City of Vallejo, California 555 Santa Clara Street Vallejo, CA 94590 (707) 553-7283 [email protected]

City of Vallejo, California 555 Santa Clara Street Vallejo, CA 94590 (707) 553-7283 Kdiohep@Ci.Vallejo.Ca.Us

Page 1 of 1

Kathleen Diohep - Re: North Mare Island RFQ

From: Stephen Weir To: Kathleen Diohep Date: 10/20/2014 1:34 PM Subject: Re: North Mare Island RFQ Attachments: East Bay Tech Office Demand.pdf; East Bay Demand References.pdf; International Startup Campus Demand.pdf; East Bay Demand References.pdf

Hi Kathleen, here is some initial info on number two of your information request:

Office: Please see attached documents. In short the demand is expanding from San Francisco > Oakland > Richmond Point (upcoming Ferry Driver) > Potentially NMI (post Ferry arrival).

Non-Office: Hotel, retail, and other non-office uses are study purposes only, and those uses may evolve as we go through the entitlement process; which is when we will be marketing to users to determine interest while finalizing our master site plan.

I’ll have further information to send through soon.

Regards, Steve

On Thu, Oct 9, 2014 at 1:45 PM, Kathleen Diohep wrote: Dear Mr. Weir:

Please find attached a letter requesting additional information on your submittal and the staff report summarizing the response to the RFQ.

Thank you again for your interest in Mare Island and your willingness to work with us as we undertake a thorough review of the responses.

Please confirm your receipt of this email.

Sincerely,

Kathleen Diohep

Kathleen Diohep | Economic Development Manager City of Vallejo, California 555 Santa Clara Street Vallejo, CA 94590 (707) 553-7283 [email protected]

-- __ Stephen Weir 415 658 5494

file:///C:/Users/KDiohep/AppData/Local/Temp/XPgrpwise/54450F52VCHCITY_PO100... 10/31/2014 (10/31/2014) Kathleen Diohep - Re: North Mare Island RFQ Page 1

From: Stephen Weir To: Kathleen Diohep Date: 10/22/2014 5:01 PM Subject: Re: North Mare Island RFQ

Hi Kathleen,

Please find response to additional information request questions 1 & 3 below. Further detail on any of the points below can be provided on request:

1. Your submittal includes a listing of projects worked on by various members of your team. As requested on pp. 20-21 of the RFQ ("Developer Experience / Past Projects" section), please provide the information for each project as specified in the RFQ. Please clearly state what role each member of the team played for each of the projects.

- Burnside: Stephen Weir - Lead Investor - Pacific Shores Center: Matt Oliver - Lead Developer - San Rafael Corporate Centre: Matt Oliver - Lead Developer - Seaport Center: Matt Oliver: Lead Developer - Touro: Pieter de Monchy - Program Management, preliminary & final engineering - Touro: Tom Wilson -Worked with Touro University, Arcadis & City of Vallejo to master plan the 152 acre North Island project for 4 years, including: - Developed Master Plan & wrote the amended Specific Plan - Coordination of consultant & engineers, - Community Outreach - Presentations etc.

2. Are any other individuals expected to participate in this project as co-developers/co-sponsors? If so, who?

There were preliminary talks with potential partners:

- Northmarq Capital (real estate Private Equity): Dennis Williams - Faralon Capital (real estate Private Equity): Steve Heath & David Monte - Bay West Group (Bay Area real estate investment & development): Bill Poland - Orton Development (Bay Area real estate investment & development): Eddie & Joey Orton - Presidio Bay Ventures (Bay Area real estate investment & development): Cyrus Sanadaji

Other: - Syndicate of private former and existing Silicon Valley technology entrepreneurs & venture capitalists - Tech Brokerage: Cornish & Carey, Colliers - TopLine Incubator at Point Richmond: Alan Young - EB5 Funding: John Cheney - Team : Tony BrettKelly - Leasing & Sales broker, Gower Smith - Private Capital Fundraising

Best Regards, Steve

On Thu, Oct 9, 2014 at 1:45 PM, Kathleen Diohep San Francisco Tech Demand for East Bay Large ofﬁce tenants can't ﬁnd enough space in San Francisco, East Bay running out, too

“15 tenants seeking spaces of 100,000 square feet or more, it looks as if the East Bay may ﬁnally land a huge new tenant.”

“There are ten spaces in the East Bay that could currently accommodate such a large tenant” [SF Business Times]

“only six buildings [in San Francisco] can accommodate tenants of that size while the East Bay offers ten spaces" Biz Journals: July 1, 2014 East Bay market set to gain as companies exit San Francisco

“expect the East Bay ofﬁce market to heat up in 2014”

“established companies in San Francisco and startups seek out less expensive space”

“particularly in areas with easy access”

Socketsite: January 8, 2014 Demand for East Bay Ofﬁce Space Doubles

“demand for ofﬁce space in the East Bay has spiked over the past three months.”

