 
Creation Care for Neighborhoods:

The Quest for Bayview Village

Sherman Lewis, PhD.

Copyright 2013 Sherman Lewis Smashwords Edition

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## Table of Contents

Preface

The Foundation

Creation care: the evolution of culture and the need for inspirational language

Evolution of thinking

The Whole Economy and Values

Chapter 1 -- Transportation Pricing Reform: Paying Directly for Driving

Carism

Definition

Specific Transportation Pricing Reforms

12 topics

Involving People in Parking Policy

Mode diversity and the locational decision

The Shuttle

Land-based shuttle finance

Conclusion

Chapter 2 -- Neighborhood Systems

Density details

Suburbia, a wonderful failure

Six goals for neighborhood systems

Affordablity; Sustainablity; Mobility; Health/Saftey/Security; Design; Community

Low productivity consumption

Smart Growth

Functional density

Grocery Store Trip

Short Corridor Systems

Optimal Building Design

Floor plans

Water and landscaping

Energy

Analysis and assessment

Chapter 3 -- Going Dense

Old and dense in Europe

New and semi-car free in Europe

Old and dense in America

Relevance for other places

Chapter 4 -- A Freeway Dies, An Idea Is Born

Early history

7 sections named by dates

2013

Chapter 5 -- Bayview Village Project Summary

Location Map

Planning Tools

Chapter 6 -- Project Description

Site, Properties, Conditions

Geotechnical Engineering

Site Plan

Bayview Village Center

Circulation

Parks and Recreation

Acres summary

Grading

Utilities

Engineer's report

Related Development

Chapter 7 -- Green Building

Affordability

Unit types and floor plans

Elevation issues

Building costs

Green Building Specifications

Chapter 8 -- Green Energy

Green Energy Cost

Green Energy Specifications

Chapter 9 -- Green Water and Landscaping

Chapter 10 -- Green Mobility

Walking and cycling

The Village Bus

Parking

Car share/rental

Other mobility

Travel time and cost budgets

Chapter 11 -- Green Jobs and Economy

Chapter 12 -- Design

Chapter 13 -- Community

Pets

HOA Services

Chapter 14 -- Regulation

a. California Environmental Quality Act (CEQA)

b. City of Hayward General Plan and Zoning Ordinance

c. C.3 Provisions

d. Green Building Code

e. Inclusionary Housing Ordinance

f. ADA and Fire Requirements

Chapter 15 -- Evaluation

Evaluation

Affordability

Sustainability

Mobility

Security, Health, and Safety

Design

Community

Related Evaluation Systems

LEED and Green Point Rated

International Living Future Institute

Litman

Chapter 16 -- Markets and Marketing

Supply and Demand

Market Research

The Market

Buyer Profiles

Pricing and Comparables

Rent, Lease to Buy, Buy

Buying Energy

Point of Sale Choices

Transitional Parking

Advertising and Buyer Education

Initial Services Implementation

Chapter 17 -- Financing

Financing

Financing Overview

Financing Details

Other Financial Analyses

Village Bus

Chapter 18-- Stages

Chapter 19 -- Risk Factors

Chapter 20 -- The LLC Option

The LLC Option

a. Investor accreditation

b. Investors and the LLC

c. The Board of Directors

d. Management

e. Accounting/Reporting

f. LLC Definitions

End Note

# Preface

This book aims to move thinking forward on one of the most important places we take for granted: our neighborhoods.

Bayview Village needs financing. Unless an investor takes it seriously, it is not going to happen. The Hayward Area Planning Association, which I lead, has been planning the project for ten years and has spent over a year seeking financing, without success. HAPA seeks someone to take over the project and work with us to make it happen.

At a few places in this book, I mention what I don't know––a Beta version comment. This eBook is a draft for electronic circulation. All this work needs to be made available now, yet also needs more work. Further, an auction of an important property within the site is being sold at auction on March 13, and the position of the new owner will be of major importance for whether Bayview Village succeeds or fails.

I do not have connections to investors or developers. I suspect that the few hundred parties I have sent information to have not responded because they don't do anything close to what HAPA is proposing, their corporate investment policy is not flexible, they have a short-term, three to five years, time horizon to get their money out, real estate development is in a major slump, the project is too big for them, the property is not on the market yet, they are not looking for projects, or, if all that were not enough, the proposal has very limited parking, only 100 spaces for 1,000 units.

It has been hard to figure out who to ask to invest, given the unusual nature of the project. Organizations like Smart Growth America, which has some developer involvement through its LOCUS program, have not helped, and are not set up to help. Many financial firms invest in existing real estate but not development. Firms that develop commercial properties don't do residential. Large residential developers concentrate on large car-oriented subdivisions; a few are doing smaller condo projects. Affordable housing agencies depend on tax subsidies and do not do market-oriented projects. Bayview is much bigger than their usual projects.

HAPA has tried going outside the development investment network to reach other kinds of investors. Most never answer my email, mail, or calls. Some have told me they like the project but never invest outside the area they know about. A few say, in effect, "Go away." I suspect they may see Bayview Village as just another real estate development, or think it won't work because of the lack of parking, if they get that far in looking at the idea.

I need to do more to get attention, to climb over the wall that seems to make Bayview invisible to those who should think about it, i.e., green patient investors.

Hence, this book. You will find the project carefully thought out, but that does not get us all the way there. The crucial ingredient for investors is intuition, that extra entrepreneurial insight that comes after extensive knowledge.

The plan of the book starts off with a philosophical non-chapter, The Foundation, discussing creation care, evolution of thinking, and the whole economy and values. For a summary of the proposal, go to Chapter Five.

Chapters One and Two have policy analysis that lay out the framework for sustainable neighborhood development. Such development involves six systems and goals, and how they reinforce each other to achieve the goals of each system:— **affordability, sustainability, alternative mobility, health and security, good design, and community.**

Chapter One covers Transportation Pricing Reform, the biggest missing policy to create a level playing field in the whole economy. Chapter Two focuses on neighborhood systems, short corridors, and functional density. Chapter Three covers existing dense neighborhoods, consisting of certain older European neighborhoods, newer European car-free neighborhoods, and certain old American neighborhoods.

Chapter Four covers the unusual historical circumstances that stopped an ill-fated freeway and saved a large property near California State University East Bay in Hayward (CSUEB Hayward) long enough that it may be possible build a new, progressive neighborhood system.

The main part of the book starts with a summary of the Bayview Village plan in Chapter Five, then Chapters Six to Eighteen cover various aspects of the plan. These chapters should be of interest to those considering investing in the land or the project, those who are planning a sustainable community and would like specific ideas about how to do it, and those with an interest in the environment and sustainable cities.

Chapters Six to Eighteen cover a myriad of details on many subjects relating to Bayview: 6: project description, 7: buildings, 8: energy, 9: water and landscaping, 10: mobility, 11. jobs and economy, 12: design, 13: community, 14: regulations, 15: evaluation, 16: markets and marketing, 17: financing, and 18: staging.

## The Foundation

While this book is primarily about how to implement a sustainable neighborhood using a specific example, those ideas result from a framework of supporting ideas. This introduction covers ideas fundamental to the whole sustainability movement, using three major topics. Creation Care covers the religious or spiritual basis, the deepest, most profound feeling and thinking we can do about life and existence in general. This topic is strenuously avoided by secular academics, but I want to make clear that our eventual discussion of details springs from the most important issues of our age or any age. Evolution of thinking discusses how our thinking about how we think has been revolutionized by scientific discoveries about our brains, the biological basis of culture, the power of culture to override facts, and how culture frames policy. The whole economy and values discusses how some cultures value monetized transactions as a dominant reality, other cultures value non-monetized reality, both sides fail to recognize the arbitrariness of their values, and the need to integrate both values.

## Creation Care

Creation Care is a term used by religious progressives who care about our stewardship over the earth which God, or some similar source of meaning, created for our enjoyment and entrusted into our care, with the long term enjoyment depending of the quality of care. Secular environmentalists and other progressives use a different kind of language for similar underlying ideas, often creating a gulf between religious and secular progressives.

The term "creation care" is not used by secular environmentalists, but their term, "environmentalism," does not frame the issue in a compelling way. Secularists can be uninformed about, and uneasy with, "religion," and often can't tell the difference between religious progressives who use science, as opposed to doctrinaire ideologues who command the attention of a benighted mass media. The media covers the zealots and not the poets, sectarianism and not spirituality, the conflicts that divide us and not poetry than can bring us together.

In California, religious progressives have a coalition, California Interfaith Power and Light: "A group of religious groups that seek to respond to global warming through the promotion of energy conservation, energy efficiency, and renewable energy." (http://interfaithpower.org) Their leaders:

Let me also introduce Richard Cizik and his New Evangelical Partnership for the Common Good. He says, [I believe] "that ultimately evangelicals will themselves be persuaded by the evidence of the argument, and people change their minds. I changed my mind, and I used to be part of the group of people that are advocating for cutting Title X funding. I changed my mind because the evidence indicated that I needed to change my mind." Title X funds services like Planned Parenthood. Cizik was an early advocate for creation care, which, for him, is of one piece with science, climate change, population stabilization, status of women, health care, reproductive services, synergy among progressive policies, and Christianity. (<http://grist.org/climate-energy/evangelical-leader-says-we-need-family-planning-to-help-fight-climate-change>, Grist, Dec. 10, 2012)

With the human habitability of the earth at stake, how we talk about sustainability needs to embody its emotional centrality, not just its rational pragmatism, in order to inspire the deepest motivations of a rising generation with a transforming purpose. Hence, I use the term creation care to frame the issue in stronger spiritual language.

Framing is important. Poetic language, secular or religious, reaches other people outside the choir. Poetic language educates and persuades others using words that are meaningful to them. Too often, environmentalists and secularists use a language of facts, analysis, and pragmatism that fails to inspire. Lots of facts are, in fact, my personal predilection, as most of this book will prove. (We can't all be John Muir.)

The challenges of creation care cover a wide range of policies, a number of which come together in neighborhoods. Neighborhoods as social places get a lot of attention, but hardly any attention as systems needing a lot of creation care. This needs to change. Neighborhoods are the major missing ingredient in the debate on creation care and sustainability. Changing how neighborhoods work is essential for slowing and reversing the environmental devastation of the earth, for gross domestic happiness (also known as the economy), and for social equity.

HAPA is looking for investors who want to invest carefully but also want to make a difference on one of the most important challenges facing humanity. Bayview Village is not just about a real estate investment; it is about entrepreneurship.

## Evolution of Thinking

Humanity is in a bit of a bind. Our lop-sided skill set is really good at analysis and tool use, which has allowed us to revolutionize technology. On the other hand, our brains as evolved to date are not really good at moving beyond tribalism, broadly defined as the us-versus-them mentality. Tribes here include corporations, nations, sects, and other reasons for dehumanizing, hating, robbing and killing other people. This genetic predisposition, which is as natural as cooperation, makes people compete with each other in "tribal" groups, in ways often devastating to the tribes. Their competition in today's world is devastating to nations, and, with atomic weapons, possibly huge parts of the earth. The path away from nuclear war, climate change, and other environmental devastation must be to reduce tribalism or, much the same idea, to expand the tribe.

Tribes in the old-fashioned sense still-exist off in isolated rural and wild areas, are politically weak, and suffer at the hands of the big tribes, with their nationalisms, corporate power, agribusiness, mining, ethnic cleansing, mega-capital mega-projects, and various kinds of oppressive dictatorships. Those little tribes, which are sustainable by nature, and those of us in the modern world who are trying to get there, are being overwhelmed.

The thinking styles of our species naturally spread along a spectrum from doctrinaire ideological thinking concerned with narrow values at one end, to pragmatic, scientific, tolerant, complicated thinking concerned with many values at the other. Doctrinaire ideological thinking as used here does not refer to various philosophies of government, opinions, and values, but to asserting one's own facts unsupported by the rules of evidence and science. The Pope once had more power than Galileo, and today Grover Norquist has more power than pragmatic moderates. Historically, the Age of Enlightenment did not achieve much in society as a whole. The enlightenment went only a little bit forward, with too few people and just the start of science.

Ideological thinking is not related to intelligence or information. There seems to be some period of adolescence and early adulthood when individuals acquire the interests that shape their careers and social action. Some individuals internalize an ideology of some kind, grab the information that reinforces their ideas, and ignore the rest, often with some, if selective, intelligence. Ideologues by nature can out-yell the pragmatists. Their advocacy can pull the uninformed into their camp along the fault lines of ignorance and fear in our culture.

In current American culture there seem to be three ideologies creating big problems: 1) an anti-science, religious fundamentalism intolerant of personal freedom; 2) anti-government feelings, from the Tea Party to Wall Street, opposing regulation protective of workers, consumers, and the environment, opposing to fair or adequate taxes, and using magical thinking about fiscal deficits; and 3) neo-conservatism, proclaiming American exceptionalism, supporting militarism and aggression, and claiming to advance democracy while advancing American political and corporate power.

Research by Dan Kahan and others finds that for some personalities, ideological commitment funnels thinking into highly selective use of facts and non-facts to support a point of view, with intelligence tending to make the distortions more severe. This focus on highly selective facts blinds people to the pressing environmental crises taking place today. Ideologues are more interested their own "facts," not the facts that will create a long-term environmental benefit to the community. We do not yet have much useful scientific understanding of the social and physiological bases for this kind of thinking. (It also exists on the left.)

Speaking for the pragmatists, we try to understand science. When the vast majority of hundreds of scientists from all over the world tell us much the same thing for about 20 or 30 years, we tend to believe them. When all the evidence from the earth confirms the science, we tend to believe it. It is hard for us to deal with the ignorance of the many and the bias of the ideologues. A few skeptics are jeopardizing the future, not of the planet, but of its human habitability for their own children. Unfortunately, so far, science understands the earth better than it understands why we think the way we do about it.

The human genome has inertia and is not going to evolve much, if at all, in a time frame we can understand. The human historical trajectory, however, has been more defined by culture than by genes, and that culture is evolving rapidly. The challenge we face today is to have the quality of social thinking catch up with the advancement of technological thinking, to reduce extreme ideological thinking, and to enlarge the tribe. Some of the answer is probably in how we raise our kids before they get to grade school, because so much of culture has been created by then, in billions of growing and connecting brain cells, and may relate to some predisposition to later ideological and tribal thinking vs. pragmatic and empathetic thinking.

While ideological thinking characterizes much of our politics, mainstream culture is equally important, long on habits and short on knowledge. American culture gets in the way of achieving the more important American values embodied in Bayview Village.

A prime example is global warming. James Hansen's testimony to Congress in violation of White House orders in 1988, the creation of the International Panel on Climate Change also in 1988, and Al Gore's _Earth in the Balance_ of 1992 mark a period when wide spread policy concerns among scientists and environmentalists broke into the mainstream of policy debate. There is no scientific debate on major issues, but effective policy has been blocked by vested fossil fuel interests, anti-science ideology, media complicity, Republican party partisanship, and public ignorance. Forests burn, droughts get longer, storms increase, the oceans warm, rise, and acidify, and most Americans still don't get it. Internationally, given the failure of the Earth Summit in Rio in 2012, things are not getting any better worldwide.

As the political situation deteriorates, the earth does likewise. Most recently, an article in _Nature_ stated "Localized ecological systems are known to shift abruptly and irreversibly; from one state to another when they are forced across critical thresholds. Here we review evidence that the global ecosystem as a whole can react in the same way and is approaching a planetary critical transition as a result of human influence." Human " 'forcings' far exceed, in both rate and magnitude, the forcing evident at the most recent global scale state shift, the last glacial-interglacial transition." (David Roberts, "We're about to push the Earth over the brink, new study finds," _Grist.org_ , June 7, 2012, David Perlman, "Close to 'tipping point' of warming," _S.F. Chronicle_ , June 7, 2012)

The scientific consensus is way ahead of the policy consensus, yet often behind the actual pace of climate change. For the first time in geological history, a species by its own conscious decisions is ending one epoch, the Holocene, and starting another, the Anthropocene. It doesn't look like it's going to work.

Reinforcing the need to reduce greenhouse gases (GHG) is the ambiguous, complicated emergence of peak oil. (<http://crudeoilpeak.info/global-peak> has excellent data on the past, less certain projections for the future) The ratcheting upward of oil prices increases efforts to extract even dirtier oil, to risk the oceans even more, to mine more coal, and to fracture substrates for relatively cleaner natural gas, none of which really works long term as well as non-fossil alternatives. Newly and rapidly growing economies demand more oil, and conventional oil seems likely to have peaked. Alternative energy like wind, photovoltaic, and thermal are expanding, and energy efficiency, also known as "nega-watts," has increasing policy maker, if not popular, recognition. What is missing is the role of land use, transportation, transportation pricing reform, and urban systems.

In 2010 the International Energy Association announced that peak oil may have occurred in 2006. The price of gasoline has been, and is likely to continue to, ratchet up. Most Americans, they will continue to buy gas as if there were no tomorrow and blame politics, oil companies, and speculators for a problem inherent in the earth's crust. The timing of the action of the ratchet is unpredictable, but it is likely that some price spike will occur during the build-out of Bayview Village and that it will increase sales.

The most effective policy to reduce GHG would be to put a price on a "bad," carbon emission, reflecting its true cost. The carbon tax swap should start at a moderate level, enough to change markets but not excessively disrupt the economy. The disruption should not be worse than the disruption now being caused by the lack of a tax swap. The policy has to be durable enough to affect long-term planning by investors, or, in other words, strong enough to deter them from using political contributions to try to reverse the policy. Taxes on "goods," such as labor (social security taxes and benefits), should be correspondingly reduced. Government should not try to pick winning technologies, but pay attention to sectorial impediments to emerging businesses. The swap level can increase as alternatives take hold. A major result would be to change neighborhood systems. Economists concerned with climate change and whole economy productivity support a carbon swap; the average American, not so much, even though the puts and takes of the swap have no net impact on the family budget.

A carbon swap would affect one of the most important and politically sensitive prices in the country, gasoline. We don't just give our cars secure, free places to sleep at night, close to our own bedrooms; we don't just use our cars a lot without thinking about it–––we have a culture of car dependency, car subsidy, and degradation by car. This kind of thinking, which can be called "carism," automatically leaps to the conclusion that something like Bayview Village is against cars. Not so. Bayview accommodates much car use, yet provides comparable mobility using a fundamentally different neighborhood system.

Concern for climate change, population growth, peak oil, water, environmental degradation, sustainability, population, biodiversity, species extinction, oceans, hazardous chemicals, bioengineering, and healthy life styles is causing some cultural change, reinforced by higher fossil fuel prices. Important advocacy groups, adding up to some kind of new environmental movement, are growing. Some remarkable things have happened in the Netherlands, Denmark, and Germany.

In the US, the Blue Green Alliance (http://www.bluegreenalliance.org/) is bringing blue collar workers and green environmentalists together to increase the economic success of reform. Van Jones has started his own group, Rebuild the Dream, as have Al Gore with The Climate Reality Project http://climaterealityproject.org and Bill McKibben with 350.org at <http://www.350.org/en>. These new efforts add to the new web-based groups like MoveOn.org, older environmental groups like the Sierra Club, Greenpeace, Ocean Conservancy, Population Connection, and the Democratic wing of the Democratic Party, all creating a solid base for, hopefully, more political influence.

(More of my musings are at  http://www20.csueastbay.edu/class/files/docs/Emeritus%20faculty/sherman-lewis-2.pdf.)

The costs extreme ideology and carist culture are already high and are likely to climb higher. Human thinking so far is not evolving fast enough. The creation care movement has not yet incorporated neighborhood systems, and needs to. Progressives focus too much on cars and electricity, and too little understanding of the role of neighborhood systems.

## The Whole Economy and Values

"Whole economy" is a way of measuring the economy using both money and the things that money doesn't measure. Better economic analysis can provide a unifying frame of reference for many problems. Most of the time, when we say we are talking about the economy, we are really talking only about the money economy. We leave out social and environmental costs.

The whole economy includes values not monetized in market exchanges, and uses more than money to measure welfare. The obvious problem is quantification. To get started, whole economy analysis has to make heroic assumptions, but they are really no more heroic than money thinking. Money economists make assumptions that they are generally unwilling to admit or examine, such as using money to measure value. Money accounting has value judgments; it is not objective. For example, when spending on insurance and crime go up, the GDP goes up. When a parent stays at home, raising self-confident, educated, well-behaved, curious children, the GDP does not go up. Which is more important?

Still, the money economy is a good place to start for defining the whole economy. Then we need to add in the rest. Already, analyses of nature services, pollution costs, and cost-benefit have often found interesting ways to quantify some of the whole economy. Similarly, the Genuine Progress Indicator (GPI) applies puts and takes to Gross Domestic Product (GDP) to estimate welfare. See <http://en.wikipedia.org/wiki/Genuine_progress_indicator>.

Micro-economic analysis and business accounting use an elegant system of income statements, assets and liabilities, and changes in financial position, but I've not seen this system applied to GDP thinking, let alone asset values based on value judgments about welfare in the whole economy. An input–output models and other GDP models, while hugely complex, are not yet good enough. They need to be developed so that money economists and whole economists can get on the same page, or at least in the same book.

Value judgments, hidden in GDP thinking, become obvious in whole economy analysis because non-monetary values must be quantified, necessarily a subjective process. Understanding the whole economy requires environmental and social values to be translated into monetary equivalents. There could be two or more versions of the whole economy reflecting differences in values. For example, those who value biodiversity and wilderness would give it much more weight than those who don't. Value judgments are applied according to science and fact, so climate skeptics and creationists cannot be part of the debate. Science does not have to be perfect to be the best referee.

The non-monetary economy needs to be integrated into complex macro-economic models. Such models will do better than GDP in measuring where we stand, and also help estimate price changes that could convert some non-monetized values into a price. They could even test how the market would respond to whole economy prices, shifting the economy towards real growth by replacing fossil-based, waste-based, and other systems that cost more than they benefit.

The whole economy can decline while the money economy grows. Sustainability requires "growth without growth": there is no reason the money economy cannot continue to grow in ways that grow the whole economy, while the negatives decline. It is not a question of reducing consumption, but changing consumption to be sustainable. It is not a question of the money economy versus the environment, but of integrating the two. It is not a question of choosing between human needs and the environment, but of saving the environment that supports humanity, materially and spiritually.

Life in general on earth is not threatened, just human life, which is already seeing lives lost to environmental degradation. Looming, unknown tipping points of reduced carrying capacity lie in the future. A tipping point is when an accumulation of small changes causes a larger system to change even faster. Carrying capacity is how much life a given ecosystem can support. Sometimes, if that capacity is exceeded, there are mechanisms, like die-offs of an excessively high population, that can restore a balance, but also carrying capacity itself can be degraded in ways for which there is no practical recovery.

We need a Dow Jones for the whole economy. Quantification involves balancing a value on nature, biodiversity, and wilderness, with a value on the human economy, and balancing the goods and services of public and private sectors, with a value on social justice. Similarly, quantitative estimates are needed for judging a range of policies to achieve our values—education, regulation, services, taxes, and market pricing. Our ability to make estimates is enhanced by computer modeling, so long as it is continually trying to reflect the whole economy.

Environmental and social costs need to be quantified, involving the uncomfortable process of revealing the value we, unconsciously and covertly, place on human life. All the apples need to be compared with all the oranges, expanding how the money system does it already.

Let's take the example of auto dependency to transition to the next chapter. What whole economy factors could be added to those already monetized? Much has already been written on this issue, on the underpricing of auto use. Todd Litman's figure on the issue has 15 columns of costs, of which only two are paid directly—vehicle ownership and vehicle operation.

  Source: Todd Litman, If Health Matters Integrating Public Health Objectives in Transportation Planning, Victoria Transport Policy Institute, 26 July 2012, p.24, http://www.vtpi.org/health.pdf

The major policy for getting markets to consider non-monetized value is to change prices, to be discussed Chapter Two, Transportation Pricing Reforms. This topic and dense neighborhoods are the analytical basis for the details of Bayview Village.

# Chapter 1 -- Transportation Pricing Reform: Paying Directly for Driving

Car users pay for some of their costs directly, out of pocket, but many, perhaps most, of their costs, are paid indirectly. The most exact term for this is "indirect pricing," but this discussion will use the term "subsidy," which is not strictly accurate but is more commonly understood. Cars in the US are subsidized, billions if not trillions of dollars' worth, in many ways: in prices, wasted time, and non-monetized values

More honest market prices would improve productivity and the economy, reduce non-monetized costs and thus increase welfare, and change over time the way the urban system works. An urban system is land use, transportation, and relevant pricing combined. Land use and transportation are two sides of the same coin, and largely controlled by transportation pricing. In general, urban systems range from dispersed auto-dependent systems to dense systems that mostly use non-auto modes. Transportation Pricing Reform is an essential policy for the gradual conversion of subsidized, high-cost, low-quality car neighborhoods into low-cost, high-quality, transit and walking neighborhoods. Transportation Pricing Reform over time would reduce traffic and parking, speed up transit, and allow redevelopment for social uses, all of which move a neighborhood toward functional density. Portland and New York City, for example, seem to have the most willingness to restrict parking in favor of social uses. The most aggressive parking reduction in Portland is at the micro-scale downtown. New York City tries to hold parking down for congestion reasons, especially on Manhattan.

Pricing reforms also increase free markets and economic freedom using market choice rather than government directive. Pricing reform is, then, both a tool to achieve policy goals and a value in and of itself.

Personal choice, education, and regulation can play a role, but pricing reform is more important.

If transportation pricing reform were in place, developments like Bayview Village would be the norm. However, under current pricing, it is still uncertain if Bayview will even be possible.

Efforts to deal with car dependency range from relatively small but politically feasible steps to policies that would be effective but are not yet feasible politically. Transportation Demand Management (TDM) includes a range of small steps and, sometimes, bigger steps that show what can be accomplished, examples of which will be mentioned below. The cause of the political problems is the way Americans understand cars, aka carism.

## Carism

A major cultural problem is automobile dependency and the thinking that supports it. Carism is the ideology that supports auto dependency. Carism is largely unconscious, a cultural assumption that much car use should be treated as a public good, not a market good.

Carism is an unspoken part of the fabric of everyday life. American culture stands in the way of seeing the problem as a whole. We are inured to its many and diverse costs, and practical alternatives are hard to find. The media generally do not report on costs already sustained, nor on what can be done. Auto accidents, for example, are just accidents, not part of a system that needs further change. Too many people see droughts, floods, and storm damage as human-interest events unconnected with lifestyle and our economic system.

Pricing reforms go against the grain of American culture of "freeways" and "free parking." In theory, Americans favor free enterprise and limited government, but in practice, for their cars, they support big government, socialism, and "tax and spend." Even environmentalists, who lean to regulation more than markets, and businesses, who claim to support markets, tend to oppose, or be unaware, of pricing reforms. Yet such reforms remain the most cost-effective solutions to the many costs of car dependency, oil dependency, and market distortion. The perception that such reforms have more costs than benefits is directly opposite from the truth. Politically, Transportation Pricing Reforms are seen as increased costs, while the costs of lack of reform, and benefits from reform, go unnoticed.

Most transportation professionals understand the efficacy of pricing, yet for political reasons and to keep their jobs, continue to administer a failed system.

## Definition

Transportation Pricing Reform in general means adjusting a monetary price to reflect its cost to the whole economy and create a market incentive to change behavior gradually, with no significant economic disruption. Drivers pay more directly for the costs of their driving; other costs are proportionately reduced, and incentives for efficiency and welfare are created. "Adjusting a price" should be interpreted broadly; it can include a tax that affects a price, or reduction of a subsidy, or a time delay for inefficient vehicles to speed up efficient vehicles.

Pricing reform can be compared to regulation for influencing behavior. Regulation exists when there is a strong social consensus to sanction certain kinds of behavior. Other kinds of behavior may be considered undesirable, but lack enough consensus to be regulated. Undesirable behavior can be reduced by increasing its price, that is, pricing reform.

Pricing reform is often more difficult than regulation. Pricing reform may involve a small price, but it affects a large number of people at once, mobilizing hostile opinion that focuses on the price and not the benefit. Regulation can be easier because it usually affects a single industry that has been demonized for its pollution or other harm, and the immediate impact of the regulation is on the industry. The public can pretend bad guys are being punished and that the cost is not being passed on, but has to be paid out of profits, that is, by magic. Regulation approximate pricing reform by encouraging innovation to avoid the harm and competing industries to meet the need.

Government has a hard time raising and lowering a price based on demand, which comes second nature to business. A government price, like an excise tax, is more likely imposed to discourage behavior widely perceived as bad or taxable, like smoking and drinking. Government also has some success with fees for services, but since the 1970s this has not been increased to keep pace with inflation and fuel efficiency. The gas tax, in fact, seems to have acquired some toxicity for politicians.

Regulation, however, is often less economically efficient than market incentives created by pricing reform. A reformed price reduces consumption of an item and thus its external costs; it helps alternatives compete on price, which in turn usually increases the use of the alternative, improves the alternative, and lowers the price of the alternative. The new price encourages innovation to find alternatives with lower costs to the whole economy. Sometimes, regulation can achieve the same result by imposing a cost on externalities.

Pricing reform is often perceived just as a price increase. Too often, people look only at the elasticity of a given item, and believe that, if it costs more, it will sell less, reducing economic activity. Certainly, that is the point of view of a company facing a regulation or pricing reform. Similarly, some alternative that costs more may also be seen as an economic loss in the monetary economy. A real understanding requires quantifying for the whole economy and looking at dual elasticities, that is, at the ability of an alternative to compete better over time when it is more in demand.

## Specific Transportation Pricing Reforms

The many different specific transportation pricing reforms need to be linked as tightly as possible to the particular cost being internalized. Some studies have lumped all the costs into a tax on gasoline, but this grossly oversimplifies the complexity of the situation, and in many cases a gas tax wouldn't work. These subsidies and reforms tailored for each are discussed here. Then, we will look at some ideas most relevant for neighborhoods, such as zoning reform, unbundling, shared parking, market parking charges, mode diversity, and the shuttle and its financing. Grocery store trip, discussed above, is part of TPR. Grocery store trip is an odd label for a pricing reform, but has to do with the conditions for functional density to support the walk trip in lieu of driving to a grocery store. Transportation Pricing Reforms in Bayview Village will be discussed in more detail under Green Transportation and Mobility. Beta version comment: I did this research several years ago and have not updated for new data.

The major categories of subsidy, or indirect cost, and reforms tailored to the problem, are:

1. Environmental externalities

2. Congestion

3. Parking

4. Local government

5. Federal and state government

6. Zoning

7. Market imperfections

8. Fossil Energy

9. Resources

10. Land use

11. Social

12. Economic

## 1. Environmental externalities

a. Vehicle and road pollutants

i. Air pollution: hydrocarbons (HCs), nitrous oxides (NOx) (HCs and NOx when cooked by sunlight form ozone [O3] or smog, which damages organic matter), carbon monoxide (CO), sulfur oxides (SOx), particulate matter (PM10, PM2.5), air toxins.

ii. Stratospheric ozone: chlorofluorocarbons (CFCs), used in car air conditioning fluid and air bags, escape into the atmosphere, rise into the stratosphere, and catalyze useful ozone into O2, which allows more ultraviolet radiation to reach the earth's surface, causing sunburn and skin cancer.

iii. Global warming/Climate change: CO2, water vapor, CFCs, NOx, and pavement increase the already significant warming of the earth's climate.

iv. Water pollution of surface and ground water by cars from tire dust, brake dust, fluid leakage, oil dumping, and litter. Old lead from before removal from gasoline. Motor vehicles: Nitrous oxides and zinc from catalytic converters; metal particles and other toxics from grease, anti-freeze, coolant, other leaking motor fluids; rust particles and paint particles from auto bodies; rubber, steel, and zinc dust from tire wear; asbestos from old brake pads, and copper, lead, and zinc dust from brake pad pollute rain water. Waste motor oil is illegally dumped into storm water inlets.

v. Solid waste: waste tires, batteries, car parts, junked and abandoned cars, and car-based litter and dumping.

vi. Noise pollution: monetary damage and quality of life costs.

vii. Vibration damage to nearby buildings from ground shaking by traffic, heavier vehicles in denser areas.

viii. Pavement damage: increased storm water runoff causing soil erosion, local heat pollution, reduced groundwater recharge, land contamination for future reuse.

b. Externalities by car-related industrial, commercial, and construction activities supporting car use

i. Vehicle and auto parts manufacture and related mining and transport.

ii. Petroleum industry operations: exploration, extraction, transport (oil spills), refining.

iii. Auto dealers, auto shops, gas stations (evaporative emissions), and junk yards, spills and leaks, leaking Underground Storage Tanks.

iv. Road construction and maintenance, sedimentation from construction sites, water pollution by deicing salts and persistent herbicides (POPs: Persistent Organic Pollutants) used on rights-of-way.

v. Other road maintenance.

vi. Abandoned land (bases, brown fields) contaminated by vehicles and vehicle support activities by military, industrial, and other users.

c. Damage from pollution:

i. Damage to human health and mortality, especially to those with respiratory problems and children, e.g., asthma, those close to heavy traffic, those inside vehicles, and by the general population on polluted air days. (4.5 percent of health care costs -Devra Davis, When Smoke Ran Like Water (Basic Books, 2002, p. 103; $55B for US -Mark Delucchi 1999 in Tamminen p. 250; $3B/year smog costs San Joaquin Valley -Janet Wilson, "A Valley's Smog Toll Tallied," Los Angeles Times, March 30, 2006)

ii. Occupational health and safety issues for oil, auto, road, and other workers and their families.

iii. Corrosion of building surfaces and materials, e.g. paint, by smog, acidic deposition, and particulates (grime).

iv. Agriculture: crop damage, lower crops yields from air pollution and global warming.

v. Forests: forest damage, slower forest growth or forest death, forest fires due to global warming and ozone.

vi. Aesthetics: visibility.

vii. Wildlife: road kill, direct car impacts through collisions with cars or cars running over small animals, and fragmenting habitat and facilitating land development also reducing habitat.

viii. Polluted water damages, cost of water treatment, adverse effect on fish, recreation.

ix. Reduced water supply due to global warming.

x. Coastal erosion due to global warming.

Many of these costs should be dealt with (and often are) on an ad hoc basis through improved design, specific regulations, and changes in practices, as appropriate for the externality.

## Carbon tax swap and ratchet

The major idea for most environmental externalities is a tax swap. The swap idea is to increase taxes on fossil carbons to reflect their real costs, and lower some other tax to offset the increase and to prevent any windfall gain to government. At the federal level, the swap could be with some combination of income tax and social security tax. At the state level, it might be a reduction of the sales tax. The tax on something harmful would be matched by a reduction on something good, like income or goods. For the average family, the extra spent on gasoline tax is offset by less spent on the reduced tax. The only thing that changes is the price incentive to conserve on gas use and have more for other things. (See details in my "elasticity illustration.") Those who use more gasoline than average face a higher net tax unless they change their behavior; those who use less are rewarded. Most low income persons are rewarded by a lower net tax. Of major importance is popular expectation of higher gas prices in the long term, leading to locational decisions which restructure the urban system. The locational decision merits some discussion of its own, which will come below.

The amount of price change should be strong enough to change behavior at a moderate pace but not so strong as to disrupt the economy more than business as usual. The ratchet idea does this; it starts with a low swap level to get the institutions in place, get some acceptance, and avoid more than average disruption to the economy. The tax would increase gradually to avoid disruption, like a ratchet. The institutions to implement the price changes are easy to establish because the sources are easy to locate: coal mines, oil wells and refineries, and natural gas wells. The swap would increase to affect the economy moderately, based on elasticities allowing competitive alternatives to grow. Over time, the swap would reduce carbon emissions and externalities related to car use to a level proportionate to the increased carbon cost. Car impacts are correlated with gasoline use, with the exception of a small number of electric vehicles.

As a result, we can expect most drivers to make many changes. Some are relatively easy, like changing trips to closer destinations, chaining more trips together instead of taking separate trips, reducing optional trips, buying more fuel-efficient, less polluting cars like the new hybrids, and more renting or car-sharing. Lighter weight materials, more aerodynamic design, and new propulsion based on biofuels, hydrogen, and fuel cells would reduce carbon emissions. Some changes would take more time, such as owning fewer cars and changing mode to car pools, transit, walking, and bicycles.

Restructuring the urban system is not possible in the short run, but over time can change at about the same pace that created car-dependent suburbia. Workers can relocate where they live or change jobs; employers can relocate jobs closer to workers. The ABC News poll of February 2005 found that 20 percent of respondents moved closer to work and 14 percent changed or left a job because of difficult commutes, just under normal circumstances.

Some changes will take place over decades, such as the development of "car free" housing in walking neighborhoods closer to work and other destinations. Developers can build closer to transit, closer to work and other destinations, and higher densities with less parking and more mixed use. As transit demand increases, transit supply can increase, serving shorter distances with more riders. As car traffic decreases, transit become more efficient, attracts more riders, and traffic decreases more. These changes increase urban system efficiency and reduce external costs. The economy is not adversely affected; in fact, it becomes more efficient for the whole economy.

There are, however, some ironies. Conservation of gasoline would reduce consumption, lowering revenues and requiring some increase in the gas tax to maintain steady revenues. The tax could eventually reach the external cost, after which any increase would no longer be economically justified. These are not problems, however; the reform is still a market-based solution which creates responsible but still free market choice based on honest prices.

Other ideas might work better for other kinds of externalities. Junked cars, for example, are created at the rate of 35 million per year. Many are exported to low income countries where, being older technologies, they cause more air pollution. If recycled, three-fourths of a typical old car can be reused, saving 1,134 kilograms of iron ore and 636 kilograms of coal. The one-fourth that cannot yet be reused, called Automotive Shredder Residue, consists of glass, rubber, plastics, non-ferrous metals, and fluids, and is usually dumped in a land fill. Waste reduction can be increased through internal company goals, industry discussions, moral suasion, regulation, and pricing incentives based on the cost of disposal. Since 1990, Saab has reduced its use of painting solvents by 80 percent. The European Union requires car makers to pay for recycling of the hazardous waste from old cars. Japan charges new car buyers $175 to dispose of the residue and recover CFCs. Japan plans to raise the car recycling rate from 80 to 95 percent, and the European Union, from 80 to 85 percent.

On a smaller scale but still important is the direct relationship between paved area and increased storm run-off and increased pollution of storm water. The loss of groundwater recharge and amount of pollution can be quantified and the monetary cost can be estimated. A pollution tax could be levied by regional water quality agencies on land owners based on paved area. Public owners like cities would also pay, using the property tax and the gas tax. The tax could be used to build storm retention ponds to hold surges of rain water for treatment in wastewater plants. Such a tax could also be an incentive to make pavement more permeable, to keep it cleaner, and to reduce the paved area, with measurable gains in water quality. Reduced storm pollution would be the basis for adjusting the tax. The tax could also include a summer heat-generation element because pavement can significantly increase hot air and air conditioning costs. The problem can be measured well by satellites using infra-red cameras. The tax would deal with one aspect of the heat-island effect of large cities. Narrowing streets and using shade trees would reduce the external cost and, thus, the tax.

## Wildlife protection.

Road kill is a small part of the much larger issue of subsidy. People drive fast to save time, but often impose a cost to wildlife and even themselves. Many people are injured or killed by collisions with deer or cattle.

The problem does not benefit from a carbon swap, except indirectly from less traffic. The problem does not lend itself in any simple way to market reform. The victims can't be identified before the fact, and the culprits cannot be identified after the fact.

The road kill problem is highly localized. For the most part, nature just regenerates enough wildlife to maintain populations, with a dip in the census along the road, except for vultures and maggots. The problem is found along only a few stretches of road and involves creatures of special significance like eagles and deer and wilderness areas. My own experience was when I was a kid going to college. My mom was driving me across Sardine Pass in Utah when a deer crashed down from an embankment on our right, hit the back right car door, and spun off the road on to the other side, down and out of sight, to an unknown fate, leaving some fur in a crack in the back door. It took less than a second, but it was memorable, and I carried the tuft of fur in my overcoat pocket for many years.

The Audubon Society and Defenders of Wildlife care about this problem. The dead include porcupines, armadillos, Florida panthers, deer, and caribou. Cows probably don't count as wildlife, but have the heft to impose a price on a careless driver. The human costs include livestock, auto body damage, human injury, and even death. A two year program compiling results of citizen observations of road kill in California and Maine found 20,000 bodies.

~~~~~

October has been a brutal month for Florida panthers.

In just four days three of these critically endangered animals have been struck and killed by motorists. The most recent death occurred October 9, when a three-month-old panther kitten became the 11th panther to be killed by a vehicle this year, and the 19th fatality overall.

**Florida panthers are some of the most endangered animals in the world**. However, their fight against extinction is only becoming more difficult as housing and highway projects continue to slash and shrink precious habitat. Collisions with motor vehicles are the leading human cause of panther deaths.

As few as 100 adult panthers are left in the wild. [10/16/2012 email]

~~~~~

The pricing reform may be a gas tax. The use of the funds can be based on statistics, wildlife science, and highway engineering. Car-wildlife collisions cluster in hot spots. The wildlife bridge in Banff National Park caused ungulate fatalities to drop by 80 percent. New, high tech systems can detect large animals near roads and flash an LED light to warn drivers. Properly designed fences and underpasses can help as well. (p. 18 Audubon, July- August 2012)

There is a small connection between road kill and neighborhood systems. Mode shift in rural areas where wildlife is most threatened would reduce car traffic and road kill. More demand for long distance rail and bus transport, revitalizing once dominant modes, would serve vacation areas and tourism. Often, the rail head was not close to the hotel, and the lodge would provide a van to complete the trip. I feel nostalgia for the old, great railway hotels and even stayed at one of the greatest, in Glacier National Park. The success of the cruise industry shows that very slow movement in a high density vehicle can be very successful commercially. There may be some sea kill parallel here, comparing cruise ships to thousands of small boats. Once a year my family travels from the Bay Area to the Black Hills, and there is simply no rail or bus alternative despite the huge visitorship to Mount Rushmore. It's too cheap to drive. Incorrect market prices deny me the market choice I want.

## 2. Congestion

Excessive congestion delay is a result of a poorly structured market that seemingly makes it worthwhile to waste time. The average US adult spends an estimated 46 hours per year in congestion. In congestion, drive-alones impose a cost in wasted time on those in higher occupancy vehicles, such as car pools and buses, which are using the road space more efficiently. A car pool with three riders causes two-thirds less congestion, and a bus with 20 passengers causes one twentieth less congestion.

## Capacity and Demand

The usual response to congestion is more highway capacity. In any high demand corridor, widening the road usually does little lasting good. The term "demand" is used here with its political definition, the number of people who want to drive a road without paying for it directly. The other definition is what people want that they are willing to pay for. This framing, part of carism, makes it more difficult to solve the problem.

Traffic increases more than predicted by planners and computer models. The models do not consider land use changes induced by the increased capacity: the faster road brings undeveloped land further out into a commutable distance. Developers get local zoning changed, sometimes before the highway is built, changing the assumptions used by the traffic planners and their models. Traffic increases as home buyers go further out to optimize the value of the house versus the length of the commute, resulting in longer, higher-speed commutes of about the same duration: the new road allows a commute of about the same elapsed time at a higher speed over a longer distance than the old road at a slower speed over a shorter distance.

