Folly or catalyst? Part 3, “Something Downtown Stockton can be proud of”

May 15, 2015 | Affordable Housing, California, CalPERS, Cities, Development, Economics, Housing, LIHTC, Municipal bankruptcy, Redevelopment, Stockton, Tax credits, US News | No comments 180 views

[Continued from yesterday’s Part 2 and the preceding Part 1.]

By: David A. Smith

As we saw yesterday, Stockton’s economic decline became possible to arrest only with bankruptcy and its slashing of liabilities, which made the city once again creditworthy and which also enabled it to rejoin the community of municipal entities reinvesting in their downtowns.  But to correct that neglect, and reanimate the hollow urban core, requires the first property re-entering the market to be financially and visually reinforced, so that both bankers and neighbors would be swiftly convinced it would work:


Looking on the bright side

City Manager Kurt Wilson [hired 10 weeks after the City filed bankruptcy] said. “This is a really well thought-out project. It’s going to get more people on the street, make it safer and make it more inviting for more projects like this in the future.”

The non-recoverable costs include the inherent ongoing subsidy implied by rent-restricting apartments for low-income families.

Sources used in this post

Stockton Record (September 17, 2014)

Stockton Record (September 25, 2014; buff blue font)

AHI post: Stock-taking? (October 15, 2014)

Stockton Record (January 25, 2015; siena font)

Stockton bankruptcy decision of Judge Klein (February 4, 2015, pdf; olive-green font)

Sacramento Bee (February 5, 2015; gray-blue font)

CBS Sacramento (March 5, 2015; forest green font)

Stockton Record (March 30, 2015; kelly green font)

In addition to the cost-value gap of affordable housing, therefore, is a second cost-value gap – that of adding back the non-revenue infrastructure needed to re-establish downtown as an upwardly trending area:

The developers have said that for Cal Weber to move forward, they would need to be successful in a competitive process to win tax credits from the California Tax Credit Allocation Committee.

A week later, TCAC approved the LIHTC allocation, as reported in the Stockton Record (September 25, 2014; buff blue font):

Downtown advocates for years have dreamed of residential housing in the heart of Stockton, creating a center-city buzz and a humming urban ambience.

A decision Wednesday by a state body in Sacramento is expected to bring the decades-long wait for such a development to an end. The proposed 40-unit Cal Weber affordable housing project is a go.

Decades of waiting.  If proof were needed that Stockton’s downtown will not recover on its own, there it is.


Amtrak to Oakland, rolling through Stockton in 1980

“We’re excited to see this project move forward,” said City Manager Kurt Wilson. “I think it’s a big first step toward getting people into downtown.”

It should be, given its location.


Downtown Stockton (815 Weber), 1930s

Though the developers and city officials say Cal Weber could be just the needed spark for downtown reinvigoration, at least one business owner has reservations.

Any time there’s development, there will be naysayers: if the market is hot, they manifest as ecological NIMBYs; if it’s cold, they’re doomsayers.

Kristyn Wilson [No relation to the city manager, I hope J – Ed.], who owns a downtown insurance agency, said last week she fears Cal Weber will wind up as just another flophouse in the heart of the city and is waiting to be convinced otherwise.

Given that Ms. Wilson has undoubtedly not bothered to review the mountain of evidence available to Ms. Wilson (the track record of LIHTC properties around the state, say, or the design and construction requirements), nothing will convince her, and she will remain invincible in her ignorance.

 “People won’t come downtown because of the crime that’s downtown, the stigma behind downtown, the panhandlers downtown.”

If it’s such a horrible place, Ms. Wilson, why do you remain downtown?

She also speculated willing residents might be scarce.

“I don’t think adding additional affordable housing is going to help,” she said.

Does that mean you won’t sell them insurance?  After all, if there’s all the crime you say, they’ll need renter’s insurance, won’t they?


Garcia moved back to Stockton to revitalize it

David Garcia of the Cort Group [since renamed Ten Space], another downtown developer, disagreed with her assessment.

“This is going to be a well-managed project,” Garcia said. “It’s going to be for working families.”

That’s certainly how it has been designed:

Plans call for Cal Weber 40 to have 28 apartments with two bedrooms and one bathroom, and 12 more with three bedrooms and two baths.

The 2-BR’s will be for couples with no more than one or possibly two little children, and the 3-BR’s will be for families with 2-3 children.

“I hope people don’t immediately dismiss it as a project that’s not going to produce the desired results. It’s going to create more street-level vibrancy.”

Said Flaherty: “It will be a place where (residents) can work and afford to live. It will be a new product.

It may well be the first flats-over-shops mixed-use development in Stockton’s history.  A century and a quarter ago, when the Cal Weber building was constructed to house the Columbus Buggy Factory, land was plentiful and people built their own homesteads. 

