments, San Francisco sets a high bar and receives equally high benefits.
This huge step forward for the high-speed rail program couldn't have happened any sooner. The project has been mired in controversy, and now congressional Republicans want to kill its federal funding. We need to pass on San Francisco's optimism to the rest of the state. When railroads were first invented, the critics of the day claimed they caused "concussions of the brain" and that they were the work of the devil, in addition to the more technologically based concerns over boiler accidents and collisions. Those concerns seem quaint and improbable now.
Our objective for 2011 must be to engage the naysayers and reach out to our friends. San Jose is allied with San Francisco on the need for high-speed rail, but our strangest bedfellows are Fresno and Bakersfield, where the project enjoys huge support. While we can shudder when the newly elected members of Congress (and some Midwest governors) want more highway spending and no rail funding, we need to take the big view. The history of infrastructure projects is that when the political support is there, the leaders will follow the people.
Imagine a future in which Fresno, with its own "starchitect"-designed station in a revitalized and renewed downtown, is only 90 minutes from San Francisco or Los Angeles. Fresno becomes the center of a state of more than 40 million people who are separated by the running time of one Hollywood movie. Geography can have its advantages. High-speed rail will change Fresno, it will change San Francisco, it will change the state and it eventually will change the country. Realistically, when Fresno, Bakersfield and San Francisco all want the same thing, the odds favor us. Add in Los Angeles and Anaheim, and statewide voters' endorsement of $10 billion for the system, and the project's politics seem solid. We just need to execute.
Some will say we can't afford high-speed rail. In an era of doubts about government spending and effectiveness, we need to respond. Let's be serious here: California's high-speed rail bill is more than $40 billion. The state already has set aside $10 billion. That leaves $30 billion for local agencies, the federal government and the private sector. Who needs to step up? Local agencies need to build and maintain their stations, just as they build and maintain their airports. The private sector needs to leverage operational efficiencies and the system cash flow to finance the trains and other portions of the system. And we'll need federal money: $15 billion to $20 billion. Seems like a lot of money, but over a 10-year period California gets almost twice that much federal money for highways (and the state gets only 92 percent of what it puts into the federal highway trust fund).
The future stakes are too high and the opportunities too great to choose the wrong priorities. High-speed-rail will have the same benefits (with few of the downsides) as the interstate highway program. Every community will want to follow San Francisco's Transbay example.
Our work plan for next year: Continue to support efforts to deliver our iconic and trendsetting Transbay project, including the all-important downtown track extensions, and work with our colleagues in the Central Valley to deliver the first phase of the project.
But most of our attention will be on the Peninsula, where the high-speed rail planning process has bogged down in local concerns, grandstanding and misunderstandings. At a time when Caltrain cannot be supported financially, the Peninsula communities need to realize that the high-speed rail project offers a way out: a real, electrified, non-polluting, downtown San Francisco to downtown San Jose rapid transit system that also is used by longer, faster trains traveling longer distances. We are frustrated with the narrow view of some Peninsula residents and their general lack of concern for the common good. Every urbanized, industrialized country has found high-speed rail to be critical to maintaining mobility in a modern economy and meeting environmental challenges at the same time. California is no different (and neither are the benefits to the Peninsula), and we need to work hard in 2011 to get that message out.
It is SPUR's job to continue providing practical support to get this project built.
A boomlet for Internet and social media companies
One of last year's few economic bright spots was the fast job growth—and major real estate deals—of a few select consumer Internet and social media companies. In early 2010, Twitter doubled its presence at Fourth and Folsom Streets to over 60,000 square feet, or enough space for 350 employees. Soon after, Zynga expanded its headquarters to 270,000 square feet at Eighth and Townsend. (This was the biggest lease signed in San Francisco since the Barclay's expansion to over 320,000 square feet in late 2005.) And finally, on the same day the Giants won the World Series, Salesforce announced plans to build a new 2 million-square-foot headquarters in Mission Bay, occupying nearly all its remaining entitled office space. When built out, Salesforce will be San Francisco's second-largest consumer of private office space (after Wells Fargo).