“ofﬁce space around Oakland now measures nearly one million square feet”

“A big driver of the spike: companies relocating from San Francisco"

Socketsite: April 29, 2014 Ofﬁce Rents in SF up 80% from 2010 Socketsite: July 22, 2014 Law could limit San Francisco’s tech boom

“Proposition M established an annual cap on the amount of ofﬁce space”

“development could soon exacerbate the sharp rise in commercial rents, drive more companies out of the city”

Socketsite: July 29, 2014 SF rents pushing ﬁrms out of City Socketsite: October 13, 2014 Appendix: “See East Bay Demand References.pdf” International Startups Reference: Blueseed’s demand studies for Bay Area ‘Googleplex Island’ Source: Blueseed Market Research Source: Blueseed Market Research Source: Blueseed Market Research

Source: Blueseed Market Research Large ofce tenants can't ﬁnd enough space in San Francisco, East Bay running out, too - San Francisco Business Times 10/17/14, 5:53 PM

Large office tenants can't find enough space in San Francisco, East Bay running out, too

Demand for office leasing keeps booming in San Francisco, but with about 15 tenants seeking spaces of 100,000 square feet or more it looks as if the East Bay may finally land a huge new tenant.

Meanwhile, with demand swelling, only six buildings can accommodate tenants of that size while the East Bay offers ten spaces, according Foundry Square III at 505 Howard St. in San Francisco was the only major Bay Area oﬃce to brokerage firm JLL. development to ﬁnish in 2013. Neustar leased part of the building, but it still has 139,186 “There is very little left to lease especially if square feet available for lease. you’re a large tenant,” said Amber Schiada, research director for JLL for Northern California.

The current year is poised to be one of the best ever for San Francisco’s office market with a projected 2 million square feet of absorption as tenants move into spaces they leased in the past few years. Much of San Francisco’s major office leasing involves buildings that are still under construction.

While developers build more than 3.6 million square feet of office space, about 65 percent of that space is already spoken for, so new construction isn’t exactly a solution.

As we reported last week, technology companies have been the main drivers of office leasing in San Francisco, but current tenants looking for big spaces include some non- tech players such as JP Morgan seeking 220,000 to 640,000 square feet, Lending Club seeking 300,000 to 400,000 square feet, First Republic seeking 100,000 to 150,000 square feet and law firm Cooley out for 100,000 to 150,000 square feet.

http://www.bizjournals.com/sanfrancisco/blog/real-estate/2014/07/large-ofce-tenants-lease-san-francisco-east-bay.html Page 1 of 3 Large ofce tenants can't ﬁnd enough space in San Francisco, East Bay running out, too - San Francisco Business Times 10/17/14, 5:53 PM

Another substantial tenant in the market is Pinterest with a requirement for 100,000 to 250,000 square feet, but it is fixing to move into the San Francisco Design Center, a building that is well-leased to furniture vendors and makers. That deal could hit a roadblock, however.

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

(Page 2 of 3)

Here are the buildings left in San Francisco with room for a big tenant (Building/Square feet available):

415 Mission St. / 661,175 square feet. 181 Fremont St. / 416,206 square feet.

535 Mission St. / 224,501 square feet. Foundry Square III at 505 Howard St. in San 505 Howard St. / 139,186 square feet. Francisco was the only major Bay Area oﬃce development to ﬁnish in 2013. Neustar leased 199 Fremont St. / 125,069 square feet. part of the building, but it still has 139,186 One Market Plaza, Spear / 101,571 square square feet available for lease. feet.

Of the buildings available, only four are available next year while 181 Fremont is not available until 2016 and 415 Mission not until 2017.

Tech companies often claim they need to locate in San Francisco to attract their desired workforce. Does the same apply to finance companies and banks? In the past, big East Bay parks have lured banking and finance tenants such as Bank of the West taking a huge chunk out of Bishop Ranch in San Ramon.

Also, tech isn’t necessarily immune to the East Bay. Google is reportedly taking a serious look at leasing an office building on the eastside.

Brokers have told me for years that San Francisco tenants are coming to tour East Bay

http://www.bizjournals.com/sanfrancisco/blog/real-estate/2014/07/large-ofce-tenants-lease-san-francisco-east-bay.html Page 2 of 3 Large ofce tenants can't ﬁnd enough space in San Francisco, East Bay running out, too - San Francisco Business Times 10/17/14, 5:53 PM

spaces as San Francisco rents have shot up — 79 percent since 2010 according to JLL — and vacancy dwindles, but while the East Bay has drawn numerous tenants — more than 300,000 square feet worth— it has yet to score a big corporate headquarters or large expansion of more than 100,000 square feet.

That could change, Schiada said, since space is becoming even more scarce and more expensive in San Francisco and some Peninsula markets.

Some East Bay landlords are ready to welcome west Bay tenants. Earlier this year, I reported on Westcore Properties’ revamp of the former Clorox headquarters at 1221 Broadway in Oakland, which has about 200,000 square feet available with lots of interest according to executives.