As employees move farther from their jobs, retail follows them, and then basic jobs, because, over time, the commute by car to a commercial center become too onerous and chokes off its agglomeration economies. Employers need employees. New highway capacity supports car-dependent development further out, a process called sub-centering. It is all very logical, and all based on subsidizing car travel.

~~~~~

"Smart Congestion Relief: Comprehensive Analysis Of Traffic Congestion Costs and Congestion Reduction Benefits" (http://www.vtpi.org/cong_relief.pdf )

This report critically evaluates the methods used to measure traffic congestion impacts, and applies a more comprehensive evaluation framework to various congestion reduction strategies. Current evaluation methods tend to exaggerate congestion costs and roadway expansion benefits, and underestimate the overall long-term impacts and benefits of pricing reforms, public transit improvements and land use policy reforms. The results indicate that more comprehensive evaluation can help identify more efficient and equitable congestion.

~~~~~

Research shows that **non-auto modes** can make a difference for maintaining the competitive agglomeration economies of central areas. Such centers can keep growing by developing other, more efficient means of access using mass transit, buses, and bicycles. In general, European cities have been more successful at this than American cities.

Basically, increased highway capacity itself, in a situation of previous congestion, induces more traffic by being **underpriced** to the users. The increase in traffic over the projected increase is called **induced demand**. It results from giving something away for free, having a lot of people "demand" it, then giving more away, and people "demand" even more, resulting in even more congestion in the name of reducing it. There are good reasons for having highways free to users, going back to the abolition of toll roads in late medieval England, but in modern America there are reasons of economic productivity and markets to shift high capacity highways from a public good policy to a market good policy.

**Induced restraint** is the flip side of induced demand: closing roads does not just divert traffic; it reduces traffic by increasing the price of congestion delay. Very interesting research has looked at road closings, and measured the reduction in traffic. Typically, only a modest amount of traffic shifts to alternative routes, and most of it simply disappears, similar to how increased capacity increases traffic with little change in land use.

However, it makes as little sense to keep closing roads as it does to keep building them. Endless expansion eventually would have sparse traffic on new capacity, and continual closings would eventually have severe congestion costs. Induced demand and induced restraint operate within a context of ample and sometimes congested capacity. These concepts do not deal with how much capacity is enough, which requires economics, balancing costs and benefits, which is turn is best done by properly structured markets.

## Congestion as a price

Congestion delay can be seen **as its own price** , that is, as a substitute for a monetary price. If people endure the delay, it is a price they are willing to pay, the right price given the choices available. Some congestion can, in fact, be more efficient than expanding a road. Up to a point, congestion causes many sensible adjustments that prevent more traffic. We see the congestion; we don't see the would-be trips that are avoiding it. People avoid congestion in many ways: a) changing routes; b) changing times of travel; c) choosing a closer location for the same purpose; d) aggregating trips to get a bunch of errands done in one trip; e) changing mode to walk, bike, or transit; f) getting more done while in congestion, such as talking on the cell, texting, eating, listening, getting dressed, grooming, and so on; g) carpooling to do business while traveling with the people in the car; h) carpooling to quality as a car pool in an HOV (High Occupancy Vehicle) lane; h) paying to drive in a HOT (High Occupancy Toll) lane; i)simply not making less necessary trips; and j) making locational decisions, discussed below.

However, as congestion increases systematically and predictably, wasting time is just not an efficient method of resource allocation.

## Value of Time, Willingness to Pay

Increased capacity where there was congestion does have some benefit, but the question is whether it is worth the cost. That question leads to another, compared to what? A cost can be assigned to congestion delay, and the cost compared to policies of doing nothing, building more capacity, having some congestion charge, and investing in alternative modes. The cost of more capacity needs to include not only the cost of the project, but also the cost of congestion delay created by construction of congestion delay caused by increases in traffic that restore the congestion at a higher volume of traffic.

The cost of congestion delay depends on determining the monetary **value of time** , which can be estimated based on some estimated **willingness to pay**. Surveys can ask people what they think is the value, but the results are problematic. Time wasted in congestion is hard to value because drivers are semi-voluntarily willing to spend their time that way. Commuters accept uncompensated time as worth it to reach compensated work. For example, the Bay Area commute duration is longer than other metro areas because people are willing to spend more uncompensated time getting to higher paid work, and the region has above-average incomes.

A more accurate estimate of the value of time can be derived from **congestion pricing** schemes in Singapore, London, Stockholm, and Norwegian cities, which typically charge for entering a congested central area. Some estimate can be made from the Bay Bridge into San Francisco when the toll goes up and bridge use goes down. Comparing driving time and transit time and comparative use can also give an idea.

By far the most accurate measure of the value of time, however, is not an estimate, but what drivers do in fact pay to save time. There is only one good case of such a system, which uses **dynamic tolling** that varies the toll based on the level of demand. On Interstate 15 north of San Diego is an 8.5 mile stretch where the toll goes up and down based on real-time demand, with parallel lanes that are free. The toll varies from $.50 to $4.00. (David Brownstone et al., "Drivers' Willingness-to-Pay to Reduce Travel Time" for Transportation Research Part A, May 2002, www.uctc.net/papers/581.pdf) Even here, though, it is complicated. The many on the **free lanes** pay nothing, so perhaps the value of time is some average for the whole corridor, those who pay and those who don't.

Some drivers may pay only occasionally to avoid being late to work or to avoid a high cost of being late to pick up a child in day care, so the value of time **varies for the same driver** , who sometimes will pay, and sometimes not. The value of time does not even correlate well with income, because low incomes cannot afford long commutes, middle incomes can afford the toll, and upper incomes may choose not to pay or can afford to live in quality housing closer to work.

## Congestion Pricing: HOV Lanes, HOT Lanes, Ramp Meters, Tolls

What is the best way to structure congestion pricing? Major polities include HOV lands, HOT lanes, ramp meters, and tolls.

A freeway lane can be restricted, usually during rush hours, to HOVs, defined as two or three persons per vehicle. **HOV lanes** , however, reduce traffic on adjacent mixed-flow lanes, initially speeding them up, reducing drive alone travel times, attracting more traffic to the mixed flow lanes, and over time increasing traffic volumes without reducing congestion. HOV lanes also have a perception problem when used inefficiently, greatly aggravating drivers in stop and go traffic who see an HOV lane with light traffic. HOV lanes are really just another form of non-economic highway expansion.

**HOT lanes** are different. A HOT lane is an HOV which additionally allows single drivers who pay a toll. The HOT lane usually has a variable toll, although the charge may not be changed frequently in response to demand. Like HOV lanes, HOT lanes can also reduce congestion on adjacent mixed flow lanes, but they tend not to be underused, because the price, based on willingness to pay, is always low enough. The revenues can be used for HOV and transit alternatives, with efficiency and equity gains.

Technologically, HOT lanes are now easy to implement. The toll should be dynamic, that is, variable based on the level of demand moment to moment, as implemented on Interstate 15 in San Diego, mentioned above. HOT lanes are still a second-best policy because congestion remains on the mixed flow lanes.

**Ramp meters** are also a second-best answer. Delay by a ramp meter is a congestion charge in time instead of money, but tolls are more efficient. Ramp meters are traffic lights on each lane of an on ramp or freeway that momentarily hold up traffic. They can hold back extra traffic to prevent overloading a freeway and thus maintain higher speed for more throughput on the freeway itself. Because the capacity of the freeway increases with less congestion, the wait time plus driving time may be less than the driving time on a congested freeway without meters. On-ramp meters and main line meters are needed at points where congestion begins. The San Francisco Bay Bridge is a main line meter that works well to discourage drive-alones and increase car pools and buses. Its success, however, should not be judged by the cars waiting at the toll booths, but by the invisible cars that are not there. Ramp meters should have undelayed access lanes for buses and HOVs, which create an incentive for more car pools.

**Tolls**. Tolls do not apply to local streets and arterials. Even with advanced technology, there is no good way to charge, the overhead cost would be high, the amount per trip would be very low, the volume of trips would be very high, and, unlike freeways, there is no way to deal with social equity problems. Tolls would apply to freeways, which have the major problems of long distance and congested travel.

Demand-based tolls are the most efficient reform as they directly affect the problem. Tolls and related measures can be calibrated to produce an optimal level of fluidity, balancing between occasional slowdowns and an under-used road. Congestion pricing would be an efficient market to allocate resources: it eliminates serious time delay, uses road capacity efficiently, indicates if demand is high enough to justify more capacity, and provides the funds to expand capacity if really justified.

Freeway trips can be tolled efficiently with modern electronic tolling technology which would charge based on level of congestion. The technology is already in place in the Bay Area in the form of FasTrak, an electronic charging system on toll bridges.

The problem is political, not technical. Congestion pricing would end major congestion and, in fact, reveal the excess capacity on highways. Congestion pricing, with some revenues used to fix equity problems, would reduce driving alone and increase higher occupancy vehicles that use road space more efficiently. Congestion is not so much a result of a mystical commitment to the auto, but an indirect result of a lack of understanding of congestion economics. People know that time is money, but don't apply it to the high cost of driving "for free" on freeways.

Tolls raise **equity questions**. In first instance, the wealthy can price the poor off the road. But there are countervailing considerations. The vast majority of poor do not use freeways for commuting, or much else. Many can't afford cars to begin with, and they can't afford to spend much time or expense getting to work. The toll removes traffic from the free lanes, which speed up transit for everyone. The tolled lanes typically are used for free by carpools serving all incomes, and the tolls can subsidize bus service in the tolled lanes, which allows buses to go faster, use road way efficiently, and serve lower incomes. In practice, equity would depend on the details of specific applications.

## Other Policies

Congestion delay costs can also be reduced indirectly using policies which will also get discussed later on: fiscal zoning, smart growth housing, land use regulation, and long distance alternatives.

One of the causes of congestion is **fiscal zoning** , that is, cities that zone for revenue producing development and restrict most housing. If a job-rich city refuses to supply adequate housing, it externalizes the housing cost and forces long commutes that create congestion. Similar problems are created by cities that don't build enough housing for their population growth, and which provide too little affordable housing for their local, moderate income workforce. Fiscal zoning will come up once more below.

**Smart growth housing** is denser and less car-oriented, located in a job surplus city, makes sense. If the city is unwilling to build enough housing, regional controls could at least restrain the errant city from making land use decisions that would increase the costs it is already imposing on the region. Similarly, if a major job-generating proposal does not have adequate housing, it should be delayed and be required to have transit and to increase housing enough to take care of the problem. Otherwise, the locational externality costs offset some of the benefits of job increases. The job-rich city benefits at the cost of other cities. Unfortunately, cities value local power more than their economic self-interest, so anarchy, or least locational externalities, prevail.

Congestion can be reduced by **land use regulation** stopping low density, car-dependent development. The total costs of sprawl in externalities, congestion, and loss of greenbelt are higher than the public benefit from the distant housing. Assuming some housing is justified by moderate growth, smart growth can always provide it more cost-effectively than sprawl. Land use regulation can also improve job-housing balances, getting more housing close to jobs and using non-auto modes to commute.

While these ideas apply primarily to commutes in big cities, they can apply equally well to **long distance alternatives** to driving. Chronic congestion on for recreational travel on week-ends is not as important week-day urban freeway congestion, but when you are caught in it, it become very important. Solutions include high speed rail and access to recreational accommodations by bus. High speed rail can generally serve major cities less than 400 miles apart better than air or auto, especially if well-linked to local transit. As mentioned under road kill above, rail and bus could serve vacation areas if well-linked into local transit or van transport provided by lodging businesses.

## 3. Parking

The initial monetary cost of "free" parking is borne by whoever initially pays for it and does not pass the cost on as a parking charge, and is restricted to certain users. It may also be borne by a renter whose rent includes parking. Examples:

a. Employer-paid parking paid by employers, restricted to employees,

b. Private commercial parking, paid by businesses, only for shoppers,

c. Government, education, health, non-profit institutions paid by taxes or donations,

d. Public on-street parking, parking lots, and parking structures paid by taxes,

e. Transit and rail access parking paid by transit agencies, restricted to riders,

f. Post office parking only for patrons,

g. Church parking only for congregants,

h. School parking only for teachers,

i. University parking only for faculty, staff, and students,

j. Visitor parking only for visitors, and

**k. Residential parking paid by renters in rent, restricted to residents** (see market imperfections below)

**Traffic costs, circling, spillover parking, poaching.** Free parking can have additional costs. It subsidizes parking and thus increases traffic, congestion, pollution, and energy consumption, particularly employer-paid parking causing congestion during peak hour. Free parking can lead to significant traffic increases by drivers going in circles looking for space, typical of public street parking in high attraction areas. Oversupply of subsidized "free" parking relative to market demand and simple economics wastes land and lowers economic productivity. Poaching is a common concern and occurs when free parking intended for one purpose is used by another. It can happen if free parking is near paid parking; the free parking will fill up before the paid gets used.

**Second best.** Second best solutions are those that fall short of a market charge but are still effective in dealing with some parking problems. They include signage, time limits, and free neighborhood parking permits. When BART commuters were parking in front of stores, the owners posted signs limiting the length of time one could park. The signs are largely self-enforcing, since commuters hate to come home from work and find their cars missing. Then the real punishment begins: the cost, time, and paperwork needed to recover the car from very profitable towing and storage businesses. In another example, in Hayward a neighborhood near the main post office and another neighborhood near the community college had problems with outside people using their personal streets. Neighborhood residents got parking permits and others were not allowed to park. The system seems to work mostly with signage.

First best methods broadly divide among no parking, hourly or event charges, and leases for a month or more.

**No parking at all**. If there are alternative modes of access and a place worth going to, people will go there. No parking or very expensive parking works in many downtowns, campuses, amusement parks, pedestrian streets, resorts, large buildings, and inside shopping malls. In some cases, a large parking lot provides access to a car-free area; in other places, transit and density supporting walking provide access. In these cases, the whole system has to support pedestrian movement, which then gains more pedestrian amenity due to lack of cars and traffic.

**Existing parking charges.** We do in fact have many places that charge for parking: downtown parking structures, airports, governments, educational institutions, health facilities, and major venues with public events. Public institutions can charge more effectively for parking as they are less driven by competitive forces. The charge is usually paid to a collector on the way in to an event, or the driver gets a tag from a gate on the way in and pays at a kiosk on the way out. In some cases the charge is based on some economic cost, e.g., to pay off bonds; in some cases it seems to be a market-like charge, and in other cases, like BART, arbitrary. How can these policies be improved and expanded?

**Hourly charges and shared parking.** For hourly charges, anyone should be able to park in any parking. Shared parking means anyone could use any space for any purpose for any duration if they pay a market price. Owners of parking would manage it as a market commodity rather than as a single-purpose resource to be subsidized. The market price means that spaces can always be found; If parking is used efficiently, there is never any parking shortage; time is saved not driving around.

An hourly rate should be periodically adjusted over time to average 15 percent vacancy or about one spot per side of an average city block. (Don Shoup, _The High Cost of Free Parking_ , on this and many other parking issues.) The rate should vary by time of day, day of week, special events, and seasons, all based on historic demand. Hourly charge systems can use computerized management to determine the rate and to collect the charge, as done by SFPark, discussed below. There should be no time limits and no parking tickets. The charge should be collected using advanced technology and easy pay systems. When a car is parked for a long time, clearly inconsistent with the general pattern of use, it should be towed.

**Attraction zone congestion parking charge**. The typical pricing approach to congestion is to charge for road use directly, with a toll, HOV lanes, or ramp meters. However, congestion can also be reduced by charging more for parking. Increased parking costs in a job center could be created by a tax on parking spaces. Revenues can be used to support car pools and transit, which use road space more efficiently. Attraction zones are easy to define: the place where people in congestion are going. The appropriate charges, in principal, are those sufficient to reduce congestion to a tolerable level. A charge in practice should start low for acceptance and to work out kinks, and rise gradually to a level that causes moderate change.

**Cashout**. Cashout is when employees may opt to receive cash instead of a free parking space. Cashing out employer-paid free parking for employees can encourage and subsidize more use of car pools and transit. Shoup, Willson, and Wachs found significant decreases in drive alone to work from cashout. Notice that cashout is helpful for congestion as well as equity for employees.

**Suburbia**. Parking in suburbia is generally so abundant that it has no market value, and its cost is paid by other land uses. There is a surplus at the price of free to the user. The business pays for the parking and recovers the cost in the price of goods sold. If some small area were to charge even 50 cents, few would pay because they could park free nearby and walk. A large area, like a regional shopping center, would lose customers to other shopping centers.

A business that charged for parking could lower its in-store prices accordingly, but the overhead and inconvenience to customers of collecting the charge, the relatively small cost of the parking relative to the total business, the minimal in-store price reduction relative to competitors, and loss of business to competitors with "free" parking all make commercial parking charges problematic in suburban areas.

Having dug so deep a hole, it is hard to get out, but we can speculate. As the area for charging for parking gets larger and larger, drivers wanting free parking have increased cost from increased driving distances to alternatives, or from the need to use some additional mode of travel like walking or transit to reach a destination inside the charging area. The willingness to pay for parking increases, the need to incorporate the cost of parking in the price of goods decreases, and commerce become more efficient.

The revenue from the charge could be used to cover costs, and if demand rises and creates surplus revenue, the funds could be used to improve transit access, reducing congestion and increasing patronage up to some equilibrium among modes of access.

Politically, no one wants to pay to park until it is established that one must pay to park, and then it is alright. People can plan accordingly and either be willing to pay or use an alternative mode. It is the change in systems and the change in thinking that is hard.

The results of market parking charges combined with other pricing reforms and alternative access by walking and transit could be surprising. The amount of vacant parking could gradually increase. Unneeded parking could be built on and could support increased transit service. The parking charge could even reach the cost to the whole economy, at which point it really pays its own way and is important for supporting more efficient alternatives. The problem is not the parking as such, but its economic nature.

**Denser areas.** The above describes American suburbia at its most subsidized, dispersed, inefficient, and hard to change. More leverage for reform exists in older, denser areas where parking demand exceeds the "free" supply, defined as under 10 percent of parking spaces vacant and drivers circling looking for spaces. Such places could easily charge for parking and function better. "Free" parking means that the walk-ins pay a higher price on goods to cover the cost of providing parking for drivers. Parking charges for streets and businesses become more feasible where demand is high and there are both car-based and walk-in customers. A system covering both private and public parking would work better. Depending on competitive conditions, a store could charge for parking, lower its prices a bit, and out-compete its rivals—a small edge, perhaps, and hard to know how important.

**The quasi-parking lot.** For public parking in higher density areas, like the Mission in San Francisco or along crowded small streets like Natoma that serve dense housing, a quasi-parking lot could work. Such an area could function like a parking lot without an attendant. A clearly posted the area would have several gates where drivers would pick up a tag through their window. To get the tag they would punch in their car license plate number, swipe a cash-value chip card, or swipe a credit card. The tag would be placed on the dashboard for enforcement purposes. Gates would also be used when leaving to charge for time used.

**BART**. At rapid transit stations, parking charges could be based on what the market is willing to pay, and thus would not lose riders. When I was on the BART Board, I explained this with great patience and erudition to my fellow board members, to no avail, and, in fact, to some consternation.

A few years later, BART adopted parking charges due to a huge financial crisis. BART now collects at most stations, but still not based on market economics. At West Oakland the charge is $5 per day and the lot fills up at 6:30 AM, while a parking lot further from the entrance charges $7 per day. At this point, please write your own little editorial.

In 1996, when I ran for reelection, developers financed a hit piece against me and ended my electoral career, which I'm afraid was fairly dubious to begin with. It was not a good use of my time, with only one other Board member, Roy Nakadegawa, sharing my views on a nine member board.

**Neighborhoods**. There is a problem of how to charge for parking in small shopping centers, small parking lots, and public streets in neighborhoods. Neighborhood parking has a special character that can make charges politically difficult. Street parking in front of housing has a quasi-private nature. The street may be owned by the city, but homeowners and even renters treat it as belonging to them, and this sense of ownership is important for neighborhood social cohesion, appearance, and crime control. Neighborhood parking permit programs can work well, and using an annual fee for residents can keep too many non-residents from parking in the neighborhood. Spaces can be mixed between some for permits and some for short term use at a market rate. If the proceeds are used within in the neighborhood, there is more political support.

**SFpark**. It is time for parking meters to die. Another way to charge for parking on public streets is SFpark, being pioneered in San Francisco by the SF Municipal Transportation Agency (http://sfpark.org/; the site has a video at the top;  http://www.nytimes.com/2007/03/29/opinion/29shoup.html?ex=1332820800&en=cdabf3ece6c4a862&ei=5088&partner=rssnyt&emc=rss; <http://shoup.bol.ucla.edu/CruisingForParkingAccess.pdf>; <http://shoup.bol.ucla.edu/Cruising.pdf>). SFpark uses high tech parking management and has five parts.

1. Meters: Meters allow drivers to pay with coins, credit/debit cards, and SFMTA parking cards, and often have no time limits. They should someday accommodate cell phones and cards like FasTrak or Clipper Card.

2. Sensors: Wireless parking sensors in each space detect availability space-by-space, and parking structure entrances and exits track the number of cars in the structure. The parking meters detect payments.

3. Data: Sensor and meter data go wirelessly to the SFpark data hub, tracking how often each space is used. Parking managers see where and when parking is available.

4. Pricing Policy: Parking managers adjust meter rates based on willingness to pay so each block and each structure has, on average, 20 percent availability. (I think 15 percent would be better.) This demand-responsive pricing evens out demand over a large area. Hourly rates range from $.25 to $6.00. During special events, such as baseball games, rates may increase beyond the ceiling. Many structures are underutilized, so their rates will decrease, attracting more efficient use. Rates at meters may fluctuate by time of day and day of week. Prices will be adjusted by increments of no more than 50 cents an hour, up or down, no more frequently than once a month. Meter rates are then updated electronically.

SFpark charges block by block. A similar concept in a large parking lot is to charge a little more for close-in parking, which is likely to be more in demand than that farther out. The market could bear a small charge for the convenience of a shorter walk, even when other parking is available.

5. Information: Current rate information and maps with parking availability information are sent to the web at SFpark.org, to the 511 system, to drivers by cell phone and text messages, and to electronic display signs at high-traffic locations in the City. Signs also guide drivers to City structures.

SFpark is far more convenient and less annoying than parking meters. The system has no time limits or long ones, no red flags, few if any parking tickets, minimal enforcement costs, optimal revenue and parking availability, no time left on the meter, no runs to feed the meter, easy payment, no coins to carry, and parking spaces always available. The system is expensive to set up, but then has low operating costs.

**Leased parking spaces**. Parking charge schemes need to include leases as well as hourly charges. If an apartment is rented for a month, it makes sense to lease a parking space for a month. People may want that security of having their spot. At the start of an unbundling policy, the living rent plus the parking rent should equal the bundled rent. However, in a market, the two kinds of rents would be based on market demand and may not keep the original ratio. The balance between the two uses may also change, reflecting which is most profitable. Parking lease rates for a year could be based on bidding for one fourth of the spaces every three months, rolling over all the spaces in a year. If the bid goes higher than other leases, it becomes the rate only for those at bid. If the bid goes lower, all the leases are reduced to the lower amount. This avoids renters paying more than a market rate for their parking. The lease rate, however, should be kept above the effective hourly rate because the lease provides security of using a particular space.

**Use of revenues**. At transit parking, revenues could be used to improve transit to transit, that is, a bus serving mass transit. This double elasticity, more expensive parking with less expensive and a more accessible bus, would increase riders and decrease congestion on arterials serving the station. For example, bus shuttles on Ygnacio Valley Blvd. in Walnut Creek, CA could alleviate its congestion going to downtown and to BART.

In a commercial area and neighborhoods, funds can be used for façade improvements, litter clean up, police on the street, local buses, improved lighting, better sidewalks, street furniture, safer crossings, landscaping, and advertising. If market demand produces a high enough price, the price itself finances the expansion of supply, or some cost-effective alternative.

Keeping the revenues in the area which generates them and involving local business and residents in decisions on how to use the funds increases political support and gets wiser choices.

**Construction of new parking.** Leverage exists when new parking is being considered. Regulators could require that future users pay the cost of providing the parking and making a profit on an identical basis to paying for the rest of the project. Parking would only be built to the extent justified by real economic demand. This is especially important in downtown areas, where publically subsidized parking reduces the potential gains from increased density. Parking structures and parking underneath housing are counter-productive unless they fully pay their own way. Unfortunately, uneconomic arguments usually prevail: the parking structure must have free parking because otherwise people will (choose one) not ride BART / not shop downtown / not attend the new cinema; they will drive all the way / go to a mall in another city / go to another cinema with free parking. There is an element of truth in them, but they are exaggerated, overlooking the success of many places without free parking and the policies that support it.

**New land uses**. Parking charges can move pricing from free to paid by the user, to a market charge based on demand, to an economic charge based on actual costs, and even, someday, hopefully, to a whole economy level. Along the way, parking charges may make some parking consistently vacant. In those cases, land can be converted to more productive uses and new construction can support alternative modes. For example, to complete the logic of cashout, an employer who can show parking spaces are no longer being used should have some kind of vested right to build on the vacant land, at least to the density and for the purposes of the existing buildings. If non-car modes are competitive, land could be converted from parking to direct social uses, which in turn could increase non-car access to commerce.

4. Local government

a. _Local road construction not financed by the gas tax._

b. _Road maintenance not from gas tax._

c. _Local road user services_ : police, fire, ambulance, hospital, legal, and insurance and liability costs paid by sales and property taxes subsidize driving

The amount and distribution of the gas tax should be based what is needed for federal, state and local roads and road user service costs. This gas tax concept is a fee for service, a different rationale from a carbon swap, to deal with a different problem as directly as possible, with a direct connection between the problem and the pricing reform. The gas tax, levied on all drivers, now primarily goes to state highway departments for state and federal highways and mostly benefits those who use state and federal highways more than average.

New land development should also pay the infrastructure it needs, a nexus-based exaction. The concept could also apply to certain assessment districts, redevelopment, and parking projects. Developers typically do pay for much of the needed infrastructure, but usually not for extra costs related to distance of the development from the city center. This pricing issue is discussed more under Resources below.

Another exception is that some burden should fall on property, which needs the access provided by local roads. The balance is not easy to quantify, but the value of road use shifts from property to road users as traffic volume increases. The long driveway to a mansion and a local road to a few houses clearly benefits property, while a freeway clearly benefits road users. The balance of purpose for road use shifts from specific property on local streets to general travel on main roads. The property tax should probably cover a basic cost for road access to property, with a higher cost for more remote properties that require more road miles. The tax would not be based on frontage, but would be higher for further-out properties and smaller for closer-in properties, which reflects the real road costs of each. The balance somehow should distinguish between arteries that provide little access and those that have businesses along the route. The balance should consider that most property along a freeway is adversely affected, but businesses at exits are greatly benefited. One way to simplify the problem is to use property land value as the basis for a tax, and to not use the proceeds on freeways and arterials with no property accesses

In California, the use of sales tax to subsidize driving is especially perverse. For pricing reform, existing sales tax programs should instead be financed by a gas tax increase. Gas tax increases would be matched with sales tax reductions. However, even the inadequate gas tax is not now available in California for any purpose because state highway account funds have been "loaned" to cover general fund deficits, with no end in sight.

d. Land in roads not really needed reduces economic activity and municipal revenues.

How much pavement is enough? No accepted methodology exists for determining how much roadway is needed because a "public good" framework is essentially political. A private good approach would answer the question: the more people pay, the more road they get. There are, however, some very good reasons for a public good component to roads, so the challenge is to find a rational basis for balance. The problem is trickier than parking. Parking has clear costs, a clear economic price needed to cover the costs, and if people aren't willing to pay, it probably isn't needed. Roadway, by contrast, is a necessity and a natural monopoly at the same time. Roadway can serve many modes and have roots in public paths and streets from antiquity. Property without some kind of free access is worthless, or a kind of prison.

Historically in Britain, an increasingly abusive and erratic system of road tolls was abolished in favor of King's Highways, supporting a great expansion of travel and trade. These highways were generally superseded by rail, which was vastly superior to animal traction. Highway development then shifted to shorter roads that provided access to rail stations. More recently, freeways have displaced much rail travel, and extreme congestion on some routes, like the ring road around London, keeps congestion from getting worse. Even more recently, a stiff vehicle entrance fee to central London has greatly improved traffic and access there. A system of mostly free roads is balanced by other systems.

So, some roads are obviously essential for a city to function, but when more area than is needed is used for right-of-way, a city loses revenue and other benefits it could get from developed land. The urban system loses functionality and efficiency.

Some of the problem is addressed by other pricing reforms. If large scale subsidies to drivers were reduced through direct pricing, traffic would also be reduced, revealing excess roadway that could be developable or be shifted to non-car modes. Selective road closings, conversion to parking or bicycle lanes, or "street diets" (narrowing or reducing travel lanes on wide streets) for "skinny streets" (narrow streets) become possible, supporting mode change and allowing for more smart growth redevelopment of close-in land, which in turn can increase walk-transit trips and decrease car trips. Redevelopment based on non-car modes could easily have comparable mobility with less traffic and a lower monetary and environmental cost. The recovered ROW would serve a socially productive function and economic productivity and the quality of life would improve.

In some cases, poorly used streets exist just because no one has tried to fix them. In Hayward, for example, Main St. has hardly any traffic and a potential for more parking. Downtown businesses want ever more free parking, even at the expense of buildable land, but have not looked at Main St.

Some narrow neighborhood streets have low traffic, but still make sense for access. There is a huge range of traffic volumes from multilane freeway to rural roads, similar to the range of blood volumes from major arteries to small capillaries, yet they are all part of the same system. If there is some corresponding unified theory applying to all roads to indicate how much is enough, I have yet to hear of it.

While it is difficult to know how much roadway is enough, some planning principles could at least prevent over-widening existing roads. Planning can designate balanced land uses that reduce needed traffic, and can plan for transit and walking modes to meet many access needs. Planning can estimate the traffic that would occur with pricing reforms. Unfortunately, most planning assumes subsidy and the resulting extremely low direct costs of driving. Planners do not use "demand" in any economic sense, but demand which is highly subsidized all part of a culture of carism which is comfortable for voters and elected officials. Again taking Hayward as an example, some street improvements mix reasonable improvements in alignment, connections, and intersection function with over-widening, specifically in recent years Hayward Blvd., Mission Blvd., and Foothill Blvd.

Bigger, older cities are more likely to just tolerate congestion as a way to avoid more congestion and as an incentive to get more walking and transit use. They are more likely to work on the trip end to reduce trips, by charging for parking and preventing construction of parking spaces. They expect downtown to have slow traffic for access, so there is no need to accommodate high speed through traffic.

## 5. Federal and state government

a. _Federal and state highway construction and maintenance not financed by the gas tax._

b. _Lack of maintenance_ and thus a decay of the capital asset whose repair cost will fall to the future. Current road users are living off capital and imposing a cost on future users.

In 2007, gas taxes and other user fees supplied 51 percent of funding for "federal-aid eligible" roads such as interstates, U.S. highways and major state and local routes, a figure that has been steady as an amount but declining as a percent of total funds for several years. These roads are 25 percent of total road mileage but carry most of the traffic. In California in 2007, 48 percent came from user fees, including all federal funds. The rest came from general funds, property taxes, sales taxes, and tax loopholes. (Subsidyscope, Highway Funding Data by Source and Type, Pew Charitable Trust, Nov. 2009, http://subsidyscope.org/transportation/direct-expenditures/highways/funding/state/, accessed 9/28/2012)

State gas taxes have fallen behind inflation and increases in fuel efficiency. The state gas tax in California is now 60 percent below its effective rate from 1931 to 1970, adjusted for inflation and fuel efficiency. It should be gradually restored to cover road and road user services for federal, state, and local roads. The amount and use of the funds should minimize mode shift back to cars.

c. _Facility and route alignments_ favoring suburbia over denser areas and car travel over other modes.

i. Gas tax cross-subsidy from local road users to state and federal road users.

ii. Gas tax cross-subsidy from present, unbenefitted payers to future, benefitted, but non-paying, users of new capacity.

iii. Gas tax investments may not be used to solve transportation or broader social needs.

The first issue is the subsidy from some drivers to other drivers. The gas tax can be used to improve roads serving existing drivers and existing land uses, on the premise that the gas tax should be used to serve directly the people paying the tax. However, the gas tax paid by existing drivers can be also used to build roads for future drivers, generally taxing from local-area drivers to benefit future drivers in other places. The taxes build high-cost roads like interstates serving new long distance drivers. Combined with being free to the user, new roads have a big impact, destroying what was there before the road was built and subsidizing land for new dispersed, auto-dependent development. Here, the premise is that the gas tax should serve potential trips. Historically, the gas tax has shifted funds from drivers on existing roads to new drivers on new roads to new development.

What could the gas tax legitimately be used for? It can also be argued that the gas tax is for transportation and should be available for transit; this idea has had limited application.

Going further, it can be argued that the gas tax should serve the urban system and be available for land use. Building compact or dense housing close to transit going to a job center, for example, could solve a problem better than more roads or more transit. A carist culture does not think twice about more roads, and does not think at all about urban systems. Big gas tax investments have gone into road capacity serving the hinterland, and none into urban systems. Highway interests have always had enough power to minimize shifting the gas tax to transit, and using the tax for land development to meet a transportation need is unheard of in real life.

d. _Perverse fiscal incentives for local governments favoring cars_ (combines with 5.c. above).

The location of major new federal-state road capacity can favor some localities in their competition for commercial and industrial development. Localities compete for such development because it produces property and sales tax revenues with little corresponding service costs. Localities, acting like businesses in a market, engage in **"fiscal zoning,"** to get development near off-ramps that will pull businesses from other cities. They zone for revenue and against housing, which is costly to serve. The city can get more sales tax and property tax revenues by taking from their neighbors. The new capacity serves the suburbs, with negative impacts on old downtowns, neighborhoods, and industry. The market imperfection combines with subsidizing and locating new highways to serve outer areas and making them free to users, shifting land development to inefficient locations.

Localities depend on narrowly-based, volatile sales tax dollars. The incentive system could be changed by shifting from sales taxes to property taxes, which are more broadly based and stable. Also, sales and property taxes within a country could be pooled and distributed to localities based on population, low income population, and business square footage. However, local finance is incredibly complex and difficult to reform. It may be more politically feasible to strengthen regional government to accomplish by regulation what a messed up fiscal market cannot. Regional government could regulate to prevent fringe commerce that threatens older areas and, instead, find ways to revitalize them. This remedy is regulatory rather than market based, but is being pursued by cities like Portland, Oregon and Grand Rapids, Michigan.

e. _The Strategic Petroleum Reserve_ is a kind of subsidy to the oil business, although it could be managed to make money, in which case it would not be a subsidy.

The gas tax should be used to buy the oil and the reserve should be managed for profit.

f. _Petroleum subsidies in federal tax code_ : Percentage Depletion Allowance, lack of severance fees (unlike other nations), The Petroleum Research and Development Program, Non-conventional Fuel Production Credit, foreign tax credits, foreign income deferrals, royalty waivers on deep-water offshore drilling leases, accelerated depreciation allowances and deductions for exploration and development costs for drilling costs and oil wells, lower state taxes based on federal loopholes, additional loopholes in Taxpayer Relief Act of 1997.

g. _Petroleum research and development subsidies_ , export financing subsidies, Army Corps of Engineers subsidies, Dept. of Interior Oil Resources Management Programs.

Reduce federal tax subsidies to the oil industry (ICTA, The Real Price of Gasoline, November 1998). Oil companies are allowed to "expense" dry holes, which are unrecoverable exploration costs, which means they can deduct the cost in the year they occur, lowing the income basis for taxes owed. The alternative would be to consider them a capital investment, allowing only part of the cost to be deducted from revenues as depreciation, over a period of years. Except for this expensing, the tax loopholes should be closed. Severance fees should be charged comparable to international practice. The Petroleum Research and Development Program should be cancelled. Non-conventional fuel subsidies should be eliminated; the relative increase in gas prices provides enough incentive. If basic research is needed it should go through the National Science Foundation or the Transportation Research Board, which use expert panels, scientific criteria, and objective reviews of research proposals.

In the related policy area of energy subsidies, the Union of Concerned Scientists (UCS) reports that, "The oil and gas industry has received an average of $4.86 billion in subsidies (in today's dollars) every year for nearly 100 years—from 1918 to 2009." The UCS reports also $3.5 billion in governmental support for the nuclear industry from 1947 to 1999, with similar amounts to the present, and up to $5.4 billion in 2008. Meanwhile, renewables got $370 million per year from 1994 to 2009. (Source: UCS, Catalyst, Fall 2012, p. 9.)

Beta version comment: I should do a section on Energy Pricing Reform. It makes some sense as part of a systems approach, because energy subsidies compete with green energy and undermine sustainability, and energy is part of the neighborhood system.

h. _Military expenditures defending Mideast oil attributable to cars._

i. _Moral jeopardy and turpitude in supporting violent, non-democratic regimes_ that abuse fundamental human rights.

Increase the gas tax to cover transportation's share of the military costs for defending oil imports. The income tax could be reduced correspondingly.

More important but more difficult politically, we should not place a high priority on defending anti-democratic regimes like Bahrain and Saudi Arabia that abuse human rights regardless of how much oil they have. Any spending should be oriented to helping the common people of those countries and fostering democratic, tolerant, competent governments. We should not overthrow governments because they are not friendly to US oil companies.

j. _Regulatory costs for oil pollution oversight_ , monitoring, inspection, enforcement, clean up, and liability not paid for by polluter.

The industry should pay and, failing that, the gas tax should pay, for these costs.

## 6. Zoning

a. _Uneconomic parking forced by zoning._

b. _Uneconomic land waste forced by zoning._

Parking requirements subsidize car travel by forcing developers to build unneeded parking that makes no sense economically. Excessive parking reduces the amount of housing, makes the remaining housing more expensive, and induces traffic and congestion, which degrades street quality for pedestrians and gives density a bad name. Subsidized parking undermines transit by increasing auto ownership, causing traffic that competes with transit and reduces ridership.

In 1998, research on San Francisco discovered that zoning-forced parking increased the price of the cost of a single family house by 12 percent, or about $47,000 per house. Condominiums cost 13 percent, or $39,000, more, per unit. Over a period of years, zoning reduced the housing supply by 43,400 houses. (Wenyu Jia and Martin Wachs, "Parking Requirements and Housing Affordability: A Case Study of San Francisco," University of California Transportation Center, July 1998, <http://www.uctc.net/papers/380.pdf>)

One rationale for forced parking is to discourage people using one land use from poaching on another land use, such as apartment dwellers poaching on free parking on a public street. Forced parking is one aspect of the psychology and economics of carism: since charged parking leads people to use free parking intended for another purposes, there should be no charged parking. The solution is seen as the problem.

Parking requirements should be eliminated from zoning. If a developer still wants parking, then it should conform to reasonable space sizes, lane widths, turning radii and so on. Deregulation reduces housing costs, improves affordability, reduces car ownership, increases walking and transit use, and raises patronage of business within walking distances. Land use becomes more productive economically.

Systemic change achieves synergy among land use, transit, and pricing reforms (including zoning reform, parking requirements, and traffic calming) to solve a long list of problems.

## 7. Market imperfections

a. **Bundling** is combining parking and other uses into one rent or sale price.

Most parking in the US is bundled and provided free of charge to the user for a single purpose which is controlled by the owner: residential parking only for residents, shopping parking only for shoppers, transit parking only for riders, work-place parking only for employees, post office parking only for patrons, church parking only for congregants, school parking only for teachers, university parking only for faculty, staff, and students, even visitor parking only for visitors.

Bundling and zoning-forced parking often come together. In Hayward, for example, a developer is required to build two parking spaces and related costs for a two bedroom apartment and to bundle the costs into the rent.

Reform is unbundling, that is, allowing parking and other uses to be used by anyone, which is called shared parking. Apartments, for example, would rent parking and living units separately. Housing, which is a necessity, is then not required to pay for parking, which is more optional, popular attitudes to the contrary. Unbundling separates the parking price from the housing price.

Unbundling without supporting policy tends create spillover parking, pushing parking to still-free places, like from apartments to the public streets, or from transit parking to in front of store, the commuter preempting the space for a shopper. Unbundling works best in conjunction with shared parking and parking charges, discussed above, so supply and demand determines optimal use and there are almost always vacancies.

b. _Lack of car rentals and car share in dense neighborhoods._ It should not be too difficult to establish rental agencies and car share; it is not clear if this is a general problem, or mostly affects lower income areas. Car share is expanding. Demand for rentals of fuel efficient cars should rise with the pricing reforms.

c. _Mortgage policies biased against housing served by non-car modes._ The lack of location efficient mortgages (LEM) biases lending toward sprawl housing. Current lending practices ignore the greater financial capacity of a family living in a "location efficient" house (centrally located, transit served, higher density neighborhood). Such a family has less expense for a car and more ability to use non-car modes, and so can spend a larger share of income on a mortgage than the suburban guideline. Low to moderate income families are often unable to buy housing because of the suburban guideline based on car expense. LEM allows a moderate income family to get a loan despite a higher percent of income being needed to cover it, because the family has savings on transportation costs. Lender bias is big problem. The LEM needs to be implemented more broadly.

e. _Legal liability costs for condos_ greatly exceed those for single family housing costs, at least in California. Until recently, the law made it easy for condo associations to sue, and attorneys to recover fees, regardless of the quality of construction. Litigation over defects has shut down construction of new condos in California.

This market defect seems on its way to solution. Builder responsibility needed to be clarified, and builders needed a chance cure defects without a trial. Recent new laws should help but are only beginning to have an impact.

f. _Mortgage subsidies favoring dispersed housing_ over compact housing. Unlike a private lender, a public mortgage company can consider economic factors not incorporated into money markets. Sprawl into green fields results from underpricing of car use, imposing costs not reflected in money transactions. Fannie Mae should not back mortgages for houses built on green fields, outside the sewered area, and in low density developments. Fannie Mae should correspondingly increase loans for townhouses and condominiums based on redevelopment, in centrally located areas with infrastructure, at higher densities.

A special effort is needed to overcome market imperfections and NIMBY resistance to smart growth near good transit, but there should also be more market demand for such units based on pricing reforms. There is no good reason for the decay of old neighborhoods while building at lower densities on green fields. Increased dispersion is possible only because of the artificially low cost of auto travel.

## 8. Fossil Energy

a. _Fossil energy dependence._

b. _Fossil energy supply and demand._

c. _Extra home heating costs_ over compact low rise multiples.

Refining, distribution, and heat use 80 percent of the energy in fuel; moving the vehicle uses 20 percent. This fact is not a pricing reform, but only suggests that technology should be able to find a more efficient way to move vehicles. The problem so far is with the efficiency part, as various alternatives are costly relative to gasoline. Obviously, pricing reforms would improve the competitiveness of more energy-efficient, and thus less environmentally damaging, alternatives.

In order to keep oil prices down, to avoid depending on foreign oil, and to support domestic oil interests, US policy has for a long time favored domestic oil production, resulting in the depletion of the domestic resource, steadily declining production, increasing dependency on foreign oil, high oil consumption relative to economic output, and increases in oil prices. The risk from depending on a few sources of foreign energy should be hedged by some tax on imported oil.

The situation is getting worse because low gasoline prices (still below $10 per gallon) continue to encourage more auto use, higher gasoline consumption, more geographic dispersion, and longer trips. Just as global warming raises the issue of external costs, the increasing international demand for oil raises the issue of supply. The "peak oil" debate has not resolved when the world will "run out" of oil, but there is agreement that at current rates world production should begin to decline in about 7 to 25 years. The horizon is difficult to predict because price increases will cause reductions in demand, possibly dramatic reductions, because oil is used so inefficiently today. Higher prices stimulate growth of alternatives. Higher prices will lower demand for oil while it is also getting more difficult to extract, with short-term up and downs. Thus the "peak" in oil production will be hard to see while it is happening, and only become clear when price spikes consistently fail to raise production above previous spikes.

