Don t Think Globally Act Locally. Micah Weinberg President, Bay Area Council Economic Institute

Transcription

1 Don t Think Globally Act Locally Micah Weinberg President, Bay Area Council Economic Institute March 2017

2 How do we drive growth, innovation, and equity in CA s economy during these uncertain times?

3 Build more houses (and upgrade infrastructure)

4 Thank you! Q & A

5 Okay, okay

6 Just how uncertain are these times exactly? And why? How much control do we have over our own economic destiny? What are the barriers to making the right decisions for our communities?

7 Source: Zillow

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9 People believe what their tribe believes and tribes change beliefs

10 People believe what their tribe believes and tribes change beliefs

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12 Economy is doing very well and not just for very rich for now US Unemployment Rate Jan-06 Dec-06 Nov-07 Oct-08 Sep-09 Aug-10 Jul-11 Jun-12 May-13 Apr-14 Mar-15 Feb-16 $100,000 $95,000 $90,000 $85,000 $80,000 $75,000 $70,000 $65,000 $60,000 $55,000 $50,000 Real Mean Household Incomes U-3 U-6 Census Cash BEA Disposable

13 California economy (in Aggregate) is doing better than U.S. as whole Unemployment Rates 14.0% 13.5% CA Share National Personal Income Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12 May-13 Jan-14 Sep-14 May-15 Jan-16 Sep-16 California US 13.0% 12.5% 12.0% 11.5% 11.0% 10.5% 10.0% 1972Q1 1975Q1 1978Q1 1981Q1 1984Q1 1987Q1 1990Q1 1993Q1 1996Q1 1999Q1 2002Q1 2005Q1 2008Q1 2011Q1 2014Q1

14 Parts of the California have been growing faster than China 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 6.9% China 2.5% U.S. Metro areas RegionalGPD Growth ( ) 5.8% 8.9% 3.9% 2.5% Bay IJrea San Jose Los IJngeles San Diego Source: U.S Bureau of Economic Analysis, World Bank

15 But poverty especially deep poverty is troublingly persistent

16 California has highest poverty rate in the nation

17 Poverty rates vary across state but not just inland/coast

18 Tech employment divergent, not convergent

19 Wage gains focused in metropolitan areas

20 So where are we going?

21 The Dow Jones Industrial Average has reached record-high closes Source: Yahoo! Finance

22 CEO Confidence increased in the last quarter of 2016, reaching the highest level in six years % of CEOs believe economic conditions are better than in the first half of Source: The Conference Board

23 What do CEOs know anyway?

24 What do CEOs know anyway? (Part 2)

25 The rich are coming to California it s the poor who are leaving : net loss of 800,000 living close to poverty line, net gain of 20,000 making over $100,000 per year

26 Economy is at top of economic cycle CA cycles with nation

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28 Welcome to our sanctuary city!!

29 Immigrants are welcome here!!

30 We care more about the poor!!

31 We care more about the environment!!

32 The primary threat to the innovation economy, economic growth, and equity in California is the underbuilding of housing Source: National Bureau of Economic Research

33 California s High Real Poverty Rates is Due to High Housing Costs

34 To prevent displacement, build places Source: Legislative Analyst Office, 2016

35 Negative impacts of housing shortage on the economy Source: California Employment Development Department

36 Many things localities can do Source: Legislative Analysts Office

37 And not do WORKING DRAFT Last Modified 2/1/2016 4:15 PM Pacific Standard Time Printed 2/1/2016 1:39 PM Pacific Standard Time Market Price: $750,000 Less Soft Costs/Indirect: $60,000 Less City/Utility fees: $60,000 Less Construction Cost: $400,000 Less Structured Parking: $50,000 Less Financing/Carry: $50,000 Less Equity Return/Profit $80,000 AVAILABLE FOR LAND: $50,000 Times 200 units - $10,000,000 Market Price: $750,000 Less Soft Costs/Indirect: $60,000 Less Fees (+20k affordable fee) $80,000 Construction costs rise 10% $440,000 Less Structured Parking: $50,000 Less Financing Costs: $50,000 Less 10% Equity Hurdle/Profit : $80,000 AVAILABLE FOR LAND: $-10,000 GO IF SELLER WILL SELL AT THIS PRICE STOP: Buyer loses money Seller operates current land use (mini-mall, garage, gas station, industrial building)

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39 Transportation is the handmaiden of housing Source: INRIX

40 Transportation wildly underfunded in spite of years of effort

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42 Practical solutions to generational regional and state issues