Bay Area Burden

Home , East Bay

Examining the Costs and Impacts of Housing and Transportation on Bay Area Residents, their Neighborhoods, and the Environment Bay Area Burden

Terwilliger Center for Workforce Housing

www.bayareaburden.org n National Advisory Board

J. Ronald Terwilliger, Chairman Steve Preston Trammell Crow Residential, Chairman OAKLEAF Waste Management, President U.S. Department of Housing and Urban Development, Carin Barth Former Secretary LB Capital, Inc., President Jonathan Reckford Tom Bozzuto Habitat for Humanity International, CEO The Bozzuto Group, CEO Nic Retsinas Henry Cisneros Joint Center for Housing Studies of Harvard University, Director CityView, Executive Chairman U.S. Department of Housing and Urban Development, Rick Rosan Former Secretary ULI Foundation, President

Bart Harvey Ronnie Rosenfeld Enterprise Community Partners, Former Chairman Federal Housing Finance Board, Former Chairman

Bruce Katz Alan Wiener Brookings Institute, Metropolitan Policy Program, Wachovia Securities, Managing Director Vice President and Director Pam Patenaude Bob Larson ULI Terwilliger Center for Workforce Housing, Lazard Real Estate Partners, LLC, Chairman Executive Vice President and Executive Director

Rick Lazio JP Morgan Asset Management, Managing Director of Global Real Estate and Infrastructure

ii nn www.bayareaburden.org www.bayareaburden.org About the Urban Land Institute The Urban Land Institute is a 501(c)(3) nonprofit research and education organization supported by its members. Founded in 1936, the institute now has more than 32,000 members worldwide representing the entire spectrum of land use and real estate development disciplines, working in private enterprise and public service. As the preeminent, multidisciplinary real estate forum, ULI facilitates the open exchange of ideas, information, and experience among local, national and international industry leaders and policymakers dedicated to creating better places.

The mission of the Urban Land Institute is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Members regard ULI as a trusted idea place where leaders come to grow professionally and personally through sharing, mentoring, and problem solving. With pride, ULI members commit to the best in land use policy and practice.

About the ULI Terwilliger Center for Workforce Housing The ULI Terwilliger Center for Workforce Housing was established by J. Ronald Terwilliger, chairman and CEO of Trammell Crow Residential, to expand housing opportunities for working families. The mission of the Center is to serve as a catalyst in increasing the availability of workforce housing in high-cost communities by harnessing the power of the private sector.

The Center supports the development of mixed-income communities close to employment centers and transportation hubs. Through a multifaceted approach the Center facilitates research, advocates for public policy change, publishes best practices, convenes housing experts, and works to eliminate regulatory barriers to the production of workforce housing.

Acknowledgments This report was prepared by ULI Terwilliger Center for Workforce Housing and the Center for Housing Policy, based on research conducted by the Center for Neighborhood Technology. This report and accompanying Cost Calculator is made pos- sible through the generous support of ULI Trustee James J. Curtis, III.

www.bayareaburden.orgwww.bayareaburden.org n n iii n www.bayareaburden.org Executive Summary

Bay Area Burden provides a com- underscores the importance of coordination of land use, housing, prehensive analysis of the “cost broadening our understanding of and transportation policies, Bay Area of place” in nine counties located housing affordability to consider jurisdictions could create, preserve, throughout the San Francisco the combined costs of housing and and expand communities that are region by examining the costs transportation, as well as the im- both environmentally sustainable and and impacts of housing and pacts of longer commutes on the affordable to Bay Area households. transportation on Bay Area environment and quality of life. residents, their neighborhoods, Housing Plus Transportation Costs in the Bay Area and the environment. Environmental Consequences This report exposes the complexity Average Annual Average Annual Average Annual Housing Recalibrating of the interaction of housing and Housing Costs Transportation Costs + Transportation Costs Housing Affordability transportation choices as well as $28,045 $13,375 $41,420 Although housing prices in the Bay expenditures, and the unintended Area have fallen from their peaks consequences on the natural % of Income + % of Income = % of Income during the real estate boom, Bay environment when they work at 39% 20% 59% Area households still spend an av- cross purposes. The report also erage of more than $28,000 annu- highlights the importance of “loca- ally on housing—about 39 percent tion efficiency”—the proximity of of the area median income. In ad- housing to transportation hubs, “When it comes to development—housing, dition to the high cost of housing, employment, and retail centers— transportation, energy efficiency—these things aren’t Bay Area households spend nearly as a driver of both affordability and $13,400 annually on transporta- environmental sustainability. mutually exclusive; they go hand in hand. And that tion. Combined, this cost burden means making sure that affordable housing exists in of $41,420 per year represents 59 Aligning Land Use, Housing, percent of the median household and Transportation Polices close proximity to jobs and transportation. That means income in the Bay Area. The high Land use decisions play a critical encouraging shorter travel times and lower travel costs. combined costs of housing and role in determining the availability transportation leave many Bay of housing that is affordable to It means safer, greener, more livable communities.” Area households with insufficient Bay Area working families in areas remaining income to comfort- that are near employment centers —President Barack Obama, July 13, 2009 ably meet their basic needs. This and transit. By strengthening the

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Table 1 ] The Bay Area Consistently Tops the Charts in Housing Costs