There is some irony to the decisions by these three firms to stay and grow in San Francisco: their products help to support a world that is less tethered to physical space, posing a challenge to one of any city's most competitive assets (real estate). By offering virtual access to servers and software, Salesforce reduces the need for a company to buy or own as much centralized office space, and to compete with other companies through these location decisions. Twitter provides a way for organizations to develop "followers" and connect with markets without face-to-face contact. And Zynga provides entertainment without in-the-flesh socializing. At the same time, each company is deeply rooted in place, and making a major commitment to San Francisco and the innovative labor force the city continues to attract.
This "boomlet" in consumer Internet companies could have a big impact on the city's economy and spatial organization in the following ways:
Success begets followers: As has been much reported in the media, the presence of marquee firms like Twitter, Zynga and Salesforce will likely inspire other smaller firms to locate nearby—even down the hallway in some cases. Some of the emerging smaller firms will become larger and more successful and encourage a new crop of startups to locate around them. This process works so long as there is available land and space for growth—not a given in San Francisco.
Export firms grow the local economy: When firms sell goods and services beyond city borders, they net new wealth that expands the local economy. The presence of a growing company means it will spend more on services (accountants, caterers, painters, paper suppliers and lawyers) and goods (computers, food, sporting equipment, etc.). Some of those businesses will fill vacant space in downtown high-rises. Others will put people back to work in neighborhood businesses.
Doing more with less: Today, you don't need as many employees to scale up a business. Twitter had a global reach with only 100 employees (they're at 300 today). Five or 10 years ago, they would have needed many more employees to reach that same global market. This new reality of small firms with big impacts reinforces San Francisco's competitiveness as a business location despite its space constraints and high costs.
Trending south (not north) of Market: In the 1980s, many successful firms moved out of downtown San Francisco to locations several blocks north—for instance, near Levi Plaza. The trend has since reversed, and many of the city's fastestgrowing companies are now seeking spaces in SOMA. Rental rates in the financial district—even in high-quality "Class A" office buildings with views of the Bay—lag behind many unremarkable, lowslung South of Market buildings sought out by tech startups. Other opportunity areas in the city with great proximity to transit (the Mid-Market area, for instance) are not desirable locations for many firms. Until a major tenant leases the vacant Furniture Mart on Market and Tenth Streets, a change in perception is unlikely.
Changing preferences for regional transit: Market Street is the city's main transit corridor and the only place where the vast majority of commuters arrive (from locations in San Francisco and across the region) via public transit. As employment continues to shift away from Market Street, transit commuting will drop off and driving to work will likely increase. At first glance, the decision of many firms to locate farther from Market Street could reflect a lower preference for proximity to public transit (in addition to a high preference for large floorplates offered by converted warehouses and other low- and mid-rise buildings). But some of them might actually be playing the odds and locating between Caltrain and BART—to access both a broader workforce and as a nod toward the increasing integration of Silicon Valley and San Francisco.
Changing density of the workplace: As firms choose larger floorplates and shorter buildings (most viable SOMA office buildings are between two and six stories), setbacks and increased parking requirements contribute to an urban form that is significantly less dense than the downtown highrise district. This pattern is very land-intensive, and as SOMA's warehouse spaces fill up, it means San Francisco may run out of office space soon. The fast growth of key San Francisco firms is proof that San Francisco remains an economically viable place for other major companies to locate. Will some emerging firms shift to the financial district? Will Mid-Market became a location of choice? Will we loosen restrictions on office space in former industrial districts? We look forward to considering these looming questions in 2011.
The Rise of Extreme Democracy
So many things are moving San Francisco in the direction of more process. We have an increasing number of commissions and citizen advisory bodies, often with overlapping jurisdiction, each with its own rules and purview. Despite recent efforts at reform, our discretionary review process remains untamed. Our planning code is the longest such document in the entire country, causing disagreements among experts as to how certain regulations should be interpreted.
Adding to these challenges is the fact that our area plans—statements of guiding principles for planning limited geographic areas—are being asked to take on a vast range of societal issues (de-industrialization, the rise of income inequality, the lack of sufficient state and federal funding for infrastructure such as transit) using the limited tools that zoning can provide. While these area plans were supposed to streamline the process for deciding what types of development should move forward, by creating a set of rules to which everyone agrees up front, there still exists substantial debate about what types of development actually conform to our adopted area plans.