Pricing reforms would reduce oil consumption, increase urban densities, and increase the efficient of use of the urban area. Dramatic energy savings are possible in vehicle design, vehicle use, and urban systems. Many European cities have higher average household incomes than U.S. cities and are decades ahead of the US in energy efficiency. A smart growth system based on walking and transit could have less than one-fifth the energy use of sprawl while having equal accessibility and a cleaner environment.

One benefit of increasing urban densities is saving fossil energy. Energy for home heating is subsidized, one of a large number of subsidies favoring dispersion of housing and higher heating costs from isolated structures. Leadership in Energy and Environmental Design (LEED) is a program of the U.S. Green Building Council for promoting sustainability. The LEED checklist shows how to make dramatic gains in energy efficiency in all buildings, but row housing and multi-family housing is inherently more efficient because the exterior walls enclose more interior space. Energy pricing reform would make compact housing more competitive in the marketplace.

## 9. Resources

Resources include timber, metals, other building materials and water for roads and houses.

a. _Extra resources needed for single family houses over compact development._

Other pricing reforms would reduce resource costs for the same housing; for the same interior square feet of living space, compact development uses fewer resources. The larger single family units of suburbia should not be compared to the smaller multiple units of old central areas. Resource savings estimates should look at units of comparable square footage and interior amenities. For building up to four stories high there are significant savings in foundations, roofs, and common walls for multi-story and multiple units, even after very effective sound-proofing is built in. With pricing reform, more development would be row houses and multiples served by transit and walking.

Buildings of five stories and higher need stronger, more expensive construction, and may not have the resource savings compared to suburbia. As a building gets higher, the area of the sides of the building increase relative to the roof area, and heating and cooling costs go up. Five stories can be a transitional building type with a first story of concrete or steel, but then, usually, building height has to jump up several stories more to recover costs, and markets for such structures are limited mostly to downtowns.

b. _Increase in distance-based utility and service costs_ over market-based use; failure to use or maintain existing infrastructure (roads, electrical utilities, natural gas, water, sewer, telephone, cable, schools, parks, public safety, libraries, city halls).

c. _Extra construction aggregates and paving_ for roads and parking over central compact areas.

"A number of studies in the United States have quantified the extra infrastructure costs required by unfocused development. Using data from these analyses, Robert Burchell found that if 25 million units of new housing in the United States were to be accommodated between 2000 and 2025 in a more space-efficient way, the nation would preserve more than 1.2 million hectares (3 million acres) of land, require 3,000 fewer new miles of state roads, and need 4.7 million fewer water and sewer "laterals." The result would be a savings of $250 billion, 75 percent in housing and development savings to developers and new property buyers." – Molly O'Meara Sheehan, City Limits: Putting the Brakes on Sprawl, Worldwatch Institute Paper 156, 2001, p. 22, quoting Robert Burchell, "Costs and Benefits of Alternative Development Patterns: Sprawl Versus Smart Growth," Lincoln Institute of Land Policy Annual Roundtable 2000, pp. 47–49.

Another study found that compact growth took one-fourth less capital for roads and utilities and one fifth less for water and sewer. These developments were possible because of very low direct costs of car use, including free use of roads to reach the houses. As with energy, the pricing reforms are discussed above. Cities should analyze distance-based costs for urban services of proposed developments and adjust fees accordingly to favor closer in and denser projects that use infrastructure more efficiently.

The further out from the central core, the higher the surcharge. See above for a discussion of the Lancaster model. The result is a system that discourages sprawl, promotes a more cohesive and orderly development pattern, and supports downtown businesses. Since the model was implemented in 1993, no new development has occurred outside the central core.

d. _Increased metals, plastics, and other resources_ used in vehicles, over market-based use, including cost-effective transit.

Pricing reforms should take care of over-consumption. New cars are likely to use more expensive materials, but less of them by weight, and with fewer total cars resulting from the growth of car-free lifestyles.

~~~~~

Distance-Based Impact Fees – Lancaster, CA

In 1993, the city of Lancaster developed an innovative model for assessing impact fees on new development. Known as the Urban Structure Program, the model included a surcharge levied on new development beyond the central core (5 mile radius).

The further out from the central core, the higher the surcharge. A typical new house located within the core, for example, incurred an impact fee of $5,500. The same house located one mile beyond the core incurred a fee of $10,800.

The model relied on a computer program, updated annually, that calculated the cost of providing city services for a particular development. Clever developers were able to reduce their fees substantially by designating their subdivision streets as private ways.

One goal of the model was to ensure that outlying developments paid their true public costs. Many city services are more expensive to provide in low-density developments located far from existing service areas. Often residents of the urban care shouldered a portion of these added costs. Lancaster's model required these outlying developments to pay their full costs.

Institute for Local Self-Reliance, Jan.12, 2009, http://www.ilsr.org/rule/land-use-policy/2469-2/

~~~~~

## 10. Land use

Land use costs are distorted by subsidies to car use, the major cause of low density suburbanization. Subsidies for cars make possible more dispersed land development.

a. _Land consumption_ : loss of open space, farms, wetlands, ranches, rural landscape caused by car subsidies causing dispersion of development (subdivisions, rural development) and excess land in pavement.

b. _Adverse effects on agricultural operations_ : nuisance lawsuits by sprawl against dust, noise, slow farm equipment on roads, spray drift, and manure and other odors.

c. _Land value and opportunity costs of land used car traffic_ (covered at 4.d. above).

d. _Decline of older neighborhoods, industrial areas, and downtowns._

e. _Increased cost of freeway-served land_ for open space protection, hindering acquisition and hastening development.

Roads and parking spaces cover about 61,000 square miles of land in the US, nine times more on a per car basis than in Europe or Japan. Research mentioned above found that 25 million houses built in a more space-efficient way would save more than 3 million acres.

The costs, however, are hard to quantify in the whole economy, and may reflect the values of the observer–how one feels about farming, wildlife, or old neighborhoods. These land use costs result from underpricing of car use, and would be reduced by the pricing reforms already discussed above.

Unless and until pricing reforms take pressure off the greenbelt, it should be protected by tight urban limit lines. This is not a pricing reform; it is pure regulation, but justified as a way to avoid external costs otherwise caused by subsidy.

Right-to-farm regulations should protect farm operations, especially in areas where new low density housing is encroaching, but farming methods may also need to be improved. Just as car use will have some external costs that can't be fixed, farming also has some impositions like odor, flies, and spray drift, which can be overly expensive to fix compared with avoiding the building of housing by farms in the first place.

Pricing reforms already discussed should reduce land lost to transportation, decline of central city neighborhoods, and other land use costs. However, urban revitalization can have adverse impacts on lower income people living in affordable, if run down, neighborhoods.

## 11. Social

Social costs include inequities to lower incomes, health costs not elsewhere classified, quality of life along streets, in neighborhoods

a. _Inequity among income levels._ Beneficiaries drive more than average, use the more valuable parking, pollute more than average, and drive during peak demand.

A major objection from people without data is that pricing reforms would hurt the poor. In general, the poor own far fewer vehicles and drive them less, so that, for example, the incidence of the gas tax on their income is no different from the middle class. Analyses that suggest otherwise usually ignore spending from savings by households with low current year income but higher incomes in other years. The statistics lump these households in with truly low income households. Spending on gasoline is also a very small item; the poor spend more on meals out than on gasoline. The poor more than most have been hurt by the collapse of transit and the flight of jobs to the suburbs. They would be helped by improved transit and walking. Free freeways have played a major role in the flight of the affluent to the suburbs, leaving school failure, high crime, and blight behind.

However, pricing reforms are no guarantee of equity. Some pricing reforms may have adverse equity impacts. Fortunately, the reform generates the revenue needed to deal with the problem. Revitalization of the city does not guarantee benefits to the poor; they may just get dislocated out of gentrifying neighborhoods. Pricing reform saves the city; it may not save the poor people in it. Therefore, it is necessary to address equity issues in any pricing reform plans.

b. _Driver externalities_ : uncompensated costs of accidents, especially to youth and children, cyclists, and pedestrians; caused by uninsured, drunk, reckless, unregistered, impaired drivers, resulting in death, years of expected life lost, disability, injury, post-accident depression, PTSD, and property damage.

In the US, death by automobile runs in the range of 40,000 to 50,000 per year. Worldwide, accidents cause about 1.2 million deaths and 50 million injuries. Driver externality costs are extremely high, but get more attention from public health experts than average people, probably because the risks are largely self-imposed, and non-car environments are generally not available in the market.

While steps have been taken to reduce uninsured and dangerous driving, much more needs to be done to close loopholes and toughen enforcement. The number of illegal drivers is still very large and better enforcement would help transit ridership and walking systems.

Car insurance using the gas tax would ensure insurance, but does not relate to how responsible the driver is. As a pricing reform, the tax would be very low, but it would not correlate with risk and claims. Some cost of insurance should be based on driving record and statistics about the driver and the locality. Insurance claims vary widely by driver and locality, which should be reflected in the cost and should not vary with gasoline consumption. However, a gas tax could reasonably be used to pay for some base insurance needed by everyone, and to pay for enforcement of driver responsibility laws. So far, gas-tax based insurance has been a hard sell.

It needs to be easier to test for impaired driving and to confiscate vehicles quickly based on such tests, particularly an ignition interlock to test breath for alcohol. Other developed countries have controlled these costs much better than the US. This issue has an overlap between pricing reforms, meant to provide incentives for more economic choices, and regulation or criminal law, meant to prevent clearly unacceptable choices.

c. _Additional externalities to non-drivers_

i. Groups: children, youth, disabled/ill/unable to drive (especially among the elderly), low income, environmental lifestylers.

ii. Impacts: auto dependency and loss of practical walking and transit mode choices; increased walking distances; barrier effects of roads, parking, and traffic; decreased pedestrian amenity; intimidation and danger from traffic; decreased access to health care, social services and shopping; inability to play on streets; loss of independence and neighborhood social support networks.

d. Additional externalities to drivers:

i. auto dependency requires drivers to chauffeur non-drivers.

ii. driver social isolation can lead to irresponsibility, aggressive driving.

As densities increase, pedestrian conflict with cars increases and many pedestrians, including children on their way to school, get injured or killed. This reality and just the presence of speeding cars create a fear factor that intimidates pedestrians. As walking increases, the level of protection usually does not increase. The cost is hard to quantify when pedestrians are trying to use the street, and even harder when they have been scared away completely.

There does not seem to be a monetary pricing reform that is relevant. A direct monetary charge does not seem feasible, but architectural and design changes, e.g., traffic calming and skinny streets, can do a lot to slow cars and thus reduce the external cost they place on walkers.

Traffic calming includes special pavements at neighborhood entry points, traffic bumps (usually in parking lots), traffic humps (usually on neighborhood streets), bollards, planters and parked cars blocking the view of drivers so they have to slow down, round-abouts, traffic circles, traffic diverters to stop rat-runs through neighborhoods, bulb-outs for sidewalks at intersections to make it easier and safer to cross the street, diagonal parking, extra curves, trees that affect sight distances, and physical barriers to prevent illegal parking.

Skinny streets involve reducing travel lane widths to create more pedestrian space or bicycle lanes. These measure increase amenity and safety without preventing vehicle use.

Car-oriented thinking has dominated decisions, but roads could be planned for other functions as appropriate, such as transit and pedestrians. The "level of service" would not be intersection delay, but speeding up buses and protecting pedestrians.

All the above applies equally to bicyclists, with the Netherlands, Denmark, and Germany leading the way.

e. _Sedentation_ (lack of physical activity from car use, displacement of walking and bicycling, and land use distances too long for walking and cycling), a major cause of hypertension, cardiovascular disease, adult diabetes, obesity, osteoporosis, and depression.

Overweightness and obesity and consequent disability and morbidity are now among the most important of all health problems in the U.S., far surpassing hunger in numbers affected. These pathologies are related to muscle deconditioning and increased stress on the heart due to endemic lack of cardiovascular fitness. Car dependency (and television) seem most to blame, compared to European cities which have higher levels of health and higher income. Children are especially affected as they cannot get around due to suburban distances for walk and bike trips, and are then further intimidated by the dangers of traffic, which in turn means that they are chauffeured around and add to traffic.

The pricing reforms already discussed should increase walking, both by reducing driving and by improving walking environments. In addition, there could be incentives to stay fit if health insurance took into account auto use, neighborhood characteristics, and fitness. Health insurance premiums could be based in part on BMI [body mass index] and related actuarial analysis of cost of treatment. There could be incentives to have a low resting heart beat and to be able to show aerobic capacity.

The "medical" model is that our health problems are not our fault and "the doctor" does things to us, like operations, shots and pills, to fix the problem. This paternalistic passivity may work for infectious diseases, but for life style choices, market based incentives would help. Education about the need to walk and housing opportunities where walking would be practical would help reinforce market incentives from pricing reforms.

f. _Aesthetic degradation_ : Strip commercial, traffic congestion, parking lots, excessive neighborhood parking, impacts on natural, historical, and cultural heritage

Given the lack of an obvious pricing reform, we can be creative. A lot of us might like to see an "aesthetic degradation tax" based purely on square feet of pavement per person in a given area. Similarly, a pavement tax based on water pollution costs and heat generation would be a step in this direction also. Land owners might pay the tax for their properties and the gas tax might pay for public right-of-way and parking. The result could be an increase in grassy parking areas.

## 12. Economic

The systemic economic costs of this category are not the hard costs, qualitative factors, and risks already discussed above, but rather costs not covered elsewhere.

a. _Economic inefficiency_ , lower productivity, less competitiveness, lost growth from grossly distorted pricing, the secondary results of lost output due to subsidy, and, more specifically, costs of induced demand, congestion, more car ownership, more fuel consumption, etc., which appear to contribute to GDP but, in fact, detract from it. The economic costs of subsidy would be fixed by the reforms already discussed.

These secondary costs are hard to estimate because they require an assumption about the economics of some alternative. If a given market is inelastic, that is, people cannot reduce their driving much, then pricing reforms could reduce total output. If it is elastic, that is, people can do a lot, especially over time, to reduce car and oil use, then total output would be increased. The evidence from the success of Germany, Netherlands, and Scandinavia, the technologies already available for improved vehicle performance, and the enormous potential of the urban system for greater efficiency all suggest that with enough time auto use is highly elastic, far more so than the conventional wisdom.

Economists, however, do not seem to have made estimates of lost GDP growth, or lost whole economy growth, leaving the debate to interested industries that publicize misleading information about losses from carbon taxes. The highway lobby has wonderful statistics about the economic contributions of highway infrastructure, which never have comparisons to alternative investments or pricing reform efficiencies. The transit lobby does the same for transit, attributing huge development gains from transit investments that do not bear close scrutiny. The European cities not only have lower carbon emissions, but spend less on transportation and thus have more money to enjoy their already higher level of per capita income and leisure time. Europeans also undercharge for car use, but not as much as the U.S., which explains why they are having many car-related problems but fewer of them.

## Involving People in Parking Policy

Transportation Pricing Reforms can be easily understood; what is almost universally not understood is the political process for getting popular support. Policy makers tend to agree on the value of such reforms but don't think about the special procedures necessary to get support. Researchers who do good academic work and policy advocacy don't explore how to get implementation. For every ton of policy analysis, there is barely an ounce of political science, which needs to start with the psychology of decision-making. So here is an ounce.

Attitudes toward change can be paradoxical. People have knowledge, usually unconscious, of how to walk, and how to use a car. People then easily suspend this knowledge when they travel; they become willing to learn, and of necessity do learn, alternative transportation systems. Then they resist applying these lessons back home. There are some ironies even at home: people expect parking problems, parking charges, and congestion in central business districts, where they do not advocate more highways and parking, but not in suburban areas, where they do. Also, people frequently spend more money and time hunting for free parking than they would if they had paid to park. Ignorance may lead to thinking that access is too slow or impossible if one can't drive, when, in fact, the time and money costs of an alternative may be less than a car.

People need information. People learn new systems by talking to others who know about them and through signage, brochures, and web information. A shuttle may be easier, but, if people don't know about it, they can't use it. In a sustainable neighborhood, there is no car access allowed into the walking area. If someone driving there finds that the paid parking is full, they need to know where to go to park and catch the shuttle. Residents need to educate visitors about how the system works. The best example of education is from Perth, Australia, where the usual publicity about transit did not work. Perth then had educators go into the home and explain to people how transit could meet their specific needs and how to use it. It worked.

People want free parking, but know nothing about the high cost of free parking, nor about Old Pasadena, Berkeley, SFpark, etc. Planners often know something about parking charges, but have never taken seriously the social process of how to make it work. Here's how, for a downtown with lots of free parking:

•Inventory the parking and usage in the large area to determine what small areas within it get parked up so much that people start circling or hunting in a tightly-parked small area.

•Estimate the cost in dollars and lost time for the high demand parking area.

•List some physical improvements like paving, street furnishings, better lighting, façade improvements, or landscaping, or services like policing or litter pick up, that the city cannot afford.

•Do not talk about charging everyone everywhere, instantly aggravating large numbers of people.

•Have a meeting and other organizing and networking about what land owners in the over-parked areas would like money for; develop a budget and priorities.

•Propose a limited number of charged spaces using SFpark systems, and have no time limits or parking tickets.

•Make sure free parking is nearby.

•Before an official vote to proceed, remind people they don't have the money yet; they have to support a charging experiment to get it.

•Start with a low price and charging only what people are easily willing to pay so that people will pay and the spaces will be used, even if initially the charge is below cost.

•Have a clear metric for success, criteria for adjusting charges, and deadlines for evaluation; have criteria for incremental expansion and contraction.

•If demand falls below 50 cents a day for 75 percent of the spaces, the parking might as well be free.

•Expect to see the free area fill more at first, then the initial fringe of the paid area, resulting in a strip of empty parking between the paid and the free, and to achieve the 75 percent for only part of the day.

•Do something visible and valued for the first project.

A modest market-based parking charge system that can grow over time would make a downtown more efficient by replacing parking with stores and cars with transit. Transportation, land use, and transportation pricing reforms work together to change the system to achieve the six goals of creation care. Too many downtowns and strip commercial areas function poorly and look terrible because of large arteries and parking lots and gaps among buildings. A transit-accessible, filled-in downtown is more sustainable, efficient, and appealing, and is a natural complement to more sustainable neighborhoods.

## Travel Budgets, Mode Diversity, and the Locational Decision

Travel budgets

The concepts of value of time and willingness to pay discussed above are aspects of travel budgets. People use **travel budgets** for deciding their travel. Regional science research shows that personal and household trip-making is primarily controlled by individual travel time and cost budgets which consider the duration and cost of the trip in relation to its importance and information about the modes available. Trip-making is not much influenced by the mode of travel, congestion, or distance. For the most part, travel decisions are automatic and based on previous decisions. Some trips require conscious thinking, such as going to a new destination, and sometimes major thinking is involved, as in the locational decision, to be discussed below.

The most important trip for most households is the trip to work, that is, the commute. Statistics on automobile commute time have a normal curve with a median around 27 minutes in the Bay Area, regardless of congestion, The curve has a long tail for longer commutes, but very few are over an hour. People have a **longer transit commute** , probably because it is more relaxing and one can do other things while riding, like read the paper, read a book, use electronics, study, unwind, or take a nap. The time budget to reach a grocery store is about 8 minutes, regardless of mode.

People do not use cars primarily because of a cultural commitment, but because they meet travel time and cost budgets better than other alternatives.

Alternatives: Mode Diversity

Mode diversity means having many modes of travel that can work for a household. The mode of travel is controlled by the alternatives available, pushing pulling among modes. Suburbia almost by definition lacks alternative modes, creating auto dependency. Compact land uses usually have more choices. Mode diversity meshes with functional density, to be discussed in the next chapter. Mode diversity and functional density are a system, like two sides of the same coin––one emphasizing transportation; the other, land use, and each useless without the other.

Mode diversity includes short walk-trips at its foundation, in the next chapter as the grocery store trip. Mode diversity includes fast, frequent, and free corridor shuttle buses, mass transit, and cars. Cars are part of mode diversity but have to pay more of their own way, so car dependency is reduced and car mode share goes down. One way they pay is by parking charges, since that is the major way land use powers can affect car costs. Cars are available through leased parking on site, car share/car rental of hybrids and electric plug-ins, paid hourly public parking, and leased off-site parking. Mode diversity includes taxi vouchers for health care and guaranteed rides home from mass transit when the shuttle is not running. It can include a Homeowner's Association managed minivan and an on-site electrocart for freight, maintenance, and short-distance moving of illegally parked cars.

Cities can, and often do, reduce drive alone trips by pushing drivers out of cars with tolls, parking charges, and congestion, and pulling riders into transit with good transit systems and compact, balanced land uses. One such transit system in the Bay Area is BART, which works well but is also supported by congestion and high tolls on the Bay Bridge and by high parking costs in San Francisco. Land use can also reduce drive alone trips with balanced, compact, and dense land use that favor walk and transit trips.

A sustainable neighborhood system, to compete with suburbia, has to provide mobility comparable to a car-dependent system while also avoiding subsidy. Subsidy needs to be avoided because it increases costs and lowers productivity. Hopefully subsidy will not be needed.

The Locational Decision

An important decision for urban systems is the locational decision, which is the decision about where to live, where to work, or where to create jobs. The locational decision is heavily influenced by transportation pricing. , such as changing jobs or housing. Sometimes, a transportation problem itself can precipitate a locational decision, such as moving closer to work to reduce commute costs, or changing jobs for the same reason. A commute that was acceptable earlier on may become congested, causing a change in location.

Primary employers, that is, those who do not need to locate close to their consumers, decide where to put new jobs. Households make locational decisions about where to work or where to live. These decisions drive the rest of the urban system. Locational decisions are motivated by travel time and cost budgets, not commitment to the auto-mode. People optimize to balance commute cost and housing value, to get the best job at one end and the best house at the other with an acceptable travel time and cost.

Searching for a home is restricted to the area that allows reaching critical destinations in an acceptable travel time: for workers, work; for students, school; for retirees, family. Shopping and other trip purposes are usually secondary. Next in importance after travel budget is the best house in quality and size they can afford, qualified by the quality of the surrounding neighborhood. Secondary locational decision criteria include routine shopping within 8 to 10 minutes and social and recreation destinations, with a wide range of situations.

Subsidy is not needed because a sustainable neighborhood can meet the trip needs of households with affordable mode diversity. Trip needs are defined by household travel time budgets, mentioned above under congestion, and repeated here for the locational decision. A travel time budget is the amount of time a person is willing to spend to reach a given purpose, such as work or shopping. Households make locational and trip decisions based more on travel times than mode of travel.

The locational decision depends on travel budgets and links transportation and land use. The locational decision is a major decision, usually about where to live, based on the most important destination of a household, usually work, but for retired people, retirement activities or progeny. The locational decision includes the acceptable travel time to reach the destination, which is usually more important than the mode of travel to get there. The locational decision may also be about where to work if the household owns a home in a community where they want to live, or about where to go to school for a student who has cheap room and board at home. The acceptable travel time may be long to reach a high income job with no affordable housing near it. It may be short, even in the same house, if the need is to take care of a dependent.

The challenge is to find places where these generalities are already working and to improve them, mainly in dense neighborhoods of older cities, and to build new dense neighborhoods. When a compact neighborhood system can use market economics to offer mode diversity that achieves travel time budget needs, it can attract the locational decisions necessary to compete with suburbia.

## The Shuttle

"Shuttle" refers to fast, frequent, mostly free rapid buses serving a short corridor. "Stop" is used for shuttle stops along a street. "Station" is used a larger structure serving transit, defined as frequent high-speed, long-distance service, usually rail, within a large urban area.

Of the various components of mode diversity, the shuttle concept is the one that needs the most discussion. Functional density has economies of scale supporting a shuttle, that is, it has a large enough population, with a low enough use of cars, on a short enough corridor, with high enough cost of car use, to be cost-effective. The shuttle can use

•smaller, 30' bus for 25 - 30 passengers for maneuverability in traffic,

•diesel-electric dual mode engines powerful enough to climb hills as fast as competing vehicles and to accelerate like a Porsche (sort of),

•regenerative braking that recharges battery power used on hills and acceleration,

•signal preference controls to change red lights to green and avoid stopping at traffic lights,

•right lane passing, also called lane jumping, to get ahead of cars at a traffic light,

•wide doors on the bus and raised sidewalk platforms at stops for flat, no step entry,

•guided docking for very precise, close alignment of the doors with the platform,

•5 seconds or less typical dwell time at stops,

•no fare collection to speed up the bus, and, instead, use "proof of purchase" by occasional inspectors who look for eco-passes and tickets,

•eco-pass fares so most ride for free, paid for by rents or homeowner association dues,

•a short corridor, which allows, for example, an 8 minute run time and 10 minute headways with two buses,

•drop-off at a mass transit station entrance, saving time relative to car access, which requires driving around a parking lot or structure, finding a place, and walking in to the station,

•medium distances between stops to balance dwell time with walking distance to achieve short total trip time,

•someday, use bio-diesel, or some all-electric system, to replace diesel,

In eight minutes at 15 miles per hour the bus can go two miles, useless in suburbia, but able to serve thousands of people in a corridor with functional density, one in which the subsidized space for cars has been greatly reduced. As a corridor becomes denser, bus frequency can be increased, the shuttle appeals to more people, and car use declines.

Organizationally, the system can be owned by a city, university, a transit agency, a homeowners association, a large institution, or some combination using a Joint Powers Agreement (JPA). An operator can be selected through a Request for Proposal (RFP), in which the sponsoring agency asks for proposals from qualified companies, similar to a bidding process. The operating agreement lasts a number of years and should have standards for wages and benefits. The periodic renewal supports cost control and efficiency using a competitive process, and avoids a race to the bottom to exploit labor by setting standards.

## Land-based shuttle finance

Shuttles require capital and operating funds, which can be based on the land they serve.

**Capital** contributions would be required from benefitted properties to finance shuttles, replacing older car-oriented exactions like payments for traffic lights. The contribution would be part of the public works requirements for new development. Getting existing uses into the scheme may be problematic, but could involve allowing a property to convert pavement to dwelling space. Properties would pay when developed, or they could buy-in. The cost could be about $2,600 per unit, about one percent of total typical unit cost.

Capital costs include bus purchase, electronics and signage for signal preference and right lane preemption, lane improvements where too much camber and potholes are a problem, raised sidewalk stops, and a maintenance facility with parking, service bay, initial parts supply, and an office.

Contributions for **operating** costs may be paid by apartment owners and included in rent, by HOA associations from dues, or by other property owners through a fixed charge in the property tax bill. In Hayward, fixed charges already can run $255 on top of base property taxes of $700. Fixed charges already include $96 for bus service. The cost per home would be about $60 per month in the rent or HOA fee.

More operating funds could come from parking charges where the shuttle is competing with parking to provide access to a mass transit station. Parking charges can help pay for a shuttle to the station based on "dual elasticities," that is, a market-driven balance between driving and shuttle access. As parking cost and walking distance from parking to the station increase, shuttle ridership goes up; as parking cost or walking distance decrease, ridership goes down, achieving an equilibrium based on market demand.

Most riders would ride free using an eco-pass issued by their land use, but it does not matter if a few occasionally ride for free. Individual tickets or eco-passes could be sold by local stores near shuttle stops. Signage and inspectors will emphasize education, an honor system, and cooperation rather than catching and punishing. A few offenders may repeat so often that something more punitive is needed. The bus drivers do not collect fares, but will have a way to call for help for behavioral problems. If a rider appears not to be able to afford a ticket, the inspector can give one out. Riding the shuttle needs to be part of a community experience. Pets, small shopping carts, bikes, and wheelchairs need to be accommodated, and they will occasionally wreak havoc with the 8 minute travel time.

The shuttle scheme may also include taxi vouchers, whose cost is included in the $60 estimate above. When a bus passenger load predictably drops below an economical occupancy, typically in the evening, the service ends and is replaced by taxi vouchers. Such vouchers could also be used for some trips that are important but not served by shuttle, like trips to health services.

The financing of the shuttle is reinforced by a sense of community, not just dollars, and community spirit helps generate the ridership and the dollars.

## Conclusion

Unless you study the issue, it is inconceivable the varied ways cars are subsidized and how huge are the externalities, inefficiencies, and other problems discussed above. They are a large part of the money economy and generally unmeasured in the whole economy. Given the culture of carism, there is no political way to achieve significant reform quickly. Nevertheless, by framing small, logical pricing reforms, some bits of progress can be made and demonstrate how to do more in the future.

Pricing reform, mode diversity, and functional density can challenge suburbia and improve the productivity of urban systems. These policies can provide competitive travel times to meet travel budget requirements, support improved densities and a better balance of jobs and housing, encourage people moving closer to work, reduce auto dependency, increase transit and walking, revitalize older central areas downtowns, and achieve the six policy goals of creation care. An unanswered question, though, is if a sustainable neighborhood development like Bayview Village can succeed absent more pricing reforms.

# Chapter 2 -- Neighborhood Systems

Neighborhood systems are a subset of urban systems and of the whole economy concept; they focus on identifying the whole economy value of land use, transportation, and pricing of transportation in neighborhoods. Whole economy analysis and computer modeling should be applied to understanding neighborhoods. Like the whole economy, neighborhoods have costs that are often unquantified and poorly considered. Time is wasted in congestion, natural landscapes are suburbanized, and land is paved over. Neighborhoods include aspects that are part of the money economy, but many parts are not monetized.

I need to define neighborhoods in a certain way. Neighborhoods, for my purposes here, are areas of primarily residential use including nearby neighborhood businesses and local institutions. They have a few hundred to a few thousand people and shade into, mix with, and abut other neighborhoods and other land uses. The residents may be in households or in group quarters like dormitories, nursing homes, and even lodgings for tourists and visitors. Neighborhoods typically have one or two major routes defining their transportation flow. Neighborhoods do not include large open space areas, cemeteries, rivers, big highways, industrial areas, big institutions like campuses and hospitals, and Central Business Districts (CBDs). They do include primary schools, but intermediate schools are wobblers, and high schools are not a neighborhood use––they typically serve many neighborhoods. Neighborhoods include small parks and small churches, but not larger shopping areas serving several neighborhoods. Non-neighborhood uses are usually on the edges of neighborhoods, but sometimes mix in, reducing the effective density for neighborhood system purposes, e.g., walking distances to transit and businesses serving the neighborhood.

A "neighborhood system" is the interaction amongst land use, transportation, and transportation pricing. The goal is to measure how cost effective neighborhoods are in whole economic terms. Neighborhood systems range along a spectrum from dispersed settlement areas featuring high-cost, high land consumption, environmental degradation, and auto-dependency, to denser areas with low use of cars. Some dense neighborhoods are so impacted by under-priced cars that the streets function poorly. A low density neighborhood can have high visual appeal and be well-off but still have high per capita environmental costs for the number of people living there.

The perimeter of a car-dependent neighborhood defines its "car-shed," the area of movement from periphery to centers. Rural and exurban areas strung out along rural roads have large car-sheds. Subdivisions on sewers typically have some outer edge from which people drive in for groceries and work. Some neighborhoods have mixed land uses but always have some degree of edge and center.

Dense neighborhoods have a walking perimeter or "walk-shed" used by most households from the house to the business street with shops and transit. My experience from looking at many neighborhoods in the US, Canada, and Europe is that about 90% of them have clarity of land use, and about 10% have some degree of mixing or intrusion by non-neighborhood uses, such as in the transition between a CBD and adjacent neighborhoods. An intrusive use affects functional density only if it is in the way of flow from the edge and makes walking trips longer.

## Density details

**Toronto**. I wrote a paper on old Toronto, which looked at detailed land uses in order to exclude from a census tract those uses which did not get in the way of walking from residential uses to shopping streets served by trollies. I avoided gross generalizations based on square mile densities, which miss the fine-grained densities of walking neighborhoods. My analysis revealed that tracts had significantly higher densities than indicated by the whole tract, and that the reduced area was a more realistic basis for understanding the relationship between land use and mode of transportation. I produced schematic maps with names and densities of tracts and did tables of area, population, density, building types, and so on for the tracts. I had to define a new concept, gross neighborhood density, to get at the systemic aspects of the neighborhoods. I found relationships between building types and densities. A more careful look at the area often meant that a smaller area, even with lower-rise building types, could achieve a higher density than would otherwise be apparent.

Many central Toronto tracts have low vehicle miles traveled per person, low levels of auto ownership, and high shares for walking and transit trips, all for a middle class population. Densities in the 30 to 60 persons per gross neighborhood density were able to cross a threshold into greatly reduced car dependency compared to low density areas, and still have low rise building types. (Toronto's Neighborhoods; Quantifying Walkable Densities, July 3, 1997)

Neighborhoods are part of larger urban areas and often, even usually, lumped into much larger areas, evident in statistics about density by the square mile. A finer grained approach uses census tracts, removes the non-intrusive, non-neighborhood land uses, and measures density by the acre. Neighborhoods in this context can be seen as tiles in the larger urban mosaic, with other uses also being tiles. These tiles are connected by transportation infrastructure forming a network that can be described in terms of volumes of flow. In the US the flow emphasizes vehicles, but the real system flows are of persons and goods. The density of the tiles is best measured by adding together the number employed in the tile and its resident populations. Otherwise the central business district seems to have no density. The economic value of the tile can be their property asset value, which is best shown as an elevation line like a geographic contour map, with peaks in the CBDs, corporate campuses, and major institutions, some high elevations in high income neighborhoods, and lower elevations going out to rural areas. I'm not aware of currently existing visualizations like this, showing density, flow, and value.

Discussions of density often fail to clarify what kind of density is being talked about, so I came up with my own system for organizing standard density information, shown in the Density Matrix below. The first thing to be clear about is density of what, with the main choices being persons, households, units, and jobs. Person density is most important for functional density because it is better correlated with purchasing power. Unit density can be misleading. Large units have more people on average than small units, and suburbia has more, larger units than central areas. Unit density is relatively stable while population can ebb and flow. As households get smaller and people can afford more housing, there tends to be fewer people in existing units. Thus, the unit count can be stable, the number of people declines, and the floor space per person increases.

Job density can be hard to find, but is useful, as mentioned, for judging the density of central areas, which have few residents and a large day time working population. Combining residents with jobs can be called intensity of use.

Density can consider in square feet, acres or square miles. Square feet are useful for a block, street or building; acres are useful for neighborhoods and corridors; and square miles are useful for metropolitan areas, states, and nations. Square mile densities usually include all land uses but are not useful neighborhood systems, as evident in Toronto, because so much land use is not relevant for daily living. A square mile can work in suburbia but is very big for a dense neighborhood, and fractions of a square mile are hard to envision.

The Density Matrix focuses on acres. Acres work better for neighborhood systems. The second thing to be clear about is what land is included, with the main choices being the lot, lot plus street, and lot plus street plus neighborhood-serving land within the neighborhood. Single developments usually look only at the lot being built upon, which I call net density. A density can also include the fronting street, which I call gross density, and is always lower than net density as it includes more area with the same units or persons. However, for neighborhood systems we need to look at more land uses, to include the local and local serving uses, as I did in Toronto, to understand how the land use relates to the transportation system, when walking and transit become competitive, and when cars, and space for cars, begin to gum up the works and reduce the economy. I call this gross neighborhood density, and primarily focus on persons.

One more density concept in the Density Matrix is the floor area ratio, or FAR, the ratio of building floor area to the lot the building is on. FAR is usually below one for single family; for example, a two story house on a lot with front, side, and back yards is usually below one even on a small lot. FAR gets higher for row houses and higher densities. For example, a three story building on one third of its lot has a FAR of one, while a three story building on 60 percent of its lot has a FAR of 1.8.

I put these ideas into the Density Matrix. At the top are data from the Residential Energy Consumption Survey (RCEC) of the Department of Energy, which has by far the best, often the only, statistics on building area and population, and many other features, focusing on energy use. The average unit size in 2009 in California was 1,583 square feet for an average household of 2.82 persons. I looked at this as a starting point for looking at densities from rural to high rise.

Many of the calculations require assumptions about the floor areas of buildings going from rural to high rise. Unit types from rural to two story row houses could use the data from the RCEC. The floor area could be met with a floor plan with enough exterior wall for windows and sunlight and enough interior space for stairs.

For taller buildings of three to sixteen stories, however, the building floor plan needed extra building space for areas not in the units and necessary to serve them: hallways, elevators, stairs, and air wells for light and air. The lot plan also needed some assumptions about front and back setbacks. I could not just assume some rectangle with 1,583 square feet. That area is hard to get in side by side buildings, which I wanted to assume for efficient densities. I worked on room widths and depths to come up with a reasonable floor plan, a deep rectangle 28 feet wide and 60 feet deep. It was two rooms wide and three rooms deep, plus space for bathrooms and other uses. The plan at this point still had no light in the middle and no way to reach upper floors. I added space for hallways, elevators, and stairs and put in two air wells on the sides for light to reach the middle rooms. The living area came out about 7 percent less than the gross rectangular footprint of the larger building, or 1,562 square feet, close to my RCEC target. For details, see Assumed housing unit in the matrix.

The Density Matrix quantifies relationships among development types as reasonably good approximations of points along dimensions in the real world. Gross density—lot plus street area per unit, ranged from 49,160 square feet in a rural area of one acre lots, to 144 square feet in the sixteen story high rise. There is a break going from row houses to three stories because the number of units triples on a comparably sized lot for the same size of unit. The three story gross density uses only 846 square feet, which is important for neighborhood systems, in that it uses land very efficiently without high rise.

I also looked at other density, but will mention here only person gross neighborhood density, which is of most interest for neighborhood systems. As a rule of thumb, it is half the net density, that is to say, other land uses like streets and local serving uses add up to about equal the residential lot area. Person gross neighborhood density is about 1.4 for the rural assumption, rising to 31 for row houses. Three stories starts at 82 and rises to 438 person per gross neighborhood acre for sixteen stories.

All these details are important for some kind of disciplined discussion of how neighborhoods work as systems, from suburbia with single houses and cars to urbia with multiple houses, walking, and transit. The Density Matrix has a lot more information than discussed here. I know of no other similar table, although there are good, if less quantitative, ideas about "transects" from rural to central districts.

Suburbia, a wonderful failure

Some commentators just don't like suburbia, which raises the question about why so many people live there. First, I have to define suburbia, and I do not use the traditional definition, which is an urban areas that grew up on the edge of an old central city. My definition focuses exclusively on the combination of land use and transportation that can be called the car-house neighborhood system. Low density sprawl begins at about four units per gross neighborhood acre. Auto-dependency begins when people rely on cars for more than about 60 percent of trips.

My definition has a grey area: compact neighborhoods that were built based on walking and trollies, but have become auto dependent. They were mostly built prior to 1950, and mostly before 1930. By the mid-1920s, the average American family had a car, and development shifted from compact walking and transit densities to the car-house system. By contrast, an urban neighborhood is one where a resident can walk to a grocery store for most monthly needs and is served by transit.

It would be hard to find anything that has raised living standards more than suburbia with its affordable houses and cars. Nor does anything else so dominate the urban landscape. I've lived most of my life in suburbia, at first without thinking much about it, and now because alternatives are hard to find. (I hope Bayview is my way out.)

It would also be hard to find anything more difficult to change, with billions invested in capital investments in long-lasting structures, happily occupied by millions of people, with the cultural and political support all that implies. It took us 70 to 80 years to get here. The system can only change about as fast as the rate at which new housing and neighborhoods are being built.

Suburbia, nevertheless, has serious problems, which can be discussed in terms of six goals for neighborhood systems.

## Six goals for neighborhood systems

Neighborhood systems have six goals: **affordability, sustainability, alternative mobility, health and safety, good design, and community.**

Affordability

Suburbia may be becoming less **affordable** as building materials, fossil energy, land, and water become less available and more expensive and commuting gets more expensive. Zoning often and rent control sometimes can dampen supply and raise prices. By contrast, a few central urban neighborhoods are becoming more affordable as they decline, some to social abandonment and physical destruction. Since the 1990s even some suburban neighborhoods, especially in rust belt cities with high unemployment, have suffered the same fate. When a local economy gets too weak, the result is very low housing prices––where no one wants to live. Affordability is also affected by larger boom-bust cycles in the general economy. The secular factors relating to sustainability, which we are concerned with, need to be separated from the cyclical factors relating to job changes and economic cycles, which we are not.

Affordability is best measured by the Case-Shiller Index, rather than housing sales in general. Case-Shiller uses the same large sample of houses, avoiding shifts in the kinds of houses being sold. In the base year of 1890 the index was calibrated to be 100. There are several versions of the index––national, Composite 10, and Composite 20. There are several time period used––monthly, end of quarter, average for quarter, and yearly. I used Data for Figure 2.1, Robert J. Shiller, _Irrational Exuberance,_ 2nd. Edition, 2009, updated by author, <http://www.econ.yale.edu/~shiller/data/Fig2-1.xls>.

From the end of World War II to 1996, the index varied within a narrow range between 105 and 115, with short spikes in 1979 and 1989 corresponding to boomlets in the economy. For 180 quarters, including three high points, the index averaged 111. Starting in first quarter 1997, prices began to rise, and rose without interruption to first quarter 2006, from an index of 107 to 198. The housing bubble then burst, falling to a low of 114 in first quarter 2012, leading to the financial crisis and recession of 2008 to 2009. Housing prices were greatly reduced but buying power was reduced even more. By the end of 2102 the housing market was recovering and the Shiller index was at about 125, with its long term trend is unclear.

The speculative bubble in housing prices may hide a smaller increase in the long secular trend in housing prices because the index is based on tracking the same houses over time. Some increase, however, could be due to increasing purchasing power being applied to housing, or to real increases in cost not related to sustainability.

The media lamented the collapse of housing prices and then celebrated the more recent increases, paying no attention to longer trends of income, housing cost, and underlying affordability. Suburban prices, in particular, seem likely to be higher because the housing takes up more land and uses more resources. As peak oil gradually ratchets up fuel prices, adding to energy and transportation costs, suburbia become may become less affordable. Regardless of the causes of home price changes, it is clear that even a same-house index shows a price index of 125 compared to the long term average of 108, a secular increase of over 12 percent in 16 years.

Sustainability

Sustainability is the environmental side of the economy-environment coin of the whole economy. Detailed sustainability arguments are hard to make and often more rhetorical than quantitative. There is no good argument for expecting some kind of short-term massive decline in human welfare, and defining what is meant by sustainability is important. For me, it not a question of falling off some cliff or of a human standard of living, but of maintaining some broad quality of life for all life. To be fully human, we need to preserve the natural world, for the human spirit to be lifted and enriched by "nature," which is both an intellectual construct and a diminishing reality. Sustainability includes our economics for consumption—climate, potable water, pollution, forests, farmland, fisheries, and energy.

Sustainability is also a matter of degrees, and much has already been lost—lives and species lost to direct and, more often, indirect results of climate change, often mixed with other causes. The Peanut Basin of Senegal is drying out; Dakar is flooded with climate refugees. The golden toad of the Monteverdian Rain Forest ran out of up, ran out of elevation as the fog rose ever higher due to climate change; it is extinct. Herdsmen kill farmers in Darfur over decline in grassland areas. Texas has a huge drought while Texans deny the cause. Forest fires burn; storms rage. Anecdotes and data already fill books and data banks.

Similarly, the argument for sustainability policy is not some kind of either-or, be-all and end-all single issue. Sustainability policy contributes to achieving other goals at the margin, a matter of degrees in a vast system of geologic time and our huge earth beyond individual understanding. We are not falling off a cliff, but perhaps sliding down a hill, we are losing sustainability, and many things we need to do for sustainability help other goals.