Rank M median Home Value Housing Costs 1 San Jose-San Francisco-Oakland, CA $694,700 2 Salinas, CA $658,700 3 Santa Barbara-Santa Maria-Goleta, CA $641,800 Housing costs in the Bay Area are among the high- 4 San Luis Obispo-Paso Robles, CA $578,900 est in the country, ranking #1 in median home value, 5 Honolulu, HI $574,400 median monthly costs for homes with a mortgage, and median gross rent (Table 1). Rank median Monthly Costs for Homes with a Mortgage Despite a relatively high median income of $72,630— 1 San Jose-San Francisco-Oakland, CA $2,803 in comparison to the national median of just over 2 Santa Barbara-Santa Maria-Goleta, CA $2,471 $50,0001—housing in the Bay Area remains generally unaffordable. While about one- 3 Salinas, CA $2,438 fourth of renters spend more 4 New York-Newark-Bridgeport, NY-NJ-CT-PA $2,432 than half of their incomes on 5 San Diego-Carlsbad-San Marcos, CA $2,412 housing in both the Bay Area and nationally, a substantially Rank M median Gross Rent larger share of Bay Area owners 1 San Jose-San Francisco-Oakland, CA $1,221 (20 percent) spend more than 2 Honolulu, HI $1,206 half their income on housing 3 Santa Barbara-Santa Maria-Goleta, CA $1,205 than is true for the U.S. overall 4 San Diego-Carlsbad-San Marcos, CA $1,168 (12 percent).2 Jurisdictions throughout the 5 Los Angeles-Long Beach-Riverside, CA $1,099 Bay Area have had difficulty permitting and building a Source: 2007 American Community Survey sufficient number of housing units to meet demand. Table 2 ] Percent of Regional Housing Needs Assessment Goals The total number of permitted units affordable to low- Successfully Permitted, 1999-2006 and moderate-income households in the Bay Area between 1999 and 2006 met only 47 percent of the San Francisco Above & Select Inner very Low low moderate moderate total target for such East Bay Cities (0-50% AMI) (51-80% AMI) (81-120% AMI) (>120% AMI) housing set forth Berkeley 68% 171% 30% 167% 107% in the regional Moderate Income plan. As shown in Households are the Lowest Freemont 33% 22% 19% 67% 44% Table 2, rates of Served in the Bay Area Haward 6% 5% 98% 167% 92% permitted housing Oakland 27% 71% 8% 267% 107% (relative to goals) [ San Francisco 80% 52% 12% 156% 86% were particularly low for households with very low in- Total Bay Area 44% 75% 37% 153% 92% comes (44 percent) and moderate incomes (37 percent). Note: Values below the Bay Area average for the category are highlighted. Source: Association of Bay Area Governments. 2007. A Place to Call Home

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Sonoma Co. Working Families is Located in the Napa Co. [ North Bay and the Inner East Bay

N 80 W E l Solano Co. Three-fifths of all Bay Area S residents live in communi- 0 10 20 ties that are unaffordable Marin Co. miles to households earning less than $80,000. Large cities 101 located along the Highway 880 corridor—principally along the eastern and southern shore- 680 Contra Costa Co. line in Oakland, San Leandro, SSanan FFrrranancciiiiscscoo CCoo.... San Francisco Co. Fremont, and low-cost parts 880 of San Jose—remain rela- 580 tively affordable. In addition, northern Sonoma and Napa 280 Alameda Co. counties and eastern Solano 0 10 20 County contain areas with miles below-average housing costs, Average Monthly Housing Costs but households living in these areas must travel farther to Less than $1,600 reach regional employment San Mateo Co. $1,600 to $2,000 centers and public transit. $2,000 to $2,400 $2,400 to $3,000 101 $3,000 and greater Santa Clara Co. Insufficient Data Highways

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On an average weekday, nearly 10 percent of the Bay Area Workforce 0 10 20 uses the public transit which ac- miles commodates more than 1.6 million riders,3 ranking it among the most 80 transit-reliant metropolitan areas in Solano Co. the country (Table 4). As with housing costs, the combined costs of housing plus Marin Co. transportation are lowest in the areas around the Bay where many 101 of the region’s jobs are located and Contra Costa Co. public transit has Combined Costs Highlight 680 the greatest reach. SSanan FFrrranancciiiiscscoo CCoo.... the Location Efficiency of SSanan FFrrranancciiiiscscoo CCoo.... These areas provide San Francisco Co. 880 the best opportuni- the Largest Cities 580 ties for working 0 10 20 miles households to save [ 280 Alameda Co. on their combined housing and transportation costs. Average Monthly Bay Area households seeking Housing + Transportation Costs more affordable housing in the Less than $2,600 outlying parts of Sonoma, Solano, $2,600 to $3,100 Napa, and Contra Costa counties San Mateo Co. $3,100 to $3,600 are burdened with higher transportation costs associated with these $3,600 to $4,200 $4,200 and greater 101 low-density, non-transit accessible Santa Clara Co. neighborhoods. These communi- Insufficient Data ties appear less affordable when Highways the combined costs of housing Fixed Rail and transportation are considered. © 2009 Center for Neighborhood Technology

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Table 3 ] Vehicle Miles Traveled and Emissions Per Household are Associated with Land-Use Patterns (2006)

