Invisible private infrastructure: Part 2, Young and educated and millionaires

October 15, 2013 | Buses, Commuting, Housing, Infrastructure, Land use, Markets, Privatization, San Francisco, Silicon Valley, Transportation, Urbanization, Zoning

 [Continued from yesterday’s Part 1.]


By:David A. Smith


As we saw yesterday, designer Eric Rodenbeck’s lovely and insightful map showing the private commuting infrastructure network set up by Silicon Valley’s tech giants, featured in Wired (September 6, 2013), has revealed a phenomenon – reverse commuting powered by employer-assisted mass transit – that he could not quite explain, probably because he was not looking at it through the lens of urbanism, infrastructure, and land use.



Adam Smith’s invisible hand?



3. The private infrastructure piggybacks on the public infrastructure


Infrastructure is about nodes and networks, where each node is a service unit or revenue unit.  The nodes get most of the visibility, the network does most of the work.



Who provides more value here?


A tree generates its value in its leaves, generating photosynthesis, but the leaves are put in a position to do that because of the network – twigs, branches, limbs, trunk, roots, capillaries. 



The deciduous guys get all the credit, we do all the work


It’s the network that holds together the system, and the system can be no bigger than its network.  If it is overstressed, the system can collapse.



What happens when you overload the system beyond its network capacity


In exactly the same way, the private corporate bus/ shuttle operators use a network of public infrastructure:



It may not be fast but it’s lower cost


We first sat at the corner of 18th and Dolores (where “Google” is spray painted on the sidewalk) and counted people getting on the shuttles over the course of a single morning.



Secret call sign?


In terms of why Google might not want to call attention to its bus pickup, there’s this:



Everybody’s an editorialist


(As far as I can tell, the graffiti was added after Mr. Rodenbeck’s article was published.)


We can know within a minute how long it’s going to take for our Uber to arrive — but we can’t know where a two-story bus on a residential street is?


Actually, no, you can’t, because one is a service you have hired, and the other isn’t. 


So why not public bus runs?


Actually, private infrastructure sometimes evolves into public carriers.  Midwest Airlines was born as Midwest Express, for the principal purpose of flying Kimberly-Clark employees between Appleton, Wisconsin and two common Kimberly-Clark executive destinations.



Anyone need a Kleenex?


Over time, the airline became so good at service that it expanded to take in regular customers, and now it’s been merged, eventually becoming part of the Frontier Air system.


Midwest Express operated like a regular airline, paying all normal gate charges and landing fees, and undoubtedly the Google and other tech buses do the same.  Which raises the question, who pays for the public infrastructure the services use?


Two major highways run north and south along the peninsula: US 101, and I-280, and it’s apparent the shuttle buses, like thousands of their fellow San Franciscans, use both of them heavily.



Only a few roads worth showing


Both of these, particularly I-280, were funded principally by the Federal government, primarily through taxes on fuel (which, in California, are the highest in the nation).


So the fuel taxes, originally enacted to pay for the highway infrastructure (does anybody remember that anymore? I certainly didn’t), now serve to discourage traveling in a personal vehicle – which, despite the buses and shuttles and BART, is still by far the Bay Area’s dominant mode of transportation.  The result of all these jobs and all these cars is enormous congestion.


TRAFFIC map minutes 010813

Note the prominence of San Jose.


In such a situation, even though the corporate shuttles are using the public transportation infrastructure, they are in fact reducing usage on the public infrastructure, because they are removing vehicles from the daily commute.  One big bus is much less highway-consuming than twenty (forty?) cars.



See any corporate shuttles here?



4. The transportation infrastructure is necessary because of shortsighted land-use policies in both the work zone and the live zone


Why then do the corporate shuttles exist?  After working through all the thinking, and finally seeing the system as an entirety, one force emerges: the jobs are in one place, the housing is in another place, and by God neither community intends to change that.


This is a story about maladapted land use.


Mr. Rodenbeck comes tantalizingly close to seeing it:


Here’s an ironic thing: I spend a good part of my day designing maps and data visualizations that represent change, while working out of one of the most change-resistant corners in the city of San Francisco.