**Suburban sustainability** concerns how fossil fuel and auto dependency, dispersed land use, and unnecessarily long distances to destinations cause high levels of fossil fuel consumption, greenhouse gases, and air, water, noise, and solid waste pollutions. Land consumption by large lots and wide streets reduces farmland and land for biodiversity. Square miles of pavement increase urban heat islands, adding to climate warming. Cheap water diversion is dewatering natural areas. Life in fresh water is declining, and more cheap water is hard to find. Climate change is reducing agricultural production, raising sea levels, and aggravating storms and fires. Improvements in agricultural productivity and increased application of transferred water, fossil fertilizers and pesticides have avoided Malthusian die-offs, but genetic limits of plants, peak oil, climate change, urbanization, salinization, poor return of organics to restore tilth, erosion, more meat-eating, and huge increases in human population make suburbanization at least counter-productive.

I have been unable to find estimates of the contribution of neighborhood systems to CO2 emissions, mainly because of the lack of research. The focus has been on transportation, or residential, but not on how much the car-house system, the transportation-land use combination, causes the problem. The EPA estimates that 22.0 percent of CO2 is from residential end use, largely because of electricity and coal, and 32.5 percent comes from transportation, largely from petroleum.

Transportation emissions need to be estimated for the residential sector. For a rough estimate, I start with San Francisco Bay Region Average Weekday Daily Person Miles of Travel for 2006. I then subtract non-work trips from total trips, leaving home-based trips, which are 78 percent of all trips. This figure times the percent of CO2 from transportation estimates the amount from neighborhood-based travel, and comes out to 25.4%. The travel part plus the housing part yields an estimate for the neighborhood systems share of CO2 emissions of 47.7 percent. Beta version comment: This figure is a first rough cut.

This figure includes all neighborhoods, including the more compact and energy efficient, but given the dominance of suburbia and it high energy use, it must have the lion's share of emissions.

The table below takes another cut at the estimate:

The top of the table does not quite tell us what we need to know. The emissions from transportation are assigned half to the origin and half to the destination of the trips. If we assign half of the home-based person miles to the home end and half to the destination end the home end amounts to about 39 percent of total miles, so about 13 percent of transportation CO2 can be assigned to neighborhoods. The 22 percent of residential CO2 is easily assigned to neighborhood systems. Industry is a non-neighborhood use and easily excluded. Most commercial is not within a neighborhood, but perhaps about 5 percent could be counted. The total for neighborhood systems CO2 would then be about 40 percent of the total, not too far from the 48 percent of the first estimate.

Mobility

Suburban mobility is reduced by the cost of cars, long distances, lack of alternative modes, congestion, and lack of parking. Rarely do we consider all the costs at once: capital costs, interest payments, insurance, gasoline, maintenance, repair, bridge tolls, parking charges, cost of accidents, and time spent in congestion, hunting for parking, and managing a functioning car. In suburbia the car is a monoculture, suppressing other modes. Suburbia bankrupts transit, replaces walking, lacks places to walk to, and threatens pedestrians.

The affluent can afford auto-mobility, but the system works poorly for lower incomes. The walking and trolley city of the 1920s had great mobility, but depended on density, a level playing field with the car, and higher fares for recapitalization, and declined. While auto-mobility goes up and down one car at a time, alternative mobility grows in larger increments of enough ridership and a supporting corridor to support the high cost of transit vehicle operation. Suburbanization weakened walking-trolley systems to the point where schools, crime control, social services, and informal networks decayed and pushed people out in a vicious circle of decay that obscured the systemic superiority of the denser system. Comparisons are not simple because of strong cultural preferences for suburbia and some lack of comparability between the two systems.

Health, Safety, Security

Suburban car dependency is dangerous for our health. Suburbia facilitates a sedentary life style by making cars easy to use and discouraging walking with long distances and traffic hazards. When suburbanization decreases physical activity for a large population over a period of time, the problem is called sedentation. Car dependency combines with bad diet and lack of exercise in making Americans lazy, unfit, fat, and diabetic. Less exercise degrades cardiovascular health and causes high blood pressure, overweight, and obesity, as well as increased dementia and reduced cognition. Pollution is a major cause of asthma and cancer. Longer commutes by car are stressful and reduce time for more fulfilling activities.

In a summary report, Litman states,

Land use patterns also affect health. One study found that, accounting for demographic factors such as age, race/ethnicity, education and income, the frequency of self-reported chronic medical conditions such as asthma, diabetes, hypertension and cancer increased with sprawl (Sturm 2005). Shifting from very sprawled regions such as San Bernardino, California to less sprawled regions such as Boston, Massachusetts reduces approximately 200 chronic medical conditions per 1,000 residents, a 16% reduction. This effect appears to be particularly strong for the elderly and lower-income people.

Improving walking, cycling conditions and public transit also tends to improve mental health by increasing physical activity and community cohesion , the quantity and quality of positive interactions among neighbors (Litman 2007; OCFP 2005). Increased neighborhood walkability is associated with reduced symptoms of depression in older men (Berke, et al. 2007), and reduced frequency of dementia (Larson, et al. 2006). In a study of 299 U.S. older adults (mean age 78 years) Erickson, et al. (2010) found significantly higher rates of grey matter volume and cognitive ability in those who previously walked more than 72 blocks a week. High quality public transit service can reduce commute stress compared with driving (Wener and Evans 2007).

Source: Todd Litman, If Health Matters Integrating Public Health Objectives in Transportation Planning, Victoria Transport Policy Institute, 26 July 2012, p.12, http://www.vtpi.org/health.pdf

Litman makes many other points about how smart growth, density, walkability, and less auto dependency can help health. The pollution and safety risks of exercise are more than offset by the benefits, with more exercise yielding higher benefits. Children are increasingly at risk from lack of exercise, over-weight, and air pollution. The exercising obese smoker may outlive the sedentary thin non-smoker.

In recent years the health problems of suburbia have been well-documented:

Walking and health: Ellen Hughes, Professor of Medicine Emeritus, "Health and Vitality: What Science Tells Us About How to Thrive," UCSF Osher Center for Integrative Medicine, UCTV, Jan 24, 2011, ehughes@medicine.ucsf.edu; http://www.uctv.tv/search-details.aspx?showID=20217

Suburbia and health: Howard Frumkin, Lawrence Frank, and Richard Jackson, Urban Sprawl and Public Health, Island Press, 2004.  http://islandpress.org/bookstore/detailse453.html?prod_id=948

Commuting and health: Texas Transportation Institute, Texas A&M University, annual Urban Mobility Report, with data on how much time, money, and mental health urban-area car commuters lose to congestion every year. http://mobility.tamu.edu/ums/, cited in  http://www.grist.org/article/2011-01-20-new-report-quantifies-just-how-much-a-car-commute-crushes-your-s

**Safety**. Auto accidents injure, maim, and kill us. They are the major cause of death for people aged 5 to 34. Deaths per miles driven per capita have declined in fits and starts from highs of over 25 during 1966 to 1973 down to below 12 from 2008 to 2011. Causes of the decline include improved design after Nader's _Unsafe at Any Speed_ of 1966; the 55 mph speed limit after the 1973 Oil Embargo; price spikes created by wars in Iran and Iraq; seat belt laws from 1984 onward; air bags and anti-lock brakes in the 1990s; and, in the 2000s, the Great Recession; improved vehicle stability; and improved crash protections. ( _NY Times_ Sep 17 2012,  http://www.nytimes.com/interactive/2012/09/17/science/driving-safety-in-fits-and-starts.html?nl=todaysheadlines&emc=edit_th_20120918) Also important have been enforcement of drunk driving laws, effective driver licensing and vehicle registration, safer roads, better signage, and insurance savings for safe drivers.

The _NY Times_ article is very interesting and important, but should at least have mentioned how per vehicle mile data obscures what is more important. Deaths per capita is more important. Todd Litman shows the data on fatalities per mile and per person in an international context.

Source: Todd Litman, If Health Matters Integrating Public Health Objectives in Transportation Planning, Victoria Transport Policy Institute, 26 July 2012, p.5, www.vtpi.org/health.pdf

The figure lacks France and Australia, but otherwise includes all the large advanced democracies.

In road fatalities per 100,000 person per year, a more relevant measure, the United States ranks 54th among the world's nations. The website, http://www.Internationalcomparisons.org, uses 11 countries as a reference group. These 11 countries are the largest and most advanced in the world: four small nations in northwestern Europe, the four big European nations, Canada, Australia, and Japan. The US has the highest rate of auto deaths in the group, 12.3 fatalities per 100,000 inhabitants per year. Sweden ranks first with the lowest fatalities, 2.9 per 100,000, one fourth the American death toll.  http://en.wikipedia.org/wiki/List_of_countries_by_traffic-related_death_rate

Same source, p. 6.

Litman penetrates further into the high US death rate to figure out who is dying. By far the highest death rate per miles traveled is not by cars, but by motorcycles. (Remember the figures are the rate, not the number. The number of motorcycle deaths is low compared to the number of auto deaths.) The next highest death rates are among pedestrians and bicyclists. They are generally not killing themselves but are being hit by cars. Once a pedestrian is on transit, their risk becomes a small fraction of what it was before. The table would be helped by splitting the user column between deaths imposed on the user and deaths caused by the user. It is possible for drivers and bicyclists to kill themselves, but hard to imagine how pedestrians would do it.

One reason not to drive is to not kill yourself; another reason is not to kill others. The rate of heavy trucks killing others is far higher than other modes, with much lower rates for transit buses, light trucks, and cars. Intercity bus, heavy rail, bicycles and pedestrians are not killing anyone. [Beta version comment: We need information about the geography where heavy truck victims occur, in what kind of neighborhood or other situation. Do these deaths have any relationship to neighborhood system?]

A caveat about the above table: it is about fatalities per billion miles traveled, and not as important as fatalities in relation to population, such as per 100,000 persons.

In the United States deaths per 100 million vehicle miles are coming down, but deaths per person remain constant at about 2 per 100,000 since 1960. It doesn't do much good to lower the death rate per miles if we keep increasing the number of miles.

For suburbia in particular, traffic accidents, injuries, disablements, and deaths are more threatening than street crime is to urbanites. Risks of auto use are mostly self-imposed. Cars seem less threatening to people than risks of crime imposed by strangers though in fact they are more deadly.

Same source, p. 7

The data, whether per person or per miles traveled, shows how extremely dangerous the suburban system is, adding to the health problems from sedentation and pollution.

**Security** from crime in suburbs is high, a reason for their success, but otherwise there is in fact no correlation between crime by strangers and density. Most very dense areas have very low crime rates, not to mention low rates of auto ownership and miles driven. There may be some correlation with poverty concentrated in an older inner suburban area dominated by car trips, and there is certainly a high perceived risk of crime in poorer neighborhoods. So on this particular dimension, suburbia succeeds, and some alternative system must do as well.

Design

Suburban **design** is a mixed bag, largely determined by local neighborhood income. Housing design ranges the whole spectrum, as do neighborhoods, and the urban alternative, while also varied, often suffers from economic decline. There are, however, some ugliness factors inherent in suburbia, mainly huge amounts of paving for vehicle movement and storage. Parking lots and parking structures vary from awful to less bad if landscaped and ornamented. Strip commercial also loses all beauty contests, combining pavement, overhead utility lines, lack of trees, annoying street lights, garish advertising, jumbled signage, architectural chaos, and poor building design. Design can help a sense of community, but suburban dispersion reduces the number there to enjoy it. Urbia has no built-in feature assuring better design, but it does have more ability to escape many suburban flaws.

~~~~~

**"If Health Matters: Integrating Public Health Objectives in Transportation Planning"** (http://www.vtpi.org/health.pdf)

This report investigates various ways that transportation planning decisions affect public health, and how planning practices can better incorporate public health objectives. Conventional planning tends to consider some public health impacts, particularly traffic accident risks and pollution emissions measured per vehicle-kilometer, but generally ignores the additional accidents and pollution emissions caused by increased vehicle mileage, and health problems resulting from less active transport (reduced walking and cycling activity). This tends to undervalue strategies that reduce total vehicle travel and increase transport system diversity. This study identifies various "win-win" strategies that help improve public health and achieve other planning objectives.

"Transport, The Environment And Public Health: Classic Papers On Non-Motorised Travel" (http://www.e-elgar.com/bookentry_main.lasso?currency=US&id=14642)

This book edited by Stephen P. Greaves and Jan Garrard includes Todd Litman, "The Economic Value of Walkability" (http://www.vtpi.org/walkability.pdf ).

~~~~~

Community

Community is hard to define, but it is as important as health. Personal health is needed for community, but, equally, the health of the community is a major determinant of personal health, with causal relationships reverberating back and forth.

Many health problems are caused by culture and life style. As mentioned, auto-dependent sprawl contributes to heart disease, diabetes, cancer, asthma and respiratory illness, and traffic injuries. (American Public Health Association, _At the Intersection of Public Health and Transportation_ , 2009.) Bayview supports a healthy lifestyle in its design and in facilitating community ties that can advocate for a healthy lifestyle.

Public health experts Richard Jackson and Ted Schettler study how community affects health, and suburbia can be deadly. Suburbia, however, is in itself complex and enmeshed with other causes, of which income and education are more important. Suburbia does not deserve all the blame, and for many people, is a healthy place to live.

Suburban **community** , or rather the lack of it, is the bane of some social commentators, but wholesale condemnations are not worth the trouble. By and large, people like their houses, their streets, and their neighborhoods. People overcome distance for the social interaction they want, with extended family, travel, and a multitude of associations from sports to music to genealogical societies to, ugh, social media. And if they stay home to watch TV, it is usually more from choice than necessity. My criticism of suburbia is at the margin, because the car-house system really does make social interaction more difficult. Suburbia has few other people close to the front door, with perhaps five to ten houses close by. Once in our cars, we drive past each other. Density is no guarantee of community, but if the social conditions are supportive, it makes interaction easier. There are more people outside the front door, and more opportunities for meeting people while waking.

Traffic is also destructive of community. Research by Richard Appleyard quantified the quality of social interactions on three blocks of San Francisco. The blocks were similar socially and physically, varying mainly in the amount of traffic. On the high traffic street there were only a few interactions on the same side of the block, while the low traffic street had many interactions on the same side and the street opposite. Traffic inhibits crossing the street and noise interferes with conversation. Bringing suburban traffic into a dense urban area simply suburbanizes it socially if not physically.

## Low Productivity Consumption

I need to be relentless about the importance of prices for the whole economy. Money economists resist potential squishiness of whole economy quantification, and environmentalist's sense of absolute value makes them uneasy with complexity, quantification, and trade-offs. As far as I can tell from my research so far, I am the only one who has tried to think about the efficiency of neighborhoods, which means their productivity at consumption.

Neighborhood systems would perform better with transportation pricing reforms. The playing field is tilted strongly in favor of suburbia. The major economic cause of suburbanization is under-pricing of auto use for the whole economy. Consumers in the economic market place are given uneconomic prices, and voters in the polity for cultural and knowledge reasons don't vote to restructure the market to be efficient. Just as government provides public goods, it also structures all markets so the private sector can serve social goals. Neither unbridled capitalism, which is the exploitation of man by man, nor socialism, which is just the opposite, have met the tests of time. Pragmatic learning over the centuries has led to hugely complex and mixed systems via evolutionary social democracy, to paraphrase Bernstein. (Eduard Bernstein, Evolutionary Socialism, 1961)

_Hypothesis_ : Subsidies, including indirect pricing, have distorted urban areas and neighborhood systems. Since the 1910s, with the commercialization of the auto and changes in land development, neighborhoods have evolved based on underpricing auto use.

In 1912, the Van Sweringen brothers began the development of Shaker Heights, Ohio, based on large-lot subdivisions built for cars. In 1913, Ford opened the Highland Park Plant with its moving assembly line, which drove down the cost of a car. The subsidies and indirect prices supporting suburbanization and auto dependency were already there, but little understood.

Had subsidies been brought under control, market forces would have led to development of more efficient neighborhood systems, and the whole-economy welfare of the US would have been much higher. With market-based transportation pricing, neighborhood systems would have achieved productivity growth in consumption.

It seems odd to talk about making consumption more efficient, like that would take the fun out of it. Anyway, doesn't productivity relate to production? Also, isn't something that is consumed also produced, getting us back to production productivity? Productivity is indeed usually measured in dollars, and usually applied to labor productivity. Other kinds of productivity are also important, such as fossil fuel productivity, capital productivity, land productivity, water productivity, health productivity, and various kinds of resource productivity. So let me make the case for "consumption productivity."

Efficient consumption is important, and neighborhoods are the major geographic location where consumption occurs, where we spend the most time, invest the most capital for living, and consume the most goods. It is where most social interaction, entertainment, and health-related behavior take place. How neighborhood land use, transportation, and prices relate to consumption can be called neighborhood systems.

Our focus is not on all neighborhood consumption, but rather the geographic components of housing, water, energy, and transportation. Consider transportation. The neighborhood is the "producer" of most trips. In traffic analysis, origin and destination mean what they seem to mean, while "production" and "attraction" assign one end of the trip to be the production, typically the "home-based" trip, and the other end to be the attraction, typically work, shopping-personal business, or social-recreational. The trip from work to home, for example, is a home-based production. The production of a trip (getting from point A to point B) becomes less efficient the more time, money, and environmental damage are created as a result of the trip. In other words, the cost of consumption is increased by the need to travel greater distances in a car, and so the trip produces less benefit.

For consumption productivity, assuming similar travel time, getting to work by walking and transit is usually more productive than using a car. If one can walk to weekly shopping instead of driving in the same amount of time, the walk trip is much less expensive.

A lesser amount of trip production is from "non-home-based" trips, which by definition cannot have the home at the other end. Non-home-based trips are, then, among work, shopping, personal business, and social-recreational locations.

Not only do homes in neighborhoods produce the most trips, but also they are critical for how chained trips work. A trip chain might be from work to gym to store to takeout to home. Only the take out to home is a home-based trip, but in a dispersed land use they would be by car, and in a dense area, by transit and walking. A suburban car trip is likely to be much longer than one based on transit and walking.

Consider housing and consumption productivity: If housing size is the consumption goal, there are different costs for the same size and quality of house. For example, a three-story house is more productive than one-story because the same roof and foundation serve more living area. If health is a goal, a three-story house requires more exercise than a one-story house. Tight construction with good insulation can be more energy productive at three stories.

If a given land area can support more people with the same quality of life, the land is more productive.

The productivity of a neighborhood is all of these consuming activities taken together, and considers not just monetary cost but values relating to affordability, sustainability, mobility, community, health and security, and design.

Analysis should be quantified, understanding that it is messy and imprecise, but also that it makes more sense than the current system of dollars and vague generalizations. Entering "quantifying environmental values for economic analysis" in Google Scholar produces many ideas about how to do it. Whole economy analysis moves beyond GDP thinking and money as the best way to count.

The academic field of neighborhood consumption productivity, as outlined above, does not exist yet. It is easy to get lost in the huge number and variety of neighborhoods, and in the various specific aspects of consumption productivity, and lose focus on the fundamental concepts for analysis, which organizes all the specific dimensions.

## Smart Growth

Devil's Dictionary: Smart growth: Moving houses closer together in the hope that human habitability of the earth will sink more slowly. Advocated by pleasant planners from their silos while they continue to plan for extra parking, ignore the bias in market structure, and have weak alternative mobility. Also known as Transit-Oriented Development (TOD), neo-traditional neighborhoods, and Focused Growth. Fashionable.

This definition is unfair but does reflect my annoyance that we can't do better. This book is an effort to figure out how we can do better generally and in terms of the specific case of Bayview. Smart growth is definitely better than suburbia; its density, walking routes, and parking management increase walking and transit use and decrease car ownership and use. Litman has the best information.

~~~~~

Smart growth residents typically drive 20-40% less than they would if located in automobile-dependent sprawl (Ewing and Cervero 2012; Litman 2008). As previously discussed, smart growth residents tend to have substantially lower per capita traffic casualty rates than residents of automobile-dependent sprawl (Ewing, Schieber and Zegeer 2003).

These vehicle travel reductions tend to reduce pollution emissions, but more compact development may increase some pollution exposure, for example, if more people walk, bike, live and work close to busy roadways, or if tall buildings create a canyon effect on urban roads. These risks can be mitigated through targeted strategies, such as using cleaner transit vehicles on major urban roads, and locating sidewalks and paths away from traffic.

Smart growth tends to significantly increase active transport, because it includes walking and cycling improvements, and because more destinations are within walking and cycling distances. This tends to improve public fitness and health. In a study that examined how land use factors affect travel activity in Vancouver, BC, Frank, et al. (2010) found that:

• Adults living in the top 25% most walkable neighborhoods walk, bike and take transit 2-3 times more, and drive approximately 58% less than those in more auto-oriented (less walkable) areas.

• Residents living in the most walkable areas, with good street connectivity and land use mix, were half as likely to be overweight than those in the least walkable neighborhoods.

• Living in a neighborhood with at least one grocery store was associated with a nearly 1.5 times likelihood of getting sufficient physical activity, as compared to living in an area with no grocery store, and each additional grocery store within a 1-kilometer distance from an individual's residence was associated with an 11% reduction in the likelihood of being overweight.

• The most walkable neighborhoods have the least ozone pollution, but the most pollution from nitric oxide. Neighborhoods with relatively high walkability and low pollution levels exist across the region.

Source: Todd Litman, If Health Matters Integrating Public Health Objectives in Transportation Planning, Victoria Transport Policy Institute, 26 July 2012, p.12, www.vtpi.org/health.pdf

~~~~~

Public policy at the regional level has tried since the 1960s to stop sprawl and promote good planning for infill and densification. The success story was the Save the Bay campaign leading to the Bay Conservation and Development Commission (BCDC). Some success has been achieved by People for Open Space, now Greenbelt Alliance, and many smaller advocacy groups getting park agencies to acquire land. Efforts at regional coordination have also had some success through the Association of Bay Area Governments, the Metropolitan Transportation Commission, and the Bay Area Air Quality Management Distinct. Efforts at real regional governance have failed, starting with the Knox Bill, and continuing through the Bay Vision 2020 discussions to the present.

Over the last few years better coordination has been achieved through the Joint Policy Committee (JPC) consisting of the four major regional agencies, but real consolidation has not occurred even though the same local officials serve on all four bodies. The consensus plan supports more hyper-growth as opposed to comprehensive sustainability planning. Smart growth, rather than helping achieve "growth without growth" is a way to get more growth without sprawl. There is, also, no advocacy for sustainability; the two major groups, Greenbelt Alliance and Transform, are focused on pragmatic agendas, and there is little if any public understanding of creation care.

Nevertheless, many give credit to California and the Bay Area for taking difficult and important steps to deal with climate change, especially new state laws, AB 32, the California Global Warming Solutions Act of 2006 and SB 375, the Sustainable Communities and Climate Protection Act of 2008. These laws require cap and trade for reduction of GHG and land use planning for compact growth. Cap and trade policy involves a "cap" on how much pollution is allowed industry in a given geographic trading area, an allowance for some pollution by each plant, and a system selling a right to pollute from plants below their allowance to plants that are above. Clean plants are rewarded by income from selling rights, and the dirty plants have the penalty of having to buy permits. As the cap is lowered over time, pollution decreases. Cap and trade and compact growth are driving planning by the JPC and member agencies pushing in the right direction, but are too weak to make Bayview Village happen.

Along with Smart Growth are a disparate number of other kinds of projects, usually much smaller, that emphasize zero carbon, or water efficiency, or non-car modes, or some combination of sustainability ideas. One example would be the 18 units Habitat Eco-Village project near Minneapolis, with net zero, rain water irrigation, car share, and garden plots. ("Building affordable, efficient homes," McClatchy Newspapers, Sept. 3, 2002. Another example is the five story Delta apartment in Brooklyn with bed and breakfast above and eatery below, which achieved net zero with wall-void heat sinks, reflective bricks and PV on awnings and walls to supplement a minimal roof. Delta also has thermal hot water and LED lighting. (Mari Gallucci, "Brooklyn's Self-Powered Solar Building," InsideClimate News, Sept. 1, 2012) These efforts are all steps toward sustainability.

## Functional Density

_Hypothesis_ : Functional density can perform equal to or better than suburbia in almost all dimensions. Functional density has enough people in a small enough area to support walking to a good grocery store and to support a shuttle bus. Such density has minimal open space within the walking perimeter, efficient walking routes to the Center, a concentration of functions at the Center, and building heights that can range from two to seven stories, so long as the density is achieved. For functional density to be attractive and support walking, most of the area excludes cars and parking.

Functional density will not work for everyone. Some people have cultural preferences for how things should look that are incompatible. On one important dimension functional density cannot compete, and that is land space per person. Suburbia necessarily does better at yard space around the home, something many people value. Others without those concerns would be willing to get the benefits.

Analysis of functional density is often complicated by a neighborhood which imports purchasing power by non-residents attracted by employment, ambience, events, special shopping, "free" parking, and over-night tourism. It can also be complicated by a neighborhood which exports purchasing power because of overly small or poorly-run commercial functions. It can be complicated by intruding non-neighborhood land uses. There is no literature on the issue.

## Grocery Store Trip

Functional density has economies of scale, having enough people in a small enough area to support a good grocery store within a five minute walk, and with an average walk of three minutes, which is faster than the average driving time. A good grocery store meets monthly needs. Functional density probably requires about 2,000 people, depending on assumptions about Stock Keeping Units (SKUs) needed to meet monthly needs, purchasing power of the neighborhood, and capture rate, that is, how much of the monthly shopping dollar the grocery store gets in competition with off-site stores.

I have not been able to find useful data in the literature. There is minimal information on SKUs for monthly needs. There is virtually no good data on day/week/month SKU/sqft. patterns and capture rates which define the grocery store trip concept for functional density.

Fashionable new developments with mixed use are usually too dispersed and car-dependent to make stores, including grocery stores, work well. Older dense neighborhoods are already adequately stored and virtually unstudied for their population - SKU ratios. There is walking-based commerce in the densest old neighborhoods, but I've seen no analysis of the data relating income, density, walking distances, SKUs, and monthly needs.

The existing capture rate data is exclusively for primary and secondary markets for stores with free parking, or based on sidewalk pedestrian counts in CBDs. The data usually uses square miles when functional density works in acres, up to about 100 acres.

We seem to lack a useful "grocery store trip theory" for guiding development of walkable neighborhoods. Planners tend to be too optimistic about how much retail square feet a development can support, and to emphasize car access.

The grocery store has to have enough business for at least one full-time, well-paid employee and enough volume to have prices only a little above a large grocery store. The grocery store concept is not meant to allow some monopoly price leverage, but also not meant to be so close to other competing stores as to have unproductive competition. The grocery store concept does mean having a store close by, with larger competing stores a bit harder to reach, requiring, for example, ten to fifteen minutes more travel time.

In playing around with these concepts, I created a spread sheet with a hypothetical sigmoid curve relating population to SKUs and with an estimated capture rate based on a 15 minute time penalty to other groceries. The SKUs run from a minimum below which too little is sold to support a store, up to a number assumed to meet monthly needs. Between the low and the high, the curve rises steeply as each added shopper makes the store more efficient, but then reaches diminishing returns as it approaches the monthly grocery SKU level. It would be nice to have data relevant for the concept.

The relationship among SKUs, store size, population, etc. is fluid within limits of viability. Responding to local preferences could easily be a more important variable than floor area. For example, Trader Joe's has better store quality than any other chain. TJ's gets about twice the revenue per sqft. and per SKU than others. The Bayview Village store will likely have some mix of locavore foods, TJ, Fresh and Easy, farmer's market, and organic veggies from the easement garden. A small on-site bakery could serve the store and the café.

## Short Corridor System

Functional density focuses on the land use in a neighborhood; short corridor system focuses on a string of dense uses can support a shuttle connecting them. The shuttle has been discussed in the previous chapter. The land uses include neighborhoods and other dense land uses like downtowns and institutions. The downtown or institution should include access to high-capacity urban transit––typically urban rail, sometimes commuter rail––to the rest of the metro area.

A short corridor is up to two miles long, the distance based on being longer than people would usually walk and short enough to have frequent service with one or two buses, to hold costs down.

The shuttle is anchored at one end by an urban transit station and served by shuttles on 10 minutes headways or less and with a run time of 8 minutes or less, supporting development based on functional density at stops, reduced parking based on market demand, and mode diversity. I have not found any good information about short corridors, functional density, and neighborhood systems.

## Building Design

A number of aspects of functional density, such as buildings, can also work on a smaller scale for sustainability, but more benefits accrue when more density and in a larger area support systemic change for both energy and for transportation. To achieve functional density, building must be dense yet avoid a feeling of density. The perception of density can be reduced through height limits, building setbacks, and other design features. An optimal building height achieves several goals:

•Conserve energy with optimal roof to side wall ratios; boxier is better; a deeper building can have higher side walls to retain boxiness.

•Support net zero with optimal ratio of roof area to living area below; three stories is the maximum.

•Promote health by climbing stairs: One flight is an easy sell; two flights get more resistance; three flights won't sell.

•Manage perception of density, which requires low rises and setbacks; two stories is easy, three is more doable with 30' or more setbacks, and four stories feels dense to most people, resistance possible, but old Paris does seven stories well, so visual design maters.

•Hold construction costs down: Three-story wood-frame works well; four stories possible; five stories requires more expensive Class A construction for the first floor. Rectangular foundations with four corners always cost less than six or more corners. Internal stairwells for three-story construction are inefficient for two bedroom and smaller units; even an internal stairwell in a three bedroom takes up many square feet relative to living area. A hallway building can work for studios and one-bedrooms but two or more bedrooms require longer hall distances between unit front doors.

•Conserve energy with row houses and longer hallway buildings, but at some point the lack of a visual break becomes aesthetically oppressive.

## Floor Plans

Functional density usually requires corridor buildings or row houses to use land efficiently. A corridor building has access to units via hallways, stairs, and elevators rather than directly from outside. Row houses have common side walls rather than being detached. A duplex is a very short row house that often looks like a detached house. Usually the term refers to three or more similar units with front doors on the street. Corridor building width is constrained by how deep a room can be and still get enough sunlight. Closets, bathrooms, halls and stairs do not need an outside window; living, dining, and bedrooms do. Row houses' depths are similarly constrained by the need for sunlight. Row houses can achieve more depth with indentations for air wells about half way back. Usually, the air wells line up with air wells on an adjacent building. This "dumbbell" configuration gets more interior square feet on a deeper lot from the same frontage, but has to have a long interior hall. With no garage, walk-access units need more foyer, entry, or vestibule space for shopping carts, bicycles, tri-cycles, and wheelchairs.

A flat is a housing unit entirely on one floor. Flats seem to work best for studios and one bedroom units because internal stairs for two stories would take up too much room relative to living space. Two bedroom units can work well with two stories, but are not for the optimal three stories, because internal stairs take up too much space relative to living space. Two bedroom flats can work well at three stories with an external staircase, with one stair case serving three units on one side and three on the other.

A three bedroom unit with three-story construction requires a lot of space for internal stairs, but it can work. The ground floor and top floor do not need much stair space, but the middle floor needs a hallway or use room space to get between floor landings. Intermediate landings increase landing area, and spiral steps have safety issues. One solution is to have a ground floor with a large flex room and to have second floor living-dining-kitchen areas that allow passage between landings. Four, five, and six bedroom units at three stories have better ratios of stairs to living space.

## Water and Landscaping

Functional density uses much less water than suburbia. Sustainability requires using no water from the piped water supply for landscaping, and landscaping using native species. If the birds don't come, it's wrong. Landscaping should use rainfall, storm retention, and grey water. Buildings should use rain barrels and grey water plumbing.

Plumbing fixtures should have low flow and toilets should be dual flush. Storm water can use large diameter pipes under walkway for retention and use trickle out and bio-filtration for slow release, retaining all storm water on site. Sewer mains should be tight against infiltration and sewage flows minimized.

## Energy

Reduced fossil fuel consumption for transportation is built into functional density, while, for buildings, the benefit comes from a mix of building designed for passive energy, also called negawatts, and other things that can be applied almost anywhere with active solar lighting appliances. Net zero on the grid is possible for three-story construction using the Echosolar system and natural gas for cooking and some clothes drying, explained in more detail Green Energy. The system meets all electrical, space heat, hot water, air cleaning, and air renewal needs, and most air cooling needs. Appliance and lighting efficiency innovations greatly help achieve net zero.

Building for net zero energy is increasingly accepted in the marketplace, but not reduced car dependency. Bayview Village reduces car use with functional density and mode diversity. By taking a systemic approach, neighborhood systems, the fossil energy use by the neighborhood is dramatically reduced. Walking is increased, pollution decreased, and health improved.

## Analysis and Assessment

Beta version comment: I have been unable to find good assessments comparing a sustainable neighborhood, as defined above, with a typical suburban neighborhood, across a wide range of variables in a whole economy framework. Good analysis of non-monetized values is possible. Don Shoup has done an outstanding job of analyzing the high cost of free parking, and we need to apply the concepts to all parking everywhere. Looking at where I live, for example, on my street and in my driveway, I don't think the parking cost is high. There is slack demand, we have patchily paved streets which the city won't maintain and which we don't want to pay for, and there is always some parking available. However, on the CSUEB campus nearby, local arterials, and downtown, the cost can be high.

An analysis of Bayview Village parking compared to suburbia would give some estimate of its productivity, and that analysis could be enlarged to include the rest of mobility. Add in the other goals---affordability, sustainability, health and security, design, and community ---and some whole economy assessment of consumption productivity could be possible.

While functional density requires a grocery store, and some kind of café can be assumed, it can also support other neighborhood amenities. The Bayview Village proposal includes several community assets owned in common and managed by a Homeowners Association (HOA). These assets include parks, trails, a short corridor shuttle bus, and a community center. The cost of the HOA assets is added to the cost of the homes, but it is not clear if the cost is lower than the value for the various components or taking them as a whole. The mobility analysis and grocery store analysis could deal with those issues, which are integral to how functional density works. The community center and its several functions should also be analyzed: does the amenity value exceed the cost? How are the same functions achieved in suburbia, and at what cost?

# Chapter 3 -- Going Dense

## Old and dense in Europe

The denser neighborhoods of advanced countries consist mostly of those which have been built, and a few which are relatively new and have a "car-free" component. In 1985 I went around Europe to a few middle class, dense neighborhoods with no high rise and no structured parking. In Europe this meant some old pre-war neighborhoods and some post-war neighborhoods with modern public housing where the old area had been bombed:

•London: Inns of Court (as an old residential neighborhood); Pimlico, central residential area

•Edinburgh: Warrender Place, New Town

•Paris, Quartier Archives

•Switzerland: Zermatt

•Venice: Caravalho

•Copenhagen: Osterbro

•Stockholm: Ostermalm, Vasastaden

•Rotterdam: Oude Westen

•Amsterdam: Jordaan

•Hamburg: Uhlen Horst

•Essen: Ruttenscheid

•Koln: Agnes Viertel

•Bonn: Innere Nordstadt

•Frankfurt: Sachsenhausen, Ostend

•Munchen: Josephplatz

I already knew about Zermatt and Venice, which were the most car-free of the places I saw. I found the rest of the places by asking at planning departments. I would walk around them for a couple of hours, taking pictures using an optical device and something called film (the now superseded technology of 25 years ago), and sometimes eating or staying in them. I collected some statistics on them, but too erratically to be useful. I wrote up a narrative and observations in _Neighborhood Systems_ Volume 1 Numbers 1, self-published in April 1986.

I came away with several impressions. The Europeans can be as terrible as the Americans in managing parking, with cars on sidewalks and in public parks. Only a few neighborhoods had neighborhood parking permits and enforcement that succeeded in creating some order. Several streets used posts and bollards to block parking, since curbs were pretty much ignored. A few places with beautiful long facades on nicely treed streets would mar the scene with parking. I particularly remember Amsterdam with cars parked along picturesque canals. Fortunately (maybe unfortunately) I did not have long pole to tilt them over into the water.

The building facades and street landscaping varied from so-so to elegant. There were hardly anyone on the streets during working hours; it was intriguing how many people were living in the area with no one to be seen, even very few in the shops. Transit and walking were so good that the myriad of cars seemed to be there for week-end trips. It occurred to me that if too many people are walking past each other too infrequently, the potential for community ties would be reduced. There may be some optimal density and design that facilitates neighborhood ties, as well as factors independent of them that could be important.

While we're thinking about this, we can also go to the other extreme, having too many people to interact with. At some point we know enough people, and it may even be hard to keep track of them. In traditional societies, these networks were large and stable, but also confining and controlling. In modern societies, affiliation is much more by choice, and it is easier to limit the amount of interaction than to start from zero and look for friends. The role of neighborhood in this is mysterious, but I believe sprawl is disadvantageous and that density and design can be supportive.

Some degree of building height to get density seems necessary, but after that these neighborhoods were very diverse. Zermatt has a unique combination of no cars, and a casual scatteration of mega-chalets around a central street. Venice has no cars and uses canaletti, small narrow canals, for an amazing amount of freight. Pedestrian movement is crowded along a few through walkways, into the main piazzas, and on to vaporettos, mid-sized passenger ferries. Meanwhile, off on little side streets, side canals, and courtyard buildings hardly a cat can be found. Old Paris has distinctive seven story walkups, a mix of broad avenues and zigzag little streets, and well-mixed land use. Amsterdam has unusually sandy soil so some anti-parking posts lean backward, typical five story construction, steep narrow stairways, and peaked roofs with beams for hoisting furniture up and in through windows. I should ask Rick Steves to do a show on European neighborhood systems.

In talking with European planners, I got the impression they were very aware of the problems being caused by car proliferation. They had stronger planning tools and a willingness to make density and transit happen, so that developers served them rather than the American vice versa. On the other hand, they recognized the value and popularity of automobility, and were allowing a lot of auto-oriented development, uncertain of where the best balance lay. They pushed for pedestrianization of central shopping areas, but neighborhoods, not so much. Parking limitations were more common than parking charges. They did not have any sense of neighborhoods as quantifiable geographic economic systems within which transportation pricing reforms would support whole-economy gains in productivity.

I wrote several more issues of Neighborhood Systems, including a definition of the field and a write-up about Pimlico.

## New and semi-car free in Europe

In 1985, I did not know of any deliberately planned car-free neighborhoods, as Zermatt and Venice resulted from historical accidents. Since then, there have been a number of new developments and research on the idea:

•Økologisk Landsbysamfund (Torup, Hundested), rural 45 houses near rail, 19% car trips, 65% car free households, 1 car per 5.1 residents viz 2.6 in a nearby neighborhood

•Bo90 (Norrebro, Copenhagen), urban 17 units in 5 stories, 3% car trips, Bo90 89% car free households, 1 car per 17.9 residents, well below Copenhagen averages

•Hyldespjældet (Albertslund , Copenhagen), 78% car free households, 1 car per 10.1 residents, 17% car trips,

•Floridsdorf (Vienna), 200 units per hectare, 5% car trips, 92% car free households, 1 car per 27.8 residents

•GWL-terrein (Amsterdam), 600 units on , 6 hectares, 100 units/hectare, 110 parking spaces, 10% car trips, 62% car free households, 1 car per 5.8 residents,

•Slateford Green (Edinburgh), 16% car trips, 75% car free households, 1 car per 8.8 residents

•Vauban (Freiburg), ~2,000 units, 2 to 4 stories, ~38 units per acre , 4,700 residents, 1/3 under 18 years old, parking structures on perimeter costing $23,000, 16% car trips, 46% or 85% car free households (sources conflict), 1 car per 6.7 residents (2006),

•Stadthaus Schlump (Hamburg), 50 units, car sharing, 25% car trips 25% car free households, .1 car per 2 residents (high)

•Beddington Zero Energy Development (BedZED, Hackbridge, London), 99 units, 65% less car mileage than UK average, limited parking, car share with LPG and electric cars.

Sources:

Isabelle de Pommereau, "New German community models car-free living," Christian Science Monitor Online December 20, 2006

Jan Scheurer and Peter Newman, "Vauban: A European Model Bridging the Green and Brown Agendas; Case study prepared for Revisiting Urban Planning, Global Report on Human Settlements 2009, www.unhabitat.org/grhs/2009

Jan Scheurer, "Residential Areas for Households without Cars; The Scope for Neighbourhood Mobility Management in Scandinavian Cities," Institute for Sustainability and Technology Policy (ISTP), Murdoch University, Perth, Australia, j.scheurer@central.murdoch.edu.au, presented at: Trafikdage på Aalborg Universitet, 27-28 August 2001

Jan Scheurer, "Sustainable Urban Development and Transport Behaviour – An Uneasy Alliance?" Institute for Science and Technology Policy (ISTP), Murdoch University, Perth WA 6150, Australia, presented at 13 AESOP Congress, Bergen, Norway, 7 – 10 July 1999

BedZED, <http://en.wikipedia.org/wiki/BedZED>, accessed 9/23/2012

Some car-free developments are small, in rural areas, and include agriculture. Some are too small to be real neighborhoods. Most include some degree of auto use on the periphery. The self-defined sustainability developments are relatively small and scattered.

## Old and dense in America

The larger achievement in sustainability is in the many large dense neighborhoods served by transit and with limited parking. They seem to have less car ownership and lower use of cars. I do not know of any research on the issue. I suspect that high-rise neighborhoods and low density neighborhoods will be markedly less sustainable than the dense, transit served neighborhoods even if they have high car ownership.

"Car-free" is not the holy grail, and tends to be misleading, but has more clarity than "less car –dependent. In the US, the National Household Transportation Survey has data on households that have no access to a car and on persons who use cars very little. The major cause is poverty, but there are also a few, very small in percent, but substantial in number, who are car free or low-use by choice.

Beta version comment: I would like to add a section on new cities in the Mideast and Asia and their neighborhood aspects.

## Relevance for other places

The analysis and discussions in the chapters above are generally relevant for green neighborhoods, but not very specific. The coming chapters below about Bayview Village get more specific about how to build green, but may be so specific that their relevance may be missed. These chapters reflect my annoyance with "how to" books that are full of vague advice about what you should do, with long lists of steps to be taken that would take forever and which are not even necessarily relevant. I get tired of reading about all the things I should do. Bayview is a not a blueprint; it illustrates one way to implement the principles and may provide some ideas useful for other places.

If you are interested in making your neighborhood, or neighborhoods in general, more sustainable, then a first step is to accept how unique each situation is, how its history, like that of the quarry area, frames the choices for the future. Cities and neighborhoods never grow up. They may be stable for a while, and acquire a reputation, but they will change. They hardly ever die, although South Bronx, South Side of Chicago, and Detroit neighborhoods have had near-death experiences. They turn over socially, and they evolve physically.

The sustainability movement, or creation care in my frame, needs to take neighborhoods more seriously. Existing neighborhoods will likely have many social issues Bayview does not have. Equity groups are more involved than most others, and recognize the need for economic change and sustainability, but often need to get deeper into the economic details of the whole economy and to be realistic about the profit needs of investors and businesses. Gentrification saves neighborhoods and creates jobs. Gentrification needs to be managed. Education, job training, green jobs, policing, and social services are also needed. Assistance to lower income workers for housing also helps. The focus should be on growth for residents, not just growth or just redistribution.

Having said that, there are some typical areas that lend themselves to short corridors and functional density if within two or three miles of urban rail transit, such as strip commercial, parking lots, old shopping centers, vacant lots and abandoned buildings. For example, I think Mission Blvd. from Bee Blvd. to downtown Hayward could easily redevelop to functional density supported by free shuttles. The temptation for marginal reductions in car dependency should be resisted, because only a big step can create the green space in the density that is necessary for high quality design.

Finally, the evolution of neighborhoods based on the principles of creation care is itself part of a larger urban system, a metropolitan area, which is a mosaic of the tiles of smaller systems. Neighborhoods need more than discussed in this book; they also depend on the economic health of the metro and its infrastructure, governmental services, and basic businesses.