Distribution of Households average Weekday Daily, Enviromental Impact by Land-Use Pattern per Household CO2 County Name urban suburban Rural vmt (pounds) The United States ranks among transit to/from employment cen- San Francisco 97% 2% 1% 19.4 20.2 the top producers of greenhouse ters, and services within walking Almeda 47% 51% 4% 33.1 30.8 gas emissions (GHG) in the distance, can be 20 to 40 percent Santa Clara 34% 61% 5% 35.9 34.4 world, and due to the historic rise lower than in auto-dependent San Mateo 35% 59% 6% 40.3 36.5 in the amount of car travel in the suburbs. U.S., the transportation sector As Table 3 illustrates, densely- Contra Costa 11% 74% 15% 43.8 42.9 is the segment of the economy developed urban counties like Marin 0% 85% 15% 35.9 35.0 where GHG emissions have San Francisco are estimated to Solano 3% 76% 20% 50.4 49.4 recently increased the most. The have substantially fewer vehicle Napa 3% 60% 37% 42.3 42.5 successful implementation of miles traveled per household Sonoma 4% 56% 40% 50.1 51.0 GHG emission reduction plans (19.4)and thus lower per house- in the transportation sector is hold carbon dioxide emissions Bay Area 36% 54% 10% 36.6 35.4 particularly important in the Bay (20.2)than do more rural and Note: Table sorted in ascending order by percent rural. Area, where transportation ac- suburban counties, where these Source: Brazil, H.M., and C.L. Purvis 2009, July. Basstegg (Bay Area Simplified Simulation ofTravel, Energy and Greenhouse Gases): Sketch Planning Charrette/GIS Models for Predicting Household Vehicle Miles of counts for 40.6 percent of green- measures can exceed the Bay Travel (VMT) and Greenhouse Gas (CO2) Emissions. Oakland, CA: Metropolitan Transportation Commission. house gas emissions,4 compared Area average by a wide margin. to 33% nationally.5 With the Of significant importance is Table 4 ] Nearly 1 in 10 Bay Area Workers Use Public Transit successful passage of California’s the fact that compact land use Senate Bill 375—legislation which patterns facilitate lower per cap- share of Workers Using Rank metro Area Public Transit requires metropolitan planning ita GHG levels in BOTH transpor- organizations to develop hous- tation and building sectors. Data 1 New York-Newark-Bridgeport 26.5% ing and transportation plans to suggests that in comparison to 2 Washington-Baltimore-Northern Virginia 11.1% lower GHG emissions—California single-family dwellings at the 3 Chicago-Naperville-Michigan City 11.0% emerged as a world-wide leader urban edge, multi-family dwell- 4 San Jose-San Francisco-Oakland 9.5% in seeking strategies to reduce ings in urban neighborhoods 5 Atlantic City, NJ 8.6% GHG emissions. can exhibit up to 75 percent less A recent ULI study, Growing combined energy usage on a per Source: 2007 American Community Survey Cooler, found that the number of capita basis. Depending on the “vehicle miles traveled” (VMT)—a source of electricity generation measure of car usage—in com- for a given metropolitan area, this pact urban areas with a mix of can yield a comparable reduction housing types, access to reliable in GHG emissions.

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$50,000

$13,834 $40,000 $13,518 $14,110 $14,646 $13,375 $14,342 $30,000

$20,000 $34,405 $32,693 $28,045 $30,261 $28,781 $26,898 $10,000

0 9-County Bay Area Marin San Mateo Santa Clara Contra Costa Napa Sonoma Solano Alameda San Francisco

Average H+T Costs $41,420 $48,239 $46,212 $44,371 $43,428 $41,240 $39,245 $38,342 $37,899 $35,995

Average Median Income $75,103 $84,028 $82,262 $85,314 $78,468 $66,709 $62,348 $65,291 $68,985 $66,523

Average H+T as % 59% 60% 58% 54% 59% 64% 66% 61% 61% 58% of Median Income

A 9-County Perspective: Households in the Bay Area spend an costs roughly approximate the regional average of $28,045 per year on hous- cost burden of 59 percent, with the Interplay between ing and $13,375 on transportation. As exception of Santa Clara. Median Incomes expected, housing costs are highest in In Napa, Sonoma, and Solano coun- the counties with the highest incomes: ties to the north, housing costs are and Housing + Marin, San Mateo, Santa Clara, and below the regional average, but higher Transportation Costs Contra Costa. These counties also have transportation costs result in combined mid-to-high transportation costs. As a costs, as a percent of income, of 61 percentage of income, these combined percent to 66 percent—above the Bay

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$50,000 Rental Housing Lowers Overall Housing Costs in San Francisco County $40,000 Although San Francisco County is often associated $14,503 $12,973 $9,501 $30,000 $14,914 with high housing costs, the data presented in this report suggest that housing is more affordable there than in five other counties in the Bay Area. Since 62 $20,000 percent of San Franciscans rent their homes, the av- $26,494 $24,742 $23,429 $24,926 erage housing costs in San Francisco are below the $10,000 Bay Area average. In comparison, only 37 percent of households in the rest of the Bay Area are renters. 0 Even though rents are high in San Francisco, they are 9-County Bay Area Marin San Mateo Santa Clara Contra Costa Napa Sonoma Solano Alameda San Francisco significantly lower than the cost of homeownership.

