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The Google Shuttle Effect: Gentrification and San Francisco's Dot Com Boom 2.0 (svenworld.com)
31 points by jjhageman on Jan 16, 2014 | hide | past | favorite | 42 comments

The city is free to mandate subsidized housing ratios in the neighborhoods it is worried about becoming gentrified.

Maybe it doesn't because it wants the property tax revenue from the highly paid tech employees that live in these neighborhoods but don't use as many of the city services (including, most evidently, the public transport).

This is like the OPPOSITE of what Wal-Mart is infamous for - paying their employees as little as they can, and forcing them to depend on millions of dollars of federal subsidies like food stamps to actually make ends meet.

Gentrification is a real social concern that needs careful but focused solutions. But it is a goddamn travesty that all the discussion is focused on "Google" (really all Silicon Valley tech companies that are doing this stuff), and the employees that have the audacity of being highly skilled, highly desired, and are willing to put up with a long commute to stay in the city.

They pay city taxes, they put money into the local economy, and they're the enemy? And don't give me the garbage that they spend all their time at the company offices. If that was the case, they'd just live in the valley and save on rent. They live in San Fran because they want to spend money on the things that you can do in San Fran that you can't do in the suburban sprawl hell that is the valley.

This isn't a "99%" thing. Everyone involved here is in the 99%.

> The city is free to mandate subsidized housing ratios in the neighborhoods it is worried about becoming gentrified.

Subsidized housing doesn't prevent gentrification, it just shifts rental profits from landlords to subletters, while depriving the city of tax income on the market value of the housing.

> Gentrification is a real social concern

Why? Why is it that nobody bemaons the pricing of gucci watches or belgian caviar or first class airline seats, but as soon as it's "living in one of the most desirable neighboods in the world", all reason has to go out the window? Clearly not everyone who wants to live in San Francisco can live in San Francisco, why aren't we talking about the millions of people in (for example) Somalia who are being prevented from moving to Mission Hill by gentrification? Why is it just those who by accident of history decided to rent (which by it's very nature is temporary occupancy) in SF that need to be now subsidized?

> Why? Why is it that nobody bemaons the pricing of gucci watches

Because the sale of Gucci watches does not push more affordable watches off the marketplace and out of the hands of people who do not have enough money for more.

The issue with gentrification is this: it ruins existing communities and takes opportunities away from people that don't have many to begin with.

People have to move from the neighbourhood they've known for decades with good facilities and schools to an area considerably further away from the job market, bringing down their quality of life and reducing the chances that they'll ever be prosperous enough to live in the neighbourhood they've just been forced out of. But hey, smart, innovative kids will still rise up, right? Well, no, because now they're nowhere near the good schools and after school programs. Neither they nor their parents have the opportunities that others do. It's not exactly the kind of meritocracy Silicon Valley champions.

The very fact that you think these people are deciding to rent speaks volumes. Not everyone can afford to buy a house or get approved for a mortgage. They have to rent, and are increasingly powerless to stop these kind of changes. Gentrification is not all negatives, but are you seriously saying you can't see why people would be angry about it?

The underlying injury is that people who feel they belong to a neighborhood cannot afford live there anymore. Now, as a society, there are a variety of ways to entitle someone to live in a neighborhood: primarily, by owning a home in the neighborhood, or possibly by coming to an arrangement with the owner voluntarily (a long-term lease negotiated up front, or continually paying more money, commensurate with the rising rents).

We also have other ways. San Francisco's rent control is one such way. It entitles the tenant to continued occupancy and limits the rent the owner can charge that tenant. Of course, this has significant negative side effects. It deliberately fails to respect the owner's interests, instead rejecting him as an invalid actor, some sort of Evil Capitalist type. It effectively functions as a wealth transfer from the owner to the renter, in the form of foregone rent increases. This naturally changes the capitalist's incentives, inhibiting the maintenance of and formation of new capital (specifically the capital we call a "housing stock"), and provides other perverse incentives for the landlord to mess with tenants.

In the case of San Francisco, this housing shortfall exacerbates its problems by raising the price of all housing... a humanitarian tragedy far in excess of mere neighborhood-dissolution. Not that this is the only thing that inhibits homebuilding in the Bay Area, though.

>People have to move from the neighborhood they've known for decades with good facilities and schools

SF does not have an abundance of good public schools. It's not atypical for families with school-aged children to move to the suburbs to afford their children a decent education.

> ...to an area considerably further away from the job market

But it's the techies with the disposable income who are creating a significant amount of the jobs the blue collar workers seek. The benefits from having people with disposable income is not extricable from the people themselves. Else you can have Detroit. That's the end-game.