One way to characterize this trend is to call it "extreme democracy." This trend has been propelled by a variety of factors, some with the best of intentions. San Francisco is a progressive city that values participation, inclusion and citizen activism. When the city suffered from the destruction of neighborhoods as the result of urban renewal and urban freeways in the 1950s and '60s, it was a cadre of citizen activists who rose up to stop the tidal wave of top-down planning. These planning wars created a deep distrust of "experts" advocating change that was necessary for "progress." To this day, many San Franciscans believe that changes to the city are presumed to be bad until proven otherwise.
This is also a city where the "haves"— the people who already live here and who own their own homes—are well organized to prevent those who are not yet here from arriving. Many people are working overtime to ensure that as little new housing as possible gets built. These people know that more process means more opportunities to delay, shrink, or kill plans and projects so that fewer things get done.
The truth is that a better democratic process does not always mean more process. Democracy is more complicated than that.
Democracy is easy when people agree with each other on the issues. But what happens when the people do not agree? Given that San Franciscans have so many conflicting ideas about what they want to see built (or not) in their city, reaching consensus on any land use or planning issue often is elusive, if not impossible. So what makes a good democratic process? Is it one that facilitates enough understanding so that the majority of people in a neighborhood agree? How should regional and citywide concerns be weighed? How do we ensure that most people's views are represented, and not just those of the people with the greatest intensity of preferences—i.e., the squeakiest wheels?
One response of the public sector to the problems of extreme democracy has been the rise of temporary solutions. Because it takes so long to complete a process, and because the capacity to reach consensus is both limited and uncertain, San Francisco has seen a boom in pilot projects. We have temporary "parklets" that can be taken down if objections are too fierce, we have "Sunday Streets" to create car-free space one day at a time, we have Market Street planning trials. These pilot projects are great ways to test out new ideas in planning, but they can't address some of the larger needs we have, such as creating a rapid transit network and building enough housing next to our Muni lines and BART stations.
Addressing the major planning issues of our day is something we as a society must learn how to do. It cannot be an acceptable answer to say that only a dictatorship is capable of building high-speed rail or capable of making major changes to land-use patterns to deal with climate change. We need a process that can tackle the housing crisis, climate change and sea-level rise while respecting the fact that we may have conflicting ideas about what solutions will work and what trade-offs are worth making. We need to prove that democracy is capable of solving the hard problems.
So what should be done? There are no easy answers, but part of the solution lies in creating processes that emphasize early and broad based involvement. Issues and concerns can be addressed up front, not resolved at the end through a series of protracted political battles. Most importantly, the outcomes of these early decisions need to be respected, not undermined, at later stages of the process.
Another key step is defining the proper role of CEQA. Many unresolved planning issues wind up getting trapped in CEQA processes, either through rounds of appeals or through litigation. We ought to deal with planning issues through a planning process that allows trade-offs to be understood, and not overly rely on the lens of CEQA, which by its nature defines new development as having "impacts" that must be "mitigated" regardless of whether that new development is proposed for an already urbanized area near transit or in a greenfield.
Finally, we need to find a way to engage a broader group of people. Relatively few people have the time or the inclination to attend round after round of community meetings or public hearings. Making use of new tools and technol-ogies to encourage broader participation might help make our processes become more democratic and prevent the loudest few from dominating the discourse.
A turnaround for Bay Area housing?
The national housing crisis continued in 2010. Foreclosures continued at a rapid pace, dampened only by questions about their legality. Numerous public policies—ranging from the affordable housing goals of Fannie Mae and Freddie Mac to the mortgage interest deduction—have been criticized for encouraging home ownership among people who could not afford it, spurring a boom in construction and threatening the stability of the housing finance system. And the housing bust remains intertwined with the recession: Unemployed people have a harder time paying their mortgage, and the depressed housing market keeps workers in construction and other industries unemployed.