“It won’t be an old hotel converted to (single-room occupancy). It’s going to be something downtown Stockton can be proud of. It’s a catalyst.”

Indeed, change is being catalyzed in downtown Stockton, as reported three weeks later in the Stockton Record (March 30, 2015; Kelly green font):


Raymond Cavazos, left, and Samuel Mora put up fencing as work begins for construction and renovation at the site of what will be the Cal Weber 40 affordable housing development at California Street and Weber Avenue in downtown Stockton.

To begin with, construction is work, and that means jobs.

Workers were busy setting up fencing around two downtown buildings and a parking lot Monday morning, a prelude to the start of construction on an affordable-housing development touted as an early step toward revitalization of the city’s core.


Wrapped in swaddling clothes, and lying in downtown Stockton

Cal Weber is not alone; more mixed-use mixed-income development is on the way:

A second affordable-housing and retail project, dubbed Grand View Village, could break ground a year from now if all goes according to the developers’ plans. Grand View is to be located at Hunter and San Joaquin streets and Miner Avenue.


Brighter skies ahead for the site of Grand View Village?

A massive 15-block housing and commercial project for east-central Stockton, announced March 22, will take significantly longer to unfold, developer Ten Space Inc. says.

Change is coming, and with change, hope?

“This is just the beginning, hopefully,” Flaherty said, ”of what is going to take place over the next ten or twenty years.”

None of it would have been possible without Stockton’s emergence from bankruptcy, which in turn required Stockton’s entry into bankruptcy. 

Officer Joseph Silva, a police spokesman, acknowledged that fighting violent crime is foremost among his department’s concerns. But Silva said the department is hopeful a sales-tax-fueled hiring push that so far has moved slowly will eventually make his force better able to respond to nonviolent lawbreaking.

“As the department is growing, we’re going to be able to start focusing more on the quality-of-life issues and blight,” Silva said.

And somewhere in Sacramento, CalPERS, whose pension contributions were protected in this bankruptcy, is fighting other cities’ restructuring of their debts, and hence is retarding their economic revitalization. 

Benguerel said he believes a downtown recovery will never be fully realized so long as the problems he so frequently witnesses are not eliminated.

“I think everything else is destined to fail,” he said, “unless they clean it up.”

That takes bankruptcy restructuring, and CalPERS is institutionally against it.  In another post I expect to return to CalPERS’s evil-empire behaviors, but for now let me quote, in movie-credit-previews-style, two passages from the judge’s decision:

(Page 8)  The authority of CalPERS to interject itself into the potential modification of a municipal pension in California is doubtful.  As CalPERS does not guaranty payment of municipal pensions and has a connection with a municipality only if that municipality elects to contract with CalPERS to service its pensions, its standing to object to a municipal pension modification through Chapter 9 appears to be lacking.

Translation: CalPERS, you have no business disrupting and obstructing municipal restructuring, including City employee pension benefits.

(Page 14)  Although the PERL contemplates that a municipality is free to shift to a different pension administrator, the ferocity of CalPERS’ behavior in this case indicates that it has a policy of, by overt and passive aggression, resisting attempts to make such shifts.

Translation: Even though CalPERS has no economic reason for caring if municipal pensions are reduced, it acts consistently and nastily as if it were in the employees’ pocket.


Judge Jules rules?


Folly or catalyst? Part 2, “With bankruptcy being over”

May 14, 2015 | Affordable Housing, California, CalPERS, Cities, Development, Economics, Housing, LIHTC, Municipal bankruptcy, Redevelopment, Stockton, Tax credits, US News | No comments 128 views

[Continued from yesterday’s Part 1.]

By: David A. Smith

As we saw yesterday, the economic decline of downtown Stockton has spanned several decades, and as the city’s finances worsened, the downtown – which ought to have been the engine of economic revival – rusted.

Sources used in this post

Stockton Record (September 17, 2014)

Stockton Record (September 25, 2014; buff blue font)

AHI post: Stock-taking? (October 15, 2014)

Stockton Record (January 25, 2015; siena font)

Stockton bankruptcy decision of Judge Klein (February 4, 2015, pdf; olive-green font)

Sacramento Bee (February 5, 2015; gray-blue font)

CBS Sacramento (March 5, 2015; forest green font)

Stockton Record (March 30, 2015; kelly green font)

One by one, buildings darkened when they lost their original purpose and could not finance reinvestment for repurposing:

In a much earlier time, the [88-year-old] McKeegan building [built 1926] was home to Dreamland Hall, a dance hall that later became Treanan Ballroom.

Dance halls are long gone, a vanished form of leisure.


A dance hall, when mummified

In the late 1800s [Built 1891], the Cal Weber building was occupied by the Columbus Buggy Company and, for a time, the YMCA.