I don't know of there being a 'right' to live in a particular place. Such that I would have a 'right' to live in Berkeley --whether I could afford it or not. Or Oslo, or London.

Why don't we see people clamoring against the 1%-er actors and actresses in Hollywood? I think people in LA understand that these free spenders benefit the local economy when they spend their money like there is no tomorrow. If the overwealthy actors and actresses in Hollywood didn't spend their monies, then that _would_ be a problem. There's be no infusion into the local economy.

All you libertarians aren't real libertarians unless you honestly answer the points raised by Geolibertarianism and Georgism. You should google both of those terms, but here's a good primer: http://geolib.com/essays/sullivan.dan/royallib.html

Another way to think about it is this: If you believe in the free market and it's ability to find the "right" price for everything, even the abstract (e.g. the time value of money), then how can you support a government enforced system that allows a finite amount of money to purchase an infinite amount of something, which is what ownership of land in perpetuity amounts to. Property taxes are a weak proxy for the time value of land, and is not determined by the free market. If we want a true free market, all land should belong to the commons, and we have a free market of long term leases. The proceeds go to the community pot (e.g. pay for government services, or checks sent to every person). Gentrification thus costs the gentrifiers and pays those who lose out. Please read the above link and understand the arguments before responding to my claims in this paragraph.

> All you libertarians aren't real libertarians

I'm not a "real" libertarian; I am neither a child nor a sociopath.

> If we want a true free market, all land should belong to the commons, and we have a free market of long term leases. The proceeds go to the community pot (e.g. pay for government services, or checks sent to every person). Gentrification thus costs the gentrifiers and pays those who lose out

I'm fine with that. Seriously. I'd even send checks to the poor bastards in Somolia. I mean it's a shitty world where I make a lifetime of money every month because I was born white, male, American, and am autistically brilliant at telling comptuers what to do, while other people die of malnutrion.

What I have a MAJOR problem with, is people who rent in San Francisco, and thus insulated themselves from real-estate downside risks, but now that upside risks are impacting them, want bailouts. "But I'm special, I live in San Francisco, I'm a unique snowflake that deserves to pay only $600/mo for a $2,600/mo apartment because eveyone else is so rich and I'm so poor and lattes are so expensive!"

(And yes, I do donate to charity, and I don't write that money off on my taxes, as I don' think that charity should displace the obligation of a government toward its citizens)

Respect. Honestly. Obviously I'm with you when you imply that populist libertarians are children or sociopaths. But if libertarians where honest and really followed through on their principles, they'd agree with the points of Geolibertarianism and quit possibly I'd change my tune and join them. Right now they are the enemy and scare me more than Fundamentalist Republicans because nothing is as dangerous as Social Darwinism. BTW, I can't stand the Democratic party either.

But you're being too dismissive of how people displaced by gentrification feel. It feels rather arbitrary (It's not like the free market is pricing them out because someone else can pay more because they can make more optimal use of that particular land), and while they are not "the poor bastards in Somalia", you're still on one end of the spectrum and they are a little closer to the Somalis.

On the other hand, if it's privilege bratty hipsters that are complaining about being pushed out of the Mission, I'm totally with you.

I live in New York now, and it's extremely obvious that gentrification isn't some color and privilege-blind blossoming of wealth that expands outward engulfing everyone in its path with prosperity. There's little engulfing. It's more of a bubble with high surface tension pushing out. The inside of the bubble is white, and the outside is black.

sup temp account. I don't talk here anymore, but I do remember when I first saw gentrificaton raised on HN.

The crux of the issue is that it resulted in a less healthy/hungry city because it made it that much harder for someone to come to SF, find a place to rent, and then work at whatever startup idea they wanted.

In the long run, its just a sign that a particular city/era's time has come/gone, and should be lauded.

The opportunity to start a new network elsewhere and build a fresh system to improve on the old is what I can see here.

Right. I also failed to invest in SF real estate, everyone should subsidize me too.

I invested in SF real estate (bought a house), and I'm pretty much even after 10 over years here.

The parts of the city that aren't fashionable haven't seen a meteoric rise in prices: people aren't being pushed out of SF, they are being pushed out of hipster SF.

> Subsidized housing doesn't prevent gentrification, it just shifts rental profits from landlords to subletters...

...how? From what I can tell, here in SF, "subsidized" housing is requirement for folks who are building new apartments to "Set aside a certain number of apartments for people making 90%->120% the area median household wage." and/or "Subject a certain number of apartments to the city rent control ordinances.".