Average H+T Costs $41,420 $48,239 $46,212 $44,371 $43,428 $41,240 $39,245 $38,342 $37,899 $35,995

Average Median Income $75,103 $84,028 $82,262 $85,314 $78,468 $66,709 $62,348 $65,291 $68,985 $66,523

Area average. In a pattern consistent with tation are lowest in absolute dollar terms the “drive until you qualify” phenomenon in Alameda and San Francisco counties, common to many metropolitan areas, which in part can be attributed to their Solano County has both the lowest hous- “location efficiency” (i.e., their proxim- ing costs and the highest transportation ity to job clusters and public transit) and costs in the Bay Area. consequently low transportation costs. Despite having higher housing costs Average annual transportation costs in than two of the counties to the north, San Francisco are nearly $3,900 below combined costs for housing and transpor- the regional average.

www.bayareaburden.orgwww.bayareaburden.org n n 7 $120,000

$100,000 Housing + $75,758 $80,000 Transportation Costs $62,798 $60,000 $43,087 $41,153 for Bay Area Cities $34,388 $33,869 $37,356 C osts $31,613 $32,725 $40,000 $30,000

$20,000

0 Median Income $54,435 $51,045 $51,531 $87,425 $157,845 $42,660 $50,172 $67,740 $64,048 $133,108 $74,991 $70,960 $96,726 $105,788 $93,311 $56,051 $55,724 $50,611 $73,336 $60,982 Transportation 0 Costs

25% Housing C osts Costs 50% 50% 49% 49% C ost 75% 59% 63% 60% B ur d en 69% 73% Median Income 77% 81% 100% % of Median Berkeley Oakland Emeryville Fremont Piedmont San Pablo Richmond Antioch Concord Orinda Novato San Rafael Mill Valley Ross Sausalito American Canyon Yountville Calistoga St. Helena Napa

Income Spent Alameda County Contra Costa County Marin County Napa County on Housing $120,000 C ost % of Median $103,135 B ur d en Income Spent on $100,000 $94,715 Transportation $80,000

$60,000 $48,346 $43,516 $40,127 $41,471 $41,956 C osts $37,191 $35,847 $40,000 $32,366

$20,000

0 Median Income $43,715 $74,908 $69,716 $181,730 $75,856 $187,378 $105,660 $75,920 $82,707 $76,495 $47,339 $58,205 $57,429 $77,144 $66,990 $43,411 $57,120 $55,940 $64,511 $74,506 0

25%

50% 51% 47% 46% 48% 57% 57% 58% C ost 75% 60% 58% B ur d en 75% 100% East Palo Alto San Mateo Daly City Hillsborough Redwood City Los Altos Hills Palo Alto San Jose Sunnyvale Santa Clara Rio Vista Vallejo Fairfield Benicia Vacaville Cloverdale Rohnert Park Santa Rosa Petaluma Windsor San Mateo County Santa Clara County Solano County Sonoma County

8 nn www.bayareaburden.org www.bayareaburden.org $120,000

$100,000 $86,926 $80,000 With average combined costs $53,457 of housing and transportation $60,000 $47,391 $46,270 $45,052 $41,241 $42,315 $41,262 $36,634 $40,000 $35,167 consuming over 70% of their income, residents of such $20,000 cities like Berkeley, San Pablo, 0 Median Income $54,435 $51,045 $51,531 $87,425 $157,845 $42,660 $50,172 $67,740 $64,048 $133,108 $74,991 $70,960 $96,726 $105,788 $93,311 $56,051 $55,724 $50,611 $73,336 $60,982 Richmond, and East Palo Alto 0 are left with little income 25% for food, childcare and other 50% 51% 61% 61% 56% 62% daily necessities. 75% 71% 66% 82% 83% 79% 100% Berkeley Oakland Emeryville Fremont Piedmont San Pablo Richmond Antioch Concord Orinda Novato San Rafael Mill Valley Ross Sausalito American Canyon Yountville Calistoga St. Helena Napa In most cases, the average combined Alameda County Contra Costa County Marin County Napa County costs of housing and transportation are lower in a county’s largest cities relative to $120,000 the county as a whole or to smaller munici- $100,000 palities in the same county. For example, in Alameda County, the combined costs are $80,000 far lower in larger cities like Oakland and Berkeley than in a small town like Pied- $60,000 $43,218 $43,044 mont with fewer than 4,000 households $35,599 $35,075 $37,270 $35,867 $35,129 $39,435 $40,000 $33,928 $31,615 (see chart). However, costs that appear relatively af- $20,000 fordable may nevertheless consume a large 0 fraction of the residents’ incomes. For ex- Median Income $43,715 $74,908 $69,716 $181,730 $75,856 $187,378 $105,660 $75,920 $82,707 $76,495 $47,339 $58,205 $57,429 $77,144 $66,990 $43,411 $57,120 $55,940 $64,511 $74,506 ample, the combined housing and transpor- 0 tation costs in Berkeley ($34,388) are less 25% than half of the costs in Piedmont ($75,758). 50% But because median incomes in Piedmont 58% 58% exceed $150,000, housing and transporta- 75% 64% 63% 66% 66% 63% 62% 72% 74% tion costs consume only 49 percent of 100% household income, compared to 77 percent East Palo Alto San Mateo Daly City Hillsborough Redwood City Los Altos Hills Palo Alto San Jose Sunnyvale Santa Clara Rio Vista Vallejo Fairfield Benicia Vacaville Cloverdale Rohnert Park Santa Rosa Petaluma Windsor

www.bayareaburden.orgwww.bayareaburden.org n n 9 A San Jose Family A mid-level network engineer Spending 58 percent of their A Bay Area Working with one infant and one elemen- income on housing and transpor- Family’s Budget tary school-age child earns an tation, this San Jose household is estimated $90,635 annually*— about $290 short of covering even 121% of the Bay Area median the essentials like health care income. After tax,** monthly and food.