Blanca Torres covers East Bay real estate for the San Francisco Business Times.

http://www.bizjournals.com/sanfrancisco/blog/real-estate/2014/07/large-ofce-tenants-lease-san-francisco-east-bay.html Page 3 of 3 Oakland Market Set To Gain As Companies Exit San Francisco - SocketSite™ 10/17/14, 5:07 PM

Oakland Market Set To Gain As Companies Exit San Francisco

Oakland’s Central Business District ended 2013 with an office vacancy rate of 12.6 percent and an average asking rent of just over $2.50 a square foot versus closer to $4.25 per square foot in San Francisco according to Cassidy Turley. With many companies in San Francisco having signed deals for office space in 2009 and 2010 now facing renewals and rent increases in excess of 50 percent, expect the East Bay office market to heat up in 2014 as both established companies in San Francisco and startups seek out less expensive space, particularly in areas with easy access to BART such as Oakland.

http://www.socketsite.com/archives/2014/01/oakland_market_set_to_gain_as_companies_exit_san_franci.html Page 1 of 1 Ofce Rents In San Francisco Are Up 65 Percent Since 2010 - SocketSite™ 10/17/14, 5:08 PM

Office Rents In San Francisco Are Up 65 Percent Since 2010

With a current vacancy rate of just over 8 percent, the lowest rate since the fourth quarter of 2000, the average asking rent for office space in San Francisco is just over $51 a square foot per year, up 19 percent over the past year and up 65 percent since early 2010 according to Cassidy Turley.

With a little over 1.1 million square feet of net office space leased in 2013, the rate of absorption has significantly slowed as compared to 2012, however, when over 2 million square feet of space was absorbed and is roughly a third the 3.2 million square feet of net space leased in 2011, driven in part by a backlog in the pipeline of new construction which is set to start flowing over the next couple of years.

As we noted yesterday, the East Bay is poised to gain from the spike in San Francisco’s rents.

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Demand For East Bay Office Space Doubles Apr 9th 2014, 21:00, by socketadmin

While the vacancy rate for office space in the East Bay Oakland market was relatively unchanged in the first quarter of 2014, ending the quarter at 15.9% (roughly double the rate in San Francisco), the demand for East Bay office...

You are receiving this email because you subscribed to this feed at blogtrottr.com. A 1980’s Era Law Could Limit San Francisco’s Tech Boom (Or Bust) - SocketSite™ 10/17/14, 5:44 PM

A 1980’s Era Law Could Limit San Francisco’s Tech Boom (Or Bust)

With office rents in San Francisco up 81 percent since 2010 and approaching an average of $60 per square foot, a mark only once before observed in San Francisco – during the “tech boom” of 2000, San Francisco’s Planning Department is holding proposals for over 9 million square feet of office space to be built in the city.

That’s a pipeline of “three Embarcadero Centers or 20 Transamerica Pyramids” worth of proposed development. And that’s on top of over 12 million square feet of office space which is currently under construction in the city or has already been approved.

The problem, as reported by J.K. Dineen at the Chronicle: Proposition M.

Approved by San Francisco voters in 1986, Proposition M established an annual cap on the amount of office space that’s allowed to be approved for development. And while the annual allocation of 875,000 square feet can be banked in a down market, the current balance in the account which can be allocated is 1.9 million square feet, roughly one-fifth the amount of space which has been proposed.

Next month, San Francisco’s Planning Commission will to begin developing a framework by which to decide which proposals should be approved and which will be denied. And while design has played a part in past allocations, San Francisco Planning Director John Rahaim plans to “urge the commission against basing decisions on aesthetics” and focus on more “objective” measures.

San Francisco’s cap on commercial development could soon exacerbate the sharp rise in commercial rents, drive more companies out of the city, and limit the city’s current boom. That being said, it could also limit a bust.

“”We don’t know how long this bubble will last, but we know what happened to the last one. It tanked hard,” [said developer, John Elberling]. “There is always way too much

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optimism about demand when you are in a boom – everyone acts as if it will go on forever. There is always the correction.””

http://www.socketsite.com/archives/2014/07/1980s-era-law-limit-san-franciscos-tech-boom.html Page 2 of 2 San Francisco Rents Pushing Professional Firms Out Of The City - SocketSite™ 10/17/14, 5:11 PM

San Francisco Rents Pushing Professional Firms Out Of The City

With demand for office space in San Francisco having reached an all-time high, the average asking rent for space in the city has increased 15 percent over the past year and nearly doubled since the first quarter of 2010, up 88 percent to just under $60 per square foot. That being said, rents remains around 15 percent lower than at the height of the dot-com boom.