# Chapter 4 -- A Freeway Dies, An Idea Is Born

Since the history of the old quarry site for Bayview Village is unusual, it not very relevant for other green neighborhoods. I summarize the history below just to help those curious about how such a large area came to be available in such a strategic location. The general ideas discussed above developed in my thinking over many years, leading to an application for a real estate development on the site.

## Early history

The fight against the Foothill Freeway in Hayward lasted so many decades, that I should start my narrative on earth, long ago, before people, with the creation of fossil fuels. Now, speeding up, we come to a brief span of time, from the 1850s to the present, the epoch of homo "sapiens" burning excessive fossil fuels due to using money transactions in poorly structured markets where the money price was far below the real cost to the whole economy. From 1980 to the present, the history is, basically, too many Americans living in denial of increasingly huge evidence of the cost to the whole economy of increasing greenhouse gas emissions and decreasing sequestration. No other people on earth have created such an historic accumulation of greenhouse gases; no other people continue to have such high per capita emissions in such a large economy; no other people of high income are doing more to ignore, deny, and make the problem worse. On this many educated people agree.

In 1958, leaders of the suburban town of Hayward in the East Bay near San Francisco campaigned for a freeway to alleviate predicted congestion in a north-south corridor along the base of the hills. The freeway would also serve California State University, Hayward, where I started teaching in 1967. In 1962, the state of California approved the project and began acquiring right of way, all part of a great freeway building era. An epic—titanic by Hayward standards—struggle for social and environmental justice began on behalf of low income residents who were losing their homes and on behalf of the environment. Caltrans was breaking laws, and in 1971 the Federal District Court stopped progress on the project for several years.

In 1978, some friends and I started the Hayward Area Planning Association (HAPA) in order to save open space, stop the proposed freeway, and advocate for better planning. We incorporated as a 501(c)(4). In 1979, a long freeway project was reduced to a much shorter stretch of five miles from Castro Valley to south Hayward, and became generally known as the SR 238 Hayward Bypass. It would not bypass Hayward at all, only the downtown; it would go through neighborhoods and open space, much on the side of hills above the Hayward Fault.

My initial interest in 1978 was how to balance conflicting values between environment and economy, where the economy needed roads. The freeway proposed to go through existing houses and open space in my town. Over time I realized that the economic ideas and computer models used to justify more capacity only rationalized a culturally-based preference, that policy makers and the public used assumptions wholly inconsistent with responsible pricing and markets, that transportation policy making used a public-good mentality that resulted in self-defeating policies, and that people lacking insight into real causes are willing to suffer harm pretty much indefinitely. The freeway would have been counter-productive even for its transportation purposes. I explained these great ideas to the few who would listen, but even my friends and allies weren't really interested––they just didn't like the thing. Even today, very few people embrace my high-minded, deeply analytical, really complicated, and probably impractical approach: transportation pricing reforms.

HAPA was part of a long process, which included decisions by a federal agency, a federal district court, the state legislature, the county superior court, the state transportation agency, the state transportation financing commission, CSU Hayward, the metropolitan transportation planning agency, two county transportation agencies, Alameda County, and the City of Hayward. The politics included legal representation for Caltrans tenants, two citizen advocacy groups, consultants, candidate elections, ballot initiatives, lobbying, testimony, community hearings, meetings and workshops, media coverage, reports, traffic studies, transportation plans and programs, analyses, demonstrations, walks, citizen organizing, innumerable meetings, fundraising, and more, over 37 years.

## 2001-2002

We jump ahead in the narrative, to one small part of the fight. HAPA worked with a newly elected County Supervisor, Nate Miley, who opposed the freeway, and for whom we had campaigned. He supported an analysis of how much housing would be preempted by using the land for a freeway, indicating that the freeway would make the housing problem worse. On June 17, 2001, I completed my report on all the property in the Bypass right of way for the Alameda County Planning Department, which used my information for its report for on the potential for housing development. The report estimated, in rough numbers, about 300 existing units would be destroyed and about 3,000 units would be prevented from being built. Of particular interest for what would become Bayview Village was an area of 34 acres, consisting of an old quarry and a small subdivision north of Bee Blvd. and Overlook Ave. very close to CSU Hayward. The report used adjacent zoning and development patterns to make estimates of holding capacity for units, and estimated 607 housing units could be built in the Bayview area. I began to get bigger ideas.

On February 21, 2002, I completed a report on CSU Hayward and the SR 238 Bypass that posed the choice between building a freeway through the quarry and using it for housing which could serve students. This point was also made in a number of reports criticizing the proposed freeway.

At a HAPA Steering Committee meeting on March 19, 2002, we discussed "smart growth ideas, need for market research study on reduced car dependency, integrated urban systems, housing and Bee Quarry as possible site..."

In 2002, a court decision killed the bypass most of the way. A local transportation agency had broken the law by trying to spend funds voters had approved for one project on a substantially different project.

## 2003

By 2003, HAPA was engaged in discussions over what would replace the Bypass along the whole five mile corridor and research and advocacy for Bayview Village in the quarry area. Almost immediately after the initiative that stopped the freeway, HAPA and others had to respond to plans to over-widen the arterials in the corridor, which would have major right of way takes. On February 26, 2003, the HAPA News proposed a "Draft Scope of Work: Foothill/Mission Smart Growth Variation" as an alternative to over-widening along two miles of Mission Blvd.:

"Smart Growth Redevelopment. Suitable parcels along the two mile distance otherwise to be taken for ROW would be redeveloped based on smart growth principles. (Many existing uses would remain.) Smart growth includes mixed use, e.g., ground floor businesses under residential housing at BRT (Bus Rapid Transit) stops. Smart growth would not be over five stories and usually three to four. It would include development of student-oriented housing on the quarry site at a density similar to Wimbledon Woods...."

Many of the other elements of what became Bayview Village were in the HAPA News and a related report, "Foothill/Mission Planning Issues." It took about two years to figure out what to do with the money once programmed for the bypass, what to do with funds from sale of surplus right of way, how to treat Caltrans tenants fairly, and what new land use designations and zonings should be applied to the old right of way.

In October 2003, "The HAPA Plan for Foothill and Mission, Hayward" proposed to the City a rapid bus service from BART to CSUEB campus and stated:

"The Bee Quarry. About 30 acres of surplus Caltrans land is up for grabs. It could be used for "car-free" housing, with lower rents, transit passes, and taxi credits in monthly rent, and mobility by Rapid Bus. Transit-oriented residential development along Foothill Mission and at the Quarry would provide the ridership to support Rapid Bus, and Rapid Bus would make a car-free lifestyle possible. Such a lifestyle is not only less expensive, but also reduces air pollution and GHG, reduces energy consumption and resource use, improves personal health and safety, and is more sustainable in the long run. A survey of 100 CSUEB students in 2003 indicated that about 1/4 to 1/3 could live in such housing, would save on rent, and would want to live there."

## 2004

In 2002, the bypass had died most of the way, killed by the obvious big dagger of the court decision. The next big dagger was a vote in 2004 by Hayward citizens to remove the project from its plans, and the bypass died the rest of the way. These developments, action by a small band of hardy, persistent locals, the high cost of the project, its low regional value, and a gradual weakening of support for freeways finally succeeded and the bypass succumbed to multiple wounds worthy of the Orient Express.

With the final demise of the Foothill Freeway in 2004, Bayview Village became the major concern of the Hayward Area Planning Association. Our website is a major part of that effort.

## 2006

In 2006, HAPA reincorporated as a 501(c)(3) to get funding from the San Francisco Foundation, but the IRS turned us down despite an effort by a very expensive San Francisco law firm. The IRS reviewer thought we were involved in a profit making enterprise, and we've been losing money ever since. The Foundation and the law firm helped us become fiscally sponsored by the San Francisco Study Center, which continues to do all our money processing and reporting. HAPA is a c3 in all respects but IRS recognition, and contributions are tax deductible. Many Hayward area citizens contribute, with the bulk of the funding from my wife and me, helped, of course, by Uncle Sam's Form 1040, Schedule A, Charitable Contributions.

## 2009-2010

The City of Hayward also had to deal with the dead freeway, planning what to do with funds from the sale of now surplus right of way and planning for new land uses along the 5 mile route. On July 9, 2009, after more than a year of planning, the City designated and zoned the old quarry area for Sustainable Mixed Use in support of Bayview Village or some similar concept. (City of Hayward, Adoption of Sustainable Mixed Use General Plan Land Use Designation and Zoning (SMU), an Overlay District for a trail, and reclassifications of SR 238 Bypass land)

In 2010 a large number of actions behind the scenes moved various processes along which were necessary for the eventual sale of the old quarry area properties. On March 8, 2010, the Alameda County Superior Court approved a long, complicated stipulation among Caltrans Tenants, City of Hayward, and Caltrans, laying out how all the tenants would be treated as tenant houses were sold. HAPA had long advocated for the tenants and supported this agreement. This court decision was just one of a large number of steps before and afterwards.

On May 20 and July 30, 2010, the California Transportation Commission (CTC) approved abandonment of the SR 238 Bypass right of way, relinquishment of state routes on arterials in Hayward (SRs 238, 185, and 92), the program for the use of proceeds from the sale of surplus right of way, and the housing program for tenants, as required by a special state law for the Hayward bypass. While the bypass had deceased in 2002 and 2004, these additional official steps were required by law.

To carry out the stipulation, in August 2010 the Housing Manager for the City of Hayward contacted tenants about the "Lump Sum Settlement and Opportunity to Purchase" which was part of the housing program. With the bypass dead and the tenants protected, it was time to end the federal litigation which had started in 1971. By October 4, 2010, the Caltrans tenants, Sherman Lewis et al., the City of Hayward, and Caltrans had all agreed to pull the plug, and US District Court Judge Thelton Henderson dismissed the La Raza Unida case as moot, ending 39 years of federal litigation and a veritable Bleak House of complications.

Also in 2010 a state court case relating to Caltrans tenants was settled by stipulation to a housing program for long-suffering tenants.

## 2011-2012

In 2011-2012 the policies painstakingly put in place in previous years began to have an impact on the ground. January 2011 had the deadline for tenants to choose Lump Sum Settlement payment or apply the same funds to the Opportunity to Purchase the house they were in. In February 2011, Caltrans began selling single family properties, itself a complicated process requiring appraisals, inspections, and CTC approvals. The schedule called for Caltrans in May 2012 to complete escrows for home purchase, except for the Bunker Hill area, which are taking a few months longer. By June 2012, Caltrans was supposed to have reached the end of settlement process.

HAPA made great progress in developing the Bayview proposal, to be presented in future chapters, and in late 2011 began looking for investors. As a year went by and there were no interest from any investors, HAPA changed its emphasis to let investors know that the land would become available. By mid-2012, four of the single family properties in the quarry area had been sold, complicating future assemblage.

## 2013

At some point Caltrans will sell the land, hopefully before 2013 is over, so I can end the suspense and get on with my life. An important piece of the larger area is to be auction in March 2013. The new owner will decide the fate of Bayview Village. Caltrans will require public auction, and probably allow two years for option purchase. Much more detail is below.

I have written a longer history about all of this. By historical accident, a long fight over a freeway had preserved some 34 acres of land on the route between CSU Hayward and downtown Hayward. My interests in creation care, the evolution of thinking, whole economy, neighborhood systems and transportation pricing reform came together to propose a project on this land. I have tried to make the Bayview Village proposal a big step forward on a number of values, yet still financially feasible in the market. The problem now is not in the analysis or financial return, but whether investors judge that there is a strong enough market to make it work.

# Chapter 5 -- Bayview Village Project Summary

"Traditional residential planning practices force Americans to own and rely on their cars, to consume electricity and natural gas at unsustainable levels, and to live in isolation and fear of break-ins. The design of community itself has to change, if Americans can ever break free of these limitations and embrace a better way of living..."

–––David Jacobson, Bay Area Development Consultant

**Introduction:** Bayview Village is a large real estate development proposed in the San Francisco East Bay foothills: It is designed to meet six complementary goals:

•Affordable attached housing: all units under HUD 110% of median income

•Green building and native landscaping for energy and water conservation

•Solar Energy: net zero on the grid

•Alternative mobility: more walking, less dependency on automobiles

•High quality visual design of buildings, landscaping, and site

•A secure, friendly community balancing privacy and neighborliness

The 34.3 acre site is in the Hayward foothills and features steeply-sloped open space perimeters around 23.5 acres of developable area, giving the project its own special character. Within the developable area are a knoll on the west, descending slopes on the south, high ground in the middle, and a large flat area of old quarry floor on the north and east. The site plan proposes 1,024 energy-efficient and environmentally-friendly townhouses and condominiums with parks, trails, open space, village center and village bus.

The Hayward Area Planning Association has been working on this proposal for several years. Its website and on-line advertising have developed a long list of enthusiastic people hoping to live in Bayview Village.

**Demand for Sustainable Housing** : Despite the current housing downturn, long-term housing demand in the Hayward area is strong. The price of raw land is down and the project could come to market as the market recovers. A recent study for Hayward projects 8,620 more households over the next 20 years (Table IV-1, AECOM, Mission Blvd. Market Analysis and Economic Development Strategy, May 24, 2010, for the City of Hayward).

Bayview Village would meet housing demand from (1) faculty, staff, and students at California State University East Bay (CSUEB), Hayward campus, (2) BART commuters and workers along the Village Bus corridor, (3) seniors and retirees, and (4) people who work at home or telecommute. Bayview Village also would appeal to people seeking affordability; personal health and safety; a less car-dependent life style; environmental sustainability; and community. Most owners would probably buy for practical reasons, mainly affordability and good mobility, and some would buy for environmental, social values, and many special features.

**Homes and Amenities** : Unit types range from studio condominiums to five bedroom townhouses. Unit sizes would vary from 440 SF to 2100 SF. Pricing estimates range from about $180,000 to $365,000. Dues to the HOA (Homeowners Association) would run from about $120 to $200 per month. The combined cost of mortgage, green energy, property taxes, insurance, and HOA dues would be affordable for middle incomes. Home prices cover the cost of HOA assets and HOA dues cover the cost of operation.

Bayview homes would have tight, insulated construction and energy-efficient doors and windows. They would have integrated solar roofs: weather protection and solar energy designed as one system. Solar panels would increase efficiency by combining thermal and photovoltaic in the same array. The energy system would supply all electrical needs with no net energy from the grid over the year and would provide all space heating, hot water, fresh air, and clean air, and most space cooling.

HOA assets would include the Village Center with the busway, the Village Square with a small fountain, a grocery store, a café, and a large Community Center. The café has a magnificent view of the San Francisco Bay area ranging from San Jose to Marin. The Community Center would include mailboxes, mailing services, an ATM, a large, flexible room for events, performances, meetings, banquets, and fitness; a few small high tech offices, potential child care room, bicycle repair shop, reading room/library, service desk, office for HOA management, and two manager apartment units,

Bayview Village envisions eleven acres of surrounding open space, two acres of internal parks, the 238 regional trail, and a trail up to a picnic area overlooking the San Francisco Bay. The plan has native landscaping, internal small picnic parks, two plazas, a bocce court, and a tot lot.

In spite of its density, the look and feel of Bayview Village design would be spacious. Three- story buildings would be set back from each other. Parks, land contour variations, facades, trees, and other landscaping would have visual appeal along varied sight lines.

**Transportation** : Bayview Village makes alternatives to drive-alone travel as convenient and efficient as the auto in suburbia. The project is by no means car-free, but travel modes would shift away from cars. Travel times for all destinations, from getting to work, shopping, or a cup of coffee, would be comparable to, or better than, those of suburbia. The plan includes greatly reduces parking and increases use of walkways to reach the units, with the longest walk from the Village Center taking less than five minutes.

HOA assets include the Village Bus, a minivan, an electrocart. The Village Bus, a small shuttle managed by the HOA, would be fast, frequent, and free. It would run every ten minutes most of the day, taking two minutes to reach the CSUEB campus and six minutes to reach Hayward BART. The bus would use numerous rapid bus technologies and no fare collection.

Bayview Village would reduce auto dependency, but would not eliminate use of cars. The site would have 100 carports leased at market rates, spaces for car share and car rental, and a few public parking spaces using easy-pay technology. The project would provide additional parking at a lower cost off-site. Taxi vouchers would cover important trips where transit does not work and trips home from BART when the Village Bus is not running. No household should need a car routinely. Residents may find they do not need to own a car at all, or can reduce the number they own.

**Finance** : Estimates are based on a detailed pro forma available on the web and in a Dropbox. The energy system would be financed by an energy mortgage or lease, with cost comparable to a typical utility bill. Separate energy financing makes the mortgage on the unit more affordable. Qualification for the mortgage would increase if the lenders give credit for reduced transportation costs (the transportation efficient mortgage), and for improved proximity to destinations (the location efficient mortgage).

The main pro forma assumes transitional parking, $7.2 million in equity, 25% of investment from equity, a 30% internal rate of return (Excel goal seek function) over 12 years, 1,024 units, and a medium rate of absorption. Total revenue is about $326 million. A downside pro forma assumes 880 units and transitional parking remains at end of project; its return is 26%.

**Project Development** : The Hayward Area Planning Association (HAPA) has promoted the project for several years. The City of Hayward has already approved the basic concepts of the project in its Program Environmental Impact Report and in its Sustainable Mixed Use land use designation and zoning. The developer who buys the land from the owner, Caltrans, would control the property and the project. The developer could be an LLC formed by investors which retains a management team, or a development firm, with investors and management team already in one company. The eventual project could be similar to Bayview Village, something conventional, or anything in-between. HAPA's involvement and my role (Sherman Lewis) would be determined by the developer. I would like to find a way to continue working collaboratively, without compensation, on the Bayview concept, and my wife and I want to live there.

If the developer pursues a Bayview-style project, it would need a relatively modest set of City approvals: a Planned-Development rezoning, a tentative map, and various storm water discharge permits. The property appears to be free of any protected plant and animal species, inasmuch as it is a former quarry site and consists of exposed granite largely devoid of any vegetation. More information is in the project Overview and supporting documents on the web and in a Dropbox.

Further Information

Sherman Lewis, President,

Hayward Area Planning Association

2787 Hillcrest Avenue,

Hayward, CA 94542

510-538-3692

sherman@csuhayward.us,

http://www.BayviewVillage.us

2/13/2013

If someone asks you, can you give me a one page summary of the Bayview proposal, the answer is no; the above three pager is as short as it gets. Then if they ask you where it is, you've got:

## Location Map

Distance, Hayward BART Station to CSUEB Hayward: 2.05 miles

## Planning tools

As I dug into the task of planning in 2007, I discovered I needed more information, some expensive, some affordable. The big engineering firms are really expensive, did not return my calls or emails, and when I did get through to them they weren't interested. I finally found a local firm to help me. In talking with Jim Toby, senior civil engineer at Lea and Braze Engineering, I found I needed an aerial survey and an AutoCAD program to use the results of the survey.

I found Randy Yick, an independent surveyor. He had Aerial-Geodetic Corp. of San Jose fly over the site, and he processed the results into AutoCAD files with dozens of layers and two foot contours. Here is the current layer list, omitting the minor layers:

AutoCAD, a powerful program able to do three dimensional designs, turned out to be not only expensive but hard to learn. I found a program that was easier to use and to learn, Design CAD 20, which had the capabilities I needed for working in two dimensions.

Over time I learned to do site plans, save different layers as JPG or PDF files, do floor plans, do building elevations, and so on. It was a big education to see all the layers and be able to show what I wanted.

Modular housing appealed to me, and I found Andrew Silverman of Zeta Communities, now with Waypoint Homes, to help with detailed design and cost estimates. Solar power is part of that process, which led me to Echofirst solar, used by Zeta, and also having the most efficient system, one combining thermal and photovoltaic systems, integrated mechanicals, and a sophisticated computer interface for management by owners. Silverman also led me to the Davis Energy Group, which did sophisticated computer modeling of how two unit types would perform for net zero.

Diana Dorinson helped analyze the Village Bus. Randol Mackley helped with information about grocery stores. More names are in the pro forma.

I also needed help with financial planning. Consultants were too expensive, not interested, or disappeared in mid-process. I finally found Dave Jacobson, a Real Estate Development Consultant, who has worked ably many hours and months on the project, moving it along with good ideas and sophisticated pro forma analyses. I tried to do as much leg work as possible, calling many consultants to get estimates of costs. We also retained Susan State, who did a marketing study for us. Jacobson is now a manager for Toll Bros., a housing developer and builder with a project in Hayward.

The City of Hayward staff and Council have also been very helpful in providing information about city processes and fees, including a lot of information on the City's website. The City's role so far was described in chapter four, history.

I have now completed all the planning that seems useful in working out the details of the project, and the time has come to find investors. As mentioned, Caltrans will sell the property, hopefully in 2013, and the new owner will decide what to do.

I'm sure every process is different, and always a learning experience. You can learn from Bayview as a manual, or reference, or case study, that could give you some ideas and save you some time in becoming effective for your neighborhood, or guide you as an investor.

# Chapter 6 -- Project Description

## Site, Properties, Conditions

An aerial photograph, existing condition site plan, site photographs, property maps, and acreage statistics are shown below

Bayview Village would be built on 34 acres located 1000 feet east of the intersection of Bee Blvd. and Mission Blvd. in Hayward, California. The property is part way up the Hayward foothills and is mostly buffered by steep open space: north, a heavily-wooded ravine with Dobbel Creek; east, a by steep rock face created by quarrying, and PG&E utility corridor 200 feet wide; west, a steep drop off to a low-density residential neighborhood, which is mostly out of sight; and south, Bee Blvd., a major artery. Access is from Bee Blvd., Overlook Avenue, and Palisade Street on the south side. This limited access, combined with the buffering features surrounding the property, would make Bayview Village an enclave able to create its own security and distinct identity.

The Project is close to California State University East Bay, which is a half a mile further east up the hill from the Bayview site. The Hayward BART Station is 1.4 miles down Bee and north up Mission Blvd. These short distances support the Village Bus connecting BART, downtown Hayward, Bayview Village, and the CSUEB campus. There is potential to integrate the Project's Village Bus with city and university transit to increase frequency of service.

In 2011, the project site plan property had all of three parcels and part of two parcels. The biggest was the old quarry property. The other four front on Overlook. The biggest of these was a little over an acre south of Palisade and Overlook, which is being auctioned by Caltrans in March, 2013. The third parcel of 2011, north and east of Overlook, was divided back to old subdivision lot lines and partially sold in 2012. Three houses were sold, leaving two vacant lots still owned by Caltrans. On the west side of Overlook were two parcels with only part needed for the site plan, the part fronting on Overlook. The remainder of these parcels slope steeply downhill to the west. Caltrans has divided these parcels also. In 2012 and 2013 Caltrans sold four houses, leaving three vacant lots still owned by Caltrans.

The sales complicate assembly for the site plan. Most of them are not needed until the last phases of development, allowing time to negotiate assembly or work around hold outs if necessary. One parcel, however, is critical, the acre plus property south of Palisade and Overlook, which is needed for stages one and two and has the busway and Village Center.

The site plan also includes the right of way (ROW) of Overlook and the part of Palisade within the project.

Major grid lines at 100 feet.

View north into quarry, steep rock face on right, ravine and Highland Blvd. at top

The shape of the property is the long arc of the Dobbel creek ravine across the north, with a large quarry pit to the south, narrowing down considerably to its frontage on Bee Blvd. The total area is 34.30 acres, or 34.92 acres. The discrepancy is due to a difference in how the City of Hayward and my Design CAD program measured the area. The City during the 238 planning process produced a list of properties with areas in square feet using Metroscan. My program used the aerial survey with slightly different results––19,588 more square feet (1.3 percent) than the City did.

The aerial data was used to measure the existing conditions of the property. It has two large areas minimally affected by development. On the east side is a steep rock face with 4.08 acres, and on the north in a large arc is the creek area with 4.99 acres. A small old quarry on the west side has .84 acres, and, on the east side, .86 acres of the rock face needs to be reshaped. Four small areas adding up to .67 acres are needed for return to grade. This area included twenty feet of setback required by the City, and is needed for construction along the steep back lot line 200 feet west of Overlook. The setback is less needed for construction along setbacks from Bee Blvd. and the PG&E easement. All the undevelopable areas add up to 11.45 acres, leaving 23.47 acres that are mostly developable.

The developable area also has a variety of existing conditions. The quarry pit has a main flat area of 11.48 acres and a deeper hole of 1.53 acres. On the west side is a knoll about 30 feet higher than the pit with 2.13 acres. High ground across the middle, which will be graded to raise the pit, covers 4.14 acres. On the south side below 300 feet elevation are 4.19 sloped acres already padded by the old subdivision, descending down to Bee Blvd.

**Details: The outside limit of development**.

North side: The limit of development is the edge of ravine, which curves around the top of the site in a long arc. At the east end the elevation is 320 feet. Going west, the edge of the ravine rises a bit and then goes down to almost 300 feet near the west end, with a clear tree line along the way.

Because the quarry floor is often below these elevations, the practical limit elevation is 304 feet. For most of this distance, existing elevations average 304 feet and are at or close to finish grade. There are seven drain points into the creek. They are, going west to east:

The first two have existing and finish elevations at 304 feet.

The third has a small loop of 300 feet contour coming in, requiring 4 feet of fill up to the back of the building footprint, or a 4 feet foundation. The finish 300 feet contour could be moved toward the 290 contour to have a typical slope going down the creek, but it is steeper than 2:1, possibly requiring a retaining wall about 54 feet long and 1.4 feet high, unless 4 TH foundations are raised instead.

The fourth point has a 304 feet existing and finish grade for the foundation, but the back yard drops off, possibly resolved by using a deck on existing contours.

At the fifth point, finish fill meets existing rock contour about 10 feet into the back yard, where the creek crevice goes down steeply on existing grade.

The sixth point is in Park C, with no need to adjust to grade.

The seventh point is at a saddle at 320 feet and a finish contour of 303 feet. The idea here is to drill a hole about 25 feet long for the drain starting at 303 feet elevation, working from the existing elevation of 292 feet (a depression), and then fill to 303 feet, where there would be a very small depression. The finish contour is contained within the existing rock.

West side: In the northwest corner is a short saddle at 310 feet about 80 feet long and 25 feet wide, between the pit and the steep west slope. The 310 foot contour is a practical limit for development. Cutting the saddle down to 304 feet creates some great views to the west. The trail from the creek comes up through here into Trailhead Park.

From the knoll going south to the top of Overlook, the development limit is the 290 to 300 foot elevation lines, because of increasing steepness to the west below 300 feet. There is an old borrow pit or quarry with steep sides going down to Redstone Pl.

At the south end of the west side the development limit is the straight west boundary of the properties on Overlook plus a twenty foot setback. Set back here allows a needed adjustment to grade from building foundations.

South side: The limit is Bee Blvd. plus twenty feet of setback.

East side: The development limit from Bee Blvd. to 300 foot elevation is the PG&E easement. Then it goes along the base of the steep rock face to the 315 foot elevation, which is the top of the fill planned for the pit, then descends down to 304 feet, where it reaches the ravine. The south end of the rock face is irregular, so grading will cut down its base and smooth it out into a quarter circle about 450 feet long to meet the PG&E line, in order to create some building area and have cut for fill.

## Geotechnical Engineering

I started getting help from Kamran Ghiassi in 2008 when he worked for Terrasearch, and more recently while working for AGS, both of which are geotechnical engineering firms. It was a real mystery to me what kinds of information were needed, how to get them, and how much they cost. Jim Toby was advising me to get some report, which I didn't think would have much in it. I'm suspicious of consultants, as well as annoyed by how many of them don't answer email, don't return calls, are too busy to talk, and cost too much. I have yet to meet Mr. Ghiassi, but he was the opposite of my prejudices, taking time to explain things to me, what I needed, and how much it would cost, which wasn't much to get started.

In March Mr. Ghiassi gave me a six page "Preliminary Geologic Hazard Evaluation" that was an education which laid bare former my ignorance. He also took Randy Yick's AutoCAD file of the aerial survey and added many layers relating to hazards and development limits. He produced a Preliminary Geologic Map showing the new features. One scary set of lines shows an east-west fault trace across the middle of the property, which I now call a geomorphic break so it is not so scary. There is gabbro, which was quarried from about 1954 into the 1970s, on the north and sedimentary Knoxville Formation on the south. The report also covered a site description, aerial photographs over years from 1947 to 2002, artificial fill, landslides, bedrock, faults, and recommendations. (Terrasearch, March 31, 2008). The development limits on the geotechnical map were exactly what one would suspect from walking around the property.

The topographic map with the geomorphic break and other features is shown below.

In December Ghassi updated a cost proposal for geology and geotechnical investigation, which I used in the pro forma. He laid out four phases, the first of which, the preliminary geology evaluation, has been done. The rest are described below under Stages.

## Site Plan

The layout of streets and walkways emphasizes direct, logical walking routes, as contrasted with the indirect routes and cul-de-sacs or a traditional subdivision.

The site plan minimizes costs. It uses existing streets for roadway, busway, and parking. Walkways are double-loaded, that is, they have development on each side, and rectangular units going back from the frontage, both of which optimize the number of homes per distance of walkway. The walkway across the north side is an arc that aligns with the edge of the developable area above the creek ravine. The main north-south walkway parallels Overlook, creating a rectangular area than can be developed more efficiently than some odd shape. The alignment also provides for solar orientation to the south, although the angle is not optimal. Parks are used where rectangles of buildings are at angles to each other.

The colored rectangular shapes in the site plan show buildings. Most of the buildings would be three-story, wood-framed structures. This site plan has 1,024 dwelling units and unit types of three to five bedroom townhouses, two bedroom flats in sixplexes, and one bedroom and studio condominiums on hallways. The use of "bedrooms" in the townhouses is flexible. The three bed unit has a flex space on the ground floor, and bedrooms can be used for a family room, study, work room or guest room, or storage.

The extension north of Overlook goes up and over a knoll that provides great views and adds variety to the site, the same as the developable area described above.

## Bayview Village Center

The Bayview Village Center would be on the busway above the intersection of Overlook and Palisade streets. The location is high enough, about 300 feet, to have minimal elevation gain from the main part of the site, and south enough to be on an efficient route for the Village Bus. Its location is just before the land slopes down to Bee Blvd. The contours allow the busway to be level from the PG&E corridor on Bee Blvd. through the Village Center, after which it goes down via Overlook to Bee Blvd.

The features of the Village Center would be in close proximity to one another and have more activity, while the residential areas would be calm and quiet. The Center consists of:

## Village Busway

The busway has elevated sidewalk bus stops for moving people quickly on and off the Village Bus, with features described below under "Village Bus."

## Village Grocery Store

In suburbia, the supermarket is a large store catering to infrequent, larger scale shopping. Customers go to the supermarket by car and stock up on inventory for about a week. In old neighborhoods, the local grocery is a small but conveniently located store carrying a variety of goods meeting weekly and even monthly needs, with fast inventory turns and a focus on fresh meats, dairy, produce, and other commonly needed items. Customers could carry a bag or use their shopping carts, two-wheel carts, or cycles all the way home.

The Village Store would start at a small neighborhood size of 2,688 SF and would carry items that the typical Bayview Village homeowner wants. The store would have about 3,500 SKUs (Stock Keeping Units). If demand justified, the store could expand into adjacent modules that would otherwise be rented until needed. The next size up would be similar to Tesco's Fresh and Easy store or Mi Pueblo, which are already operating in Hayward. Trader Joe's is the most successful of US grocery stores, but seem to require a bigger store than Bayview can support.

Residents have more than enough purchasing power to make a small store viable, but it would require good management to be successful. The store manager will have to be responsive to what residents want, and work with them and the HOA to make it work. The store could feature local farmer produce on Saturdays, shopping services for items at Trader Joe's, Whole Foods, and Costco, and home delivery into lock boxes in the units.

The store is an amenity like a park, and has to have the capital cost subsidized. Since the residents would own the store, they have every incentive to get the balance right among items for sale, competitive prices, and profitability. The revenue from the store reduces the HOA fees.

If commercial demand justifies, the ground floor units facing on the Village Square can be converted to commercial space regulated by the HOA.

## Neighborhood Café

The neighborhood café would be located on the second floor, enabling the dining area to have sweeping views off to the west, from Mount Tam to downtown San Francisco, and south down the peninsula to San Jose. Like the store, it would start off small at 1,344 SF and, if demand justified, expand into adjacent rental modules. The café would use the roof of the Palisade Building for outside dining. The café would respond to local demand, for example, for freshly baked croissants or Danishes or donuts and coffee in the morning, a counter service, take-out, buffet, or soft-lit evening table service with a view. Like the store, the café would be owned by the HOA and be leased to operators.

Three-stories: Top floor: HOA manager apartments, some community space. On-site management supports high quality attention, security, and service. The Community Center diagram has some concepts for the first floor. Second floor: a large, dividable multi-purpose room for a fitness center, meetings, banquets, parties, dances, movies, performances, and other events. This room, like the café, would look out over the Bay and have a balcony. The second floor would also have a small kitchen with a self-serve coffee bar, locker rooms, and small rentable offices with high-capacity computer plug-ins and internet connectivity. The ground floor would have a lobby, the mailboxes, other mailing services, an ATM, an HOA service counter, an office for HOA management and security video surveillance, a small laundry room, a room convertible to a child day care center, bicycle support, and a quiet reading room with books and a wood-burning EPA-rated stove. Having the mailboxes, ATM, and other services will facilitate social contact among residents.

I have not figured out yet where to put the resistance pool, hot tub, and Jacuzzi, or if the budget allows for them.

## •Village Square:

A small landscaped park with benches around a small fountain and wading pool is at the heart of the center, a place to meet friends and visitors or relax under the trees.

## Circulation

Car access is from Bee Blvd. or Palisade St, and parking is in 100 car ports on upper Overlook, 22 spaces for car share and car rental, and 18 public parking spots. There are a total of 140 spaces, all charged at a market rate. There is no specific idea yet for off-site parking, but the plan calls for finding a place nearby on Mission Blvd., which has many used car lots and vacancies, or on Caltrans land across the street off Bee Blvd. The plan also calls for temporary, transitional parking on late phase areas, which would be built on at the end of construction. The various parking ideas mean some ambiguity about unit to space ratios. The most limited definition would be 100 spaces to 1,024 units. Adding in car share and public parking makes 140 spaces to 1,024, and transitional parking and off-site parking would increase the ratio further, but with increasingly inconvenient locations or costs designed to add to the incentives to reduce car use. Mobility is explained in more detail below.

Walkways are limited to everyday pedestrian use, emergency services (fire, police, and ambulance), major deliveries, and weekly garbage collection. Otherwise, motor vehicles are prohibited and would look out of place. Most residents would walk easily to the Village Center on the busway (upper Palisade Street). They could also use bicycles, probably where walk time is three to five minutes. Many residents would work at home or work at home by telecommuting from their home offices. Many would use the Village Bus, car rental, car-share, biking, or taxis for trips outside of the Village community. Some residents would park on site; others, if they owned a car, would use off-site parking. Limited, market-based parking is the most controversial aspect of the Project.

To help pedestrian and disabled accessibility, The Project would have no curbs and would use swales and on-site retention for stormwater.

The streets, Overlook and Palisade, are already paved and have 938 centerline feet of length. The busway and the ten walkways would be paved with grasscrete for water absorption. The busway is 655 feet long, including 280 feet on the PG&E ROW. The travel width on Overlook and Palisade would be 24 to 30 feet, and the busway, 24 feet. Vehicle travel lanes are 10 to 12 feet wide. The walkways are all 20 feet wide, with 7 feet of setback on each side of Main Way and 6 feet of setback on all the others. Those widths yield a distance between building faces on Main Way of 34 feet and all the rest of 32 feet. A spreadsheet page has data by type of ROW and by building phase. There are no curbs; all edges are secured by swales.

## Parks and Recreation

There is limited ability to provide open space within the on-site developed area because of the need for functional density. There is abundant open space on the north and east sides of the project.

**On-site**. The green parcels in the site plan show public open space areas within the developed area. These would be five small parks with fire pits, grills and picnic tables for gatherings and recreation. Parks and other open space areas would be landscaped with drought-tolerant native plantings and irrigated with a combination of stored, filtered rain water and greywater. The parks are located to break up sight lines and to provide for intensive recreation, following William H. Whyte's philosophy of usable public places (<http://www.pps.org/articles/11steps/>.)

**Four small parks** in the main residential area

The **Courtyard Park**

The **Village Square,** a formal park with trees in elevated planters in the corners, park benches, and a fountain in the middle

The **Tot Lot** , a Bocce Court

Two **plazas** on the main walk way, with small fountains

The **Fitness Center** on the second floor of the community center

**Trails**. The peripheral open space is steep, but will have trails. The site includes on the east side a steep rock face left by quarrying. **The Bayview Trail** ascends from the Village Center up this rock face to a picnic spot at the top of the grade, with spectacular views, including a three-bridge view of the Bay Area. The trail then descends gradually to the north and loops back into the developed area at a park on the northeast corner.

The **238 Trail** will traverse the project and ultimately will be five miles long, connecting Foothill Blvd near I-580 in Castro Valley to Industrial Parkway in South Hayward. "238" refers to the old State Route (SR) 238 Bypass proposal, now abandoned, which now has surplus ROW for the Project and for the 238 Trail. Most of the trail would be managed by the Hayward Area Recreation District. Just north of the Bayview site, the 238 Trail would connect to the Ward Creek Greenbelt, with trails west down to the municipal swimming pool and band shell, and east up into the hills.

Bayview Village would plan, construct, and manage the section of the trail coming through the site and would dedicate it to public day use by a conservation easement. On-site, starting from the north side on Highland Blvd., the 238 Trail descends into the steep ravine, crosses the seasonal creek, climbs up into the main project area, crosses two parks, comes down on the Main walkway through the Village Center, and leaves along the busway to Bee Blvd.

**PG &E Easement**. The easement, above the busway, could have a community garden with fruit trees, vegetables, and flowers.

**Off-site.** The Hidden Hills Health and Tennis Club on the east side of City View apartments is a short walk away and has public memberships for tennis (lighted courts), swimming (pool heated in summer), and fitness. Outdoor facilities at CSUEB Hayward, e.g., fields and tennis, are available when not used by the university.

## Acres summary

It is hard to cover this subject without a lot of mind-numbing numbers, so please look at the Summary table for more than most people would want to know. Almost a third of the property is undevelopable open space. In the developable area, building footprints cover almost a third. The lot area equals these footprints plus backyards plus frontages and courtyards. A frontage is a strip of land six to seven feet wide in front of a home on a walkway. A courtyard is the yard between homes that face each other off a street or walkway. The lot areas cover most of the developable area, 61%.

The parks, grade adjustments, and street verges cover one-fifth of the developable area.

Mobility land uses include streets, busway, parking, and walkways, which are 18 percent of the developable area.

The HOA has to take care of parks, grade adjustments, street verges, and frontages, which are almost one third of the developable area. The HOA also has to care for the undevelopable open space, but it mostly takes care of itself.

Notice that mobility uses cover only 18 percent of the site; in suburban areas they can easily exceed half the area and serve far fewer people.

The Floor Area Ratio (FAR) is the ratio of floor area to land area. For example, a two-story house covering half its lot would have a FAR of one, a three-story house covering half its lot would have a FAR of 1.5, and four-stories, 2. The high FAR for the project is a result of mostly three-story buildings, a few four-stories in the Mixed Use (MU) block, and minimal frontages. Since there is no traffic on the walkway, the walkway ROW feels more like a front yard and reduces the effect of the high FAR. If the walkways are included, the FAR is 1.57.

If the Summary table is not enough, we also have a summary table by building phase for the 11 phases.

## Grading

At first, I worked on a site plan as if no drainage were needed; it was flat. Then Jim Toby, the civil engineer at Lea and Braze who was helping, explained to me how water runs downhill and needs to be planned for. Then I worked on grading as a basis for doing a site plan. He told me the site had to have a two percent grade, that is, for 100 feet laterally there had to be drop of two feet vertically. Two per cent is a rule of thumb and not hard to achieve. In practice, in small spots, the grade can be less. Two percent is hard to notice if you are walking, and for most purposes can be called flat.

At first, I thought no drainage should go into the creek. As a result, I wound up with huge amounts of fill on the north to get it all to drain to the south. I also got involved in doing an estimate using a spread sheet and a 100 foot grid. I came up with a number, and Toby said it actually was not too bad an idea for estimating, just a bad idea for how to do it.

Then I realized that there used to be a hill above the quarry floor where there is now air, which was hard to remember since it was gone. The old hill drained naturally into the creek, so drainage from the site would restore old runoff, not create new. Jim Toby added that there were no regulatory vetoes on using the creek; you just had to use drainage structures that dissipated the energy from the flow. Also, on the site, big pipes will be used to retain most, if not all, storm water on site, minimizing any flow into the creek.

The least cut and fill was possible if there were a depression in the middle of the site, which could drain off in some deep pipe or be pumped out. Jim Toby explained that such a system was hard to maintain and had no long-term savings from somewhat more fill. In practice such pipes clog up and pumps fail. I was worrying way too much about grading. My estimate of about 100,000 cubic yards of cut and fill was probably on the low side, and that for such a big site, much more grading was common. He advised me to do the site plan first and he and the civil engineers would figure out the grading. It was clear he was a lot more relaxed about grading than I was.

Toby's firm, Lea and Braze, did some AutoCAD estimates of cut and fill for, finally, a reasonable idea and came up with about 53,240 cubic yards of soil and 102,260 yards of hard rock to get the contours, and 20,000 more yards where the initial cut left hard rack and so an additional over-excavation by one foot was needed to estimate for foundations and utilities. Then we'd probably also need another 20,000 yards from grinding of quarry aggregate for on-site base, for a grand total of about 122,000 yards for expensive hard rock work and 73,000 yards for cheaper dirt.

The simple, elegant, if one can use that term for grading, plan has the contour rise steadily at two percent from the curve at the top of the ravine by eleven feet over a distance of 550 feet, level off, and descend gradually by eleven feet for another 550 feet, reaching a point 100 feet north of the Village Center. The final four feet of drop is at a 4% grade, arriving at the busway.

Further south there is not much choice but to follow the slope below about 300 feet down to Bee Blvd. This area is already padded for houses.

While that covers most of the site, there is a knoll on the west side at about 330 feet, which would be cut down by about 10 feet. The knoll would have the same slope as Overlook, and so the Overlook extension as the Knoll walkway goes up to where it needs to level off to descend to the main pit area on the west. In this overall scheme, all the slopes and curves work except for one point, where Knoll Way connects to West Way and D Way, which is steep, but is not needed by fire trucks and garbage trucks.

The main cut and fill and some other smaller grading costs add up to about $5.4 million, and are an important and dynamic part of the pro forma. By "dynamic," I mean that other costs are more cut and dried, and grading costs can vary more depending on the approach.

Details: Cut and fill within the limit of development.

The Knoll goes up from 306 feet elevation at the end of Overlook to a little over 330 feet and now ends in a cliff and step path down to the pit. It is about 160 feet wide and 200 feet long.

Grading, mostly hard rock, would round the knoll down by ten feet or more, to 321 feet at the top, with a 5 percent grade up from Overlook and then down at 5 percent to the pit, meeting pit fill at about 308 feet. (Buildings at north end stop at 308 feet, where the park starts.) The west side has hard rock and a sharp drop off. The unit foundations are set back from the drop off for safe construction and to provide a flat back yard. The northeast corner is on the deep fill of the pit. The Knoll would be graded to have a width for buildings on both sides of the walk way.