But 2010 quietly marked the beginning of the housing turnaround for the Bay Area. In September 2010—the latest data available—Bay Area house prices were higher than a year earlier, in all three metropolitan areas (San Francisco, Oakland and San Jose). For California overall, prices were slightly higher than a year ago according to one source and slightly lower according to another, but both sources showed California house prices rising faster (or falling less) than the national average. In previous years of this housing bust, California's price declines were—along with Nevada, Arizona and Florida—among the steepest in the country. In 2010, prices in those other three states continued to decline sharply, but not in California. The state still feels plenty of pain: The foreclosure rate in California in late 2010 is still twice the national average, and prices continue to fall in many inland and northern parts of the state. But housing prices in much of coastal California appear to have stabilized.
Why are prices turning around in much of California but not in the other states with steep price declines? In California, the dramatic short-term price fluctuations of the housing boom and bust took place against the backdrop of our perennially tight housing market. Throughout the boom and bust, California's residential vacancy rate remained among the lowest in the country, and far below the vacancy rates of Nevada, Arizona, Florida and other states with big price drops.
While the slight rise in housing prices in the Bay Area and much of California is good news for homeowners, it means that California now faces both the immediate foreclosure crisis and the long-term challenge of housing affordability. Even if home values continue to rise modestly, economic recovery will be slow, with unemployment expected to remain above normal for many years. High unemployment and adjustable mortgage re-sets will make monthly payments unaffordable for many homeowners. Defaults and foreclosures will continue.
At the same time, the housing price decline in California made little dent in the high cost of housing in the Bay Area and California relative to the rest of the United States. The average home price in the San Francisco Bay Area is nearly three times the U.S. average, and expensive real estate raises costs for businesses wanting to locate here and for the workers businesses hope to attract. Of all the high costs of doing business in the Bay Area and in California, real estate costs are the most out of line with national averages.
Within California, price stabilization on the coast widens the affordability gap with inland areas where prices are still falling. The average home in the San Francisco area costs more than triple the average in Stockton today, versus less than double at the peak of the housing bubble. Even within the Bay Area, the gap is widening: The average San Francisco home is between three and four times the price of the average Antioch home today, compared with only 50 percent higher at the housing bubble's peak. The gap between the average Oakland home price and average Antioch home price has widened from close to even at the peak, to two-thirds higher in Oakland today. As the gap in prices between coastal and inland California widens, regional challenges that took a back seat during the recession will reappear. Some workers may move inland for less-expensive housing in exchange for a longer commute, putting renewed stress on congested roads and on the state's goal of reducing greenhouse gas emissions by driving less.
As 2011 begins, therefore, the Bay Area and California face complicated housing challenges. Stabilizing or rising housing prices are good for homeowners, will help restart the housing industry and will contribute to employment growth. But the cloud of foreclosures and underwater borrowers has not yet lifted, and the silver lining of increased affordability is dissolving.
The open-source city
At the very core of the idea of community is the notion that we take responsibility for the place in which we live. We do not just want to be taxpayers and consumers of public services. We want to be citizens. We want to be co-creators.
This is part of a trend in which visionary public- sector leaders are sometimes able to redefine their job as "governing by network":
The hierarchical model of government persists, but its influence is steadily waning, pushed by governments' appetite to solve ever more complicated problems and pulled by the new tools that allow innovators to fashion creative responses. This push and pull is gradually producing a new model of government in which executives' core responsibilities no longer center on managing people and programs but on organizing resources, often belonging to others, to produce public value. Stephen Goldsmith and William D Eggers, Governing by Network: The New Shape of the Public Sector, The Brookings Institution, 2004, page. 9.
One of the national leaders in this movement was our own Brian O'Neill, the long-time superintendent of the Golden Gate National Recreation Area. Brian pioneered a new way of managing a national park, which relied heavily on strategic partners to "program" the park—organizations like the Bay Area Discovery Museum, the Fort Mason Center, and the Headlands Center for the Arts. The most important partner of all was (and is) the Golden Gate Parks Conservancy, which raises huge amounts of private money for the park and runs important stewardship programs as well. Thousands of people volunteer to work in the park each year. It is the network of volunteers, donors and strategic partners that make the park so publicly accessible and so successful. Rather than try to "own" all of the work inside the public entity, the GGNRA embraced a government-by-network approach that invited the entire Bay Area community to become stewards and caretakers of the park.