A Solano County Family income is $6,367. $4,433 A Solano County firefighter and a Housing and transportation Housing -$1,952 teacher’s aide with one pre- costs consume about 58 percent Transportation -$1,243 school-age child together earn an of gross income in Santa Clara What’s left $1,238 estimated $62,658 annually*—86 County, which leaves only $2,516 percent of the Bay Area median per month to cover other house- A family of three in Solano income. After tax,** monthly hold expenses: income is $4,433. County can expect to incur the Housing and transportation following basic expenditures: $6,367 Housing -$2,724 costs consume about 61 per- Child care -$713 Transportation -$1,127 cent of gross income in Solano Food -$592 What’s left $2,516 County, which leaves only $1,238 Health care -$315 per month to cover other house- Miscellaneous -$321 A family of three in San Mateo hold expenses: Budget Deficit County can expect to incur the fol- at month’s end -$703 lowing basic expenditures:

Spending 61 percent of their in- Childcare -$1,451 come on housing and transporta- Food -$650 * Average salaries for these professions in the San Francisco-San Jose-Oakland Metropolitan tion, this Solano County house- Health care -$276 Statistical Area according to salary.com. hold is $703 short of covering Miscellaneous -$429 ** Tax estimates and monthly expenditures with the exception of housing and transporta- even their basic essentials like Budget Deficit tion are based on The Self-Sufficiency Standard child care and food. at month’s end -$290 for San Clara County, CA 2008, produced by Insight Center for Community Economic Development. * Average salaries for these professions in the Vallejo-Fairfield Metropolitan Statistical Area according to salary.com. ** Tax estimates and monthly expenditures Reductions in combined housing and with the exception of housing and transportation are based on The Self-Sufficiency Stan- transportation costs are essential to help dard for Solano County, CA 2008, produced by Insight Center for Community Economic working families meet their basic needs. Development. [

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Table 5 ] Transportation Costs are Significantly Lower in Transit-Accessible, Job-Rich Regions Along the Bay The Regional Perspective: Monthly % of Monthly Transportation Costs Region includes Transportation Costs Bay Area

San Francisco San Francisco City/County $819 13.5% environmental impacts of extensive regions consume an estimated 20 to Inner East Bay coastal portions of $1,113 18.4% driving and the “time tax” associated 22 percent of the monthly income of Alameda, Contra Costa, a median-income household, which and Solano Counties with long-distance commutes and traffic congestion, this level of auto can add $5,000 to $6,000 to the an- Peninsula San Mateo County $1,122 18.5% Sonoma Co. dependence can strain a household nual transportation bill compared to a Silicon Valley northern part of $1,125 18.6% budget. Transportation costs in these household Nlivingapa Cino San. Francisco. Santa Clara Valley Santa Rosa

Outer East Bay eastern portions of Alameda $1,238 20.5% N and Contra Costa Counties W E North Bay four northernmost counties $1,262 20.9% lSolano Co. of Marin, Napa, Solano, Sonoma Co. S and Sonoma Napa Co. Vallejo Santa Rosa Marin Co. 0 10 20 South Bay outlying portion of $1,317 21.8% miles Santa Clara County Concord Solano Co. *For Average Median Income Household Source: Center for Neighborhood Technology Calculations Contra Costa Co. Vallejo Marin Co. Oakland SSanan FFrrranancciiiiscscoo CCoo.... For purposes of this report, the look at Alameda County as a whole, 0 10 20 San Francisco Co. Bay Area has been divided into seven this section splits the county into the miles Concord Contra Costa Co. regions—North Bay, San Francisco, Inner East Bay and the Outer East Bay. Hayward Oakland Peninsula, Inner East Bay, Outer East As Table 5 suggests, San Francisco SSanan FFrrranancciiiiscscoo CCoo.... 0 N1o0 rth Ba2y0 San Francisco Co. Alameda Co. Bay, Silicon Valley, and South Bay— stands out as a particularly location- Smaniles Francisco Fremont Peninsula Hayward based on physical geography, develop- efficient region, based in large part on Inner East Bay North Bay San MatAeolam Cedao. Co. Fremont Sunnyvale ment patterns, and socioeconomic its access to public transit, its walk- SanO Fruantecirsc Eoast Bay PeninSsiliulcaon Valley 6 Santa Clara characteristics. The seven regions able communities, and its concen- InneSr ouEast hB aByay San Mateo Co. Outer East Bay Sunnyvale Silicon Valley broadly group together communi- tration of jobs. Transportation costs Santa Clara San Jose South Bay ties that share similar attributes. For are highest in the Outer East Bay, Fixed Rail San Jose example, dense urban communities North Bay, and South Bay. In these Fixed Rail Altamont Commuter Rail AltamonAmt Ctormmak uter Rail like Oakland and Berkeley have more regions, the typical household must AmtraBARTk BART Santa Clara Co. Santa Clara Co. in common with one another than they drive farther and more frequently CaltraiCn altrain MUNI MUNI VTA do with Pleasanton, but all three are lo- to reach employment centers and VTA cated in Alameda County. Rather than services. In addition to the adverse © 2009 Center for Neighborhood Technology

www.bayareaburden.orgwww.bayareaburden.org nn 11 The Regional Perspective: Transportation Housing + Transportation Costs Housing $60,000