According to Cassidy Turley, it’s not just the non-profits that are now being driven out of the city in search of cheaper space, but professional firms as well, with the surge in rental rates negatively affecting profitability for businesses that are worried about such things. And in the near term, it’s likely to get worse.

http://www.socketsite.com/archives/2014/10/san-francisco-ofce-rents-double-pushing-professional-ﬁrms.html Page 1 of 2 San Francisco Rents Pushing Professional Firms Out Of The City - SocketSite™ 10/17/14, 5:11 PM

While there is currently over 4 million square feet of office space under development in San Francisco, the largest pipeline of commercial space in over thirty years, the majority of the pipeline won’t be ready for occupancy until post-2015, and over half the space has been speculatively pre-leased by companies such as Salesforce , Uber and LinkedIn.

For those looking for relative bargains, the areas around Showplace Square ($47.54) and Jackson Square ($50.19) are currently asking the least, while “creative space” and access to transportation continue to command a premium and the most expensive area in San Francisco remains around AT&T Park, with an average asking rent of $66.38 per square foot.

http://www.socketsite.com/archives/2014/10/san-francisco-ofce-rents-double-pushing-professional-ﬁrms.html Page 2 of 2 Oakland Market Set To Gain As Companies Exit San Francisco - SocketSite™ 10/17/14, 5:05 PM

Oakland Market Set To Gain As Companies Exit San Francisco

http://www.socketsite.com/archives/2014/01/oakland_market_set_to_gain_as_companies_exit_san_franci.html Page 1 of 1 Richmond incubator near future UC research site targets growing companies - San Francisco Business Times 10/17/14, 6:25 PM

Richmond incubator near future UC research site targets growing companies

Allan Young's incubator in San Francisco, Runway, aims to help companies take off; now he has leased 40,000 square feet in Richmond for a new business accelerator to help them climb to cruising altitude.

The new venture, called TopLine, began operations quietly on June 1, but Young says three companies have already moved in and he At full capacity, TopLine incubator in Richmond could hold 10 to 15 companies with 25 to 40 expects to have a full complement of young employees each. firms in the invitation-only accelerator within three to six months. Candidates for TopLine are “companies that have hit or are about to hit that inflection point to really accelerate revenue growth,” said Young, who calls the space the biggest incubator co-working space in the East Bay.

The accelerator could be well-positioned in a couple of ways. For one thing, it provides a resource for growing businesses that’s welcome in the East Bay generally and Richmond in particular, economic development officials in the area say. In addition, the site in Richmond’s Marina Bay area is just minutes from the planned location of a new research campus for UC Berkeley and Lawrence Berkeley Laboratory, which is expected to create an anchor point for technology-oriented development for decades to come.

“What we’re doing at TopLine has a very different flavor” than the collaborative work space at Runway in San Francisco, Young said. “Runway is about 30,000 square feet and it has 80 companies, and TopLine is about 40,000 square feet for 10 or 15 companies. They can stay longer and scale here,” he said.

Young is an entrepreneur who has founded companies, including call-center play

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CallSocket with co-founder Tom Henderson, and has worked at Sorenson Capital and with University Venture Fund of Salt Lake City on investments in startups that went public. He developed one of his own startup plays through the collaborative Y Combinator program before launching Runway and now TopLine.

“We learned a lot of lessons at Runway,” Young said, and among them was that the open collaborative work area at the San Francisco incubator didn’t work as well once a company shipped a product and began looking to expand its customer base.

“The space just wasn’t set up for anyone to grow and build a marketing team and an inside sales team,” Young said. TopLine, at 1402 Marina Way South, will have about half its space devoted to collaboration and half that’s divided more like a traditional office that would be focused on customer service and sales work.

At full capacity, he said, TopLine could hold 10 to 15 companies with 25 to 40 employees each. He’s looking for companies born in the East Bay and North Bay, as well as international ventures looking for a U.S. beachhead.

Three have moved in so far, Young said: Mayvenn, a product of the “500 Startups” program, which links stylists and salons catering to African-American clients with an online source of specialty hair products; a company that connects senior citizens with reliable sources of legal help and health care planning; and a software company developing artificial intelligence products.

Representatives of the companies could not be immediately reached.

Young said he has pumped more than $1 million into the property to upgrade its data network, buy furniture and otherwise make TopLine ready for business, and has signed a startling 20-year lease.

“I have a strong commitment and a strong conviction that this area will be the next fastest-growing hub for technology in, at minimum, the East Bay, and maybe even the greater Bay Area,” because of the new research campus, Young said. “We’re literally a

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four minute drive from the planned campus. The opportunities for tech transfer and commercialization will be immense.”

Lawrence Berkeley Laboratory announced in September that it had selected a UC-owned site on the Richmond shore for a new UC research campus, to open in 2016, in part because of abundant open space and its proximity to the existing lab site in the Berkeley hills.

“There’s a lot of anticipation around Richmond about the lab,” said Darien Louis, executive director of the East Bay Economic Development Alliance. “The Marina Bay area is a good strategy because its close” to the area now known as the Richmond Field Station where the campus will go, she said, and it’s in line with a wave of speculative real estate activity around the Richmond shore.