Dominating the market in 1905

You know the old business joke about cornering the market on buggy whips?  They’re long gone too, as are boarding houses and flophouses:


The seedy Land Hotel … was demolished two years ago [2012].

Even if the shell is sound, if the interior is useless, the building becomes valueless – in fact, negative value because it costs money to secure against interlopers animal and human.  To survive, it must be turned into a new needed use — urban housing.

Sunil Sharma has run his convenience store for 10 years at what could the ground floor of a Downtown Stockton transformation.


Sunil Sharma adds to handwritten signs inside his Sharma Market on California Street and Weber Avenue. CALIXTRO ROMIAS/THE RECORD

America remains the land of opportunity, attracting entrepreneurs of all sizes, shapes, and ethnicities – who need customers and prospects, because they cannot sell to those who will not come downtown.

“It will be great. It will be good business for me with the apartments coming up,” he said.

It’s called the CalWeber Project. The $14-million dollar public and private investment just approved by the city will transform the entire city block, adding 40 affordable housing units and remodeling retail stores at the bottom.

“Flats over shops,” as the British call them, offer a lively streetscape, coupled with an ongoing evening and night-time presence, so we have eyes on the street 24/7. 


Yes, but where’s its street presence?

They’re an essential feature of all successful modern cities, especially the information-age elevator-lifted increasingly vertical cities of the twenty-first century.  In ecosystemic terms, they’re the orchard, stabilizing the ground, refreshing the atmosphere, and producing economically edible fruits to attract critters (consumers).

Chris Flaherty of DFA Development said retail businesses on the ground floor of the Cal Weber and McKeegan buildings would be able to maintain operations during construction and would be much more attractive to the public afterward.

Any city that hasn’t rezoned its downtown to encourage higher-density mixed-use (retail/ residential) is under-fertilizing its urban economy.


Founded to be the port connecting the San Joaquin Valley to the Pacific via the San Joaquin River

“Really it’s a catalyst for potential new development and new expansion to come after it,” said Stockton Economic Development Director Micah Runner. “Sometimes when you have projects like this, it really is the start to have some additional projects come forward.”


A decade ago, I posted that when it comes to urban redevelopment, Cities must lead, for the same reason that plants must flower; capital is mobile, real estate is sessile, so the plant that does not fragrantly flower loses the competition.

He says the owner of the building was willing to invest with the city to turn the area into somewhere that people would to live and shop. The approval comes just a week after the city announced it has exited bankruptcy.

With bankruptcy being over and moving forward, we’re hoping that it kind of opens the door to future opportunities for projects like this,” he said.

For those in the area, hearing about investment in a city not used to being bet on is huge.


Maybe not that huge

And it was a very long time coming, as seen when retrospectively reading this story from half a year earlier, in the Stockton Record (September 17, 2014):

New businesses and attractions, some already operating and some preparing to open, are dotting downtown Stockton these days, ranging from a Mexican ice cream shop to a Filipino history museum.

Cities are where immigrants immigrate to become Americans.  They come for the job prospects; they buy property in depressed areas because that is what they can afford; they improve the property because that is how they can monetize their labor.


Changing face of the rural plains: Growth in the population of Hispanics in the Great Plains — especially in rural areas, where even small growth can have an outsize impact — is filling some of the void left by a declining white population. The Hispanic population in the seven Great Plains states shown below has increased 75 percent, while the overall population has increased just 7 percent.


Now, ready-made customers soon may be moving downtown as well.

A proposed affordable housing development at California Street and Weber Avenue is on the brink of the government approval it needs for construction to move ahead.


Note the eyes on the street 24/7: windows everywhere

Micah Runner, Stockton’s director of economic development, said he is encouraged by the prospect of affordable housing in the city’s core. It would be another step, he added, toward creating the vibrant downtown Stockton is seeking.

“It’s going to be organic, incremental growth — exciting projects here and there,” Runner said Wednesday. “Individually they don’t look like a lot, but as you build momentum you see some good things happening.”

Stockton’s decline and then its bankruptcy put on extended hold any possibilities of public-sector reinvestment in the city’s downtown, and because cities must lead that turnaround, Stockton’s inability to reach bankruptcy made things worse.  As a result, when it came to jump-start redevelopment, the price was high:

The $12 million Cal Weber 40 project –


Not Mayweather money, but a lot

Let’s deal up front with the eye-popping price tag, because though it looks like $300,000 per apartment, it’s actually either a lot less per apartment or a lot more property than just apartments.

– will be a modern, new apartment complex boasting solar-powered units, a computer lab and a private playground for its residents.


“It has the feel of a new, urban project,” Runner said this week. “We have to create that activity and that flavor here.”

The streetscape shows a building of either four or five stories: assuming 4½ average, then 22% of the space (1 / 4½) will be retail; and add another (say) 10% for the computer lab, open space, and the two-story parking garage, and the property is about 68% residential. 