The middle area between Overlook and the knoll and the PG&E line and rock face needs major cut. At grid ticks 10,350 east and 10,050 north, this area has a saddle at 327.6 feet. The main pit to the north is generally at about 305 feet. The saddle and the middle area around it need to be lowered and the pit, raised. The new high elevation from the knoll to the rock face would be at 315 feet, with drainage north to the creek and south to Bee Blvd. The saddle, then, would be cut down about 13 feet.

In the pit, fill rests on the steep rock face, follows the edge of the ravine around the north arc, and ends abutting on the side of the knoll.

In the community center area, Palisade extends its current east-end alignment at 310 feet, crosses the PG&E line, curves around south at grade, and intersects with Bee Blvd. with minimal grading. The elevation in the center area would be about 300 feet.

A major question is, is there enough reasonably affordable cut in the middle area to raise the pit floor enough for drainage at 2 percent grade? Detailed planning would create more exact figures for cut and fill, and the knoll can be a balancing factor, cut more or less to have cut equal fill.

Internal retaining wall issues. The knoll may require some retaining wall. However, the floor of the pit on the east side rises up to 315 feet, just six feet lower than the knoll. The plan now shows a retaining wall six feet high for 28 feet, but the key elevations could be raised to avoid having to build a wall. Also, a low wall could use a rock face 2 feet to 4 feet high in a back yard or use Soil-Nail Retaining Walls, which are very affordable.

In the middle area, there is distance of about 250 feet north-south midway between Overlook and Main Way, between the courtyard units on Overlook and the backyards of units on Main Way. The height varies from about 2 to 4 feet and can be put in the back of the back yards as a short rock face.

The base of the rock face might need a low fence to catch falling rock, but there is no evidence of rock fall.

## Utilities

The planning for Bayview Village did not take place in the logical outline of topics shown here. Utilities were looked at early on. The City of Hayward has excellent utility maps for water, storm, and sewer. The storm water system will include a new underground pipe, a retention pipe, in addition to the traditional storm drain. Water, storm and sewer are the wet utilities, and there are dry utilities all placed in a joint trench.

**Water** will not be a problem; good capacity water mains come right up to the upper part of the property through City Apartments on the northeast, and lower elevation water serves Overlook and Palisade.

**Sewer** was more problematic; we knew what the capacity was on Overlook, Palisade, and Bee Blvd. The capacity is higher due to the steep slope of the lines. With help from Lea and Braze, we calculated the number of toilets, bathroom sinks (lavatories to engineers), showers, tubs, kitchen sinks, washing machines, and dishwashers, both residential and commercial. If it was connected to the sewer, we counted it, made estimates per item of waste flow, and added them all up. One unresolved issues is how much we can reduce flow using water saving shower heads and dual flush toilets, grey water, and perhaps other water and sewage reducing ideas. We have to meet regulatory standards, and the City does not want some developer overloading its sewers. See Lee & Braze, _Preliminary Sewer Study_ , January 28, 2010.

We related the project effluent to the available capacity on the Palisade sewer, that is, the capacity of the sewer minus existing use. There is a lot of unused capacity, but not enough for the project. A potential problem for one block, on Mission from Palisade to Bee Blvd., is being fixed by a city road rebuilding project along Mission. That leaves the question of Bee Blvd., where we know the capacity but not the existing use, and the Bee sewer serves a large hill area and the campus. There is some risk of having to put in a new capacity down Bee Blvd. What is the existing use? Can we shoehorn in the bit we need to avoid big sewer costs? Can our water conserving fixtures reduce use enough?

Details:

Project volumes: 2,373 water closets, Drainage Fixture Unit Value 2, Gallons per minute 7,119, plus five other fixture types, total flow, 19,750 gallons per minute, or 2,641 cubic feet per minute, unadjusted. Palisade sewer: 8 inch vitrified clay pipe at 95 percent full, and considering roughness and slope, carries 1.669 cubic feet per second. Mission sewer: same pipe, less slope, but two parallel mains, carries 2.673 cubic feet per second. The project for Palisade-Mission would produce 125,685 gallons per day, adjust upward for peak flow is 728,974, converted to cubic feet per second is 1.128. Existing flow plus project = 1.273 cubic feet per second; percent of Palisade capacity used, 76.3 percent and of Mission capacity used, 50.9%; sewers are big enough. Carlos Bee sewer: The project needs to add about .200 cubic feet per second, and the same size pipe has more flow, 3.612 cubic feet per second, but current flows are not known.

Storm water utilities are straight forward and predicable, just expensive. California has new requirements for on-site retention of storm water for a flood that comes every 100 years, complicated by the need to consider a series of storms and the antiquated FORTRAN software used in the calculations. Toby recommends a large, two foot diameter pipe in front of all the houses. These storm retention pipes hold enormous amounts of rain water, which trickles out a little one inch pipe at the bottom end.

Dry utilities include conduits for electricity, natural gas, telephone, cable for cable TV, telephone, and high speed internet, and possibly fiber optic cable.

All the utilities have to be put in at the same time, appropriately spaced horizontally and vertically from each other, and outside a 45 degree angle coming down from building foundations.

Unlike the grading, the cost of utilities is fairly predictable.

## Engineer's report

This plan has been carefully evaluated by the civil engineering firm of Lea & Braze Engineering, Inc. to verify that it is feasible from the perspective of (1) incorporating wet and dry utilities into the ROWs; (2) complying with City of Hayward ROW street criteria such as maximum slope, minimum width, and minimum turning radius; (3) estimating cut and fill to balance and to provide drainage and ADA-approved slopes; (4) staging grading to optimize delaying cost to close to when needed for phases; and (5) meeting State Water Board regulations for storm water treatment with an underground storm water detention pipe-network with metered release to the creek to the north or storm drains to south and west.

Any project on the property will face a very similar situation, but in general site development costs for the site plan are in line with other developments.

**Note** : The "Supporting files" indicated below can be accessed in a Dropbox on the web, which requires installation of some software on your computer. Access is provided by an email inviation. Most of this information is also at http://www.bayviewvillage.org under "Resources."

Supporting files: /Bayview Village/2.0 Project Description

/Bayview Village.ppt and /BV details.ppt

/Brochures, fliers, news/

/Pictures of quarry area/

/Pictures of view/

/Property maps and aerials/

/Bayview Village/2.1 Community Plan: **Bayview Village Site Plan** ; special site plans for building phases and grading, community center area, existing conditions, finish contours, parking, parks center trail walk times, property lines and development limit, and trash collection route; spreadsheets on buildings, site areas, and home planning.

/Bayview Village/2.1 Community Plan/ **Civil Engineering** : Building and grading issues, City of Hayward Mission Blvd. Utilities, Grading Plan May 2011, Grading Plan with Walkways Units, Preliminary Engineering Study and notes; sewer study, underground utilities cross section

/Bayview Village/2.1 Community Plan/ **Commercial** : Village Center Commercial files

/Bayview Village/2.1 Community Plan/ **Site Plans** CAD files: AutoCAD and Design CAD files

These files are available in the Dropbox and on the Bayview website.

## Related Development

Plans by the City of Hayward and by CSUEB Hayward could affect Bayview Village.

The University could adopt sustainable transportation policies and implement a shuttle from Hayward BART to the campus along lines I have been analyzing and advocating for many years. The financial capacity of parking fees and parking fines would support two buses similar to those proposed for Bayview Village. The "Beeline Bus" would decrease headways from ten to five minutes.

The City is planning redevelopment of Mission Blvd, including the segment from Bee Blvd. to downtown. If the City were to apply its SMU zoning and follow neighborhood system principles for functional density and alternative mobility, the relevant properties could support one more bus, allowing buses to come every few minutes.

With service that fast, free, and frequent, there is no need for most routine use of cars. A bus bridge exists on the short corridor, allowing less congestion and more travel. It means that it would be easy to stop off at the café and store on the way to or from the campus, as well as competitors along the route. The economies of scale would improve systemic competition with suburbia.

If you are reading the above for your own project, it gives a good outline of the kinds of things you will need to talk about for an overview, but we still have a long way to go to cover all the details.

# Chapter 7 -- Green Building

For the next few chapters, the text is supported by many detailed folders and files, which are referred to as "Supporting files," shown at the end of each chapter.

## Affordability

Bayview Village would build high-quality (but not luxury) sustainable units while controlling costs for affordability. Quality construction yields operating and maintenance cost savings and reduced pollution and energy consumption. Rectangular outside walls and many common dimensions also help reduce cost. Wood frame construction is much less expensive than "class A," which uses cement and steel, but four stories is pushing the limit and one to three stories are more typical.

Three-story construction also optimizes construction cost by having three living levels served by one roof and one foundation. Plumbing fixtures would generally be co-located to reduce cost and minimize heat loss from hot water pipes. Building materials would be sustainable and avoid air pollution from off-gassing by using low VOC paints and no formaldehyde. Solid waste design would be convenient to use and support recycling.

For some construction materials and design elements, construction costs are more than offset by reduced operating costs. For example:

•High-performance windows: To avoid major heat-loss/gain, the project uses high-quality, double-paned, sound-rated windows with Low-E coatings and fiberglass frames. This cost increase would be reduced by careful design limiting the location and sizes of windows to where they are required by code, and by shading windows from summer sun.

•Thicker walls and ceilings: Exterior walls would be framed with 2"x6" studs, though 2"x4" is adequate per code, to allow thicker insulation. This increased cost would be partially offset by spacing studs at 24" on center as allowed by code.

•Radiant barrier roof sheathing and Cool Roof where not covered by solar panels.

•High-efficiency HVAC systems: See Green Energy below.

Rain screen siding will ensure against mold.

Sustainable lumber will be certified by the Forest Stewardship Council or equivalent requirements.

Tracked in dirt has many particulates along with healthy dirt, which is healthier yet if kept outside. The particulates include soil, volatile organic compounds, pesticides, sand, mold, road grime, fungi, allergens, bacteria and even lead. Once inside, they can be difficult to get rid of, especially from surfaces such as carpet that readily trap and absorb them. Track-off entryway systems improve indoor air quality and help keep the house clean. Sustainable building requires track-off systems with 1. A permeable outdoor mat or grille system to collect loose dirt and water; 2. Indoor mats that brush or scrub shoe soles as people walk across them; and 3. A duster or finisher mat that removes remaining dirt and helps dry shoes. Carpets are a no-no because they accumulate dirt. Flat floors if otherwise slick need anti-slip treatment, and need to be waterproof and easy to clean. I'm not sure about the difference between a duster/finisher and a carpet. Foyers can make it easier to take shoes on and off.

Modular, factory-built housing promises greater efficiency from designing to minimize waste, protection from weather, large-jig techniques, and more efficient use of labor. Research results on modular building were positive but not conclusive. Where cost-effective, the project would use advanced methods such as panelized framing members, engineered materials such as wood I-joists, or factory-built modules. With regard to modular methods, Zeta Communities has provided extensive information, and, if competitive, could be the builder for this project. Zeta's manufacturing center is in McClellan, CA, near Sacramento. Modules are trucked to foundations prepared in advance and assembled in a day. Within two weeks they are ready for occupancy. Although Zeta is a relatively young company, it has established itself as a quality provider of green, modular housing for both large and small scale projects. With respect to quality and efficiency, Zeta's modular system offers the following:

1.Using efficient indoor manufacturing processes and quality control procedures, Zeta is able to construct a precision-crafted housing unit in a factory setting.

2.Specialized labor trained to perform across a range of trades uses labor more productively to achieve excellent craftsmanship at a lower labor cost with a living wage.

3.In a factory setting, with production planning and inventory control, waste, debris and mistakes are all minimized and weather delay eliminated.

4.The work can be done from CAD computer files on tablet computers that travel with the modules and have the customer's specifications

5.Production planning and control allows for reliable delivery schedules, thereby eliminating the risk of on-site errors, which contractors face as they intensify work efforts to meet deadlines.

6.Zeta adds efficiency in design process with techniques such as its proprietary "utility core," which co-locates plumbing, electrical, and HVAC in the same wall cavity.

7.Construction proceeds simultaneously with as site preparation, saving time.

Our research, however, did not get into similar detail for field-built or "stick-built," which can also be cost-effective, but whose costs vary across a wide range from large mid-quality subdivisions to one-off, labor-intensive, architect-designed, high-end mansions. Similarly, there are issues to be determined concerning spread footing/stem wall foundations, slab foundations, and post tensioned (PT) slab foundations. In the design phase, the developer would make a determination about the building method and the builder based on bids to common specifications for a phase of units, to decide which method of construction is most cost-effective for the same design.

The developer would determine what green building ideas are most cost-effective in order to control costs and achieve their competing goal of affordability. They would also look for cutting-edge but tested technologies that have been sufficiently commercialized to bring down unit costs. Several additional green building features are listed under Green Building Code below.

## Unit types and floor plans

The 1,024 dwelling units are a mix of seven unit types.

All the **studios and one bedrooms** are in the Mixed Use (MU) Block shown in the site plan under Bayview Village Center above. The MU block has five buildings on a slope around a courtyard park. They go from level 1 on Bee Blvd. up to level 8, the third floor of the MU Bldg on the bus way. The west end of the MU Bldg has a store on level 6, the busway level, and a cafe on level 7, overlooking the bay area and with a view deck on top of the Palisade Bldg. The MU Bldg has an entry hall and office on the busway. The buildings have central hallways, stairways, elevators, restrooms, janitorial rooms, office, lobby, and trash storage serving one bedroom units and studio units. Each building is no more than four stories high at any one point as they step up and down the hill. The dimensions are based on unit widths of 20 and 24 feet. The modular design accommodates some expansion of commercial space and interchangeability between studios at 20' and one bedrooms at 24', depending on market demand. Modules as shown are all 24' wide. Elevation changes cut into bedrock, then go up 10 feet, trying to balance cut and fill. The Walpert Bldg is shorter on the north side than the south.

Some buildings are linked by an external hallway. The links and elevators allow access to the café and store without the need to go outside, and the bus stop is just outside the main entrance.

All the **two bedroom flats** , some with one bath, most two baths, are in **sixplexes** with access off a common central stairwell. **Three, four, and five bedroom units** are all **townhouses** with internal stairways.

The floor plans for hallways, flats, and townhouses are designed to have no windows on the side and have depths for front and back rooms that work for outside light. Common interior walls, unlike the thick exterior walls, can be thinner, using less expensive 2"x4" stud framing with no loss of insulation.

Gross space is the outside perimeter of a rectangle; net space subtracts front door setback, balcony, outside entry, half of stairs, and porch and adds square feet for push outs and bay windows.

More details on floor plans are discussed under marketing.

The project has 1,186,608 square feet of residential space, including two manager units on the third floor of the community center, and 11,832 square feet of commercial space, which is the store, the café, and the community center.

## Elevation issues

Elevation changes in foundations and between buildings are affected by floor height, which is 10 feet, allowing 9 feet of ceiling height. The foundations on slopes are elevated at one end and cut into the slope at the other. The side view drawing below of the sixplexes west of Overlook shows a balance between cutting into bedrock and elevating the foundation. It shows how backyards can work for lower units and decks can work for upper units. It shows how the courtyards can be kept close to level and how that preserves views for units next up the slope.

Side view of west side of Overlook looking west. Inset showing spread footing stem wall foundation.

When a cut begins to get too deep, the floor level ends. When a stem wall gets over about 4', the building ends. The MU block drawing shows details for elevations of cut lines and building footprints for the 5 connected MU buildings, which have, in all, eight levels. MU Block contours also shows "cut to" and "start at" elevations at ends of, and within, buildings.

The biggest elevation change can be from a high corner diagonally across to a lower corner. The high corner can be cut in below the slope, with the unit entrance at ground level.

The amount of grading on elevations below 300 feet, which is sloped, is reduced by the previous grading for pads for an earlier subdivision.

Elevation examples for the MU Block:

Se corner, MU building, 299', existing grade 299'.

Middle of Walpert Bldg at the change to a lower floor, lower floor 279', higher floor 289', existing grade 280'.

Se corner, Bee Bldg, 259', existing 256';

Sw corner, Overlook Bldg, 249', existing 245'.

Elevation examples, sixplexes, west side of Overlook:

This area has seven existing pads. Overlook and back property lines rise at 9.5% grade from Bee to Palisade for 3 lots and then at 11.6% from Palisade to dead end on Overlook for four lots. The land also slopes down from Overlook to the west, creating a large elevation change on the diagonal. Sixplexes on courtyards would step up along Overlook and up from the west side property line to Overlook, so the northeast corners are higher than the southwest corners.

To the west of the Overlook Extension from grid tick 10,400 north to 10,500 north and going west to the 290 feet elevation is a small area descending below the road. Grading does not look to be needed if pier and grade beam foundation are feasible.

## Building Costs

To get a good estimate of building costs were had Zeta prepare two architectural floor plans and price them out. Zeta and HAPA went back and forth a bit to get more details and adjustments, and used the results in the pro forma. Here are the cost summary, building spec list, and energy spec list.

Details: **Buildings**.

The five MU Block buildings connect with each other by hallways, stairwells, and elevators. They descend from the 300 foot elevation on the busway to Bee Blvd. on land already padded for a previous development. They are three to four stories high. On the hallway, the one bedroom has 24 feet of width and the studio has 20 feet. The hallway width is eight feet in two buildings and six feet in the others. The buildings, depending on hallway width, have 54 feet to 56 feet of width depth: a unit on one side, the hall way, and a unit on the other side.

The MU Building is one of the five in the MU Block and is on the busway with immediate access to the shuttles, store, café, square, and community center. The next building north, also on the busway, is designed to have its roof at café level, to preserve views and to serve as the patio for the café. The other three buildings front on Overlook, Bee Blvd., and the PG&E easement.

The two bedroom flats in sixplexes are accessed off a common stairwell in the middle. They may face on a walkway or onto a courtyard, and two sixplexes can be right next to each other.

Three, four, and five bedrooms are townhouses. Flats would work with less loss of space to stairwells, but we believe the market prefers townhouses. The three bedroom townhouse loses too much space to stairwells unless the living, dining, and kitchen are on the second floor, which allows the living room to serve both for living space and for connecting stairways. This idea also allows the ground floor to have a separate large "flexroom" that can have an optional small kitchen and can function as a bedroom, home office, workshop, or studio apartment, with a patio in the back.

## Green Building Specifications

If you are in the development business, the following list is your bread and butter. Without it, you can't plan, you don't know how much anything will cost, you can't figure out how to sequence construction. If you are not in the business, you may wonder, why do they have to be so specific? The reason is to shift from rhetoric to the God of the details. Early on, I said, "high-quality (but not luxury) sustainable units." With these specs, a knowledgeable person will know what I mean and be able to discuss it with me. For the rest of you, it's an education if you can stay awake.

**Supporting files:** See /Bayview Village/2.2 Green Housing: floor plans for the seven home types, café floor plan, community center, and spreadsheet on building and energy costs

/Building CAD files: AutoCAD and Design CAD files for units, café, community center, roof plans for Echo, stairs spreadsheet and drawings

/Modular vs. Field: Zeta BV Cost Estimate, specs, cost data, floor plans, timeline, and pictures; files on Modular vs. field

# Chapter 8 -- Green Energy

Green energy has two major components: passive energy and active energy. Passive energy consists of the design, tight construction, 2"x6" exterior studs, insulation, casement windows, and doors discussed under Green Housing, which buffer the home against outside temperatures, both hot and cold, reducing the need for active energy. Tightness is tested with a blower door. Walls are insulated to R-value 26 and ceilings to R-value 50. Additional passive energy design includes building orientation to the sun, larger south facing windows to gain heat in winter, thermal mass and colors to absorb heat, outside window overhangs or louvers and indoor curtains or shades to increase shade during summer, and building width to optimize solar light. Casement windows open fully while sliders only half open. Efficient systems require computer modeling.

Three-story construction, about 30 feet high, has advantages for passive energy, active energy and construction. Three-story construction has a cross section that balances roof area with the living space below. The roof has most of a building's heat losses and gains, until the building gets too high and the walls become more important. Three-story construction avoids exposing too much wall to heat loss. Row housing maximizes common walls, further minimizing heat gain and heat loss. The roof area is just large enough to have enough solar collectors, which, when combined with building efficiency, supply the energy needs of three floors of living space below. In a three-story building, the roof area is sufficient to meet the electrical and thermal needs of each two bedroom flat with a PV system capacity of 2.82 kilo Watts (kW) and each four bedroom townhouse with a capacity of 4.32 kW. Three-story, wood-frame construction and no elevators avoids the higher cost of higher buildings, and uses land more efficiently than lower buildings.

Passive energy also includes green appliances and lighting, which reduce the energy needed from active energy. Energy Star refrigerators, washing machines, stoves, microwaves, dishwashers, clothes driers, computers, printers, and copiers conserve energy. Designing for needed light levels (and no more) and lighting controls saves more energy.

Compact fluorescent lights (CFLs) are already affordable. CFLs can dim based on natural light level and room occupancy.

Even more efficient Light Emitting Diodes (LEDs) are becoming competitive. They are more durable and last longer than incandescents and CFLs: 17 years vs. 2,000 hours vs. 8,000 hours. However, as LED increase in wattage to produce more light, they generate relatively more heat and become less cost-effective. At this time, 60 watt equivalent LEDs are very effective, 75 watt equivalent LEDs are available, and 100 watt equivalent prototypes exist. The 60 watt equivalent LED uses only 12 watts. Unlike CFLs, LEDs contain no mercury, click on instantly to full brightness, can be dimmable, and can turn on and off frequently without degradation. To avoid the problems of heat and heat dissipation with aluminum fins, two bulbs can be used. LEDs are expensive, about $20 per bulb, partly because they use expensive sapphire base semiconductors. R&D may solve that problem.

Green energy would supply all electrical needs with no fossil fuel use. Over the course of a year, a properly managed dwelling takes off the electrical grid no more electricity than it puts onto the grid, which is called net zero on the grid. Typically, a home supplies surplus energy to the grid during summer and takes energy off during the winter to achieve net zero. The Echofirst system provides all electricity, space heat, hot water, air renewal, and clean air, and most space cooling.

Green energy and green building combine to guarantee high indoor air quality.

The car ports will have PV canopies for energy, heat reflection, and water capture.

The HOA would have expertise to help residents manage their energy use.

Active energy uses energy from fossil, solar, and other sources. Bayview Village uses some fossil fuel, natural gas, for cooking and clothes drying. Natural gas replaces electrical demand that would otherwise exceed the roof area available. Natural gas usage is still much lower than for typical housing units, has less carbon content than other fossil fuels, and has potential for replacement by bio-gas. Natural gas use could be reduced if a resident wanted to use outdoor clothes drying lines in backyards and on balconies. There are no technical or economic reasons why indoor dryers could not be designed for solar thermal, but there are none on the market yet.

PV and solar thermal energy until recently have not been competitive in the American market because of the underpricing of fossil fuels, but declining prices for PV panels, improved construction methods, and increasing fossil fuel price are changing the balance. Tax breaks improve the competitiveness of green energy, and an expanding market is driving down costs in the future. Green energy will have increasing marketability as consumers see the need to protect themselves against rising electrical and fossil prices, and become more committed to green lifestyles.

Most of the active energy for the project would come from photovoltaic (PV) electricity and solar thermal energy using Echofirst technology. Echofirst uses PV collectors and thermal panels on a sloped roof. The roof construction and mounting systems are integrated with mechanical systems in the attic below and shed water, avoiding many roofing costs. Black PV panels have hot air ducts underneath, so the system combines PV and thermal for greater efficiency. The hot air rises to a thermal hot air panel at top, with ducts into the attic. The attic contains systems for electricity, hot air, hot water, air cleaning, and air renewal. An Energy Transfer Module (ETM) heats water and passes hot air on for space heat. The ETM also exchanges heat to recover outgoing heat from the living space, and brings in night air to cool the house. A hydronic space heater by the ETM boosts space heat. If no space heat is needed, the system heats the water and vents the hot air outside. The system includes various wires, conduits, dampers, louvers, thermostats, controls, fans, and filters. Low velocity fans using bigger ducts and curved turns can move air more quietly and efficiently. Fans and high efficiency HEPA air filters in the ETM provide air renewal and air cleaning.

Below the attic inside each home, besides wire and pipe connections, is a solar hot water tank. The water tank achieves over 70 percent of hot water needs from the ETM, and the rest is supplied by an electric heating element inside, near the top of the tank. Proper energy management would prevent the electrical back up from engaging in the late morning at a time when more hot water is not needed, thus allowing the sun to heat the water as the day progresses. Hydronically heated towel bars, common in England, dry towels and help heat the bathroom. PV electricity goes to an inverter and the main electrical panel.

Echofirst has user-friendly computerized controls which allow residents to monitor consumption and manage the system to meet their needs and minimize electrical use. The controls include measuring temperature, humidity, carbon dioxide, and carbon monoxide. The controls could be a wall panel in each home, or use software on a home computer.

## Green Energy Cost

Green energy costs have a mix of unstable and stable elements. Costs have been lowered by several tax breaks for solar power: The California Solar Initiative (CSI), the California Multifamily New Homes Program (CMFNH), federal incentives for active solar, and federal incentives for passive solar. The CMFNU program helps with windows, water heating, insulation, space heating, appliances (dishwashers, clothes washers, natural gas clothes dryers, refrigerators, lighting fixtures), and with energy rating services and energy consultants. In 2011 the federal income tax allowed a tax credit of the 10 percent of cost of passive solar, solar water tank, and hydronic heat, and 30 percent of the cost of active solar energy.

A tax credit reduces taxes owed regardless of income, as contrasted with a tax deduction, which reduces the amount of income taxed. A tax credit is deducted from the tax owed regardless of income. A tax deduction is a deduction from income, after which a tax rate is applied. As income goes up, the tax rate, "the tax bracket," goes up. A higher income person paying in a higher tax bracket get more benefit than a lower income person paying in a lower bracket. Therefore, a tax credit seems more fair because the benefit is not affected by the amount of income. Builders can also take accelerated depreciation of solar costs. Accelerated depreciation means the tax payer is allowed to deduct more depreciation expensive than actually occurs in the depreciation of the asset. The various programs can be quite complex, and there is no simple source of information about all of them in a consistent format and related to each other. What with year to year tax changes, estimating amortization cost, and estimating the utility bill to compare to, it becomes difficult to do much beyond a rough estimate in a pro forma. The important point is that tax incentives reduce the cost to the builder and are likely to continue.

In addition to tax benefits, hardware costs are coming down. China ramped up production of solar panels and lowered the price, depressing American panel manufacturers and bankrupting Solyndra, but helping solar buyers, lenders, contractors, and installers. The cost per watt of capacity, meaning the watts produced at peak efficiency, has declined from about $27 per watt in 1980 to about $3 per watt in 2011. Germany has been the leader in price and installed capacity, with China coming up fast. A typical four kilowatt system in 2011 cost $20,000 in the US and $8,000 in Germany, largely because of greater overhead, customer acquisition, supply chain, permitting, labor, and hardware costs; inverter and panel costs were comparable. Germany has no sales tax or fees for solar, and a simple registration form. Germany, with less solar insolation, or total sunlight, than the US, nevertheless produces half its household electrical demand from photovoltaics. (Paul Rauber, "Solar for all," Sierra, January/February 2013, p. 41)

There are, however, stable elements whose costs cannot be lowered dramatically, although these will decline a little due to volume increase and small technology improvements. Solar thermal power, insulation, windows, and the like require an inescapable amount of physical material and have limitations on productivity gains imposed by the laws of physics. A thermal panel, for example, has to have some minimum of metal and glass to capture heat, and the sun produces a limited amount of heat.

While many assert that tax-subsidized new construction green energy pays its own way, it was not so obvious in the numbers I came up with. Part of the problem is "compared to what." Green energy compared to a leaky old house with energy wasters inside is cheaper. Green energy compared to a Title 24 house with energy misers may not be so hot. Also, green energy as defined for Bayview includes some extras: Rain Screen Siding, heated towel bars, Panasonic super-quiet fans for bathrooms and kitchens, all space heating, hot water, air cleaning, and air renewal, and most cooling. (Bayview is about affordability, just not about extreme affordability.)

The biggest jokers in the deck are oil supply and climate change policy which, by increasing fossil costs, would make green energy more competitive. The estimate below is based on today's prices, but with some expectation they will come down.

Estimates in the pro formas are based on costs, but leasing is increasingly common and overcomes the barrier of high initial capital costs, as well as, in some cases, a slow payback. With a lease, the owner does not need to get an energy loan, or recoup the cost on sale, or maintain the system. SolarCity, Sungevity, and SunRun offer leases, acting like a small PG&E building a power plant on your property and charging a fixed rate which is, in fact, mostly amortization. However, the economics of solar leasing depend on the same governmental incentives as direct purchase. The need for subsidy reflects the problem that conventional electricity is under-priced in the whole economy; and substantial real GHG costs are externalized to society. Under-pricing obscures the cost advantage of green energy in not polluting and in avoiding costly long-distance losses of energy in high voltage transmission lines and transformers.

Leasing is taking off in several states. Over the last five years leasing in southern California totaled about $1 billion. (David Roberts, "Energy Democracy," _Grist_ , Sept. 18, 2012; http://www.solarlease101.com) Nevertheless, research by Paul Spencer of the Clean Energy Collective in Colorado concludes that ownership is more profitable than leasing.

Utilities can limit the amount of electricity a resident pushes into the grid when the home system is producing a surplus or they can pay some going rate for it. Since utilities sell electricity, they have a business model confusion if they buy it from the people they are selling it to. One solution is to use software to treat the owner in consumption mode as a consumer and to consider the owner as an energy producer like the other producers the utility buys from in surplus mode. The result is not the same an energy bill based on net zero, which can be a problem for the utility because they still have transmission costs. Electrically, a home system can be "net zero" for the year, but the utility can't be "net no income" for the year.

Owners, for their part, need some security for how much they will be paid by the utility, whether by net metering (running the meter backwards) or by feed-in tariff (payment for production).

## Green Energy Specifications

One unit type is a 2 bedroom flat with 912 sq ft in a six-plex row house and a 4 bedroom flat with 1,540 sq ft in a triplex row house. Some green energy scales in steps, such as number of panels and fan size; you can't have half a panel or some arbitrary fan size.

Passive Solar

Moisture barrier

Rain Screen Siding, $0.65/sq. ft., a moisture barrier that prevents mold

Insulation in Walls and Roof

Exterior wall constructed with 2x6" studs, surface dried lumber, 16" O.C., advanced framing methods

Exterior wall insulation with Eco Batt R-21HD and R-5 1" Rigid to achieve R-26

Interior party walls insulated to R-13

Roof Insulation to total >R-50 with R-38 Opencell Spray Foam and R-17 Rigid. Alternatives: cellulose; iso (iso: polyisocyanurate); R-30 Ecobatt Glasswool insulation

Caulking and weather stripping as needed for air tightness

Upgraded Doors and Windows

Pre-Finished 3'x6'8" white Solid Slab Fiberglass Doors

Vinyl Framed Exterior Glazing, 6'x6'8" Vinyl sliding patio door, Low "E" glass, R-3

Insulating gases between double panes and heat-reflective film layer

LP Smart Panel Window trim 3" Corner trim 6"

U-factor of 0.32 or better

SHGC of 0.23 or better

Air leakage through cracks in window frame; rating below 0.3 is good

Warranty: high quality windows have 20 year warranties

Casement windows for full opening, not sliders

Window coverings allowance, decided by buyer

Design to allow sunlight to replace electric light

Energy Efficiency

Lighting

High efficiency lighting, e.g., CFLs and LEDs, bright in work areas (kitchen counters, desks, reading chairs), dim for general area lighting and elsewhere

Lighting controls able to dim or turn off lights with sunlight is enough and adjustments by users

Lighting allowance: Two bed flat: $902; Four bed flat: $1,540

Recessed light over kitchen sink

Chandelier in dining room

Bedroom lights on switched receptacle – overhead lights optional

Single Exterior light at front door

Door chime standard on front entry door

TV jack – Living Room and Master Bedroom

Telephone jack – Living Room and Master Bedroom

Large Appliances

Refrigerator. Frost free, ice maker option. Energy Star top freezer (e.g., GE 21CF $825 or Maytag M1TXEMMW 21 cu ft 67"H 33"W 33"D $750

Clothes washing. stacked front-load washer and electric or natural gas dryer. Energy Star. Not by Zeta

Clothes drying. affected by gas vs. electric. Not by Zeta.

Range. Natural gas (e.g., GE 36" Profile PHB925SP $657, 30" GE JB700DN $700, or Frigidaire Professional FPCC3085K)

Dishwasher. (e.g., GE Tall Tub Dishwasher $449 or Kenmore 1374 $650). Energy Star

Microwave. Energy Star Microwave over range (e.g., Samsung SMH9187 $280)

Since energy efficient appliances cost about the same as inefficient, they are not listed under Energy specs.

Misc. electrical/plug-ins. Owner electronics, small appliances and plug ins. Not by Zeta; used for energy analysis

Vacuum cleaners. LG Kompressor vacs LuV200 and LG LuV300 bagless uprights compress dirt, hold more, empty less often, less dust when emptied

Other small appliances. bathroom, range, and ceiling fans; toaster, coffee grinder, coffee maker, radio, food processer, blender, slow cooker, bread maker, Panasonic Whisper quiet exhaust fans- kitchen and bathrooms

Electronics. Computers, HD TV, VCR or DVR, DVD player, Dish converter box, radio, etc.

Active Solar

Based on estimates for Echofirst and hydronic space heater, not by Zeta. More details in BV Energy.xlsx.

Echofirst Solar, 2607 7th Street, Suite G, Berkeley, CA 94710, 510-809-3250

On roof:

Aluminum runners to hold roof array; CleanLine mounting system

Roof array of Sunmodule SW 245 mono black Ver. 2.0 or successor PV panels and thermal panels. Panels shed rain for most of roof

2 bedroom flat, 1/3 of 5 wide x 9 high array, 40 PV panels, 5 thermal collectors

4 bedroom flat, 3 wide x 7 high array; 18 PV panels, 3 thermal collectors

In attic:

Attic has all mechancial: sensors. Attic is part of heated space.

ETM = Energy Transfer Module. ETM uses hot air from panels to heat hot water and space heat in unit; heat recovery; renews air; cleans air; some air cooling

Hydronic space heater

Dampers, louvers, sensors, controls

High Efficiency Air Filter (Merv 6+)

In unit:

Rheem Servant Single Storage water tank (4.5kW heating element near top; no Heat Exchanger). Water heater meets 2.35 COP or better. 2 bdrm unit, 80 gallon tank (81VR80TC-1); 4 bdrm unit, 120 gallon tank (81VR120TC-1). Pumps.

Water pipes between EPS and hot water tank

2" electrical conduits, PV inverter and circuit breaker box

Connections:

Hot air ducts sealed with mastic connecting roof array to conditioned space in attic and unit in a hot out and cold return closed system

Pipes between ETM and hot water tank

Control wiring and thermostats connecting roof, attic, unit and ECHO controls

2" conduit and wiring from roof to PV inverter and circuit breaker box

Bathrooms

Bathroom hydronic warm towel bar: Flat panel wall mount radiator for bathroom, Myson 21G SX 70 60G Double Panel Single Convector 27.6"x23.6" 3,802 Btu $123 or Biasi Ecostyle 12"H 16"W $153 [has many variations]

Management

System of electronic controls and ECHO control panel for monitoring of current conditions of temperature, humidity, carbon dioxide, carbon monoxide, and energy use, reports amount of energy use during day and for billing period, allows user to control settings for space heat, hot water, and other equipment; has expanded analysis on a personal computer for user management.

Verifications

HERS of 0

HERS (Home Energy Rating System) Index of energy efficiency is a scoring system established by the Residential Energy Services Network (RESNET). The Reference Home, using a lot of energy, scores 100, while a net zero energy home scores 0. Each point corresponds to 1% of energy consumption compared to the Reference Home.

Installation of insulation, visual verification

Blower door test for air infiltration verified at SLA (Specific Leakage Area) 1.5 or better

Duct leakage under 6%

SEER of 15 or better

SEER (Seasonal Energy Efficiency Rating) rating and performance standards have been developed by the U.S. government and equipment manufacturer's to produce an energy consumption rating that is easy to understand by consumers. It has a universal formula and conditioning that can be applied to all units and compensates for varying weather conditions. Basically, the lower the S.E.E.R. rating, the more energy (electricity) is required to produce the desired effect. No air conditioning based on heat generation will be used; buildings may not meet SEER of 15 or better for cooling.

Water heater 2.35 COP or better.

COP (coefficient of performance) is the ratio of heat energy of the water heater to the electrical energy input when both are in consistent units. There is no standard rating condition for COP testing for water heaters, so manufacturers' claims are not comparable.

U-factors below .3

U-factor: how easily heat passes through windows, lower down to 0.1 is less heat, 0.3 is acceptable, basic window is about 1.3.

SHGC below .3

SHGC (Solar heat gain coefficient): fraction of sun radiation that passes through window; below 0.3 is low.

EF above 2

EF (Energy Factor) is the ratio of heat output to energy input as measured during a specific 24-hour test. EF in an electric water heater is lower than 1 because of heat loss through piping and tank walls. Efficient water heaters have an EF of 2 to 2.5; they heat over twice as much hot water as from an all-electric water heater with the same electrical energy input.

ASHRAE 62 Ventilation Rate

Air measuring

Tests before occupancy and after nine months of occupancy of particulates and volatile organic compounds

Not used: EER of 12.7 or better.

EER (Energy Efficiency Ratio). Room air conditioners generally range from 5,500 Btu per hour to 14,000 Btu per hour. EER is calculated by dividing the cooling capacity in Btu/h by a chiller's or room air conditioners power input in watts. The higher the EER, the more efficient the unit is at converting electricity into cooling. Units do not have air conditioning based on heating (chillers), so EER is not used.

Not used: Heat pump meets HSPF of 8.9 or better.

HSPF (Heating Seasonal Performance Factor) measures the efficiency and heating output of an air source heat pump, including defrosting, temperature fluctuations, supplemental heat, fans and on/off cycling. The output is in Btu during normal use, divided by the total electric energy input in watt-hours. The higher the HSPF, the more efficient the heat pump. Units use a hydronic space heater, not a heat pump, so HSPF is not used.

**Supporting files** : See /Bayview Village/2.3 Green Energy/BV Energy.xlsx, pdfs on solar incentives

/Energy data: various files on energy costs and solar energy

# Chapter 9 -- Green Water and Landscaping

Bayview Village would have water sustainability. **Rain water** and **grey water** would be the only source of irrigation water for native, drought-resistant **landscaping** , except in the Village Square, which would have irrigation. The open space is already naturally watered, but some continuing effort will be needed for new interior parks that get heavy use.

In addition to landscaping, **walkways** would be permeable for absorption and ground storage of water. **Rain barrels** would retain roof rain for irrigation. Hard scape is impermeable surface, such as pavement or roof. Hardscape increases in Bayview because reduced pavement is more than offset by more roofs. Still, permeability and on-site retention will usually reduce storm-water runoff to zero; provide water for trees, grass, and plants; and reduce the heat-island effect.

The **storm water** system would meet "C.3" requirements for on-site retention. Storm water would be stored and filtered mechanically in two-foot diameter retention pipes running underground in front of units. These pipes would have a one-inch outlet pipe at the downhill end for slowly trickling out the water. Water is gradually released for landscaping (bioretention) or percolation into on-site soils, into Dobbel Creek, or into the city storm drains. This solution is less costly than setting aside otherwise buildable land for surface treatment and storage, and it reduces landscape irrigation costs. Yet to be studied is the possibility of ponds for irises, cattails, tules, lotuses, carp, and other fish in the Village Square fountain pool or a park.

Hayward enjoys pristine Hetch Hetchy potable water, with service already on the site. **Water use** would be conserved through EPA WaterSense certified fixtures: dual flush toilets using 1.6 gallons per big flush, showerheads restricted to two gallons per minute, low-flow, aerated faucets, efficient dishwashers, and "water star" clothes washers using 14 gallons per load. Bayview may have an extra incentive to conserve water if it means avoiding expensive expansion of the sewer line on Bee Blvd. (see CEQA below).

As long as we're on the subject, Bayview should offer the Japanese washlet toilet seat. In 1980, the Japanese company Toto introduced the washlet. Just as European transit and German solar are wake-up calls for backward Americans, so also is the toilet in Japan, now found in 72 percent of Japanese households. American critics of the Japanese economy are clearly missing something going on under the toilet seat. The washlet sprays warm water onto one's derriere (shower mode) or female genital area (bidet mode), controlled by a panel on the side or back of the seat. Initial use is quite startling (according to reports), but the initiated never want to go back to a more primitive, less sanitary, toilet-paper intensive system. The base cost is about $600, with upgrades available for heated seat, pressure sensor to detect sitting, dryers, motion sensor to open lid when one walks into the room, ability to speak (but I'm not sure what), and brushed steel luxury controls. Calculations of forests saved by reduced toilet paper consumption have not been made, but Americans use 57 sheets per person per day totaling 3.2 million tons of toilet paper per year. Consumption could be reduced by 90 percent, with a corresponding reduction in the large amount of water needed to grow the trees and make the toilet paper (37 gallons per roll). Clearly, we can have cleaner bums and more sustainability through technological progress. (<http://www.worldwatch.org/node/6403>; http://priceonomics.com/toilets/#japanese)

There is no plan yet for how Bayview might market washlets. It is a little hard to imagine model homes where they can be tried out. We can imagine high publicity and high visitorship not translating into fewer home sales. It seems more realistic to provide them as options along with granite countertops.

The Bayview plan is to have some **greywater** use, such as, internally, from sink to toilet tank, and, externally, from washers to landscaping. No potable water would be used for irrigation.

One unresolved issue will be elevation and pumping, since so much of the rain water and grey water are lower than where they are needed. Some elevation distances are very short. A bigger lift will be needed for irrigation of the orchard for fruit trees and garden for vegetables and flowers planned for the PG&E right of way.

Water retention is emphasized for abundant plant growth, which in turn will greatly enrich bird habitat.

I am not planning to tackle composting toilets or on-site potable water.

Beta version comment: This is a really short chapter. If I knew more, it would be longer.

**Supporting files** : Preliminary Engineering Study and notes; sewer study, underground utilities cross section referenced under Civil Engineering, Community Plan. Group: Greywater Guerrillas

# Chapter 10 -- Green Mobility

Providing homeowners with reliable, fast, frequent, and cost-effective transportation options is vital for marketability. While residents would walk within the community, they must be able to travel elsewhere in the Bay Area without feeling inconvenienced. If residents have to use cars routinely, the proposed benefits of cost savings and traffic reduction from minimal use of a car would be lost. Green mobility is probably the most interesting and innovative aspect of the Bayview plan, the one most at odds with the car culture, and thus perhaps the most challenging for people to understand.

The project incorporates many alternative mobility features: walking, Village Bus, on-site leased parking, on-site metered parking, off-site leased parking, car share/rental, taxi vouchers, HOA van, electrocart, and deliveries.

The steep hill location minimizes bicycle potential, except on-site. The nearby CSUEB campus is walkable for some people, despite the hill. Already, residents of nearby City View apartments and International House routinely walk up to the campus, but it is not a major option.

## Walking and cycling

In Bayview Village, walking would be a major form of transportation. On-site mobility includes walking and cycling to the Village Center and the parks. The larger units would have a foyer with space for bicycles, strollers, wheelchairs, and personal shopping carts. Bicycling in Bayview would be more European than American, more fat tire, one speed, and coaster brake for a slow crowd than narrow tire, multi-speed, and hand brake for muscular spandexed youth. Options could include an adult tricycle, which would be safe and easy to ride for most people. Bicycles would have baskets and could be designed for easy riding, with step-over seating. The Village Center would have bicycle parking and a bicycle service shop.