“We’re excited and always glad when someone discovers our wonderful city, bringing companies with him,” said Janet Johnson, economic development administrator for the City of Richmond, who had heard about TopLine but hasn’t been out to see it yet. “There’s always a need for support for growing businesses.”

http://www.bizjournals.com/sanfrancisco/blog/real-estate/2014/07/topline-allan-young-lawrence-berkeley-lab-richmond.html?page=all Page 3 of 3 In Oakland, A Sign of Some Very High Times | TechCrunch 10/21/14, 9:00 AM

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Two years ago, this building in downtown Oakland was the part of the country’s ﬁrst major cannabis growing educational institution, Oaksterdam University. After federal agents from the IRS and DEA raided the home of founder and marijuana legalization activist Richard Lee, he stepped down and the university gift shop pictured above shut down and was left vacant for about a year.

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Enter Addresss SUBSCRIBE Today, the building is home to Edyn, a Y Combinator-backed startup that builds a wiﬁ- connected garden and soil sensor. In the background is a leftover whiteboard from Oaksterdam’s tenancy, listing some marijuana varietalsRelated that were Videos grown in the same space.

How bad is the commercial real estate crunch in San Francisco and Silicon Valley?

Uh, bad?

So bad that that prices per square foot are  roughly where they were around the ﬁrst dot- Moto Phones | Fly or Die com boom. 2:20

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So bad that Uber decided to go in, buy its own piece of land and build its own headquarters from scratch.   Apple’s iMac 5K Apple Pay In Real Life So bad that Doug Shorenstein, part of the storied Retina Display multi-generational family of San Francisco More Related Videos developers that rehabbed the building that houses Twitter’s headquarters, went on Fox to explain why landlords are the demanding 10-year leases that are making Benchmark Capital’s Bill Gurley and Marc Andreessen ﬁnally talk about the “b” word.

Space is so tight that startups are quietly trickling over into downtown Oakland, where rents for creative oﬃce spaces are roughly half to two- thirds of what they are per square foot in San Francisco. The’s city’s commercial vacancy rate is also double San Francisco’s at around 14 percent.

Nothing might be more symbolic of Oakland’s oncoming wave of change than what’s happened to the Oaksterdam University gift shop.

The university, dubbed “America’s ﬁrst cannabis college,” was started by activist Richard Lee to teach growers about everything from horticulture to law. An activist for more than two decades, Lee was involved in a failed bid back in 2010 to legalize the drug beyond medical use through the California state ballot proposition. His house was raided over the summer by federal agents from the IRS and DEA with no particularly well-

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explained reasoning that I’ve seen.

After a previous raid in 2012, he stepped down from leading the institution and the gift shop stayed vacant for about a year.

Meanwhile, Jason Aramburu, a Princeton grad who had worked on agricultural sustainability issues in East Africa, was starting a company. With the help of designer and Jawbone chief creative officer Yves Behar, Aramburu had designed a smart, Internet- connected garden sensor that could pick up soil acidity, temperature and moisture. His company, called Edyn, first debuted on-stage at TechCrunch Disrupt last year. After operating in and out of Berkeley and San Francisco, Aramburu needed bigger office space.

It’s tough. On the large end, the last time I checked there were less than a half-dozen spaces with more than 100,000 square feet available in SF. Small space is just as competitive and pricey.

But Oakland’s a totally different story.

When Aramburu ﬁrst checked out the gift shop space, which had been vacant for at least a year, he heard some recorded chanting music wafting through the air. His Chinese-American landlords were doing a kind of ritual for someone – really anyone – to take the space.

He signed the lease. It ended up costing about a tenth of what he would have ended up paying

http://techcrunch.com/2014/10/20/oakland/?ncid=rss&utm_source=…m_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29 Page 5 of 21 In Oakland, A Sign of Some Very High Times | TechCrunch 10/21/14, 9:01 AM

in San Francisco’s startup-heavy SOMA district.

Yeah, a tenth. And it’s three blocks from a BART station.

“It’s insane,” he said. He had more than enough space for what he needed, so he’s renting out the other part to a non-proﬁt.

So now, the one-time cannabis educational institute is home to an Internet-of- things gardening startup.

Edyn isn’t alone in Oakland. Up Broadway Street, there are a few other Y Combinator startups like journalism crowdfunding platform Beacon Reader and The Immunity Project, which is developing an HIV and AIDS vaccine. There’s also the high-end photo app VSCO, which just raised a hefty $40 million led by Accel Partners, and the stalwart Pandora, which has been in the city for years. On the phone a few weeks ago, Sam Altman mentioned that two Y Combinator companies were moving over, but he didn’t name who because it was the startups’ news to share, not his. He said that one was pretty high-proﬁle.