If you're living in a rent-controlled apartment, it's not permitted for the total amount of rent that you collect from all of your roommates to be more than the amount of rent you pay your landlord. [0] I don't know the details of how the "low income" housing program works, but I would be floored if there weren't periodic checks to ensure continued income eligibility and to ensure that folks aren't making a profit off of subletting.

[0] If you're profiting from your roommates, your roommates can go to the city Rent Board, who will then require that you return the excess money back to them.

[0] is true in theory. in reality, people get friends/relatives to be roommates and give them a portion of the discount, thus incenting them keep the scheme quiet

Gentrification is a real social concern that needs careful but focused solutions

Not really: Up until the Petaluma City Plan was found legal in the 1970s (see http://en.wikipedia.org/wiki/Petaluma,_California#History for more) and the growth of height-limit acts in major cities, places that experienced growth built more buildings to accommodate new residents, so prices stayed (relatively) low for most people moving to a given locale.

We're seeing the end game of extreme supply restrictions in popular major urban areas: very high prices as increasing demand hits limited supply. The solution is to increase supply, but SF has mostly chosen not to do this: http://www.theatlanticcities.com/housing/2013/10/san-francis... .

Are you unaware of the record building that is going on in San Francisco?

It's still not even close to market demand. I'm a homeowner in San Francisco. The market is telling me to bulldoze my house and build a 10-story condominium. Hell would freeze over before I'd be allowed to do that.

Is it building that increases density or just remodeling?

Every time I read anything complaining about gentrification in San Francisco, I think about this: http://seattletransitblog.com/2012/04/01/city-looks-to-detro... ("On a recent fact finding mission to both cities, council members and staff met with officials from Detroit and Baltimore to learn from the nation’s leaders in combating gentrification.").

Gentrification is a good thing. You can't do all of the liberal shit San Francisco's municipal government wants to do without a bunch of "2%" types whose taxes can bankroll the whole endeavor. You lose your tax base, and you turn into Detroit or Camden, NJ, and then its game over. If you're a municipal government, 90% of your energies should be spent figuring out how to get businesses and wealthier people to move into and stay in your city. Without the tax base, your great ideas for everything else are totally irrelevant.

I am mystified by housing/anti-gentrification advocates' refusal to consider building new housing stock as a solution to this problem. And what's with "luxury housing" snub? You can't prevent highly paid tech workers from moving into the city without restricting their freedom of movement.. so why not make some room for them? The "historic character" of neighborhoods doesn't have to be ruined, either.

I'm not opposed to something like her Community Benefits Agreements, as long as it actually does speed the approval process up. Of course, it might be hard to get off the ground, since "While the community coalition might be a representative group, there is no oversight to guarantee appropriate representation", and the rest of the community will always be arguing over who has the right to represent them.

> I am mystified by housing/anti-gentrification advocates' refusal to consider building new housing stock as a solution to this problem.

Because an anti-gentrification advocate is bascially saying, "you don't have the right to desire to live in my neighborhood, only I should be allowed to desire to live in my neighborhood"

"... that I moved to as part of the last round of gentrification."

That's the real kicker. They are all "forty-niners".

Bit ironic given that those complaining the loudest likely displaced others in the not-so-distant past.

"Luxury housing" condos often get bought as an investment by someone outside the city rather than by someone within the city looking to move. They tap into demand from outside the city and fail to increase the housing supply and lower housing costs. New York has had a huge problem with foreign investment driving up housing costs [0], and according to realtors I've talked to, foreign investment is playing a large part in driving up SF prices too.

Increasing the housing stock is definitely the solution to out of control prices, but the type of housing built does need to be managed so real demand is met.

[0] http://www.nytimes.com/2013/02/12/nyregion/paying-top-dollar...

tl;dr: The City of San Fancisco should prohibit Google buses until Google promises to magically repeal the laws of economics that rents increase when demand exceeds supply.


The paper specifically recommends that the city prevent Google buses from stopping to pick up passengers until Google enters into "Community Benefits Agreements" (CBAs), the purpose of which is to "foster changes" and "mitigate impact".

Unfortunately, it's obvious to any rational person that Google cannot change human nature via any kind of CBA. Hell, they can't even get me to sign up for Google+!

The thing that makes the paper super-funny, are the types of things the author be included in these CBAs would be agreements to "hire locally", which would require Google to open new offices in San Francicso, which would... further increase rents. Funding for parks, which would... further increase rents. Job training, which would increase wages and... further increase rents.

But hey, we could all live in a Marxist paradise if people would all just magically stop being humans who want what's best for themselves.