American transportation planning does not take walking seriously; it is treated as a minor design problem rather than as a form of transportation that depends on an underlying structure (density in enough area, safety, aesthetics, direct routes) to support short walking distances. Bayview Village tries to balance the need to get people to walk more with their varying reluctance to do so. Five minutes at three miles an hour is a widely acceptable walk time, and goes a distance of 1,320 feet. The maximum walk distance from the most remote front door in Bayview Village to the Village Center is 1,290 feet, taking 4 minutes 53 seconds. The majority of residents would have walk times under three minutes.

Walking provides access to the store, the café, the community center, the bus, the car share/car rental, to recreational paths, and the Hidden Hills Health and Tennis Club above City View, the apartment complex just east of Bayview Village. The store includes normal shopping, shopping, home delivery, and a small farmer's market in the Village Square or in front of the store. Shopping services would mean something like a number of residents having the store buy items at a Trader Joe's or other place with enough demand to keep overhead low. The Farm Fresh To You company has an excellent service for delivering fresh fruits and vegetables (http://www.farmfreshtoyou.com/).

## The Village Bus

Instead of buying a house with parking and a car, residents would buy a house and a small bus system. The land use finances the transit through the cost of the home and HOA dues. The home price includes a prorated capital cost, and the HOA dues cover operating costs. The Village Bus would be fast, frequent, and free. It would have ten minute headways, and travel times of two minutes up to the campus center and six minutes down to Hayward downtown and BART.

Use of the Village Bus approximates how we use cars. The capital cost, as a sunk cost, is not considered in the travel decision; the money is gone and you have the asset whether you use it or not. The capital cost makes the average cost of trip fairly high, but it is not perceived. Also, the operating cost is partially hidden. In the case of a car, buying gasoline is not part of a typical trip, so the decision to travel is somewhat separated even from the marginal cost of the trip. In the case of the shuttle, the operating cost is even more removed as a sunk cost in the HOA fee, the money spent whether you ride the shuttle or not. Thus, like the car, the cost of single trip in minimal or free to the user, and the economics of the transit decision is like that of the car trip, with a low marginal cost. This eliminates a psychological barrier to using transit, which is the immediate imposition of an out-of-pocket cost for the trip.

The shuttle system would have high ridership because of the above, and also because Bayview residents have a little separation from other vehicle modes, such as a short walk to their car or car share, so the walk to the bus is not a disadvantage. The functional density of project generates the financing and potential ridership to support the service, and the service is good enough to get the riders.

The Village Bus would shuttle from the campus, through the project on the busway, to the Hayward BART station and back again, a distance of 2.4 miles (see map). The Bus would make stops along the way, giving access to businesses on Mission Blvd. and downtown Hayward, and supporting transit-oriented development along the route. The Hayward BART station provides access to a large area by BART and many public buses. The system could consist of two ISE-Thundervolt Diesel-Hybrid buses for low emissions, regenerative braking, alternative fuels, and hill-climbing speed. ISE is a world leader in electric, hybrid, and fuel cell technology, and a provider of alternative energy systems for public buses. These shuttle buses would operate in tandem to provide an average wait time of 5 minutes.

The Village Bus system would be owned and operated by the Bayview Village Homeowners Association. The HOA would make decisions about a contract bus operator and levels of service. HOA dues would finance operations, with passes ("Eco passes") for all residents. Local operators include MV Transportation and transMETRO.

This project also would build raised sidewalk platforms and use traffic signal preference controls. These upgrades would ensure reliability and speed up the Bus, improve bus service in the corridor, and mitigate impacts anticipated in the project's environmental clearance.

A number of rapid bus features increase the effectiveness of the Village Bus: small (30 foot) buses for nimbleness in traffic, traffic signal and right lane preemption, wide doors and raised platforms for fast, no-step boarding, guided docking to get very close to the platform, and "proof of purchase" fare inspection, so the driver does not collect fares. These features allow the Bus to minimize dwell times at stops, and to accelerate and move in traffic like cars.

## Parking

On-site leased parking.

Parking is not bundled with the home price; it is unbundled and leased separately. The plan has 100 carports on upper Overlook Avenue, 50 on each side, to be leased based on market demand, probably starting at $125 per month (in 2012). Bids for annual leases for 25 spaces every quarter would determine the lease rate. If the rate dropped, everyone would pay the lower rate. If it went up, only the new lessees would pay the higher rate. The revenue would lower HOA dues, benefiting everyone. Carport roofs would have solar panels providing direct current for recharging batteries for electric cars.

On-site metered parking.

The plan has 20 metered spaces, to be charged using SFpark technologies (http://sfpark.org/). These spaces are convenient to three buildings in the Mixed Use Block and to the sixplexes on the west side of Overlook, but less convenient for the store or café. The charge is raised and lowered to have on average two vacant spaces during peak demand.

Off-site leased parking. The project would arrange for residents to lease from a private business, such as a used car lot on Mission Blvd. for the back of the lot, or for land on the earthquake fault zone, just south of Bee Blvd. The cost would be low, and especially serve residents who want a car for special trips, e.g., on the weekends. One possible location, sloped land on the south side of Bee Blvd., is owned by Caltrans and in the Alquist Priolo Earthquake zone. It is so close to the project it would influence the character of parking availability by having a big supply of parking much closer than alternatives.

## Car share/rental

Palisade Street would have spaces for about 15 car share and car rentals. Many residents would likely have advance arrangements with agencies for easy sharing and rentals. The cost would compete with all the other modes. This area would also function as a drop-off/pickup lane for private cars.

We would hope to have gas-electric hybrids and plug-in electric vehicles (PEVs), so the roof would have solar panels providing direct current for recharging batteries for electric cars. Electrical charging posts would be part of the design. Bayview would also have dynamic ridesharing for car share and for car port lessees wishing to participate. Dynamic car sharing uses an app for the purpose which runs on cell phones, email, computers, and a web site to match riders on the fly or longer term. Offers and requests for rides are posted to a data base and promising fits are sent to the parties. GPS on cell phones can help driver and rider locate each other quickly and easily. (Elizabeth Deakin et al, "Dynamic Ridesharing," Access, Sprint 2012) Regular car sharing would be folded into dynamic car sharing. Bayview residents or others frequently going to Bayview would be vetted for the service, and outsiders not routinely going to Bayview would generally not be part of the system. The HOA would manage the system. Participant riders would have to understand the risks of catching a ride on the fly and have back up plans. The scheme is likely to work better for longer trips because shorter trips would take too long to arrange relative to the duration of the trip. Since most trips are well-covered by other mobility options, dynamic ridesharing might have to find some niche we haven't been able to predict. One possibility might be a loosely scheduled interest in car-pooling to shop somewhere or go to a cultural event when the HOA minivan is not available.

Car share/rental is somewhat more expensive than owning a car if the car is used frequently, but with great cost savings if the household does not own a car and needs one infrequently. In my own experience, I had a car too unreliable for a round trip from California to South Dakota, so I rented a car and was able to get a very good car at a reasonable rate. Vacation trips and special family and business trips to car-dependent locations lend themselves to car rental, and occasional tips to local car-dependent places lend themselves to car share. Trips to airports may be better served by bus and BART with light or no luggage, and to air porter vans otherwise.

## Other mobility

Spillover parking. Spillover parking would occur if Bayview people parked on neighborhood streets, preempting spaces needed by fronting properties. The economic policy would be to allow spillover until 85% of spaces are being used, then start charging for parking, using the revenues to improve the neighborhood and pay for shuttles. Parking policy in Hayward, as well as in the US as a whole, rarely has anything to do with economics; it is based on politics and subsidizing pubic parking, first come first served. That reality requires that economically efficient market parking has to mitigate impacts on subsidized parking. Fortunately, that turns out to be easy and inexpensive to do. Hayward already has two neighborhoods that prevent spillover at virtually no cost to the neighbors or the City, one at the main Post Office on Santa Clara, and the other for the neighborhood south of Depot Road at Chabot College. Signs warn outsiders that they need a parking permit, or cannot stay longer than two hours, or they get towed. It seems to solve the problem. Bayview would do something similar, but prevention is also important. People will park where they should not because of a lack of information about where they should. Signage for Bayview would also include information about alternative access.

Spillover parking is unlikely to be a problem because the creek, the steep rock face, and Bee Blvd. are formidable barriers to parking for Bayview. The one accessible street, Palisade, is down a steep hill, with only a short distance at the top that might tempt residents with units close to Overlook. Bayview will promote alternative access to make access easier using non-car modes. Residents will educate visitors about the system.

Taxi vouchers. Certain trips are particularly important, so the plan is to make them fast and affordable, based on an allowance of a few taxi vouchers per month which can accumulate to some limited total. They would be specifically for trips to clinics, hospitals, and other health care, and as a "guaranteed ride home" from BART when the Village Bus stops running. The Bus would stop running when it is not cost-effective compared with taxi vouchers. The HOA would arrange with providers to increase convenience. The vouchers would have a limit on value to prevent long trips. It might be possible to use them for purposes besides the above. The HOA would develop policy to avoid the vouchers from going over budget or benefiting too few people.

HOA minivan. The HOA would manage use of a HOA van parked at the Community Center. It would be committed to taking students to school, and could be used for trips to big box retail stores like Costco, Wal-Mart, Target, Home Depot, and Office Depot; shopping malls like Southland and Stoneridge; grocery stores like Smart and Final, Trader Joe's, and Whole Foods; theaters, events in San Francisco, and other events as decided by the HOA.

Electrocart. A cart like a golf cart but designed to carry freight would be kept at the Community Center and used to carry heavy objects to the units. (Moving vans would be allowed also.) The electrocart would also be used for maintenance by HOA workers.

Signage and public education would help people know how to reach the Village. The system is not too different from downtown San Francisco or much of Europe, just in an unusual location. For Village residents, the trip to San Francisco would be as fast as by car, and less expensive. Downtown Hayward is five to six minutes away and has steadily improving amenities based on more residents living in downtown redevelopments. The CSUEB campus, a major cultural destination in its own right, is two minutes away.

Deliveries. The units will have drop boxes that allow delivery of some groceries and prescription drugs inside.

## Trip Durations

The travel budgets for Bayview are competitive for all trip types. Research on travel budgets for dozens of different kinds of trips finds them doable in Bayview Village. Bayview has good marketability because even with non-car modes the work trip has access to a large number of jobs within an hour. Travel budget analysis can apply equally well to the routine shopping trip. In Bayview, instead of driving eight minutes to a store, Village residents may walk from a few seconds to five minutes, which is the longest walk time in the project. It might take suburban drivers a minute to walk to their car, get in, and get underway, while Village residents have already traveled 260 feet. The driver has six minutes on the road, and a minute to park, get out, and walk to the store. Village residents in four more minutes have traveled 1.060 more feet and reached the store three minutes ahead of the driver. The NHTS data reports that traveling to buy groceries on the travel day takes an average of 14.85 minutes, and that they are 20.1 percent of all trips. The Village Store will have to compete with Lucky in downtown Hayward, which is within an acceptable travel time of about 14 minutes (7 walk/wait, 6 on bus, 1 walk).

Both cases, the Village Store and Lucky, require consideration of how to carry goods without a car. The bus will accommodate a standard two-wheeled, open wire frame shopping cart, which can carry 2 to 3 bags of groceries. Car share or the village mini-bus would also work. The travel time would still be comparable to suburbia. A shopping cart can be used for the walk home with groceries, whether from the Village Store, bus, or car share. The Village Store also allows use of a shopping cart. The lack of curbs and no step entry to ground floor units makes it possible to roll the whole round trip. The car system requires carrying bags of groceries short distances, and Bayview would be similar.

The project supports convenient access to BART, downtown, and CSUEB Hayward. Downtown Hayward has major shopping, cafes, a multi-plex cinema, and so on. CSUEB Hayward has restaurants, shopping, education, cultural events, and people. Residents can reach jobs, school, shopping, restaurants, entertainment and cultural events, health care, religious activities, and other venues in a normal, reasonable travel time.

## Accessible destinations

Besides generic trip durations, Bayview has good access to a large number of specific destinations. These durations are for average door to door travel time, which includes walk times and wait times, as well as in-vehicle travel time

**Bayview Village** , short walk for groceries, café with coffee, ice cream and snacks, ATM, community center, outdoor recreation, 3 minutes

**Hayward BART** by Village Bus, 14 minutes

**B St. (downtown)** , Cinema, restaurants, Lucky Store, The Book Shop, Buffalo Bills, Neumanali, Buon Apetito, Bijou, banks, optometrist, antique stores, numerous businesses, 14 minutes

**CSUEB Hayward** , the university, bookstore, academic library, two ATMs, a copy service, food vendors in the University Union, Theater, musical performances, University Dining Hall with a variety of affordable food, by Village Bus, 10 minutes

**On Mission Blvd**., Enterprise Car Rental, Hayward Plunge (large indoor municipal swimming pool), the band shell, Ward Creek Park, 8 minutes

**Neighborhood center** at Hayward Blvd. and Civic Ave., Bronco Billy's pizza, Subway, Chinese restaurant, Bonfair grocery store, women's workout gym, dry cleaners, 12 minutes

**67 eating places** , from fast food to fine dining, in Mission to downtown corridor, 8 to 12 minutes

**Garin Dry Creek Park** , 15 minutes [bus to campus, walk]

**Bay Fair Center stores** and Cineplex in San Leandro, 20 minutes, with 4 minutes on BART

**Downtown Oakland** 12th St., 40 minutes with 22 minutes on BART

**Oakland Airport** , 50 minutes with 12 minutes on BART

**Downtown Berkeley** , 50 minutes with 33 minutes on BART, UCB campus 10 minutes more

**Downtown San Francisco** , 45 minutes with 32 minutes on BART to Embarcadero and 36 minutes to Civic Center

**San Francisco Airport** , 1 hour 30 minutes with 1 hour 16 minutes on BART

**Buffalo Bill's Brewpub** , a popular attraction in downtown Hayward:

**Supporting files:** See /Bayview Village/2.5 Green Transportation/: files on activity and trip durations; Bayview Village trips and commerce; easy destinations from Bayview Village; NHTS data on persons or households, trip durations, purposes of trips, mode of travel, vehicle miles traveled, auto owned; NHTS data on VMT by density, income; and US car free low mileage statistics; spreadsheet on Village Bus. (Also special site plan on parking under 2.1 above.)

/Mobility analysis: 24 files on MTC, NHTS, and ATUS data and analysis, supports above.

# Chapter 11 -- Green Jobs and Economy

Bayview Village would create green jobs or, in more disciplined economic terms: given a probable fixed amount of investment in housing, energy, and transportation, green jobs would exist instead of conventional jobs in the same sectors. Some green jobs, like assembler, solar installer, and transit operator, might cost less per job than the corresponding conventional building trade job. Other green jobs, like high tech design and consulting jobs in rapid bus, solar design, and sustainable modular building, might pay more. Claims about jobs from green advocates and conventional builders tend to be unsubstantiated by careful comparisons; the research has not been done.

What can be claimed legitimately is that jobs shift from conventional to green; that conventional is getting more green; that green still includes some conventional jobs; and that the difference between the two in money and jobs is not likely to be great.

The real difference is the social and environmental benefits, which are hard to measure in the money economy. The analysis for the whole economy is different. The whole economy includes valuing non-monetized environmental and social values. In this frame, Bayview Village would show large gains compared with sprawled development, car dependency, inefficient land use, fossil fuel emissions, pollution, limited walking, and degraded health. Bayview Village achieves non-quantified values and frees some spending from the burden of the suburban system to more valuable consumption. A more efficient neighborhood system achieves the same goals as the suburban house system at a much lower cost.

Beta version comment: If I could get Van Jones to write this, it would be a lot longer. Jones is not as academic as the above; he has been a charismatic advocate to employ disadvantaged inner city youth in green economy jobs. They can do home energy audits, infra-red photography of heat loss, installation of insulation, weather stripping, better windows and doors, and solar systems, blower door tests, white roofs, and modular building construction, matching a needy workforce to sustainable jobs.

With leadership, California State University East Bay could link into the Bayview process and use it for a hands-on curriculum for engineering, business, economics, social science, and science majors. The university could work with an affordable housing agency to serve low income families with students. Students could do part time work for the store, café, HOA, and bus service. Investment in green human capital supports long term sustainable growth.

While it is hard to say in some disciplined sense if Bayview sustainability would have more money growth and jobs than sprawl, it is very clear that it would contribute far more to the whole economy, the big economy that includes non-monetized values.

# Chapter 12 -- Design

A major challenge of Bayview Village is to create a perception of low density in a high density neighborhood. The issue is not how dense to build it, but how to build it dense. The streetscape should look inviting, familiar, and comfortable, like an up-scale old neighborhood. The systemic aspects and economies of scale for the Village Bus, café, and store, which are not visible, need to be complemented by high quality design, which is visible. A major reason Bayview Village could achieve density without feeling dense is that it needs hardly any space for vehicles.

All too often, the emphasis of design is on the great building, standing alone, accessed as if by magic by people who float across some large blank space in front, which has to be there so we notice how great the building is. It doesn't occur to the show casers of artistic great buildings to show the parking lots or buses or subways necessary to get there, or how its function relates to the rest of life. There it is: the theater / concert hall / library / tall office building / research building / lecture hall / museum / religious building / government building, standing in all its glory.

Bayview architecture is about the sociability of all the buildings, relating to each other, with friendly and variety of design within a consistent theme. There are many places which have this sociability, usually when a neighborhood is built at once, like the row houses of older cities, or a main street with a row of stores around a square. It is the architecture of community, where many social networks of different sizes and overlaps are constantly evolving.

There are four components of design: building mass and setbacks, trees, facades, and longer views.

Building mass and setbacks are defined by the shape, height, and lengths of building facades and their distance across the street or walkway from each other. Rectangular building footprints are broken up by offsets among frontages, internal balconies, bay windows, and push-outs. Landscaping and ornamentation of facades would be added for visual appeal.

Buildings three stories high need enough separation for low-rise aesthetics, i.e., a feeling of openness and less density, which would be created by setbacks and walkways 32 to 34 feet wide, about the height of the buildings.

Landscaping breaks up the views of the buildings and is attractive in its own right. Tree spacing would avoid too many trees that could darken the street, hide the buildings, and overpower the rest of the design. At walkway entrances, Bayview Village could have statuary lions on brick pedestals opposite stylish old-fashioned street lamps on similar pedestals. Six feet of width between the walkways and building fronts would be landscaped. The frontages, including flower boxes, would be maintained by the HOA unless the owner wanted to do it.

One idea for the Village Square is to have raised triangles in the corners for trees, with different native tree in each corner: redwood, live oak, laurel, and sycamore. There would be benches on the side of the triangle facing the central plaza and fountain. The fountain pool would be shallow and designed for wading in hot days, with the fountain providing a cooling spray.

Lighting will avoid the glare of high, bright lights and use lights at about knee height that cast light down on the walkway and create connected pools of light for pedestrians. The Village Center would have brighter lighting and fancier fixtures given its high use, which would still be kept indirect to avoid glare.

Facades would have ornamentation; nothing creates a feeling of oppressive density faster than a big blank wall. Bayview Village would use neo-Victorian design structural ideas such as slanted and square bay windows, balconies, and push-outs, to enhance facades. Lapped siding using Hardie Board provides an appealing wall surface. There is some potential to use roof cornices, transoms; balustrades, porches and porticos; building corners, decorative elements on blank walls, etc. Bayview Village would use selectively ideas such as window hoods, window shields, and other window trim; cornices and gables, quoins, finials, bargeboards, spindle work, and sawn decoratives; decorative sticks and shingles; rosettes, buttons, bullets, and sunbursts; dentils and beading; brackets; pilasters, columns, and colonnettes with caps and capitals; friezes and panels with wreaths, rinceaux or garlands, balusters, and newel posts. I like the idea of flower boxes in windows at ground level, nine-light windows, and the Hayward city logo. The plan does, however, draw the line at towers, witches caps, and external balconies.

One unresolved issue is exterior window shades, such as a set of slats that slide on an outside wall to cover a window, or a protruding flat rectangle sloping down from above the window. These modern shades help let in heat in winter and fend off sun in summer, but do not fit with the neo-Victorian concept.

Bayview Village would also use Victorian colors, probably sets of three color palettes consisting of a light-toned main color, a stronger contrasting trim color, and a flashy highlighting color used with restraint.

From this cornucopia of possibilities, Bayview Village would incorporate a limited, coherent, and affordable set of design choices and test them on focus groups. Buyers would be offered some choices within the theme. The result should be affordable and with enduring eye appeal, great variety within a consistent theme––a gift to the street.

Longer views down the walkways would be varied, such as long graceful curves, views into a park, or facades at an angle from the viewpoint. Some views should be a short distance, others long. A major reason for six small parks is to provide for varied views. Two plazas on Main Way would also help increase visual appeal.

The Mixed Use Block has linked buildings around a courtyard and access from a main entrance on the busway, going to wide central halls, stairs, and elevators. The design would be similar to the walkway areas, and also visible from Bee, Overlook, and Palisade streets.

Overview of Village CenterLooking east, up busway

Moving up busway

Community CenterVillage Square

MU Bldg, Condo entrance on left, store entrance on right

Views north up Main Way from Village Center

Views further north up Main Way from Village Center

**Supporting Files** : See /Bayview Village/2.6 Look and Feel

/Other places: 152 eclectic pictures from about 20 cities

/SketchUp by Ta: drawings of 3 bdrm TH, 6 plex, Community Center, and Main Way

/Victorian homes in Alameda: 71 pictures of Victorian homes in Alameda

/Victorian Ideas: Woody Minor tour of Alameda, Victorian glossary, Victorian design outline and PowerPoint, colors spreadsheet, folders and pictures of 5 topics of Victorian design

# Chapter 13 -- Community

## Pets

Bayview should allow cats and dogs, but with regulations.

Any landlord who has seen a pet destroy their rental probably has a "no pets" rule. It simplifies things; it avoids having to figure out good pets from bad pets. Other landlords then make money off landlords that prohibit pets because they can charge more.

Humans, however, need pets for mysterious reasons buried deep in evolution and our brains. Pets humanize people, warm up their lives with special companionship, and help us relate to others. Pets can, in fact, be interviewed and a few management rules can keep the peace. There may be a few bad pets, and there are certainly a large number of untrained pet owners. There can be insurance to cover pet-caused damages.

Dogs are a bigger problem than cats, so we will focus there. Because of how we pamper them, cats think they are gods, while dogs for the same reasons but different brains think we are gods. Dogs simply do not allow their owners to have low self-esteem. They will be there for us whether we deserve it or not. Dogs mind our health by walking us. People walking a nice dog are easier to say hello to, although walking a nice human toddler also works. The tough teen with a 'tude to defend his 'rep melts back into a real kid in the presence of a puppy. Bayview lends itself to dog sharing and dog care exchanges for owners on trips. The Bayview Trail is a great dog walk.

Cats have one major strike against them, which is killing birds. The sweetest little pussy, no matter how well fed, is a hunter. Cats, however, unlike dogs, can live indoors. With a rule to that effect, dogs outside are less distracted by the need to chase cats, and there are more birds.

I think the pluses outweigh the minuses, but pet management and rule development are likely to be a frequent challenge for the HOA Board. One possibility would be a weight limit for dogs in the 60 to 80 pound area. Barking dogs can be managed with anti-bark collars. Bayview will have a higher sense of community with pets in the social network.

## HOA Services

As sales take place, management of the common area would gradually transition to a professional Home Owner Association management firm retained and managed by the Board of the HOA. Costs would be reduced by offering the two apartments in the Community Center to the on-site managers.

Management would perform administrative functions: manage HOA dues collection, security, condo sales, rentals by condo owners, homeowner association meetings, the community center, the store, the restaurant, carport parking, public parking, the car share/rental area, the Village Bus, taxi vouchers, minivan, electrocart, deliveries, utilities, landscaping, maintenance, and related matters.

There is a close link between security and community. There would be some security cameras, careful lighting, and defensible space, but much security would be provided simply by knowing everyone, walking around, and listening. The HOA management would manage issues among residents before they became serious. Double staffing would be avoided. On-duty staff, regardless of specific function, would also be trained for security functions. Indeed, security is primarily an automatic result of all the polices supporting community, which create social networks preventing crime.

The by-laws would have detailed, special procedures for dealing with problem owners, should the need arise. The HOA Board would have elected members and a small number of owners selected at random who were willing to serve, with terms of office balancing the need for turnover with the need for institutional memory and competence from experience. The City of Hayward would back up the HOA in emergencies, based on clear rules about appeals of HOA Board decisions.

The HOA management will have extra responsibility to help create a sense of community. They would have an email news service to send out advice as needed about how to manage the home energy system when cold or hot weather is coming, provide some fire safety education and training, advertise for the store and café, announce farmers markets and provide recipes for what is in season, help residents plan and publicize social and cultural events in the community center, and announce items that residents want others to know. For example, everyone would get an earful about my granddaughters within the HOA prescribed newsletter personal items word limit. In hot weather, the fountain would be open to kids, and the volunteer "fire department" could test its skills at getting things wet. The HOA would work with teens to keep them out of trouble and into things they want to do, assuming those are different things.

# Chapter 14 -- Regulation

Regulation is largely determined by the City of Hayward. Though the project is currently conceptual, the City of Hayward has taken action to support it. The City has approved Sustainable Mixed Use land use designation and zoning, and has approved a Program EIR for development of the surplus right of way in the SR 238 Bypass corridor, which includes the project area. The important regulations include CEQA, General Plan and Zoning, C3 stormwater regulations, Green Building Code, Inclusionary Housing Ordinance, and Fire and ADA requirements.

The City regulates the development from start to finish on every important issue. The regulations are not arbitrary, but there are so many of them requiring so many judgments that the City has real power. And it should, because the people of the City have to live for a long time with whatever the Council approves. The City has a strong incentive to approve development because it has no substantial capital of its own make things happen. The City has little choice but to be the arbiter of how best to allow necessary private profit to get enough of the public good it creates.

This power is especially important for Bayview Village. Some average developer may claim that Bayview is financially not feasible, can't get financing, won't sell because it is unrealistic about parking, and so on. Even with a supportive developer, it may be difficult to get financing; lenders have attitudes very similar to developers. The green they believe in is currency, and they avoid risk by sticking to what worked in the past. It seems likely that the City will have to go with the developer to ask the largest lenders in California, and even ask the State also to support the financing. The City's will to support Bayview will depend on its commitment to the vision and its deep understanding that it will be profitable.

With that as a framework, the City's commitment to use its regulatory powers to make Bayview a good project, and not to slow it down, hem it in, or stop it, will make a big difference. The specifics of a project may be close to the Bayview proposal or a variation, and it is hard to say how much can be reduced without losing the economies of scale that make it work. No investor will move forward with a Bayview kind of project without assurance of support from the City.

## California Environmental Quality Act (CEQA)

A landmark set of environmental laws adopted in 1970, CEQA requires considering the impacts of a project on its surrounding environment as well as the environment's impacts on the project. The impacts of this project (like any project in California) would be determined by an environmental consultant together with a team of specialist-consultants and documented at first in an "Initial Study." Many general impacts have already been addressed in the Program EIR, which evaluated the Sustainable Mixed Use plan designation and zoning that apply to the project area. No environmental problems were found. The project concept is consistent with the designation and zoning and thus has regulatory support.

A project application would require a more detailed environmental review. The City as lead agency would do an Initial Study to review the application and determine a CEQA "track." Based on initial meetings with City staff, this project could be put on a Mitigated Negative Declaration (MND) track, which protects the environment without the much greater time, expense, and uncertainty of a Project Environmental Impact Report track. In an MND, all impacts are deemed negligible or are made negligible with mitigations. City areas of concern would probably be local traffic, utility services (notably sewer), earthquakes (the site has a geomorphic break), and storm water management.

Traffic volumes would be about one-fifth the level of probable alternative residential development. Traffic impacts would be managed primarily by signals or other controls on Bee Blvd., at Overlook, and at the busway. Sewer impacts may require expanding a sewer line from the project down to Mission Blvd. If geotechnical investigation finds that the geomorphic interface is an active fault, the site plan would be redesigned so that dwelling units maintain a safe setback from the fault. The land immediately above the fault line would become available for other uses, such as a park or parking. A CEQA investigation may require additional mitigations.

The Bayview Village project would benefit the environment by replacing sparse vegetation and rock with native landscaping and bird habitat. Existing historic habitat, such as the wooded slopes in the creek area, would not be affected.

## City of Hayward General Plan and Zoning Ordinance

The General Plan acts as a blueprint for the long-term development of a city. Zoning regulates property more specifically and the density must be consistent with General Plan land use designations.

In 2009, the Hayward City Council, at HAPA's urging, included the Bayview Village concept in planning for the future of the SR 238 Bypass ROW. The Council did a program EIR on the corridor, designated the quarry area as Sustainable Mixed Use, and zoned the area with the same name.

The City of Hayward Land Use Map designates most of the site as SMU (Sustainable Mixed Use) and the Zoning Map does the same (<http://gis.hayward-ca.gov/pdf-maps/COH_Zoning.pdf>). The SMU zoning has an unusual parking requirement:

"Residential Parking Ratios. Residential units are allowed a **maximum** of 1.3 off-street parking spaces per studio or one-bedroom home and a **maximum** of 1.5 spaces for units with two or more bedrooms." [bolding added] There is **no minimum requirement**. The project has well under these maximums (100 leased spaces and 10 public spaces for 1,024 units).

The project complies with the zoning, and more parking would be permitted. The temptation is to increase the parking to appeal to dominant cultural preferences, but the more parking, the more loss of systemic efficiencies: less walking means decreased health; fewer units and more cars means reduced commercial viability, lower bus ridership, and less interaction for community. There would be less need to develop innovative market education strategies and less demonstration effect for the nation. There would be less excitement and less media coverage.

However, seven old lots on the west side of Overlook Avenue on the west side of the project area are zoned RSB6, Single Family Residential, 6000 sf Lots Minimum. SMU supports the intended density and land use proposed for Bayview Village, but RSB6 does not. The RSB6 area is 4.5 percent of the total project area. Development on the west side of Overlook would require an application to amend the City's General Plan and its zoning to SMU.

Some preliminary discussions with City planners have identified public open space, private open space, parking, street trees, and breaks in buildings for on-site views, circulation, and emergency access as zoning areas of concern. City planners suggested applying to rezone the whole site to "Planned Development," which allows the developer to work collaboratively with the City staff to allow greater design flexibility, such as in specifying sizes and locations of small parks within this project. A PD zone is not a blank check; it typically limits density to the existing zoning, and otherwise allows exceptions to that zoning. Furthermore, deviations from desired goals have to be balanced by going above average for other goals. For example, a short-fall in open space in the residential area could be compensated for by trail development contributing to a regional trail and providing trail access through a steep, heavily wooded creek area.

Whether the developer applies for a PD zone or for a redesignation and rezone of the seven lots on Overlook remains to be determined.

This property is also subject to a special zoning district overlay, SD-7. Overlay districts impose additional restrictions on properties to address specific needs. In this case, SD-7 calls for a regional trail on the property, linking proposed trails to the north and south. The trail must be approved by the City and the Hayward Area Recreation District (HARD), which is a municipal corporation independent from the City. This project would comply by providing a trail through the project, including a small segment of trail to the north to reach Highland Blvd. The exact specification of the trail remains to be determined.

**Supporting files:** See /Bayview Village/2.9 Regulatory Compliance: City of Hayward Land Use and Zoning; Form Based Code PowerPoint, Sustainable Mixed Use Zoning, Planned Development Zoning, Open Space Requirements

/238 land use planning 2007-9

/City regs applications and fees, in addition to the above

/Mission Blvd corridor, files relating to utilities and land use planning

## C.3 Provisions

The California State Water Resources Control Board (SWRCB) regulates storm water management. As related to construction, for many years the SWRCB focused on preventing pollution from entering runoff as it exited the site during construction; even silt was considered a pollutant. In the past five years, SWRCB has stepped up pollution prevention to regulate runoff exiting the site after the construction is complete, the "C.3 Provisions" in reference to its State law section number. Not only must pollutants be removed, but the volume of runoff exiting the site cannot exceed the volume, pre-construction. This project would satisfy its C.3 requirements by building the underground trickle-out system described above at 2.4 Green Water.

## Green Building Code

In January 2011 the State of California took its first step toward regulating green building by adopting the California Green Building Standards Code (Title 24), which Bayview Village will exceed. Build It GREEN is an agency serving Alameda County with offices in Oakland that promotes the code:

The first phase of CALGreen's rigorous new building code came into effect in January 2011, and subsequent phases have, and will become mandatory through 2014. This Code requires all new buildings in the state to be more energy efficient and environmentally responsible. And, it applies to all new building design, construction, and retrofits. <http://www.builditgreen.org/>

Independent organizations such as the U.S. Green Building Council (LEED certification) and Build It Green (Green Point Rated certification) provide guidance, training, and incentives for green building. The City of Hayward requires Green Point Rated certification. The new code requires:

•Installing Energy Star appliances

•Providing energy monitoring subsystems

•"Commissioning" buildings, which prepares and tests their system-level specifications for green standards

•Installing insulating covers on whole-house fans

•Providing at least 1 percent of electrical power consumed by a household from renewable sources

•Installing low flow water fixtures

•Not using potable water for irrigation

•Using efficient framing methods such as lining up studs spaced 24" on center under joists or trusses also spaced 24" on center

•Using locally supplied building materials

•Using Forest Stewardship Council sustainable lumber

•Installing only direct vent gas fireplaces or sealed wood burning fireplaces

•Using Low Volatile Organic Chemicals (VOC) paints, finishes, adhesives, caulking, flooring, and carpeting. Ray Anderson at Interface Inc. pioneered modular carpet tiles, made of recycled material and recyclable themselves. Worn tiles can be replaced, leaving good tiles in place.

•Providing individual room comfort controls (such as thermostats, operable windows, fan speed controls)

The Bayview Village project would meet or exceed all pertinent codes. Some options have yet to be explored, like use of ground granulate blast slag to reduce Portland cement use and fire resistant mineral wool instead of fiberglass or polystyrene for insulation.

## Inclusionary Housing Ordinance

To provide housing for low and moderate income families, California adopted the Community Redevelopment Law in the early 1970s. The law requires new developments to set aside percentages of the project's housing as affordable, with restrictions on resale to preserve affordability. The law also wanted intermixing affordable units with market rate units so low-income families could become better integrated into the local economy.

Income levels are established each year based on income data for each urban area from the U.S. Department of Housing and Urban Development. The urban area is the Primary Statistical Metropolitan Area (PMSA). State regulations are implemented at a regional level by the Association of Bay Area Governments (ABAG), the Council of Governments for the 9 counties and 101 towns and cities of the Bay Area. Each city is responsible for establishing its own inclusionary policies and demonstrating to ABAG a realistic plan to reach affordable housing goals.

The City of Hayward Inclusionary Housing Ordinance requires that 15 percent of the units in Bayview Village be affordable for moderate income households, defined as those with incomes below 110 percent of urban area median income for a given size of household. Affordability includes mortgage, HOA fees, taxes, and house insurance, with a total cost no more than 35 percent of income. In addition, a deed restriction limits increases in the resale price by the amount of inflation for at least 45 years.

In 2011, in the Oakland PMSA a one person household income limit was $77,500, of which 35 percent, or $27,143 per year ($2,262 per month) could be used for housing. For five persons, the income limit was $128,450, and the housing limit was $44,958 per year ($3,746 per month). The inclusionary home pricing is based on family size and number of bedrooms in the home: the bigger the household, the larger the home.

Based on current data from the California Department of Housing and Community Development, and assuming 10 percent down, 7 percent interest, and a 30 year mortgage, all Bayview Village units qualify for moderate incomes. For example, a one bedroom home for one person would cost $1,476 per month. A five bedroom home for a five person household would cost $3,054 per month. The project would need to qualify prospective buyers for 15 percent of the units. This analysis uses assumptions on the high side for housing cost, and is documented in a spreadsheet. The affordability is surprising so the analysis has been reviewed several times trying to find some error, but it holds up. Affordability could be a major marketing draw.

## Fire and ADA Requirements

Over the last decade or so, fire requirements have become tougher and ADA requirements have been created. These requirements are strict and quantitative. Fire access lanes have a minimum width, and maximum dead end distance, a minimum turning radius, a maximum distance from fire hydrants, a maximum distance between fire hydrants, and so on. There are rules for having two access roads, for slope for parking a fire apparatus and for building height. Bayview will have to be sprinklered at considerable expense, but, on the other hand, house insurance will cost less, and the place is less likely to burn down. Fire access width requirements of 20 feet were a major factor in walkway width, but the need for spaciousness was more important, requiring six to eight feet on each side of the walkway for a width of 32 to 36 feet.

Planning documents for the 238 Land Use Study include references to establishing two accesses to Bayview by building a second access from Highland Blvd. across the creek to the old quarry. This bridge is incompatible with Bayview for several reasons: it is very expensive, it urbanizes a natural area, it is car-oriented, and it is unnecessary. The project will have three road accesses: Palisade St., Bee Blvd. from below via Overlook Ave., and Bee Blvd. from above using the busway.

Residents would get some training in fire prevention and should get some training in on-site fire-fighting in really hot weather, along with some water play.

# Supporting files: See /Bayview Village/2.9 Regulatory Compliance: City Inclusionary Housing Ordinance.pdf; BV and City Inclusionary Housing.xlsx Chapter 15 -- Evaluation

The six goals of Bayview Village should be understood as mutually reinforcing and should be applied to evaluate most neighborhoods and neighborhood systems. Still, as complex and important as this framework of analysis is, it should not be considered as any kind of a complete picture. The framework is intended to help understand and improve all middle class and affluent neighborhoods; it is not helpful for low income neighborhoods, where problems of poverty are paramount. The framework is not helpful for dealing with population growth, and should not be used as a way just to get more and more people to live on less and less land. The framework is premised on a belief that this country, the U.S., is plenty rich enough to deal with poverty, population growth, neighborhood systems, and many other problems. What we lack is the knowledge, the insight and imagination, and the empathy necessary for a healthy body politic.

Also, a higher quality neighborhood only has value as a platform for living, which can be no more meaningful than the people doing the living. Bayview should be a great place to live, but what people use it for is more important than the platform. That quality of living is a mix of the enjoyment of the moment and working to achieve things. If I get to live there, I have a long list of things I would like to work on—cultural events, academic work, preparing old papers for archiving, family history, drinking small amounts of scotch whiskey, maintaining my health, crossword puzzles, jigsaw puzzles, and even enjoying my family and neighbors. The supporting neighborhood system will be hard to notice. The constancy of the surroundings and the routinization of life support activities mean they gradually fade from high conscious attention into the background of habits. The vital role of the system becomes almost invisible, no matter how valuable. And that is what neighborhood systems should do, just like we don't think about breathing and digesting.

## Affordability

The affordability question has three parts: the systemic affordability, cost controls to keep prices down, and the affordability to households of the combined cost of housing and transportation.

Affordability. The systemic affordability of Bayview compared to suburbia consists of building more housing on less area by reducing space for cars, lower costs from less roadway, parking, and structures for cars; energy savings from sixplexes and three-story row house construction; utility cost savings; and transportation cost savings, especially if no car is owned. Some issues are undecided, such as whether construction in a factory is less expensive than on-site construction and what kind of foundation to use. Some cost-saving in Bayview can also be done in suburbia.

Bayview necessarily has shuttle costs that can be avoided in suburbia. There are also some amenities in Bayview that add to the cost, but which also could be part of suburbia. In general, the research so far indicates that Bayview is more affordable than suburbia even with the essential shuttle bus, and that the added, more optional, features to make the affordability comparable.

Cost control. the design of Bayview has many cost controls, such as rectangular and efficiently laid-out floor plans and buildings, dimensions that minimize construction material waste, three-story construction optimizing roof and foundation costs, short utility distances per unit served, more units built on the same land area, greatly reduced infrastructure costs for cars, more efficient use of water, efficient passive and active energy systems, self-management of energy, walking trips, and reduced car costs. These savings are offset by features which add value, but also increase costs.

What costs can be stripped away and still have system change? The store, café, and bus are necessary, but the parks, trails, community center, and HOA services could go. These sacrifices, however, would virtually eliminate much of the design and community values that are also part of the big picture. A quick estimate of the total capital cost of the extras is less than $10,000 per unit, hardly significant in an average unit price of $254,000. HOA management costs $19 per month, part of the average HOA fee of $145 per month.

The HOA services can also be seen as contributing to affordability. The HOA provides "Easy Ownership": maintenance of outsides of grounds and buildings, high security, and other HOA services, eliminating most work outside the house and related costs of home owning, and making it easy to go on trips. My experience as a young homeowner was that I saved money by doing almost everything myself. My experience as an older homeowner was that I waste a lot of time and money taking care of my house. A lot depends on how one values one's own time, and one's ability to value one's own time as much as one would like.

The second issue looks at affordability to households of the combined cost of housing and transportation, currently and in the future. Concerning the future, affordability considers protection from rising costs for gasoline and electricity. Part of the cost, then, is for an insurance policy against the risk and probability of higher future costs.

Concerning the present, affordability considers the whole package, including the amenities, reduced utility costs, and reduced travel cost from mode change and from being closer to destinations. Analyzing the whole package gets complicated. For example, the buyer is subsidizing a bit of the cost of the store, but having an on-site store reduces travel time and costs, but then the small store lacks the economies of scale of a larger supermarket. The whole package, however, seems to be more affordable than comparable, more distant, suburbia, especially when a household learns how to live well without owning a car.

I've not seen comprehensive research, but the Center for Neighborhood Technology (CNT) has researched housing plus transportation costs. Their analysis supports the affordability of denser, inner areas because of the transportation savings. The Housing and Transportation (H+T) Affordability Index combines housing and transportation costs and divides the total by income to create an index. The index shows how transportation costs associated with the location of the housing impact affordability and how denser, transit-served areas have a lower overall index. <http://www.cnt.org/tcd/ht>. Bayview, for example, supports no-cost walking trips to the store and café, as compared to driving.

This discussion does not look at affordability compared with market housing, which we will look at under market research and underpricing and comparables.

## Sustainability

Energy: Transportation

Most sustainability talk has been about energy and buildings, and more recently about smart growth, but there has been relatively little discussion about transportation issues, and even less about integrating land use and transportation for systemic change. Bayview achieves more sustainability because it integrates a number of dimensions of sustainability into a systemic approach. Bayview Village itself could be more sustainable without any parking, but in my judgment that could not get financed and, in fact, Bayview with some parking is not getting financed.

Energy: Buildings

Green energy in buildings reduces dramatically the need for large power plants and long distance transmission of electricity. Power plants, especially coal burners, are the single biggest source of global warming gases. On-site generation in Bayview Village reduces the need for power plants, including large solar arrays that degrade desert landscapes and the need for transmission corridors which harms long swaths of landscape.

Land

Bayview saves land relative to suburbia, the amount depending on the definitions which, as it turns out, are difficult. Rather than try to get statistics on a whole bunch of suburbs and try to estimate their neighborhood walking area, we will start with the abstract analysis of the Density Matrix and the neighborhood systems concept of gross neighborhood density, as discussed in Chapter One. The Bayview site plan is specific about all the land uses and, thus, is specific about lot sizes and the ratio of residential lot area to other developed uses.

Using the Density Matrix also allows the definition to start from floor area per person to avoid complications of house floor area and household size.