Then over the summer, Menlo Park-based real estate investment ﬁrm Lane Partners also plunked down $25 million to buy the old 400,000- square foot Sears building downtown. They’re going to renovate it, rename it “Uptown Station” and hope to lure a big tech tenant.

Um, so does Oakland want a ﬂood of tech

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bros?

Is Oakland prepared for what might be coming? Does it even want this?

The city has twice the land mass, half the population and roughly one-fourth of the city budget of San Francisco.

It’s in the middle of a mayoral race at the moment where issues like community policing, jobs and education seem to be more at the forefront than housing, which is San Francisco’s red-hot button at the moment. (Today, by the way is the last day to register to vote before the elections.)

Current mayor Jean Quan has adopted a plan to build 10,000 housing units, which seems to be inspired by former mayor and current California governor Jerry Brown’s playbook. (She did not return a request for comment.)

Rebecca Kaplan, who polls say is the current front-runner, sees a lot of room for in-ﬁll development.

She thinks Oakland could add another 100,000 people.

Wait, what?

“That might sound like a lot,” said Kaplan, an MIT alum who started programming in BASIC and Pascal when she was 11. “But given that we have so much unbuilt space and so many abandoned buildings that need to be brought back into re- http://techcrunch.com/2014/10/20/oakland/?ncid=rss&utm_source=…m_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29 Page 7 of 21 In Oakland, A Sign of Some Very High Times | TechCrunch 10/21/14, 9:01 AM

use, I don’t actually think 100,000 people would make Oakland feel overcrowded. We would still be so much less dense than San Francisco.”

Across the Bay in San Francisco, there is practically a pissing match every time over building even a 100 units here or there.

Over the summer in one of the lowest turnout elections in city history, San Francisco voters decided that they wanted to vote on every project on the waterfront that was higher than existing height limits, which are sometimes zero. That proposition was funded primarily by a single wealthy couple that lives on the waterfront.

The ostensible intent was to prevent a wall of high-end luxury condos from sprouting along the city’s waterfront. But there’s a perverse consequence of injecting so much political uncertainty into every development: project and borrowing costs have to rise to compensate for the heightened risk of something not passing through city’s highly politicized process. Those additional ﬁnancing costs get reﬂected in the ultimate prices of housing units.

Oakland’s development process, however, is slightly more relaxed. The non-proﬁt Housing Action Coalition has a rundown on the differences here. And if you want an explanation of why rents are so high in entire San Francisco Bay Area region, here is a 13,000 word explanation of that.

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Kaplan pointed to a 300,000-square foot Class A LEED certiﬁed building that’s permitted to be built right above the 12th Street Oakland BART station. That is a choice piece of real estate, given that tech companies like Dropbox, LinkedIn and Salesforce have already pre-leased more than two-thirds of the oﬃce space currently under construction in San Francisco.

“We have some absolutely fabulous commercial real estate if someone wanted to step in,” Kaplan said.

Libby Schaaf, who has zoomed into second place in the polls after being endorsed by her former boss Governor Brown, also wants to attract tech incubators and startups to the city. She partnered with Kiva to offer loans to small, homegrown Oakland businesses, lured Code for America to move its headquarters Oakland and worked with them on a program to make public records more accessible online.

“I really am hopeful that tech companies that come to Oakland choose to have a social conscience,” she said. “We’ve always been a city of social movements. That is the part of the DNA of our city.”

While she was hesitant to throw out a speciﬁc housing goal like rivals Quan and Kaplan, she favored a lot of market-rate housing development along transit hubs.

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“One of the best ways to stave off more displacement is to build more housing,” Schaaf said. “We can create more revenue streams to address the affordable housing need, but we shouldn’t discourage this much-needed infusion of market-rate housing.”

She favors using targeted subsidies to transform existing units into permanently affordable housing over constructing new below- market rate units. In San Francisco, developers either have to build 12 percent of units on-site as permanently affordable or pay 20 percent into a fund. It’s a particularly expensive way of providing affordable housing units, since each new unit can require at least $250,000 in subsidies. Without as much federal or state funding for affordable housing as there has been in the past, those costs usually get passed onto the buyers of other units, which makes it arguably a tax on market- rate units. This new building slated for 6th and Howard in San Francisco, for example, will cost $690,000 to build each permanently affordable unit.

Schaaf argues that taking existing units that people already live in and either using tax credits or direct subsidies to convert them into permanently affordable units might be a more effective route. She still favors upholding inclusionary goals that set aside 15 percent of new housing in redevelopment areas as affordable.

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She also mediated negotiations over the spring to cap the maximum increases under rent control to 10 percent a year when a landlord does capital improvements or debt service passthroughs. Rent control covers about 60,000 of Oakland’s roughly 170,000 units, which is a slightly lower percentage than San Francisco, where 172,000 of the city’s 376,000 housing units are rent-controlled.