$50,000 $16,809

$40,000 $13,518 $15,056 $13,942 $13,375 $14,478 $30,000

$40,262 $20,000 $32,693 $28,045 $30,678 $29,638 $27,191 $26,494 $23,624 $10,000

0 9-County Bay Area South Bay Peninsula Outer East Bay Silicon Valley North Bay Inner East Bay San Francisco

Average H+T Costs $41,420 $57,071 $46,212 $45,735 $43,581 $41,669 $36,482 $35,995

Average Median Income $75,103 $99,107 $82,262 $87,511 $84,456 $69,360 $62,992 $66,523

Average H+T as % 59% 61% 58% 55% 54% 63% 63% 58% of Median Income

On average, a household in the substantially from region to region. Regional Variations Bay Area spends $41,420 annually At one end of the spectrum is the in Combined Costs on the combined costs of housing South Bay, where combined costs and transportation or 59 percent of are more than one-third higher than and Incomes are the Bay Area’s median household the Bay Area average, with hous- Significant income. Within the Bay Area, these ing costs alone exceeding $40,000. costs, as well as the incomes of South Bay incomes, too, are excep- the households who pay them, vary tionally high, helping residents to

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$50,000

$40,000 $13,518 $15,056 $13,942 the lowest transportation costs, $14,478 equivalent to a savings of more $30,000 $12,858 $9,501 than $7,300 each year compared to the South Bay. In the Inner East $20,000 Bay, transportation costs are the $32,693 $28,045 $30,678 $29,638 $27,191 $26,494 second lowest among the seven $23,624 $10,000 regions, and housing costs are the least expensive. Despite these low costs, Inner East Bay households, 0 9-County Bay Area South Bay Peninsula Outer East Bay Silicon Valley North Bay Inner East Bay San Francisco on average, spend 63 percent of their income on these combined expenses as a result of their compa- Average H+T Costs $41,420 $57,071 $46,212 $45,735 $43,581 $41,669 $36,482 $35,995 rably low incomes. Average Median Income $75,103 $99,107 $82,262 $87,511 $84,456 $69,360 $62,992 $66,523 Tied with the Inner East Bay for the highest combined cost bur- Average H+T as % 59% 61% 58% 55% 54% 63% 63% 58% den, North Bay households also of Median Income © 2009 Center for Neighborhood Technology spend 63 percent on housing and transportation. Housing costs in offset the higher costs. the North Bay are comparatively San Francisco and Inner East Bay affordable, but the savings are are the only regions with average offset by high transportation costs. combined costs below the nine- As a result, the North Bay is the county Bay Area average. In San only region with combined costs Francisco, access to public transit, above the Bay Area average and an employment centers, and a very low average median household income rate of auto ownership help produce below the Bay Area’s.

www.bayareaburden.orgwww.bayareaburden.org n 13 The Regional Perspective: Housing + Transportation Cost Burdens

One-fourth of all households in the Bay Area live in neighborhoods Table 6 ] Neighborhoods with Extreme H+T Cost Burdens are where housing and transportation Concentrated in Inner East Bay, North Bay, and San Francisco costs account for 65 percent or more of income—a level this report Households in defines as an “extreme housing Neighborhoods Avg. where Avg. Housing Transportation Avg. Median and transportation cost burden.” H+T Costs >= % of Region’s Costs in these Costs in these Household As shown in Table 6, in most Region 65% of Income Total Households Neighborhoods Neighborhoods Income regions, the typical incomes of Inner East Bay 196,344 34% $1,595 $936 $39,786 neighborhoods with extreme housing and transportation cost burdens North Bay 143,454 34% $2,010 $1,106 $50,673 fall between $39,000 and $53,000, Silicon Valley 83,852 15% $2,191 $1,090 $52,635 suggesting that such burdens primarily affect low- to moderate- San Francisco 80,028 25% $2,139 $751 $45,969 income households. The Peninsula Peninsula 47,391 19% $2,661 $1,071 $61,290 and South Bay are outliers, where Outer East Bay 45,798 13% $1,748 $1,091 $44,756 the average median incomes of households within burdened neigh- South Bay 11,870 35% $3,219 $1,269 $75,692 borhoods are $61,290 and $75,692, 9-County Bay Area 608,736 24% respectively.

In the Inner East Bay, North Bay, Source: Center for Neighborhood Technology Calculations and South Bay, more than one-third of all households have extreme other regions, and both expendi- are due at least in part to the fact than $40,000—barely half of the housing and transportation cost tures fall below the Bay Area aver- that the area is well served by mass Bay Area median. Extreme cost bur- burdens.7 In absolute dollar terms, age. The low transportation costs transit, and many people work dens in these neighborhoods are housing and in the region. Incomes, more a function of the residents’ transportation however, are also below low incomes than of their housing costs in the Combined Costs as a Percent of Income average, and neighborhoods and transportation costs. Inner East Bay Exceed 65% in Many Neighborhoods with extreme housing and Although the North Bay exhib- are relatively low transportation cost burdens its a comparable percentage of in comparison throughout the Bay Area have an average median neighborhoods with extreme cost to those of the [ household income of less burdens, similarities with the Inner