Brian's work has inspired people all around the country. With any luck, the San Francisco Department of Recreation and Parks will one day have a similar model, with the help of the Neighborhood Parks Council and the Parks Trust. But this idea is applicable to many other realms of community life as well, from education to economic development, from public health to public safety.
Another important success story is the community benefit district movement. CBDs partially answer the problem of how to make local government more responsive at the neighborhood scale: property owners get together, decide on what services they would like added to their neighborhood, vote to assess themselves, and then form a non-profit to manage the services. In 1999, working with the Union Square Association, SPUR helped organize a CBD for the Union Square neighborhood. Since then, the movement has taken off. Today there are ten in the city (soon to be twelve). In 2010, the Union Square neighbors expanded their district from 10 blocks to 27 blocks. In anticipation of our move to the Urban Center, SPUR worked for two years to form the Yerba Buena CBD, the second largest in the city behind Union Square, which became fully operational in 2010. Today there are one thousand such districts in Canada and the U. S.
In some cases, citizens have—literally—taken matters into their own hands. Following in the footsteps of Rebar, a local design collective, and the guerilla-greening movement spearheaded by neighborhood leaders Jane Martin and Gillian Gillett, several nonprofit groups have led citizens in small-scale, temporary, grassroots projects throughout San Francisco. We call this do-it-yourself movement DIY Urbanism, and in 2010 featured 22 DIY projects in an Urban Center exhibition and issue of the Urbanist. From sidewalk rain gardens, to parking spots converted to café seating, to art installations in empty storefronts, to vegetable gardens on vacant construction lots, DIY Urbanism projects gain scale through the collaboration of project initiators with the design community and City agencies. What's possible on one particular site, in one particular neighborhood, becomes possible citywide.
The launch of Data SF in August 2009, and San Francisco's new open-data policy (passed last November) signal further steps toward empowering citizens to improve the information landscape of cities. The legislation will encourage City agencies to publish their data sets on the Data SF website—where software developers can download the sets and create useful websites and mobile applications at no cost to the City .
New software applications created from publicly available data are starting to change the way we experience cities. The innovations go beyond programs like Next Bus, a website and mobile phone application that uses GPS signals to track Muni trains and buses. The Municipal Transportation Authority is currently developing SFpark, a new approach to managing parking. The SFpark pilot projects are a federally funded demonstration of a combination of smarter pricing and real-time data about where parking is available to make it easier to find a parking space, whether at metered spaces or in parking garages.
In early 2011, the MTA will publish data on its website and, similar to Next Bus, share real-time data via an open data feed, so that anyone—companies like Google, iPhone and Android application developers, and even in-vehicle navigation systems—can develop products to make sense of the data and use it as the basis for new software applications. And the benefits, begun by the City and furthered by its citizens, could be huge: Changing the perception that parking is difficult to find in San Francisco will improve our economic competitiveness by bringing people back to the city to shop rather than losing this business to surrounding communities. These applications will also help reduce circling and double-parking, a cause of congestion on narrow streets, and reduce local greenhouse gas emissions.
Finally, new websites and software applications draw on the ideas of multiple people to solve problems in city life. Community crowdsourcing allows groups of people to come together to collaborate on solutions to problems. For example the goal of the "Urban Forest Map," launched in 2010 by the Department of Public Works, Department of the Environment and Friends of the Urban Forest is to document all of the trees in San Francisco. Formerly, more than a dozen local, state and federal agencies struggled to oversee this resource. The "Urban Forest Map" still encourages these agencies to submit their information, but also promotes individual citizen involvement.
We can think of this whole set of experiments as the attempt to create an "open-source city"—a city that welcomes the participation of all of us to help make it a wonderful place. We have a long way to go, but the year 2010 saw a flowering of opportunities to co-create our city.
—Gabriel Metcalf & Jordan Salinger
The participation economy
What we have seen in the past decade, and more acutely over the last year, is an incredible growth in companies that are challenging our baseline notion of consumer motivations and potentially revolutionizing the very notion that to be successful and grow, we must consume more stuff.
For a long time investment—the pillar of further economic growth—has been rooted in products and services that cater to society's relentless appetite for novelty: for the new toy, house or vacation that is a symbol of who we are. This strategy was successful for many years. As a result, our economic growth was related to continually expanding consumer markets.