On site garaged parking

That’s about $205,000 an apartment – not cheap to be sure, and doubtless influenced by the green luxuries, but better.

It would be the first new downtown affordable-housing project in years.

Just as affordable housing always has a cost-value gap, so too does urban pioneering,

[Continued tomorrow in Part 3.]

Folly or catalyst? Part 1, “I bought strong locks”

May 13, 2015 | Affordable Housing, California, CalPERS, Cities, Development, Economics, Housing, LIHTC, Municipal bankruptcy, Redevelopment, Stockton, Tax credits, US News | No comments 152 views

By: David A. Smith

A dying downtown is unspeakably depressing.  Property’s decay and death is painfully slow and painfully visible: fading signs, drawn blinds, leaves and scraps huddled in doorway corners, sun-bleached shingles and paint, all of them say, Nobody cares about this place. 

Stockton — Attorney Jacob Loyal Benguerel became a pioneer of sorts late in 2013 when he purchased for his practice a century-old building on a forsaken downtown stretch where boarded-up storefronts and a vacant lot dominate the landscape.


Down these mean streets a few attorneys go

Sources used in this post

Stockton Record (September 17, 2014)

Stockton Record (September 25, 2014; buff blue font)

AHI post: Stock-taking? (October 15, 2014)

Stockton Record (January 25, 2015; siena font)

Stockton bankruptcy decision of Judge Klein (February 4, 2015, pdf; olive-green font)

Sacramento Bee (February 5, 2015; gray-blue font)

CBS Sacramento (March 5, 2015; forest green font)

Stockton Record (March 30, 2015; kelly green font)                                                       


The southeast corner of California and Weber is occupied by an aging building, with a vacant lot next to it where the Land hotel stood until it was torn down two years ago. Soon, though, it may be renovated as new affordable downtown housing with a playground and parking in the current vacant lot.

In long-declining Stockton, California, the observant herd has observed disinvestment, so it disinvests:

One day a passerby tossed trash on the sidewalk, and when Benguerel confronted him, he says the individual told him, “Well, you don’t have a garbage can out in front of your building so, of course, I’m going to throw it on the ground.”

Over and over, via the broken-windows theory, it has been have demonstrated that people’s behavior is not immutable – we take our cues from what we see.  And it’s not just the poor who think that way; we all do.

Benguerel added, “I’m so tired of hearing, ‘That’s just Stockton.’ It’s ‘just Stockton’ because that’s what everybody’s mentality is.”

Pioneers, like the urban Robinson Crusoes of Detroit, are people who see the future, not the past.


Mr. Berenguel’s offices in downtown Stockton

Benguerel, 35, opened the doors to his family law practice last March [2014] after he slapped a coat of paint on the outside of the old Stockton Morris Plan Company building and uncovered brick walls and replaced carpeting inside.

But 10 months later, his frustration is mounting.


Downtown Stockton, April, 2014

Without public support, the city atrophies, slowly dying:

In downtown Stockton, the business pulse has shown signs of strengthening in recent months with announcements of upcoming housing developments and incoming places to shop and eat. But as downtown awaits the new and improved, those who arrived early to set up shop are left to cope with the remnants of the old and unsightly.


Downtown Stockton, 2008

In his time downtown, Benguerel says, the outside of his building has been used as a urinal by one man, plants were stolen and his planters were repurposed by others as trash cans, and he had to chase away kids who were getting high and shooting craps in broad daylight.

Here too is the meaning of property ownership; without investment, Mr. Benguerel would more quickly leave; having invested, he perseveres.  And he becomes the eyes on the street, the citizen cop who is seen seeing.

And just this month, one of his security cameras recorded a trio of early morning taggers on a spray-painting frenzy, and another camera captured images of a man using bolt cutters in an attempt to bust into Benguerel’s offices.

“He couldn’t break the locks,” Benguerel said last week. “I bought strong locks.”

There speaks justifiable pride, but reversing a downtown’s decline takes more than a few urban pioneers; it requires a powerful market signal:


Searching for signals: Dan Cort

For downtown to succeed, said longtime downtown developer Dan Cort, it’s crucial to provide support to those who already have ventured into the neighborhood.

“Some of these problems like blight and graffiti are mitigatable if we put resources into it so people like Jacob, who put their lifeblood into their businesses, feel comfortable downtown,” Cort said.

The signal, meaningful property investment, is finally arriving, as reported in CBS Sacramento (March 5, 2015; forest green font):

Fresh Out Of Bankruptcy, Stockton Will Start Spending To Rebuild Part Of Downtown

A little more than a week after coming out of bankruptcy, the city of Stockton will start spending money to rebuild part of its downtown.

