Sustainable Development Silicon Valley's Way

Carl, in the last issue of our sister publication, Metro Investment Report, Joel Kotkin, author of Digital Geography, opined: "We are rapidly approaching the point where technology empowers people to live anywhere in the U.S." He went on to conclude that a region's economic success is depending increasingly on its ability to provide a quality of life environment that attracts and holds on to highly mobile professionals. Assuming Joel's correct, what's the Silicon Valley Manufacturing Group doing to ensure that the neighborhoods adjacent to your members' businesses meet this livabiliity test?

The purpose of the Manufacturing Group is to foster a region that is economically and environmentally healthy for everyone. Our core issues are those quality of life issues that make a great place greater-traffic, housing, education and the environment. All are intricately linked to each other, and we're working on comprehensive, sustainable solutions to address them.

Could you elaborate on how the Manufacturing Group goes about getting its agenda enacted?

Packard's vision was that Silicon Valley leaders' role was not to stand on the sidelines to either cheer or jeer, but to get into the game and move the ball forward. He formed an organization with a board of directors comprised of 27 of the top CEOs in the nation. They created a vision that tackles challenges in a quantifiable way rather than writing a report about them. And we update that agenda annually to keep it fresh and focused. We have very specific goals in each of those areas.

Elaborate on those, if you would.

Sure. There's probably no tougher issue that the Valley faces than the shortage of affordable housing. The Manufacturing Group has created partnerships to tackle this issue at the grassroots as well as the grass-tops level.

At the grassroots, six years ago we formed the Housing Action Coalition, which today consists of 200 individuals and organizations that work together to provide homes that are well-built, relatively affordable, and appropriately located. They do this by advocating, educating and legislating for a more regional approach to make Silicon Valley more affordable.

For example, the Coalition identifies housing developments that meet Smart Growth criteria and goes out to planning commissions and City Councils to advocate for their passage. It's worked 98 out of 99 times resulting in 26,000 new homes in 18 Silicon Valley cities. With a diverse group of leaders-from the local head of the Sierra Club to the local head of the Chamber-the impact you have advocating for these developments can be a critical force.

On the grass-tops level, three years ago the Manufacturing Group formed and staffed the Housing Leadership Council which supplements the Coalition's grassroots work by focusing on seven strategic initiatives to address both the supply and demand sides of our housing challenge.

We've also founded the Silicon Valley Housing Trust Fund whose mission is to raise $20 million in 24 months to leverage $200 million in private development dollars. This allows us initially to assist 5,000 families in three critical categories: affordable rental homes, homeless shelters, and first-time homebuyers. Most of the funds are allocated as loans rather than grants to be paid back after we help the initial 5,000 families. We'll then help thousands more.

In just ten months we've officially raised nearly $12 million towards the $20 million goal. We've decided to shorten the campaign from 24 months to 16 months because the need is so great and the momentum so high.

The L.A. City Council recently created a similar housing trust fund, but was only able to muster $5 million. Given our comparative size relative to Silicon Valley, what lessons can you offer the business and political leadership of Southern California?

There are several unique factors to our Trust. First, out of the 150 trusts nationwide, ours is the first to be funded completely free of any new taxes or fees. Second, ours is the only one that has made Smart Growth criteria a grant criteria. Third, we are the only one that raises funds with more than just a token of private sector contributions; we currently have $12 million, and nearly two of every three dollars of those funds comes from the private sector.

There are new ways to do things. We don't have to do tax-based funding to mitigate challenges like traffic and environmental degradation. No development should be built in a way that isn't Smart Growth oriented. You can get the private sector to contribute to all environmental protection needs.

Given the pressing demand for housing in the Valley, how is your Group able to keep the focus of these disparate communities in your region on a Smart Growth agenda?

There have been many years of bad land use planning. Yet in the past 20 years most of our cities have recognized that Silicon Valley must be a sustainable community. By pulling together, more and more leaders are willing to return to the way things used to be done in planning a community.