Oakland’s maximum rent increases are also looser than what you’ll ﬁnd in San Francisco; they match the pace of inﬂation unless the landlord does capital improvements. San Francisco’s rent board caps rent increases at 60 percent of the CPI, which means that almost half of the city’s units’ rents are declining in real economic terms even as market-rate rents on the city’s 37,000 non-rent controlled units climb to nationwide highs.

Kaplan’s goal is to set aside 25 percent of new development as affordable housing.

“The goal is not for Oakland to copy what San Francisco has done,” Kaplan said. “Our goal is a future that is thriving, dynamic and inclusive. We won’t allow wrongful evictions, we’ll enforce the housing laws and we’ll protect tenants.”

For comparison, Mayor Ed Lee has said that he wants 10,000 units of his goal to build or rehabilitate 30,000 housing units by 2020 to be affordable.

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The Regional Question

Oakland could sure use the tax revenues from tech jobs and population growth. The city has had to cut its workforce by more than one-fifth over the last decade after the 2008 financial crisis gutted its finances. San Francisco’s progressives also don’t seem to mind pushing tech across the Bay either; former mayor Art Agnos said last week in a forum that tech companies ought to look at the city to relieve pressure from San Francisco’s heated market.

This is the thing. Cities make these decisions to attract these jobs, startups and people because they want the tax base. As vocal and critical as parts of the progressive community are about Mayor Ed Lee’s policies, San Francisco’s annual budget is more than $1.5 billion larger than it was when he took oﬃce. Virtually all of that economic growth is due to the tech boom and the spillover jobs it has created.

After the ﬁnancial crisis, municipal Bay Area governments made choices favoring job creation. These choices just worked far faster than people anticipated. Too well for the current infrastructure and region’s severely constricted housing stock to handle.

I was in San Francisco in the Mission District ﬁve years ago when blogs like Mission Local were cataloguing stores shutting down amid the recession. These days, it’s a different story. With

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some longtime businesses being priced out, city supervisors are considering building a registry of legacy businesses that’s paired with ﬁnancial incentives for landlords to sustain them.

Then, of course, there’s housing. San Francisco has ended up creating 70,000 jobs since 2010, but it has only built roughly 5,000 housing units in the same time period. Even with all the construction cranes everywhere, last year is only marginally better: the city added 17,600 jobs in the last year but ﬁnished a net total of 2,940 housing units during the last four quarters.

As I’ve pointed out, it is a regional problem. But the Bay Area’s diffuse power structure makes it diﬃcult to have a cohesive, long-term vision for the entire region. In New York City, there are 8.4 million people under a single municipal government. In the Bay Area, there are 7 million people living under 101 city governments and 10 bus and rail systems. Everyone ends up just shoving the problem onto everyone else, and the wealthiest suburbs on the peninsula and in Marin County are the worst culprits.

Back in 2012, the city council of Mountain View, where Google is headquartered, approved space in North Bayshore for an additional 10,500 weekday commuters, but no housing. That combination of limited or no housing development, plus Google’s transformation into a nearly 54,000-person company has made home prices and rents out of reach in what used to be a http://techcrunch.com/2014/10/20/oakland/?ncid=rss&utm_source=…_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29 Page 13 of 21 In Oakland, A Sign of Some Very High Times | TechCrunch 10/21/14, 9:01 AM

middle-class suburb.

“On paper, I’m a millionaire,” said Lenny Siegel, who is running for Mountain View city council and bought a home there back in 1979. “My house is probably worth between $1.5 and 2 million now, but my kids can’t afford to live here.”

Siegel is pushing to allow 5,000 new housing units in the North Bayshore area, which Google has wanted to do for years.

Kaplan also sees it as a regional problem. There is some groundwork for a regional movement, but it’s not very powerful or enforceable. A Plan Bay Area calls for adding 2 million people to the region by 2040 and there is a regional organization called the Association of Bay Area Governments that is supposed to set aside housing allotments for every city. But many city governments do not actually follow it.

Kaplan said that individual cities may need to work out deals. So, for example, if Menlo Park fails to build enough housing to go along with the 11,000-person campus Facebook is currently constructing there, perhaps they should pay into a regional fund that will build affordable housing elsewhere.

Trying To Not Do It All Wrong

While there are a lot of sexy, surface-level stories like this New York Times piece on how Oakland is the new “Brooklyn By The Bay,” there are also

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immense concerns around displacement.

The history and landscape of Oakland has been profoundly shaped by racialized housing policies and redlining in the mid-20th century, which separated the relative privilege of the hills in the East from the entrenched poverty in the ﬂatlands of the West. Basically, minority parts of the region had little or no access to Federal Housing Administration-backed mortgages, which prevented the capital accumulation that other communities were able to experience through homeownership. Because banks deemed certain areas risky, that also meant that many kinds of basic businesses like grocery stores couldn’t ﬁnd the capital to open up in these neighborhoods. If you want a primer on this, I would just go read Ta-Nehisi Coates’ long and comprehensive piece in the Atlantic.