When we focus on municipal bankruptcy, as in many previous AHI multi-part posts, we emphasize the cancellation of no-longer-collectible debts without which the city is entirely unable to operate – but in that, it’s easy to overlook the damage done to the city’s economy by the unthinkability of new investment, because time being implacable, a city that cannot invest or reinvest in its built environment inevitably fades.


Louie, Louie, me gotta go

In fact, when I
posted about Stockton as it was emerging from bankruptcy, I thought the City was going to take on CalPERS and cut its pension funding, and was surprised when it did not.  However, the judge’s ruling (made verbally in October, in writing three months later) made clear that it could:

[Bankruptcy judge Christopher] Klein said Stockton had the legal authority to break its contract with the California Public Employees’ Retirement System and scale back its pension plan.

The city could cut the pension obligations, but …

In the second, the judge decided to approve Stockton’s reorganization plan even though it kept the pensions fully intact.

… it chose not to.


“You couldn’t even finish that dissertation.”

“I could have finished it, I chose not to.”

The judge left no doubt he thought Stockton was coerced:

Klein had little sympathy for CalPERS, calling its legal defenses faulty. He wrote that the pension fund “bullied its way about in this case with an iron fist.”

Yet the judge concluded, with palpable reluctance, that coercion has worked:

“This court is persuaded that no better plan is likely under the circumstances,” Klein wrote, giving his nod to Stockton’s decision.

In effect, Judge Klein made a fact-based economic decision – that the savings the City might reap from remaining in bankruptcy to pay Franklin Templeton more and CalPERS less were smaller than the lost-opportunity cost to Stockton of not rewarding and reinforcing efforts like these:


Let’s celebrate emergence from bankruptcy and downtown reinvestment

New hope [January, 2015] may come from Cindi Fargo, who assumed the reins late last year at the Downtown Stockton Alliance. On Friday afternoon, Fargo was apprised of the problems Benguerel has faced and paid him an impromptu visit within an hour. When she arrived, two bicycle officers already were on hand and Benguerel showed all of them his videos.


Stockton has Fargo

Those bicycle cops, by the way, would not be there but for the business community:

Fargo said her organization is doing what it can. The Downtown Stockton Alliance subsidizes the city for the bicycle officers at an annual cost of $300,000, and Fargo said the business organization in 2014 removed one mile of graffiti, devoted a total of nearly 100 days to power-washing the streets and collected more than 64 tons of trash.

It’s delightful to see a city bouncing up the instant the bankruptcy weights are removed:

The first focus will be the 500 block of East Weber Avenue.

Officials are hoping a multimillion-dollar project is the start of something major.

To turn around a neighborhood, fix the biggest eyesore first.  That means the worst-maintained, best-located property, and often that will be a downtown structure that has outlived its original use – a flophouse hotel, a warehouse, an old factory.

[Continued tomorrow in Part 2.]


May the (work) force be with you: Part 3, Fearful bigots oppose extraordinary gift

May 12, 2015 | Affordable Housing, California, Development, Elderly, George Lucas, Housing, NIMBY, Workforce housing, Zoning | No comments 191 views

[Continued from yesterday’s Part 2 and the preceding Part 1.]

By: David A. Smith

As established in yesterday’s Part 2, George Lucas’s ‘neighbors’ (term used in its geographical sense, not in any sense of sociability) had thwarted his original plans to develop a sophisticated and jobs-creating film studio on his property, and then exhausted his second possibility, affordable housing using the available programmatic series, and they thought they had won –


– only to be outfoxed by Mr. Lucas using the dark side of his wealth, and proposing (gasp!) to use his own money entirely and to build only what he needed no further permission to build (double gasp!).



Sources used in this post

New York Times (May 21, 2012; purple font)

Marin Independent Journal (April 14, 2015; pastel blue font)

The Washington Post (April 17, 2015)

Previous AHI posts on California NIMBYs versus billionaires

Shooting a white elephant (May 11, 2009; Forest green font)

Revenge of the Sith (June 1, 2012; Brick red font)

Posts on NIMBY-ism generally

The production paradox (January 1, 2007)

Bringing ‘those people’ to our neighborhood (March 12, 2010)

Deciding who lives near whom (March 30, 2010; two parts)

The NIMBYist surcharge (October 19, 2011; three parts)

Nor can the neighbors even feel themselves superior for having protected the community against a trashy or cynical addition, because everything about Mr. Lucas’s proposed development is first-rate, and much better than any programmatic requirement or alternative possibility: Low visibility (cannot be seen from the road), low density (2 ½ times as spacious as normal), and target population of workforce housing. 

Nor did the benefits stop there:

4. Design quality: Award-winning architect. 

The architect for the project is Robert W. Hayes of Sausalito, a designer who won acclaim for his Toussin Senior Apartments affordable complex at 10 Toussin Ave. in Kentfield.