...so you haven't actually read the paper

I read the paper. 90% of it was hand waving that could be boiled down to a grudging acceptance that demand exceeds supply, and drives up rents, and the remaing 10% was wishful thinking about how to change reality so that rents would somehow dip below market-clearing rates.

Markets are not any more natural to humans than driving cars or using a cellphone. They are a human invention, not something that comes out of nature, or whatever natural humans do.

Markets are emergent phenomena from trading and ownership. Most cultures independently came to establishing various types of markets, so I'd argue that yeah, until we are not in a post-scarcity society, markets are natural

I wasn't aware until now that "city planning" was so much marxist navel gazing. Am I supposed to just assume that rising rents and gentrification are a bad thing?

Indeed. I waded through the whole thing, trying to mentally rewrite it in a wikipedia NPOV voice. I failed.

I was also heartily amused that IPO deserved a footnote, but the reader is expected to swallow 'neoliberal urbanism' whole.

An interesting undertone is introduced very early on, there is a quote:

“many first-stage (sweat equity) gentrifiers have sold their property to new (very well-off gentrifiers), who are regentrifying property in the neighborhood”

To me this implies the idea that a tech workers income is not sweat equity, that it is either undeserved or un-earned—while this may be true for some, it fails to recognize the work that most of us put in at every level of schooling, at work and on our own time

"sweat equity" specifically means doing repairs to a property to increase its value, as opposed to building equity by making payments. A tech worker's income is not sweat equity.

I've never heard a real person complain about Google offering free buses and keeping the killer traffic on the roads down. It's just something journalists and other professional personalities like to use as an excuse to talk as far as I've seen.

This master’s thesis does provide some evidence that shuttle stops are correlated with localized rent increases. This is a survey rather than an experiment; there’s no way to tell whether the shuttle lines caused rent increases, or whether they simply started in already up-and-coming neighborhoods. It’s also impossible to tell whether the desirability is due to shuttles or other transit; all the chosen shuttle stops (“selected by the San Francisco Tenants’ Union”!) are also within a couple blocks of a Bart station or the intersection of major Muni bus lines. I wish she had at least compared these locations to other Bart and Muni stops that don’t have shuttles (although admittedly this can be difficult). She also makes no attempt to correct for geography or neighborhood differences and just assumes that the annulus around a circle contains “similar units in the same neighborhood.”

I doubt that this would be too useful to the greater debate, however. The real problem is not that a few bus stops are getting too expensive; it’s that the entire city and peninsula are getting too expensive. And to discuss that, we really need to quote the number of housing units and the number of jobs in the area.

Not sure I agree with all of it, the data on rents of 1 and 2 br units within and not within walking distance didn't see particularly convincing. But I really appreciate that the approached it methodically and could share that with us (a requirement for the project I know, I still appreciate it).

I get kind of lost on the economic justice angle though. I'm not sure what an economically "just" city would entail.

This article is confusing cause and effect. Bus routes have been opened to cater to people who choose to live in desirable neighborhoods. It's not the buses that make the neighborhood desirable. If all googlers decided they wanted to live in Marin, I would bet that google would send a bus up there in a heartbeat.

I'd imagine it's at least partially a feedback loop. Bus routes are determined by looking at where employees live, and figuring out the optimal locations for stops, which I'd imagine is how the first routes opened up. For new employees/employees moving who are figuring out where to live, though, proximity to a shuttle stop seems like a relevant factor in the decision. If nothing else, not having shuttle service could be a point against living in a given neighborhood. I'd imagine if you took away shuttle service away from one neighborhood (just for the sake of argument), you would probably see a gradual decline in the number of employees living there.

Thing is, it'd be hard to quantify to what extent shuttle service availability influences the decision making process, so I'm not sure how much we can say about the net effect of shuttle routes on demand for living in a particular neighborhood.

It's more chicken and egg. Clearly the value of a potential housing unit, to a Googler, would be higher if it were closer to a Google shuttle stop.

Actually, it's showing just that. The were able to demonstrate that the buildings nearest the bus stops were rising faster than the neighbours - and within each neighbourhood. Googlers weren't congregating around the bus stops before they showed up.

Furthermore, it's showing us how much of the price hike we can attribute to the change just to the buses and not other tenant sources.

Google already has shuttles to Marin.

Thanks providing something concrete to go with all the hand waving on all sides of this.

I gladly welcome more study in general. Every conversation on this topic is either anti-gentrification hand-wringing or self-victimization by oversensitive tech professionals. More data, less sensationalism.

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