14 nn www.bayareaburden.orgwww.bayareaburden.org North Bay

N Wl E S

0 10 20 miles

North Bay

80 • Oakland San Francisco • • Hayward

San Mateo • Outer East Bay 101

0 10 20 Inner East Bay miles 680

SSSaaannn F FFrrrraaannncciiiiscscoo 880 Housing + Transportation Costs 580 Silicon Valley Outer East Bay As a Percent of Local Income East Bay end there. Typical monthly Peninsula 280 Less than 48% transportation costs for these 0 10 20 48% to 59% North Bay neighborhoods of $1,106 miles 59% to 65% are the second highest reported in Table 6 and largely offset the Housing + Transportation Costs Silicon Valley 65% and greater comparatively low housing costs in As a Percent Sofou Lothc alB aInycome Insufficient Data these neighborhoods. Together, the Less than 48% Peninsula costs of housing and transporta- 48% to 59% Highways tion create extreme cost burdens in 59% to 65% 101 neighborhoods where the median 65% and greater South Bay income is $50,673, or 70 percent Insufficient Data of the Bay Area’s median income— leaving little funds for these house- Highways holds to spend on basic necessities. © 2009 Center for Neighborhood Technology

www.bayareaburden.orgwww.bayareaburden.org n 15 Current and Future Challenges

“We are the first in the nation to tackle land-use planning. What this will mean is more environmentally- friendly communities, more sustainable developments, less time people spend in their cars, more alternative transportation options and neighborhoods we can safely and proudly pass on to future generations.

— Governor Arnold Schwarzenegger, September 30, 2008

By examining the combined costs ronmental impacts of commuting. structive steps to encourage new of housing and transportation, Over the next 25 years, the patterns of growth and cleaner and the subsequent impact on the Bay Area is projected to grow by modes of travel by facilitating environment, this analysis pres- 1.6 million new residents—a 22 the development of affordable, ents a more complete measure percent increase in population.8 transit-oriented housing. For of the “cost of place” in the Bay This is an opportunity to integrate example: Area. Housing that appears af- land use, housing and transporta- fordable based solely on housing tion policies to encourage new n Through Resolution 3434, costs may not be truly afford- residential development in areas Metropolitan Transportation able when it is located far from that are well served by public tran- Commission (MTC) encour- transit, jobs, and/or services. This sit or near job centers. ages increases in residential underscores the importance of density near planned public broadening our understanding of Promising Policy Developments transit stops. MTC also pro- housing affordability challenges to The Obama Administration, the vides grants to help communi- also include transportation costs State of California and the Bay ties plan for this outcome, as and both the “time tax” and envi- Area have taken a number of con- well as funds for small-scale

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improvements (e.g., pedes- infrastructure and services, Looking Forward trian walkways, bike lanes, especially transit service.” In While the Bay Area has made streetscape improvements) that total, these Priority Develop- progress in aligning land use, help make it feasible.9 ment Areas represent less than housing and transportation policies, n Senate Bill 375, passed in 2008, 3 percent of the Bay Area’s total much work remains to be done. directs MTC to develop coor- land mass but could accommo- The data provided in this report dinated housing, land use, and date more than half of the Bay on the housing and transporta- transportation plans that lower Area’s projected housing growth tions challenges faced by Bay Area carbon dioxide emissions and fa- through 2035.11 households and the consequences vor transit-oriented development. n The Sustainable Communities for the environment may help n Proposition 1C authorized Initiative brings three federal expand awareness of the problem over $1 billion in state housing agencies—Environmental and build support for the resources bonds for the development of Protection Agency, U.S. Depart- and high-level policy attention transit-oriented housing and infill ment of Housing and Urban needed to address infrastructure. Roughly half of Development, and U.S. Depart- it effectively. the housing units planned in the ment of Transportation—togeth- first round of funding will be af- er in an unprecedented effort to fordable to households earning align federal policies and 80 percent of the area median funding for housing and income or less.10 transportation projects. n A regional joint committee iden- tified approximately 120 areas in 60 Bay Area jurisdictions as either planned or potential Prior- ity Development Areas (PDAs), defined as “locally designated land where future growth can be channeled, at sufficient densi- ties to take advantage of existing

www.bayareaburden.orgwww.bayareaburden.org n 17 Methodology

Estimating Housing The Original Housing + and methods have been reviewed Transportation Cost Model by practitioners at the Metropolitan and Transportation The Housing + Transportation Council in Minneapolis-St. Paul, fel- Costs by (H+T sm) Affordability Index was lows with the Brookings Institution, Neighborhood developed by the Center for Neigh- and academics from the University borhood Technology (CNT) and its of Minnesota, Virginia Polytechnic, collaborative partner, the Center Temple University, and elsewhere, for Transit Oriented Development specializing in transportation model- (CTOD), with support from the Brook- ing, household travel behavior, com- ings Institution’s Metropolitan Policy munity indicators, and related topics. Program’s Urban Markets Initiative. Specifically, the transportation This cost index has been applied to cost model incorporates four neigh- 52 metro areas in the United States, borhood variables (residential den- and is unique in that it measures sity, average block size, transit con- the joint transportation and housing nectivity index, and job density) and affordability at a neighborhood level four household variables (household (see www.htaindex.cnt.org). income, household size, workers per household, and average jour- Transportation Costs ney to work time) as independent The transportation costs estimated variables. These variables are used in this model and used in this report to predict, at a neighborhood level are more than the cost of commut- (census block group), three ing to and from work. They also dependent variables—auto owner- include trips to and from school, ship, auto use, and public transit errands, and other travel that is usage—that determine the total part of the household daily routine. transportation costs. The methods for the cost model draw from peer-reviewed research Housing Costs findings on the factors that drive Housing costs were determined household transportation costs. The using the census variables Selected model assumptions, calculations, Monthly Owner Costs (SMOC) for