L’Ouverture de Lucas: Toussin Apartments

5. Property management: Capable local non-profit. 

Mr. Lucas is working with a well-established non-profit (originally known as Petaluma Ecumenical Properties), founded in 1978, that already operates 430 apartments in the county:

The project is being coordinated and managed by PEP Housing of Petaluma, which developed Toussin as well as affordable housing complexes at 13 sites in Petaluma, among other projects.


Groundbreaking ceremony, Kellgren Senior Apartments, Petaluma, 2012

Th3ey are at pains to assure that none of the ‘drug dealers and lowlifes’ some neighbors wrote about will not be moving into Marin:

Aside from meeting income level requirements, renters must clear “an extensive background check” that includes a review of criminal and other records, as well as interviews with former landlords, Stompe said, adding her organization maintains a tight grip on tenants.


Have you certified your income?

I’m sure she phrased it differently.

6. Resident and community amenities: Extensive, appropriate, and free

Beyond the housing itself, Mr. Lucas will be adding an incredible list of amenities:

The proposal includes:

A community center and pool

Terraced gardens

An orchard and a “micro farm” or community garden

A barn. 

It sounds idyllic.  Most communities would kill for a property as nice as this – at no cost to the community. 

7. Economic contribution: An $86 million gift.   In designing and proposing the project, Mr. Lucas is sparing no expense:

Costs for the project had been estimated at $120 million to $150 million at the time.

Using the midpoint ($135 million) and allowing 25% of the total for the non-residential amenities, it works out to $452,000 per apartment (net), or $602,000 apiece if the amenities’ cost is factored in.

Thomas Peters, CEO of the Marin Community Foundation, called Lucas’ plan an “extraordinary offer” that underscores the filmmaker’s commitment to the housing needs of the vibrant workforce that drives the region’s vitality.


Tom Peters is in search of excellent in gift-giving

As against that, assuming the most favorable possible economics – 100% occupancy (no vacancy loss), the highest level of practical rent ($1,820 per month), 40% for operating expenses, and capitalization at 6.0% — the apartments will have an economic value of no more than $218,000 apiece, or roughly 48% of their development cost.  (All this counts the land value at zero, so I’m significantly understating the contribution.)

Add it all up and I figure Mr. Lucas is giving the Marin community $86 million of value, for Marin’s elderly and its blue-collar workers.

I repeat, giving that to the community, and asking nothing for it.


We’ll build the droid-force housing over there

D. The neighbors have no one to blame but themselves

As one reads the stories, supporters of Mr. Lucas do pop up, though they are presented as isolated voices:

[Back in 2012], the initiative did have supporters, including some residents and officials. 


Arnold thought it an opportunity

Supervisors Judy Arnold and Steve Kinsey sounded optimistic notes, with Kinsey calling it a “wonderful opportunity.” Arnold noted that affordable housing is in short supply in Marin and “in this case we have the opportunity to be more creative.”


Kinsey reports it’s a wonderful opportunity

“It’s a huge public gift and I am confident the public will embrace it,” added [Mary Stompe, CEO of PEP Housing, the non-profit that will operate the property]. “We’re providing homes for teachers and others in the county.”


Mary’s confident the voters will Stompe out obstructiveness

“The unique thing about this is George is financing it 100%,” said Gary Giacomini, former county supervisor and an attorney for Skywalker. The situation will leave Lucas in charge, and not grantmakers, while eliminating red tape associated with subsidized housing, Giacomini noted.

‘Red tape’ means delay, uncertainty, and cost.

Reaction to the latest plan for Grady Ranch was mixed, with Supervisor Damon Connolly citing worries about “the cumulative impact on the entire area” of a cascade of development proposals that can “literally and figuratively change the landscape in Marinwood and Lucas Valley.”


Development, Mr. Connolly, is what enables you to live in Marin.


Glad he’s in Marin and unwilling to help others become his neighbors

E. “Fearful bigots oppose extraordinary gift”


There is good in all of us

If the Post had properly understood the situation, they’d have retitled their article Fearful Bigots Oppose Extraordinary Gift, because that is precisely what they have done and are doing.

[When Mr.] Lucas tried to build affordable housing on the site, which once again stoked concern among some residents, the people who had opposed the studio expansion were being blamed for the possibility of low-income housing coming to a wealthy community.

In fact, the bigots came out of the woodwork to express themselves:

“We got letters saying, ‘You guys are going to get what you deserve. You’re going to bring drug dealers, all this crime and lowlife in here,’ ” Carl Fricke, a board member of the Lucas Valley Estates Homeowners Association, told the Times in 2012.

Remember, that’s the ‘recently resurrected formerly defunct’ homeowners’ association, the one whose board members may not have been legitimately elected.