We fueled this appetite through expanding our money supply. The unsustainable debt and personal savings ratio that led to the Great Recession of 2008 and beyond shows just how fragile, dangerous and limiting that strategy is.
Simultaneously, there's an opportunity for the economy to diversify beyond this traditional consumer pattern. Two movements best represent this shift toward an emerging participation economy that values community over products and the power of collective intelligence:
Experiential, participatory, community-inspired "products"
These businesses don't sell stuff. They sell social connections and the chance to participate in purpose-driven communities.
Do-It-Yourself Movement: From Maker Fairs, where local artisans sell their products and draw millions of people to multiple events across the nation, to Techshop, a tool-lending "library" that offers access to everything from laser cutters to welding machines for a monthly fee of $100, the DIY movement has spawned magazines as well as countless new businesses. At the smallest scale are craftspeople making clothing, dolls and jewelry. At the artisanal manufacturing scale—or small-batch production—you see everything from chocolate to beer to messenger bags. Etsy: What started out as a craft exchange for local makers in New York City has exploded into a world-wide platform for entrepreneurs to sell their goods to consumers across the globe, with no real estate costs. Their vision is to build a new economy and present a better choice: buy, sell, and live handmade. A recent valuation estimated total sales in 2011 at about $1 billion.
Social Gaming: Almost 57 million people played a game on a social network between June and August 2010. Thirty-five percent are new to gaming. What's happening here? This kind of gaming isn't about the interaction with the electronic tool, it's about social connection. Second Life and CityVille are not focused on winning but on participating in a community.
The Hub: A world-wide network of 25 co-working environments, the Hub goes beyond the simple brilliance of sharing an expensive fixed asset like office space amongst a group of entrepreneurs, startups and freelancers. With nearly 1,000 members in the Hub SOMA location alone, the Hub hosts dozens of member-driven groups and events that bring together a community around social enterprise and shared intellectual resources.
Food: From the explosion in food carts selling everything from crème brulée to Chinese buns, to the Slow Food movement, to farmers markets—this is a movement that attracts people for all sorts of reasons, but ultimately keeps them coming back because of the social connection it offers.
We are experiencing the transition from social networking to social production—made possible by a collective intelligence that ultimately relies on the deep commitment of the individual to the community. The individual is motivated to participate and meaningfully engage in a community because of the possibility of collective solutions. These are solutions that no one individual could generate on his or her own.
Crowdsourcing: Innocentive, a website where companies can post challenge problems and the broad community of users tries to solve the problems, offers a cash prize that goes to the best solution. Some of the hardest company problems are solved in this forum. Generally the reach of experts is far more diverse than the talent housed in an individual company, so the collective intelligence of that crowd can prove much better at solving complex problems.
Wikipedia: A collaboratively created encyclopedia, Wikipedia was questioned by many at its inception. Why would be people spend that type of time when they could be watching TV? Because it's participatory; it's a community. This is a new form of consumption that gives participants social connections and attention. So rather than spending a collective 200 billion hours of TV consumption every year, some are willing to carve out 100 million to build Wikipedia.
This shift does not shut down or destroy the notion of economic growth and capitalism. Nor does it require that human nature undergo some enormous change. Rather it shows that as the opportunity for alternative ways to live, consume and connect emerge, individuals are inherently motivated to participate.
As a developer in cities, I see this as an opportunity for reimagining the place-making elements and overall investment thesis for urban real estate. Instead of the traditional financial district or downtown CBD model, new models assume the value of "third places" in cities—zones to connect, share, interact, observe, learn, participate and grow. The prototype for this investment thesis, the 5M Project in San Francisco, is in its very initial stages and already proving an "above market" value.
We are experiencing a rebirth of the city as the social connector. The place where individuals, companies and economies thrive because of its unique ability to densely assemble a diverse population that has easy access to information, networks and community. As our behavioral and social preferences shift, as we go from passively watching TV to active participation in activities that connect us to community, cities reclaim their physical and social value in our society. They once again become the organizational center-point that fulfills a lifestyle we need and crave.
Reimagining our cities with this lens is critical. Our craving for community and authentic connection is coming to a forefront. As a city, we need to respond to these new demands.