It’s not an exaggeration to say that the relationship between the traditionally anti-urban values of the suburbs and anti-suburban attitudes of the city is at least partially responsible for this change in San Francisco.


Actually, San Francisco’s built environment isn’t changing.


One cannot build housing (zoning, NIMBYism, and rent control) except at ruinous cost.


I want to know the price of building on new home in San Francisco on a flat small lot. When I looked online someone posted $300 psf but in other parts of the country only $100 psf.  If I have to take out a loan against one of my houses to build another for a rental, I can afford $100 but not $300, which would exceed the value of the second home.  I have to sell.  I can’t rent out the house without rebuilding it. So there is no income being generated by the property to offset the cost of taxes and so.


One cannot build parking:


When you look at the zoning regulations in Palo Alto, you learn that the tech companies have basically run out of room to build parking lots on their campuses — they can’t grow any further using the model of one parking spot per worker.


One cannot build much of anything. 


As a result, San Francisco’s built environment is static while its regional economy is immensely dynamic.  Thus, what is changing in San Francisco are three things:



We’re forcing change


1. Where the jobs are


The jobs are in Silicon Valley, where the additional space of creating a job isn’t that much, because the jobs are intellectual:


It’s logical that the tech companies would need to use shuttles to bring their workers to campus.


2. What housing costs


San Francisco led the country in the rapid rise of home prices as values across the nation increased over a year ago. Frisco homeowners saw sales prices increase by a stunning 24.5% compared with last year, according to data from S&P/Case-Shiller’s latest 20-City index. New York home prices rose a much more modest 3.3 percent during that time.


(This little San Francisco Chronicle story shows that, despite a ‘crash’ in 2008, when home prices dropped 15%, they have more than tripled in 16 years.)



See any crash in there?


3. Where upwardly mobile people live


It’s not the hipsters that have chosen to gentrify San Francisco, but the Facebooks and the Googles who are incidentally causing this kind of development through the simple calculus of where they can house the most workers. 


Mr. Rodenbeck confuses company strategy with market decisions – the companies aren’t deciding where their people should live, the employees are buying or renting where they choose – and those employees, many of them, think of themselves as the hipsters (who in Mr. Rodenbeck’s formulation are ipso facto poor, and therefore not a threat to push up housing prices):


That those workers are young and educated and lots of them are millionaires is kind of beside the point.


Actually, it is entirely the point.  These workers would love to buy houses in Palo Alto, but Palo Alto’s residential development laws make housing there so expensive that even millionaires cannot buy in Palo Alto. 



Like it?  Only $15.9 million



You can get this cottage for a mere $2.4 million



And this for only $1.4 million


Faced with these prices, the tech-boom employees are doing what at least three generations of Americans have done – accept a longer commute for the sake of a better housing choice. 


In fact, I would be astonished if the private corporate shuttles were not fitted out to be effective work environments.  I can imagine high-quality broadband, larger seats, power and plugs in the seats, and in effect, a mobile office environment.  If so, commuting in a pack not only cuts down highway traffic, it expands the employee’s work day and work productivity, while also yielding happier employees.  I’ll bet it pays for itself in greater productivity.



Something higher-class than this


San Francisco, which was born out of the Gold Rush, has been transformed many times over by various other gold rushes — this is just the technology one — and waves of immigrants.


(Mr. Rodenbeck’s map stops at the boundary of San Francisco, but it’s reasonable to assume that the companies run corporate shuttles also to the peninsular communities such as Daly City and South San Francisco.)


In fact, the Mission District that provides a backdrop for my view here was largely Polish and German until the 1960s. What we now think of as “authentic” San Francisco largely rezzed-in during that tumultuous decade, and it’s a good bet that the largely working-class Irish residents of pre-1960s Castro had similarly negative things to say about their new Summer-of-Love neighbors.


Of course they did.


Maps and Heraclitus tell us that nothing is permanent but change.  However, another Yuppie Eradication Project showing us how to puncture Volvo and Prius tires along Valencia Street isn’t going to help with any of this.


No, it won’t.  Instead, the future will be solved by making networks more efficient, and that includes making more efficient use of the infrastructure we have (hence the value of corporate shuttle buses), using our time better, and connecting work places to living and recreational places.



A fantastic map that shows much more than it tells