“The standard naysayers will be hanging around, but an awfully lot of people will support it,” Giacomini added. “We will have a healthy public process but it will not be one-sided,” he said. “There will be in-depth scrutiny.”

Let’s apply the reverse-incumbency principle:


What if Marin already had 224 apartments of workforce family housing and elderly housing, located on land owned by Mr. Lucas, and Mr. Lucas declined to renew the at-will arrangement, and instead proposed that PEP Housing do as Mr. Jobs’ neighbors wanted him to do, cart up the buildings and relocate them elsewhere, so that he could restore those 52 acres to their natural, pre-development state.

The neighbors would crucify him.


Give us back our workforce housing


May the (work) force be with you: Part 2, Facing death by delay

May 11, 2015 | Affordable Housing, California, Development, Elderly, George Lucas, Housing, NIMBY, Workforce housing, Zoning | No comments 130 views

[Continued from yesterday’s Part 1.]

By: David A. Smith

In yesterday’s Part 1, property owner George Lucas, like his contemporary Steve Jobs, had discovered that in California, no matter what a rich owner wants to do with his property, the neighbors will come out in force to oppose it:


Don’t bring your affordable housing here

Having failed in his initial quest to bring high-tech and high-paid jobs to Marin, via an expanded computer-based digital film studio, Mr. Lucas then shifted to affordable housing.  Switching from a commercial venture to desperately needed affordable housing would please the neighbors, one would have thought, but it did not.


We’re the duly elected committee

Sources used in this post

New York Times (May 21, 2012; purple font)

Marin Independent Journal (April 14, 2015; pastel blue font)

The Washington Post (April 17, 2015)

Previous AHI posts on California NIMBYs versus billionaires

Shooting a white elephant (May 11, 2009; Forest green font)

Revenge of the Sith (June 1, 2012; Brick red font)

Posts on NIMBY-ism generally

The production paradox (January 1, 2007)

Bringing ‘those people’ to our neighborhood (March 12, 2010)

Deciding who lives near whom (March 30, 2010; two parts)

The NIMBYist surcharge (October 19, 2011; three parts)

As I wrote three years ago in Revenge of the Sith (June 1, 2012; Brick red font):

Some states, like Massachusetts but unlike California, have a potent inclusionary zoning law that can override local opposition when the locality, as for instance Marin, has a minuscule proportion of affordable housing.

As Mr. Lucas wrote, NIMBYism is selective, it discriminates against ‘those people’:

Marin is a bedroom community and is committed to building subdivisions, not business.  Many years ago, we tried to stop the Lucas Valley Estates project from being built, but we failed, and we now have a subdivision on our doorstep.

Naturally, those who benefited from previous supply expansion now oppose paying it forward: 

No one is more conservative than a newly arrived property owner who, having transformed the landscape to accommodate their immigration, now wishes to stoop that transformation for anyone else (what Rakesh Mohan has called the ‘third-class carriage’ mentality: I’m inside, don’t you dare come in).


Lucas Valley Estates residents remained unconvinced. “This is a neighborhood of young children and retirees. It is quiet here, rural. This was going to become a multiplex with wine-tasting,” says the association’s president, Liz Dale.

Thomas Forster, Lucas’ property manager of nearly 30 years, sees things differently: “We were offering to shut down at 11 p.m. and spend $70 million to restore creeks ravaged by erosion and farm debris. Nothing we offered to these people was ever going to be enough. And so we were facing death by delay.” Dale insists her organization never intended to kill the project.


I’m not opposed, I shall merely never agree

Ms. Dale was fibbing, and she must know that. 

And here I thought that Woodstock, NY took the prize for NIMBYite surcharges on development.


No, bro

C. To act, Mr. Lucas had to do something that the neighbors couldn’t stop

When Lucas first tried to build affordable housing on the land, he had told the Times, “I’ve been surprised to see some people characterize this as vindictive.”

As we saw with Mr. Jobs’ house, non-as-of-right land use is one place that small-minded neighbors envious of the nouveau-tech-riche can thwart even those will billions (in California, anyhow).


Crawford knows the regulations

Brian Crawford, head of the county’s Community Development Agency, noted the site and adjacent areas are targeted for residential development by county land use regulations.

Reading between the lines I think Mr. Lucas became personally pissed off that his integrity was being not just doubted but implicitly libeled. 


Any orders, sir?

“I wouldn’t waste my time or money just to try and upset the neighbors,” Lucas told the Times.

In any case, Mr. Lucas decided that perhaps the neighbors’ opposition was not to the proposed development but to him personally:

Then the “Star Wars” creator wanted to sell the land to a developer who would build affordable housing.

“It’s inciting class warfare,” Carolyn Lenert, then head of the North San Rafael Coalition of Residents, told The New York Times at the time.

Though that three-year-old quote is memorable, it’s contextually impossible to deduce what Ms. Lenert meant.