In the face of so much exclusion and disinvestment, black communities in the East Bay had to build their own institutions and culture. Oakland has been home to everything from the Black Panther Party to strands of West Coast hip-hop, rap and R&B.

The community’s size peaked in the 1980s, and between 1990 and 2011, the city lost about 40 percent of its black population. Some of this is by choice as black homeowners sell property and move elsewhere into the suburbs, exurbs or follow a broad migration back into the South. Some of it is not, with lower-income blacks being http://techcrunch.com/2014/10/20/oakland/?ncid=rss&utm_source=…_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29 Page 15 of 21 In Oakland, A Sign of Some Very High Times | TechCrunch 10/21/14, 9:01 AM

priced out and displaced into areas where the unemployment rate is higher. Broadly speaking, as both baby boomers and the young and aﬄuent move back into the U.S.’s inner cities, poverty is being suburbanized in less dense areas that don’t have the resources or institutions to deal with economic deprivation.

Gentriﬁcation is a complex phenomenon that brings both risks and opportunities. In a study published in the American Sociological Review over the summer, Harvard University’s Jackelyn Hwang and Robert Sampson, found that gentriﬁcation basically bypasses areas that are more than 40 percent black. That segregation means that these communities get left out of the informal social networks that lead to jobs and upward economic mobility, and generally get relegated to underfunded schools and poorer quality public services. The impacts of being in these different neighborhoods are enduring and multi-generational, Sampson found in his landmark book about Chicago.

But what’s happening now in American cities like New York and San Francisco where gentriﬁcation is at its most advanced, this growth is putting pressure on historically black neighborhoods. That’s what you’re seeing when San Francisco’s Bayview-Hunters Point neighborhood has its most expensive single family home sale ever. Or when a plan to rezone West Oakland — colloquially known as ‘WOSP’ — is passed despite

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protests. Or in East Palo Alto’s brutal ﬁght against Sam Zell’s Equity Residential. Or when director Spike Lee goes on a tirade about gentriﬁcation, as it starts to spill over into Bedford-Stuyvesant after Bushwick and Williamsburg. Or when the young mayor of Compton tells the Guardian that her city is the new Brooklyn.

Shortly after the ﬁrst tech boom, Oakland novelist Ishmael Reed railed against Jerry Brown for affecting “a countercultural style while practicing a brutal capitalist philosophy,” when the former mayor carried out plans to bring 10,000 new residents to downtown Oakland.

For Oakland, it raises the question: is it a people or is it a place?

For the tech community, which has faced criticism about its lack of diversity, there is an opportunity — if people want to rise to it — to create something integrated. Several of the city’s startups are already run by black founders like Mindblown Labs‘ Jason Young.

Two pieces worth reading are Susan Mernit’s essay “San Fran Tech Types: What You Need To Know To Move To Oakland” or writer and playwright Chinaka Hodge’s “Gentriﬁer’s Guide to Getting Along” from San Francisco Magazine.

Mernit, a former Yahoo, Netscape and AOL executive, is the co-founder of Hack the Hood, a non-proﬁt that teaches tech skills to

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minority youth in Oakland. It recently won grant money from Google and part of a $500,000 donation that Marc Andreessen and his wife Laura Arrillaga-Andreessen gave to three non-proﬁts.

“Oakland has a terriﬁc start-up community, but it’s very connected to place, and to culture,” she said. “The way to do well here is to learn from your neighbors. Get involved in what’s here already–and hire some local people as you grow.”

Ayori Selassie, who grew up in West Oakland and has worked as an engineer and product manager at Salesforce for the last seven years, said that hands-on time and mentorship might be more helpful than money or the creation of service-level jobs.

Many of the tech industry’s fastest-growing companies like Uber or Homejoy, actively create a two-tier system of jobs that may align with or even reinforce pre-existing socioeconomic and racial inequities. Neither company has released diversity numbers on their employee and contractor base; no one really understands whether these business models will enhance or diminish social mobility over the long run. Other big companies like Facebook and Google have also received blowback for how they pay and employ security guards, shuttle drivers and delivery people for projects like Google Shopping Express.

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“There are jobs where that don’t require college- level skills like facilities and administration work. Many would like to see those jobs go to people in the community,” Selassie said. “But what concerns me about that is it reinforces a social hierarchy that says unskilled labor should be relegated to people of color and so it doesn’t solve the challenges of social inequity. It might put a temporary dent in gentriﬁcation, but it will be short lived.”

The real work of building and training a diverse work force takes years of engagement and effort. (You know, maybe less of this kind of “Making The World A Better Place,” and more of this kind instead.)

“For sustained change we need our startups to be vested in the social journey of people in the community,” she said. “They need to volunteer in the schools, mentor, and give their time — not just money — to the community to be a part of lasting change. I understand that startups can be capital-limited, and that’s OK because their story, life experiences and empathy are the most valuable thing they can give to these communities. Once that happens, real progress can begin.”

UP NEXT

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