18 n www.bayareaburden.orgwww.bayareaburden.org Owners with a Mortgage and considered the percent change of Gross Rent for Renters Paying variables from 2000 to 2005-2007 Cash (GR). SMOC is defined as within the Public Use Microdata the sum of payments for mort- Areas (PUMAs). PUMA data for gages, deeds of trust, contracts 2005-2007 were obtained from to purchase, or similar debts on the American Community Survey the property (including payments (ACS) 3-year estimates while 2000 for the first mortgage, second US Census block group data were mortgage, home equity loans, aggregated to the same PUMA and other junior mortgages); real boundaries. Once the percent estate taxes; fire, hazard, and flood changes were calculated between insurance on the property; utili- fuels as part of the rental payment. mortgage payments are therefore the two time periods for each ties (electricity, gas, and water and The estimated costs of utilities and excluded. PUMA for each variable, these val- sewer); and fuels (oil, coal, kero- fuels are reported on an annual For a full description of the ues were then used as multipliers. sene, wood, etc.). It also includes, basis but are converted to monthly methods used in the original Hous- Year 2000 values for each block where appropriate, the monthly figures for the tabulations. ing + Transportation Affordability group within each PUMA were condominium fees or mobile home The census reports aggregate Index, see www.htaindex.cnt.org/ multiplied by this percent change costs (installment loan payments, values for both of these variables model_summary. to estimate 2005-2007 values at personal property taxes, site rent, as well as the count of owners and the block group level. registration fees, and license fees). renters used to compile the differ- Updating the Original Transportation costs were Gross Rent (GR) is defined as ent aggregates. Therefore, to find Model to 2005 - 2007 updated by applying new cost the contract rent plus the esti- an average value for SMOC and Input data for the original model factors to the model’s estimates of mated average monthly cost of GR, the aggregate is divided by the are primarily composed of 2000 vehicle miles traveled and automo- utilities (electricity, gas, water, and number of households making up US Decennial Census block group biles per household. These cost sewer) and fuels (oil, coal, kero- the aggregate value. For the pur- data and values that were created factors were based on the 2006 sene, wood, etc.) if these are paid poses of this study, housing costs and calculated based on these AAA estimates of costs for owning by the renter (or paid for the renter are estimated using only renters data. Since the most recent data and operating a vehicle, which are by someone else). Using gross paying cash and owners paying are for 2000, estimates for 2005- estimated to be $5,569 per auto rent eliminates differentials that mortgages. Renters paying with 2007 were carried out using a and 15.1 cents/mile for fuel ($2.41/ result from varying practices with vouchers (e.g., subsidized housing) recognized procedure called the gallon), maintenance, and tires. respect to including utilities and and owners who no longer have “constant-share method,” which

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References

(Endnotes) 1 2005–2007 American Community Survey 7 We focus here on the Inner East Bay and Calculator three-year estimates for the San Jose–San North Bay because they are much larger Francisco–Oakland Combined Statistical than the South Bay, and thus contain many What does Housing and Transportation Area. more people with extreme cost burdens, cost YOU in the Bay Area? 2 The federal standard is that housing costs and because the comparatively higher in- should consume no more than 30 percent come of South Bay residents suggests they Find out with the Housing and Transportation of household income. Data are from the are better able to afford other essential Cost Calculator. 2007 American Community Survey. costs. The ULI Terwilliger Center for Workforce Housing is 3 Metropolitan Transportation Commis- 8 Association of Bay Area Governments. pleased to announce its Housing + Transportation sion. 2009, June. Statistical Summary of 2008, June. San Francisco Bay Area Hous- Cost Calculator to the Bay Area to provide consumers Bay Area Transit Operators: Fiscal Years ing Needs Plan, 2007–2014. Oakland, CA: with up-to-date cost data to make informed housing 2003–04 through 2007–08. Oakland, CA: Author. decisions based on housing and transportation costs. Author. 9 Metropolitan Transportation Commission. 4 Source Inventory of Bay Area Greenhouse 2009, April. Change in Motion: Transporta- To access the calculator, Gas Emissions, December 2008. Bay Area tion 2035 Plan for the San Francisco Bay go to www.bayareaburden.org Air Quality Management. Area. Oakland, CA: Author. 5 Condon, Patrick, Duncan Cavens, and 10 Sprowls, Sharon. 2009. Evaluation of First Nicole Miller. 2009. Urban Planning Tools Round Awards Under California’s Transit- for Climate Change Mitigation. Cambridge, Oriented Development (TOD) Housing and MA: Lincoln Land Institute. Infill Infrastructure Grant (IIG) Programs. 6 These regions were developed because San Francisco, CA: Housing California. the main drivers of transportation costs— 11 Metropolitan Transportation Commission. particularly features of the built environ- 2009, April. Change in Motion: Transporta- ment (e.g., public transit rails and routes, tion 2035 Plan for the San Francisco Bay residential density, the proximity of Area. Oakland, CA: Author. employment centers) and socioeconomic characteristics (e.g., household income and composition)—do not always adhere to city or county boundaries.

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