North San Rafael’s 2012 person of the Year: Carolyn Lenert

Now, two years after that project stalled, Lucas has decided to build the affordable housing and pay for it all himself.

As Lord Vader might have said, “If you only knew the power of zoning.”


“We’ve got enough millionaires here. What we need is some houses for regular working people,” Lucas said through his lawyer Gary Giacomini, CBS affiliate KCBS reported.

Mr. Giacomini recently retired from 24 years’ service on the Marin County Board of Supervisors.


The longest-serving county supervisor, still smiling after a quarter century

Filmmaker George Lucas has proposed a 224-unit affordable housing complex at Grady Ranch.

Representatives of the “Star Wars” billionaire’s Skywalker Properties, calling plans for rental housing that accommodates seniors and local workers a “magnificent gift” to Marin County, said Lucas intends to pay for the entire project himself, without federal, state or other grant aid.

Readers might be forgiven for thinking that hyperbole, but it’s entirely true.

D. The neighbors don’t deserve the unbelievably high-quality development they will get

When the foundation departed, Angelo Garcia, president of Lucas Real Estate Holdings, pledged to “start immediately to engage in discussions” with developers identified during the foundation study. These included PEP Housing. “George Lucas feels that affordable housing is necessary so that people who are important in this community such as teachers, home health care workers and nurses don’t have to live outside Marin,” Garcia said then.


Garcia thinks affordable housing is necessary

Let there be no doubt: Marin needs more affordable housing.

According to Census estimates, 7.7% of county residents live below the poverty line.

Everything about this development is high quality and raises the bar compared with what is commercially feasible even using available affordable housing incentives. 


Tucked into Marin

Lucas financing the project entirely means it can’t stall because outside funders pull the plug.  If the proposal is approved, the development could be finished by 2019, the lawyer added.

1. Visibility: Discreetly blended into the landscape

Mr. Lucas’s ranch property totals over 1,000 acres (just under two square miles, and the development will sit on 52 of them, or less than 5% of the total area.  Moreover:

None [of the development] would be visible from Lucas Valley Road.


Any of that icky affordable housing around here?

Lucas Valley Road, Marin

2. Low density: Over 2½ times more spacious than typical.  At 224 apartments over 52 acres, the property has an amazingly low density of 4 units to the acre; typical walkup affordable housing would be 10-12 apartments to the acre, three times as dense as this.

A plan that will be submitted to the county Community Development Agency this week calls for 120 two- and three-bedroom workforce residences in one four-story cluster and two two-story clusters on the site, and 104 one- and two-bedroom residences for seniors in a four-story cluster, as well as four parking garages.

Nor is Mr. Lucas jamming up against the zoning limits:

Zoning allows as many as 324 dwellings on the site.

I’m surprised Mr. Lucas isn’t building more housing than he is … or perhaps he’ll add the additional 100 homes after the first phase is done?


Who knows what I’m capable of?

[Mr. Lucas’s proposal] limits development to a 52-acre tract of the 1,039-acre ranch, 800 acres of which already have been dedicated as open space.

3. Target population: workforce housing that Cannot be feasibly delivered any other way.  Mr. Lucas envisions making this workforce housing.

Income requirements could be set so eligible residents had to make less than 80% of the area’s median income, the paper reported. 

Through a lacuna in America’s affordable housing programs, rental housing affordable to people above 60% of median income is not subsidized in any way.  While this works in what I call ‘America’, the Norman Rockwell land of Clean Rest Rooms and free iced-tea refills, the America that largely votes red.  But in blue-urban America, restrictive land-use policies and NIMBYite procedural obstructions drive up the price of land and make apartments unaffordable:


Above 60%, below market-rent-income-level, is an empty space in American housing affordability

The median household income for Marin County is $90,839, according to U.S. Census Bureau estimates.

To put that in context, for the median Marin household, affordable rent (at 30% of income) would be roughly $2,250 a month, and 2-BR apartment rents in Marin County range from that up to $3,600 per month.

He had also emphasized the need for affordable housing in the county, so that people with moderate incomes who worked in Marin could also live there.

At 80% of AMI, affordable rents are $1,820 per month, which basically does not exist and at 60% of AMI (the tax credit cap), they would be $1,370 a month – which absolutely does not exist.

Mary Stompe of Novato, executive director of PEP Housing for the past decade, said regulatory controls will be filed with the county ensuring affordability of the residences, with targets set so that workforce housing applicants earn less than 80% of median income, and senior renters falling somewhere between 30% to 60% of the median.


Congratulations, California, you’re America’s least affordable state

Mr. Lucas is creating housing priced to accommodate Marin’s key workers:

Lucas financing the project entirely means he can set aside units for people like teachers and local employees who meet income requirements, Giacomini told the local newspaper. 

[Continued tomorrow in Part 3.]