First, we need a transit system-such as rail-that provides a skeleton to build upon. We need to grow up rather than out and include amenities such as parks and open space within cities so that we're not building just more homes, but better neighborhoods. By doing that, we can achieve the twin objectives of affordable homes and livable communities.

Nick Bollman of the California Center for Regional Leadership is quoted in last month's TPR as follows: "Government reform will be essential as we move into the new economy. We need to make sure that our economic development strategies acknowledge that regions are what matter. We need to acknowledge ecological regions in how we organize support for the improvement of our natural resources." Your comments?

Nick is on the mark. The Manufacturing Group's entire focus has been that a strong economy means a strong environment. In every survey I've seen of Information Age workers, they love vibrant downtowns. They like the dynamics of entertainment and the people, and they want it to be safe. The more a community provides these things, the more it will be amenable to Information Age jobs, which are high paying and great for their region.

Changing focus, Silicon Valley Manufacturing has been spearheading the campaign to extend the Bay Area Rapid Transit system (BART) to San Jose. Could you update us on the status of that effort?

The Campaign is actually a traffic relief initiative that would include BART as well as scores of other improvements in both road and rail that are critical to the Valley. Some people in support of-or in opposition to-the idea of BART have shorthanded it to sound like it's solely for BART. About 40% of the funds will be used to finally bring BART into the Valley. And 60% will be for other incredibly important rail and road improvements.

If you were to be successful in securing the capital to extend rail or BART into San Jose, how would the operational costs be covered?

Whenever the Manufacturing Group has successfully lead these traffic relief initiatives in the past-we did so in 1984, 1992 and 1996-we have only funded the capital costs of rail transit improvements, not the operations.

However, with that stated, it's clear that the cost of operating BART-about $20 million annually-is an issue that needs to be addressed. Whether it's addressed through funding with this measure or through a different funding route worked out by the County in cooperation with BART is yet to be determined.

Carl, former Silicon Valley State Senator Becky Morgan has repeatedly remarked how even the charmed civic leadership of the Silicon Valley is unable to overcome the negative incentives of our current state-local fiscal arrangement in California. Local government reliance on sales tax revenues, she asserts, undermines local attempts to approve affordable housing and Smart Growth land use plans. What is the Manufacturing Group doing to revisit California's state/local finance scheme and to incentivize local governments to do the right things?

We need to partner more with the State on the fiscalization of land-use issues. The ERAF agreement for example; returning all or a portion of those funds would be an important step. And making sure that we are not operating with a tax structure that rewards big box retail over even a high-tech company or housing developments is critical.

On a related matter, you're also the Chair of the San Jose Downtown Foundation. We've been carrying articles by Assemblyman Gil Cedillo about urban infill, the possibilities of preservation, and the restoration of downtowns. What's the cornerstone of your plans for San Jose, and how is it coming?

The Foundation has not been that active as of late. But the overall vision for the Valley is fairly clear. In Santa Clara County we have 15 different cities with good opportunity to build a strong vibrant downtown urban core in each. Several are headed in that direction-Palo Alto, Los Gatos, Mountain View and San Jose-and each can be encouraged by local leaders.

Let me close with this, Carl. If you were to give advice to a private/public effort in L.A. similar to yours, what would you suggest they learn from the Silicon Valley Manufacturing Group's experience?

In the Valley, engaging civic leaders has required five things: one, a key peer to pull a coalition together-David Packard. Two, you need direct revenue, resources and staff. Three, making sure it stays member-led rather than staff-led-we have eight people working at the Group and more than 400 member company volunteers, which allows us to have a budget of less than $1 million dollars a year. Fourth, entrepreneurship-we have short, mid and long-term goals. Fifth, the mantra of the Manufacturing Group has been "minimum time/maximum impact"-we're talking about people with international schedules who put great value on civic action.