Bayview uses 23.47 acres for a neighborhood of about 2,300 people. The standard suburban lot area is about one fourth of an acre. The Density Matrix shows 6.1 persons per gross neighborhood acre, requiring 375 acres, 16 times as much. The ratio of lot area to developed area in Bayview is 1.5, that is, neighborhood uses besides lots add 50 percent to the area to get gross neighborhood density. In suburban neighborhoods the gross area is about double the lot area because of large lots, large areas needed for paved streets and parking, and area for other local uses--small parks, neighborhood businesses, local schools, and related neighborhood uses. If a suburban area were planned as efficiently as Bayview and needed only 50 percent more area for gross neighborhood density, it would still need 282 acres, 12 times as much land as Bayview.

The offsite land savings are also of interest but not estimated. Bayview has many more walk trips, shorter vehicle trips, more bus passenger trips, and more mass transit trips than suburbia, resulting in dramatically less need for streets and parking. Large areas of open spaces and agricultural land could be closer to the urbanized area and accessed by transit, and more vacation areas would be reached by bus and rail. Walking neighborhoods along short corridors are feasible now, and if they grew, it would help increase ridership and achieve the large step increases needed for transit efficiency.

Land savings are a real issue because so much undeveloped land is threatened with unneeded suburban development. Greenbelt Alliance, a Bay Area advocacy group, publishes maps showing various threat levels. The map below for Alameda County shows threats directly relevant for the project. (On the map, the small pink "medium risk" land above the "d" in Hayward is close to the Bayview project location.)

Water

Many of the water sustainability features of Bayview can be implemented in any new construction: low flow fixtures, water-conserving appliances, duel flush toilets, grey water, storm water retention, and use of retained grey water and storm water for landscaping. Bayview has extra water conservation in greatly reduced landscaping area per capita and car washing compared to suburbia.

Materials

The California Climate Action Plan on Transportation and Land Use states, "smart growth projects can reduce VMT (vehicle miles traveled) and GHGs (greenhouse gas emissions) from 15 to 52 percent compared to traditional development projects." In general, Bayview would perform much better than smart growth (now called focused growth) because of its green energy and green transportation design. For specific households able to achieve mobility without car ownership, the savings would be greater, but variable. A resident walking and using the shuttle bus would save more VMT and GHG than a resident who may not own a car but uses car share and taxi vouchers a lot.

Even with some parking, the project is probably the most sustainable large neighborhood development being proposed in the US today precisely because it goes so far in reducing auto dependency. Bayview dramatically reduces fossil fuel use and greenhouse gases based on passive and active solar energy, including net zero on the grid, efficient appliances and lighting; tight, insulated construction; special windows and doors; and, of course, green mobility.

Bayview has less pollution of inside air using sustainable and healthy building materials, and less pollution of outside air based on reduced vehicle emissions.

Bayview uses much less water, has less storm run-off, reduces water pollution, and enriches habitat by using on-site retention and gradual release of storm water, rain water, and grey water, greatly reduced paving, water-conserving plumbing fixtures, and native drought-resistant landscaping.

Economic sustainability is an integral part of the environmental concept, but can be hard to distinguish from affordability. Doing more with less—productivity—helps both goals. Productivity here is meant broadly, not just labor cost per hour per unit of production, but also capital, fossil energy, water, land, and resource productivity.

Efficiency in land use is a result of reduced land area for cars. SMU zoning reduces the area needed by half, and Bayview requires only 7 percent of the area needed by the previous, typical zoning.

Bayview by itself in the larger scheme of things has only small impacts, but larger implementation of the concepts would become significant over time. Bayview improves energy independence and international competitiveness. It would reduce dependency on foreign oil and related military costs.

## Mobility

The proposal uses a large number of ideas to ensure mobility, which should not be seen as more difficult without a car, but as different. Given American culture, a better understanding requires thinking though many different trips to achieve a comfort level with alternative mobility. A different mobility system is unlikely to be clearly comparable to the car system; it will have some trips it does more poorly, and others better. Also, it is hard to untangle the characteristics of a particular location from the modal ideas of the project. Bayview Village works, in part, just because it is close the CSUEB Hayward, downtown Hayward, and Hayward BART. A suburb could work very well if the neighborhood happened to be close to an office center and a shopping area. Nevertheless, as the CNT data shows, inner, denser areas usually have better mobility because of the combination of improved proximity and walking and transit trips.

The mobility gains include the disabled, as discussed above.

Given how hard it is, in the American mind, to reduce parking and charge for it, it is critical for Bayview Village to go the extra mile, or perhaps better, to save the extra miles, by extensive alternative mobility. The project has onsite walking mobility for many shopping, eating out, and recreational trips, transit and walk access to CSUEB Hayward, fast/frequent/free transit access to the Mission corridor, downtown, and Hayward BART, onsite parking for 100 cars, car share/car rental, and public parking, offsite parking, mini-van for school trips and special cultural trips, taxi vouchers for health trips, and guaranteed rides home.

Car share/rental can be less expensive than car ownership and allows use of different kinds of vehicles for different purposes. Car share/rental is increasing with successful companies like City Car Share (<http://www.citycarshare.org/>) and Zipcar (<http://www.zipcar.com/>). Car share/rental is vital for mobility but also a degree of continued auto dependency. Too much use of car share would be difficult to manage, but can be moderated by pricing. Basically, car share/rental is supplemental, not the main mode.

I examined all the trip types for which information is available, from getting an ice cream cone to going to the airport, and all are quite doable. The challenge will be to educate investors and buyers that it will work for them.

Beta version comment: I'd like to evaluate mobility in terms of travel time budgets for a long list of trips based on household surveys by the Bay Area transportation planning agency, by the Metropolitan Transportation Commission, and by the federal National Household Transportation Survey. The hypothesis is that Bayview residents will have substantially shorter travel times and lower costs than suburbanites

## Security, Health, and Safety

Security

Women and the elderly are concerned about their personal security and their children's security from violence when walking in public. Without special measures, they could feel vulnerable at night on the walkways. In suburbia, cars provide security to get close to the front door.

Bayview needs to serve real needs and felt needs for security. The geography helps, with a steep rock up slope on the east and steep down slopes to the ravine and hill face to the north and west, leaving only a small half circle accessible on the south side.

The project will provide security many ways. Much is accomplished just by social networks, by which residents know who belongs and who is an outsider. The private nature of the project outside the rather busy and public Village Center makes it easier for residents and HOA staff to monitor who is there and remove suspicious or undesirable persons. The security cameras strategically placed at main entries and main walkways, nice lighting, some privacy gates, and defensible space, especially on walkways at night, will help.

Bayview should also have cell phone app so a few pushes of the keys alert the HOA manager on duty. Bayview should have an escort for anyone who requests it, typically for when the bus or minivan returns from an evening event, and people need to stroll home. The night manager would also have some irregular walks about to keep an eye on things. Residents would get guidelines and occasional short training about how to respond appropriately to various situations.

The security system needs to be able on occasion to ramp up, because sooner or later miscreants will test the system. However, a reputation for effective security is the best deterrent. The whole emphasis is on prevention, which, ironically, will mean that the system is not particularly noticeable. Most of the time security will need only a light touch and can be unobtrusive.

A specific issue concerns the regional trail. The proposed route through the project must be closed at dusk. If that is not permitted, a less desirable route around the east side is possible and can be fenced off from the residential area.

Safety

Children and teens are especially vulnerable to auto accidents. The project will be safer because of less risk of auto accidents. Kids can play on walkways where traffic is banned. There will be less driving and so less risk for drivers. Pedestrians will mostly be in areas with no traffic, which is especially important for children.

Health

Bayview Village will be healthier because of reduced air pollution, a quieter environment (no motorcycles! no trucks!), and more walking. Bayview encourages health by having a fitness center, hiking trails, and nearby recreational opportunities, the Health and Tennis Club, which has a pool, and the CSUEB Hayward playing fields and tennis courts. Convenience does not, of course, guarantee use, but it is correlated with increased use.

A generation ago, three fourths of American children played outside every day; now only one fourth do, and many hours are spent with electronic media. Kids in Bayview will have safe outdoor play spaces nearby.

Hopefully, the community garden, store, and cafe can feature locavore and other healthy food.

Air pollution is reduced several ways. Less burning of fossil fuels means less production of hydrocarbons and nitrous oxides, which lead to smog, which is ozone, a very reactive corrosive form of oxygen. Less burning of fossil fuels, especially coal, reduces particulate matter, which is soot, and which kills more people than car accidents every year. Scientists report that particulates are a special threat to children and the elderly, combining with smog to trigger asthma attacks, permanently damage child lung development, and trigger heart attacks.

See also Dropbox / x. Evaluation / Articles of Interest

## Design

Design here focuses just on how the project looks, not the many other aspects of design, and has largely been discussed above. Within the development footprint, the project has intensive landscaping and attention to design aesthetics of sight lines and variations of elevation, building form and space, managing perceived density with setbacks, push-outs, balconies, recesses, bay windows, porches, and façade treatments with Victorian concepts and painting schemes. It does not have to be Victorian, but it does have to be something appealing and approved by focus groups.

It would be wonderful if the gurus of Neo-Urbanism could lavish their special vocabulary on Bayview design. It is, however, the opinion of the buyers that matters. I want to use focus groups to refine ideas that architects come up with, starting with variations on Neo-Victorian. SketchUp has been used to give some idea of how the Village Center and how Main Way would look, shown above under Project Description, design. In short, the evaluation of design depends on people more than the professionals, because it is people who will live there. If professional do decide to live in Bayview, let's hope they agree with people.

## Community

Community depends more on people than on architecture. Nevertheless, there are some things planning and architecture can do. Don Appleyard's research on Livable Streets shows how important traffic is in depressing social ties and perception of neighborhood quality. Suburban streets tend to be too wide and houses spread out too much for much social interaction. Even a little density helps; a neighborhood on a narrow, low traffic street with houses closer together can have good ties.

The density of Bayview Village is helpful for community. People will meet face to face, not bumper to bumper. The project facilitates community on the walkways, in the mailbox area of the community center, at various community center functions, at the store and café, in the small picnic parks, in the community garden and orchard on the PG&E easement, and in HOA-sponsored school, shopping and cultural trips in the mini-van, and during community events. The lack of traffic creates a quiet, peaceful atmosphere. The HOA Board and live-in managers will be as much responsible for fostering a neighborhood as maintaining the physical plant.

The Village Square will have the design and central location to be a hub for informal hanging out in good weather, and the Community Center will have loafing space also. I imagine chatting with some neighbors in warm weather on a bench in the Village Square. I'll have a cheap Americano and an over-glazed crinkled donut from across the busway.

I expect affinity groups will spring up such as, for example, a musical performing group. In good weather some people will hang out in the square and parks. The community center can be a place for interaction for fitness, meetings, and special events. Once families realize how well Bayview Village works for them, they will have community around the tot lot, the children center, and the minivan.

The role of the HOA in achieving other goals, such as dynamic carpooling, is also valuable for creating community.

Privacy is also important. Some urbanologists may exaggerate the importance of neighborliness; some seem to be overly fascinated by Italians walking past each other in hill town plazas. Many residents are likely to have primary ties outside the project, or be happy within a small social circle. The project will also be careful to preserve privacy and being left alone.

## Related Evaluation Systems

Congress for the New Urbanism

The Congress for the New Urbanism (CNU) was started about twenty years ago at the Ahwahnee Hotel in Yosemite Valley. A group of progressive architects and designers created the Charter for the New Urbanism with excellent general principles and 27 criteria for metropolitan, neighborhood, and project levels. (<http://www.cnu.org/charter>) The CNU principles for neighborhoods, criteria 10 to 18, are close enough to smart growth as advocated by Smart Growth America, that we can cover both using CNU terms.

"10) Areas that encourage citizens to take responsibility for their maintenance and evolution." Bayview will be governed by a Home Owners Association that will have a somewhat complicated organization to assure participation and avoid the over-participation, polarization, and incredible dysfunction that has plagued some HOAs. The structure will provide for a mix of at large and phase area representation, with some directors from the whole Village and others from small phase areas. The HOA will have a kind of term limits in the form of breaks in service, use overlapping terms, and pay a few homeowners to attend a Board meeting on a slow rotation. Professional HOA management will explicitly be qualified in conflict prevention, and not just manage a physical plant of utilities, buildings, and grounds. Since structure––the procedures used by the HOA––cannot guarantee success, there will also be some fallback procedure that can be invoked to put an issue into the hands of the Hayward City Council. The procedures should not be easy to use, but would be there if needed.

"11)...Compact, pedestrian friendly, and mixed use." Bayview is planning the amount of mixed use that seems to be economically viable for a small neighborhood. Usually mixed use refers to businesses within walking distance, but the Village Bus expands considerably the amount of easily accessible business.

Also "11)...Corridors are regional connectors of neighborhoods and districts..." The Village Bus creates a backbone of support for the CSUEB Hayward to downtown corridor. Additional city policies and investment are needed to reach a higher level.

"12) Many activities of daily living should occur within walking distance, allowing independence to those who do not drive, especially the elderly and the young. Interconnected networks of streets should be designed to encourage walking, reduce the number and length of automobile trips, and conserve energy." Bayview Village fully meets these criteria. Walking short distances is not just encouraged; it is required.

"13) Within neighborhoods, a broad range of housing types and price levels can bring people of diverse ages, races, and incomes into daily interaction, strengthening the personal and civic bonds essential to an authentic community." Bayview meets the housing type criteria with units from studios to five bedrooms, with a corresponding price range. Bayview may or may not meet the income criteria, depending on the definition of "broad." Bayview is constrained by its need to be profitable. It lacks upper income housing as such as part of its philosophy, although upper income people should buy in. All of the housing meets HUD affordability for moderate incomes, but not low and very low; it's just not economically possible. If an affordability housing agency participates, more lower incomes could be helped, but the agency would have to be persuaded not to subsidize cars, which they all do at this time. Bayview also meets these CNU criteria with many features in addition to housing type and price level. Bayview is committed to social diversity not only in its make up but also in its support for social interaction.

"14) Transit corridors, when properly planned and coordinated, can help organize metropolitan structure and revitalize urban centers. In contrast, highway corridors should not displace investment from existing centers." While Bayview is not a corridor project, its bus supports corridor and downtown Hayward redevelopment with transit and with business patronage based on transit and walk access.

"15) Appropriate building densities and land uses should be within walking distance of transit stops, permitting public transit to become a viable alternative to the automobile." The longest walk to the Village Bus is just under than five minutes, but the transit is private, owned and operated by the HOA. The bus is likely to start as a service for Bayview residents. The plan, however, is to integrate the service with the proposed CSUEB Beeline Bus shuttle on the same route, and with proposed support from Mission Blvd. redevelopment. Joint Powers Agreements and Memorandums of Understanding can allow most riders to ride a fast, frequent, free service. The initial service would be every ten minutes, then every five minutes with CSUEB Hayward, and every four minutes with City support. The financing is not based on fares; operating revenues come from parking fees, class pass, HOA dues, and rents, allowing the supporting entities to allow public use of their buses, and they operate as a single system as far as riders are concerned.

"16) Concentrations of civic, institutional, and commercial activity should be embedded in neighborhoods and districts, not isolated in remote, single-use complexes." Bayview centralizes activity in the Village Center with a Village Square, Community Center, Store, Café, and Busway within the project area.

"17) The economic health and harmonious evolution of neighborhoods, districts, and corridors can be improved through graphic urban design codes that serve as predictable guides for change." Bayview does not have a code yet, only a lot of design ideas. The developer would probably work with the City to develop such a code based on the design of the initial project. The need for such a code is long term, given that the project builds a whole neighborhood that will last for decades before some rebuilding might be needed.

"18) A range of parks, from tot-lots and village greens to ballfields and community gardens, should be distributed within neighborhoods. Conservation areas and open lands should be used to define and connect different neighbor- hoods and districts." Bayview has large open space on its periphery, small parks within, a tot lot, a bocce ball court, trails, a picnic site with a view, and a community garden. A tennis club is within walking distance as are playing fields of CSUEB Hayward, and an old basketball court on the PG&E corridor.

LEED and Green Point Rated

Based on the most recent spreadsheet for evaluating performance by LEED, Bayview should achieve LEED platinum. Using the LEED 2009 for Neighborhood Development Project Scorecard, Bayview got 110 points, with platinum anything over 80 points. Whether the project goes for the rating depends on how expensive it is to get it.

The GreenPoint Rated Checklist for new multifamily is similar to LEED ND, is more extensive, is required by the City of Hayward and may be more practical to use. By "more extensive," I mean eight pages, all of which are presented here. It is interesting that so many of the building and energy specs are not used by GreenPoint and require technical tests not part of GreenPoint. The Checklist, however, is a better outline for sustainability than the specs for Bayview, because it applies to all projects, and covers some items not relevant for the Bayview case. If you are trying to figure out your own project, the Checklist broadens your frame of reference.

International Living Future Institute ILFI

The simplest way to discuss the Institute's system of 20 imperatives and Bayview is by using a table. Bayview Village is in Transect L4, the General Urban Zone, which "is comprised of light- to medium-density mixed-use development found in larger villages, small towns or at the edge of larger cities." Bayview, with a FAR of 1.47, is at the top of the L4 range of 0.5 to 1.49, and the next transect up, "urban center," is definitely too dense. Much more detail on the "Living Building Challenge 2.1" is at <https://ilbi.org/lbc/LBC%20Documents/lbc-2.1>

The ILFI Living Building Challenge does not have the detail of GreenPoint Rated, but brings in new ideas about what is included. It generally has enough specificity so you know what it is talking about, but many of the specs seem designed for a different situation or have some goals that Bayview does not have. Bayview has a strong commitment to affordability, which limits the ability to achieve more costly sustainability. Bayview needs to have affordable prices to be marketable and still provide a good return to investors; it is trying to demonstrate economic as well as environmental viability

Litman

Todd Litman, America's leading transportation analyst who lives in Canada, has a Healthy Community Checklist which can be used to evaluate Bayview Village (BV).

•Sidewalks and crosswalks on most streets. BV: yes, on all streets

•Sidewalks accommodate wheelchairs and other mobility aids. BV: the southern part of the site is too steep in some places for wheel chairs. About 80 percent of the site is less than 5 percent grade and has no curbs, for curbless access from front door onto the bus or into building in the Village Center

•Moderate to low traffic speeds on local streets. BV: most streets are walkways with no routine personal vehicle use. Speed limits on three blocks with vehicles will be slow, reinforced by steep grades and distances on the only three short blocks allowing traffic for 1,024 units.

•Streets are safe for cycling: BV: Yes, most with no traffic, a few with slow and light traffic.

•Well-connected paths and roadways provide multiple routes to destinations. BV: yes, plus site plan is laid out to minimize walk distance from periphery to center.

•Most commonly-used services (shops, healthcare, parks) within convenient walking distance (less than a half-mile of homes), with good sidewalks and crosswalks. BV: The size of BV is too small to support more than small parks, community center, a grocery, and a café. The maximum walk distance to Village Center is just under five minutes, 1,290 feet or .24 miles.

•Public parks are available nearby. BV: A public regional trail comes through the project, providing access also to Ward Creek linear park. The playing fields of the public university are across the street and uphill a bit.

•Streets have trees and other public greenspace. BV: The streets, really walkways, will have spaced trees and six to eight feet of frontage landscaping in front of the units. All the units are close to small parks and trails.

•High quality public transit (at least half-hour frequency) available within convenient walking distance. BV: BV does not have public transit; it owns its own bus system, providing fast, frequent (every ten minutes), and free service to residents to the campus, downtown Hayward, and BART.

•Region has high quality public transit and high transit mode share. BV: The region is very uneven in transit quality and mode share. BV will be part of the high quality inner core of San Francisco and the East Bay, with the Village Bus functionally an extension of BART.

•Parking is efficiently priced and managed, so residents only pay for parking spaces they want. BV: All parking is charged a market rate. The 100 carports are leased for a year based on bidding. The small number of public parking spaces are charged hourly based on an 85% vacancy guideline and using modern monitoring and charging techniques. Offsite parking would be at a market rate.

•Relatively high (at least 20%) non-automobile mode share. BV: I have not yet done a detail mode split analysis, which would require many assumptions. However, given the cost advantage of alternatives to the car and their rich and diverse availability, I would estimate that the non-automobile mode share would be 90 percent. However, car share and rental are part of the plan, so including those could lower the non-automotive share to 75 percent. Trip estimates include walk trips to Village Center and parks that would in suburbia be made by car. They also exclude taxi trips as automobile trips as they are set up as transit-like benefits using taxi vouchers for health appointments and guaranteed ride home. Another complication is non-personal trips like store/café, parcel, postal, and sanitation pick-ups and deliveries, utility related trips, maintenance trips, and public safety trips.

•Good air quality. BV: BV dramatically reduces vehicle trips and thus air pollution. The car share vehicles will be hybrids or plug-ins and the Village buses will be diesel electric hybrids with regenerative braking.

The evaluation of Bayview needs to stick to basics and not get distracted by the more outré Age of Aquarius, or maybe now post age of Aquarius, or Burning Man age, or whatever, that gets away from how most urban people live most of the time, in their very practical way. Creation care is a mainstream idea. It is rooted in historic religious commitments to the holiness of creation that is so fundamental to more specific beliefs, no matter how much those beliefs may differ on the specifics. It is not a stretch to say that our practical daily life is also our deepest, emotional commitment to life. We can try harder to understand how neighborhood systems support that life, how suburbia is failing them, and how we can do better.

# Chapter 16 -- Markets and Marketing

Initially, for most buyers, the affordable price of homes will get their interest. Bayview prices will be affordable, but it is hard to predict how they will compare with other offerings after the roller-coaster ride of housing prices over the last decade. The US housing boom and bust, unique in world history in its recklessness, criminal speculation, and vast size and scope, is nearing its end in 2013. The Shiller constant-house price index from 1890 to 2010 shows a fantastically high peak in 2006 and an equally fast collapse to early 2012. This history means that prices during the boom and bust are not useful for judging prices of Bayview units.

By 2013, prices dropped down to a little above normal. A huge overhang of foreclosures, broken chains of ownership, incompetent banks and other lenders, and paperwork scandals has slowed recovery nationally. By contrast, the strength of the agglomeration economies and technologies of Silicon Valley and San Francisco are pushing Bay Area recovery ahead of the nation. Commercial space on the Peninsula will soon tighten up. The growth hubs will push demand outward to places like Hayward.

The length of time on the market for home sales is a sign of where the market is. The housing inventory in Hayward in early 2012 was down from about six months to 75 days. Housing listing time on market was shrinking. Developers are coming in with rental projects. Short sales are working down underwater problems and defaults, as banks figure out how to lose money more slowly. Bayview is now more at risk of being too late to market than too early.

## Supply and Demand

Long term projections for demand for housing in Hayward, Alameda County, and the San Francisco Bay Area are bullish. Absorption of the number of units proposed by Bayview is quite feasible within the demand projected for Hayward.

1.A recent study by ERA|AECOM evaluated demand for Hayward: "ERA projects demand for approximately 8,900 new residential units in the City of Hayward between 2010 and 2030. Of this total, about 5,700 would be single-family units and another 3,170 would be multi-family units." (ERA|AECOM, South Hayward BART Area Market Analysis, ERA project #18355", September, 2009, p. 3)

2.The City of Hayward is planning redevelopment of the section of Mission Blvd. just below Bayview. AECOM Economics in May 2010 prepared a 51-page market analysis which also mostly applies to Bayview. The report covers employment and commerce as well as housing, and states that the corridor needs revitalization and can expect gradual employment and retail growth. Concerning housing, most relevant sections stated:

"Based upon a tabulation of building permits issued, Hayward added on average 351 units per year during the 1998 to 2008 period with the multi-family share being 25 percent." (p. 9)

"A review of the Hayward housing demand, based upon a modest 0.8 percent annual population growth rate, indicates 9,000 units over the next 20 years. This averages out to 450 units per year; and given the highly cyclical nature of real estate cycles, the actual construction in any one year could deviate considerably from this long term annual average. As land becomes scarcer, the proportion of multi-family development will increase. The multi-family share of overall demand is estimated at 59 percent (see Table II-12)." (p. 3 and pp. 12-13 [See Market Study.xlsx for Table II-12])

AECOM Economics projected 8,620 more households over the next 20 years. (Table IV-1, AECOM, _Mission Blvd. Market Analysis and Economic Development Strategy_ , May 24, 2010, for the City of Hayward).

3.The City of Hayward has planned and zoned the quarry area for the Bayview project. The City updated its Housing element in June 2010. The Housing Element reports 23,824 owner-occupied housing units and 20,980 renter-occupied units in Hayward. (City of Hayward, 2009-2014 _Housing Element,_ p. 17, for 2000.  http://www.hayward-ca.gov/about/generalplan/Chapter05-Housing.pdf). The report indicates that the new SMU zoning for the quarry area has a potential for 964 units:

City of Hayward, 2009-2014 Housing Element, p. 5-78.  http://www.hayward-ca.gov/about/generalplan/Chapter05-Housing.pdf, Table 5-42)

4.On a regional level, ABAG completed an internal study in May of 2009 that projected the need to add 635,000 new homes for 1.7 million people for the nine counties over the next 25 years. (Regional Housing Needs Determination Plan, Part B, Regional Profile, p. 1,  http://www.abag.ca.gov/planning/housingneeds/pdf/RHND_Plan/RHND_Plan-Chapter_1B.pdf ) ABAG planners are pushing for denser growth near transit as a way to accommodate growth without adding to freeway congestion or losing open space. The ABAG study projected that Hayward would have the 10th largest growth as a percent of base population among the 101 cities of the Bay Area, or 35,600 more people.

The state Department of Finance has similar projections and, in fact, ABAG is required to use its projections, and local officials are required to use ABAG's. These official projections are generally similar to what private firms like AECOM come up with.

## Market Research

Conventional market research is limited by the large differences between Bayview Village and other housing. The generally conservative mentality of the residential real estate development business makes innovation difficult. There is a belief that market research studies can answer the question about price and absorption, but such studies only look carefully at the past and examine minute trends in great detail. They guess the future by looking into a rear view mirror. If reduced parking projects in the past worked in the most central areas of a few big, old cities, then that's the only place they can work. An excellent market research firm told me that Bayview could work in San Francisco, Oakland, or Berkeley, but not Hayward. The basis for this conclusion was that similar projects had been done there, not Hayward, and that the inner bay cities had the cachet to attract buyers.

It is hard to study the market for Bayview because it is so different from the rest of the market. More research could be done. Surveys, interviews, and focus groups of the primary market would have subjects keep a travel diary. They would list their home-based trips, frequency, general purpose, specific purpose, and duration, similar to surveys MTC does already. Keeping track can prompt people into thinking about the trips they make. Trips would range from those made frequently, once a week or more, e.g., to work, shop, and eat out, to those special or long distance trips away from home for a night or more. Respondents would think about what trips would be comparable in Bayview, which easier, which more difficult. They could summarize the workability of Bayview on a 5 point scale. They'd discuss pricing, unit types, floor plans, façade design and ornamentation, color schemes, and mobility options. The group would discuss the potential for education to market the project. They would tell us if they might want to buy a unit in Bayview Village.

This kind of extra sociological research that might analyze a market for Bayview has not been done, and, if it were, would probably not be believed by conventional investors. Development firms look at what worked last year and what competitors might be doing. Investors look for developers with a track record, but no one in the US has a track record for any project like Bayview, which is much bigger than the average project and much more innovative.

Investors seem to prefer personal networks developed over years of activity, and are highly secretive about their pro formas, either for competitive reasons, to avoid embarrassment, or both. There is no national website for smart growth investments needing investors.

I have informed a few hundred possible investors, and none are sufficiently interested to study the information I have developed. Bayview seems to require an entrepreneurial investor with environmental values, able to invest for a longer period than usual, who understands the future better than the industry. Sometimes, as Einstein said, imagination is more important than knowledge.

HAPA did invest in a conventional market research report. Much more detail on market conditions is provided in Susan State's Bayview Village Market Study of July 2011. She reports (p. 8):

Bayview Village "would introduce a level of sustainable living unlike anything in the CMA, resulting in potential upside for absorption among residents seeking this lifestyle. There is considerable support on the part of the development team which suggests that the community outreach program has the potential to be marketed to an untapped audience, and may well have a level of "celebrity" endorsements unlike any conventional new-home community. These endorsements could include people and entities tied to sustainable living, green living, co-housing, and other contemporary thinking individuals which could result in a tremendous amount of public relations articles reaching a broad range of potential buyers/renters."

"News articles written and endorsed by celebrities all across the nation could result in an absorption rate that far exceeds a typical subdivision."

"For this reason, we are projecting a potential for absorption rates that could be double (or more) that of a typical community. The more optimistic absorption rate, based on extraordinary efforts on the part of the development team could yield...For-Sale Program: 10 per month (2015) and 12 to 15 per month in 2016, moving forward."

Her report, however, has not been enough.

## The Market

From a great deal of research and the logic of the situation, four major markets are identified: retirees and seniors, CSUEB students, faculty, and staff, BART users, and home office workers. These groups can generally and easily meet their travel needs in Bayview. A fifth category has buyer interests that alone or in combination with others could make the sale. There are also a few qualifications that seem to apply to all comers: willingness to live in Hayward; ability to qualify for a mortgage; travel patterns with acceptable durations in Bayview; and attitudes supportive of the general concept.

Seniors

Bayview is specially designed for seniors, retirees, and empty-nesters. 22% of Alameda County population is 55 and older. Seniors often sell a big house they no longer need and move to a retirement location, to be close to their children, or to a smaller, better-located space. Bayview offers "easy ownership" because the HOA does all the outside yard and house work; it is easy to leave on trips. Bayview offers high security based on defensible space, social networking, surveillance, and HOA on-site managers.

The Mixed Use block has one bedroom and studio units ideal for seniors with limited personal mobility. They can use interior hallways and elevators to get to the front door of the Mixed Use Building, where the bus, store, café, village square, and community center are located.

Most seniors, however, are active and involved in the community, where day-to-day activities are social and recreational rather than work-related. In Bayview, they would have other seniors to associate with as well as other ages. Many in this group have lived in the Bay Area for many years and wish to remain because of familiarity, ties to family, friends, various group activities, and attractions. Bayview provides a high quality environment for those who want to drive less or not at all. Some seniors, for example, won't drive on freeways at night. Many who are personally mobile have given up, or greatly reduced, their driving because of age and the stresses and expenses that go with a car. For them, living in Bayview Village would improve their mobility and quality of life.

Seniors generally have social skills for developing community, but have extra needs for security, as discussed above under health.

CSUEB Campus

Administrators, staff, faculty, students, and those who want to live close to a university would be attracted to this project because of its proximity to the university. CSUEB has a high population of international students, who for various reasons do not have cars and who also might appreciate a community like Bayview. Residents can hop on a free bus and get to campus in two minutes. Similarly, other Bayview residents who are employed along the Mission Blvd. corridor and downtown, including City Hall, would reach work in about six minutes once on the bus. Local employees would have the ability to get to work without a car, saving on both the cost of driving and of car ownership.

BART and Bus Commuters

Bayview should appeal to people who use BART, go downtown, or go to places served by the Village Bus or by the AC Transit bus hub at the BART station. From BART, there is a special express bus to San Mateo with stops in Foster City and Oracle's worksite. Its travel time is 45 minutes; it costs less than driving, and is more pleasant. At developments near BART, such as City Centre in Hayward, renters are noted for paying a premium ($100 to $300 per month) over other rental options to get a short walk to BART. Vacancy rates at these villages tend to be low. These renters ultimately save money by avoiding or reducing car ownership. Several condominium developments near Hayward BART have sold well. In Bayview, the fast (six minutes on the bus), frequent, and convenient bus shuttle service to BART makes it comparable to BART transit villages.

Home Office Workers

Bayview is ideal for work at home. Very little outside of San Francisco has been built for a work at home market. A growing segment of the workforce spends a significant portion of the workweek at home, working, for example, at their computers in their home offices, or in their shops making artisan products, or operating mail order businesses. Empowered by inexpensive computer systems and high-speed internet access, businesses are finding that it is cheaper and more productive to employ people working out of their homes. More self-employed small business owners also can work from a home-work unit. Floor plans showing bedrooms could also show them as work spaces, and there is some flexibility within the outside wall perimeter to meet buyer needs.

The three-bedroom unit is especially designed with spacious flex space on the ground floor for an office or work shop. The Community Center will have some rental office space on the second floor with the most cost-effective communications technologies, such as video conferencing. For home workers, living in Bayview Village would allow working while being part of a peaceful, pedestrian-based community. Telecommuters often complain about feeling isolated and, as much as they prefer working at home, would appreciate opportunities for social interaction with neighbors.

Overlapping Markets

Where other markets overlap with the four major markets described above, Bayview becomes even more attractive. While the four above market groups are mostly distinct from each other, several additional markets overlap with them and with each other: families, environmentalists, health-seekers, people with disabilities, community-seekers, cohousing groups, and affordable housing agencies.

Families

It is fundamental to the Bayview value on community that all kinds of households and all ages can have a high quality of life. Bayview is for everybody, including families.

Twenty percent of Hayward households have five or more persons. Bayview may have unexpected appeal for families with several children and three generations. Multi-generational homes are increasing, by about 30% from 2000 to 2010. Causes include the cost of housing, a relative who can help with child care, the need to take care of an adult dependent like an aging parent, helping a boomerang kid (out of college/veteran/lost job/back in school), and cultural preferences, especially for Asians and Hispanics, who are about 17 percent of households.

Bayview can meet their needs in the four and five bedroom townhouses on the north side. The three bedroom townhouse flex space has 340 square feet and a patio. It has a separate entrance and room for a kitchen, allowing it to be a small independent living unit for a family member. The Tot Lot will have a children's play area and fencing to make caring for toddlers easier, and other parks would have some play areas for older children. Bayview will have a minivan for taking kids to nearby schools and for driving to family outings. The Community Center will have a room and outside area suitable to convert to day care if parents want to make it happen.

Children are safe within the main area because there is no traffic. They can play on the walkways and parks, catch the bus and mini-van, and visit friends safely.

Travel with children is challenging in any environment. Here and in Europe strollers often carry groceries and children. Cars make some things easier, but there are ways to manage just as well in Bayview as in suburbia. In suburbia, some trips require strapping the child into an infant or child safety seat, possibly folding up a stroller, lifting the child out of safety seat, unfolding the stroller, putting the child into stroller, crossing traffic and a parking lot to a store, and reversing the process at the end. In Bayview, you could put the baby in your personal home grocery cart and walk to the store in five minutes or less. You return with the groceries and the same cart (and baby). For ground floor units, you can keep rolling to the kitchen counter.

I've studied neighborhoods all over the US and Europe. Denser US communities are not being designed for families. Dense neighborhoods of the 1890s to 1920s, where children of all classes once walked and rode the bus even into the 1960s, are often not safe these days. The threat is from traffic more than crime, and, in fact, suburbanites are even worse off due to auto accidents.

Even in US neighborhoods horribly impacted by traffic, barriers to movement, threats to safety, noise, and pollution, people travel with children and no car. Old neighborhoods in San Francisco, Oakland, and Berkeley have many families traveling without a car. In the Bay Area, parents routinely roll strollers onto BART. These families often have problems created by other people's cars–speeding, blocking the way, creating anxiety for pedestrians. Many lower-income people with children get around fine; lack of a car is the least of their problems.

Concerning education, high quality pre-school, primary, middle, and high schools serve the project. The CSUEB Hayward campus provides high quality child care at the Early Childhood Center (ECC). The ECC has services for infant, toddler, and preschool age groups, and a nutrition program. The ECC meets Head Start standards and is accredited by the National Association for the Education of Young Children. ECC maintains a ratio of one staff to four children or infants, and that limits the facility to about 80 to 100 children. The ECC is less than a mile away, but not easily walkable due to hills and roads. Bayview residents can reach the ECC by Village Bus, which will come close to it, or by Village minivan, which can get closer.

The grade school for Bayview is Stonebrae School at the top of Hayward Blvd.; it scores the best in the district. Bret Harte Middle School and Hayward High School are further away up Second St. All are easily reached by the minivan. Many graduates from Hayward High go to top universities, such as Stanford and the University of Chicago.

We know from Vauban in Freiburg, Germany, that a pedestrian system appeals to families. The design is safe for children, protected from the automobile, a major killer of children. Car-free projects in Europe teem with children outside because of the high quantity of safety and good play areas. The Bay Area has many parents raising their children in a sustainable environment.

Bayview would be a step up. The initial families will be real pioneers, pulled in by affordable space or by sustainability. They will help work out the kinks and may become the sales force for more families. It will be important for the HOA staff and residents to work with the first families, but there is ample reason to believe that Bayview will, in fact, be much better for families than suburbia.

Environmentalists

**Environmentalists** are a growing market in the Bay Area. Environmentalists can not only find a personal lifestyle to live their values, but also demonstrate to the larger development world that an alternative system can provide sustainability, affordability, mobility, and profitability. I am part of this group. My wife and I want a five-bedroom townhouse at the top of the project, and we can afford it.

Health-seekers

**Health-seekers** include a variety of interests. Some people want to walk more for health by putting themselves in an environment where need to walk more: they have to walk to their units, climb stairs, and have reduced temptation to drive. Others might want to escape the safety problems created by traffic in developments they lived in before Bayview. Recreationists and outdoor people would come for the fitness center, the trails, and nearby pool, tennis courts, and playing fields.

People with disabilities

**People with disabilities** also have various concerns. For the archetypal person in a wheel chair, Bayview has the Mixed Use block with all units accessed by halls and elevators, no curbs, and a store and café within the building. Ground floors of other units will not have steps, serving not only wheelchairs but also shopping carts. In fact, except for Overlook and lower Palisade, which will have vehicles, curbs, and curb cuts, the project will have no curbs. Shopping carts should be able to roll to and from the store with ease. Blind and vision impaired would find Bayview attractive because of no curbs and no traffic. Finally, some people can't, should not, or do not want to drive a car have few choices in today's market and could live easily in Bayview

Energy costs

Some buyers will **seek protection from energy costs**. You don't have to be a survivalist to know the high probability of peak oil and climate change policies driving up the cost of carbon fuels, and of price spikes due to world-wide political and economic volatility.

Community-seekers

**Community-seekers** are not necessarily Age of Aquarius hippies or people who talk too much, but may just be people who value the easy sociability provided by proximity, having a bunch of neighbors they like and get along with. Suburbia can get spread out. People pass each other in cars and can feel isolated. Bayview makes interaction easy, concentrating daily movement along walkways and in the Village Center. Picking up the mail, you can run into people.

This category also includes lifestylers—people who understand the Bayview concept as a whole and want, broadly, what it provides.

Cohousing groups

**Cohousing groups** are one manifestation of a desire for community. Such groups live in one continuous area, either multi-family or small-lot singles in ordinary housing but also have a common space for regular meals with the group and shared work assignments. The major problem for cohousing is the lack of land for groups of families ready to build. Bayview could accommodate one or more cohousing groups, melding the idea into Bayview.

Affordable housing agencies

**Affordable housing agencies** could take some of the units in Bayview to manage as rentals for moderate to low income people. Such agencies can bring credibility to the project as a whole because of their project management experience and their ability to reach a demographic that otherwise could not afford to live in Bayview.

Affordability

Bayview Village is not going to appeal to the traditional market for single detached houses, but it will appeal to the market for houses. The sustainability aspects, especially reduced car units adjacent to living units, are those most noticed by car-based thinkers, that is, most people, which can mislead one into thinking Bayview would only appeal to lifestylers, that is, only a few odd balls.

In my judgment, about 20% of the market is related to lifestyle, and 80% would be pragmatists looking for an affordable house in the Hayward area. They would buy in Bayview for practical reasons: they can afford the house and can meet their mobility needs. Bayview, after all, mainly affects modes of travel, not the rest of lifestyle. Bayview comes tailor-made for the trip needs of its major markets---seniors and retired, BART riders and corridor workers, CSUEB Hayward, and those who mostly work at home.

Bayview is designed to minimize lifestyle changes, making just those necessary for the system to work, and otherwise being similar to living in a conventional neighborhood. It will appeal to many buyers who now have few or no options in the marketplace for this kind of neighborhood, which offers them strong benefits not available elsewhere in the Bay Area or even in the whole country. However, because there is so much that is special about Bayview, one may lose sight of the single most important factor in selling homes: affordability. This project is in Hayward, not Berkeley or San Francisco, and many people who like its features are not interested in living in Hayward. Affordability will sell the project more than the special features. My sense is that perhaps about 20 percent or fewer will have the special considerations as a major reason to buy, while about 80 percent will be buyers seeing a good price in a good location, and figuring out how it would work for their travel pattern. Their mode of travel would change, but their general lifestyle would continue. This mass market means that Bayview could be an inflection point in the evolution of neighborhood systems.

The Metropolitan Transportation Commission recently did in-depth interviews of over 900 households in the Bay Area who were looking to move or had moved recently. MTC wanted to figure out who would like transit-oriented development and who would not. What attracts San Francisco Bay Area home-seekers to transit oriented development (TOD) neighborhoods? How can we improve these neighborhoods to better attract home seekers? MTC advocates for TODs: "The Bay Area has the opportunity to provide compact, connected and walkable mixes of land uses: housing, work, civic, retail and services coupled with rich transportation options. Our goal is to help elected officials, public agency professionals, community stakeholders and developers understand how to develop high-quality TODs ...The Briefing Book summarizes study design, survey results, market segment descriptions and strategies for targeted market segments, along with examples of approaches for addressing neighborhood issues."

The analysis used innovative categories that were interesting but unrelated to geographical and sociological variables usually used for market research, so it was not possible to relate the data quantitatively to Hayward. The report was of more interest to planners than investors. MTC Market Segments favorable to transit oriented development were the Transit-Preferring, 7% of the mover population, Urban DINKs (Double Income No Kids) with 13%, Young Brainiacs at 18%, and Mellow Couples with 10%, adding up to 48% of all recent movers or looking to move would consider a Bayview Village type of development.

(See MTC, Choosing Where We Live: Attracting Residents to Transit-Oriented Neighborhoods in the San Francisco Bay Area; A Briefing Book for City Planners and Managers (PDF, 15 MB) To request a paper copy of the Briefing Book contact the MTC/ABAG Library at library@mtc.ca.gov. http://www.mtc.ca.gov/planning/smart_growth/tod/5-10/Briefing_Book-Choosing_Where_We_Live.pdf and Summary (PDF, 6 MB); http://www.mtc.ca.gov/planning/smart_growth/tod/5-10/Chsng_Where_We_Live_SUMMARY.pdf)

## Buyer Profiles

Bayview Village will tap into an under-served market.

HAPA launched a website for this Project beginning in December of 2006 for several purposes: (1) to build an interest list of potential buyers, (2) to test the market to verify interest in the concept, and (3) to identify market segments. The website provided detailed information about the Project, including an early version of a site plan, floor plans, description of benefits, and preliminary pricing. An email address was provided for submitting requests to be put on an interest list or for further inquiries. The Project was on Craig's List for about two years and publicized in other ways. Respondents were contacted and wrote profiles explaining their interest, or profiles were written by the Hayward Area Planning Association based on the survey answers and approved by the respondents. An interest list of 125 families was compiled.

Response to the project's website from some people has been passionate. For example, a San Diego urban planner said he would move to the Bay Area just to embrace the pedestrian lifestyle. He said, "I am very excited to be part of this. Keep me informed!"

Pricing and Comparables

Affordability is desirable in itself, but also crucial to compete in the market place. While buyers may want the Bayview extras, they are limited by their income and wealth. Bayview may offer too much, more than what people can afford. Initially, I thought Bayview could be more affordable than houses of a similar size and location. As discussed above under evaluation of affordability, Bayview savings on some aspects are generally offset by the cost of worthwhile features, and the whole package is hard to measure. These features make difficult a simple comparison of Bayview to other housing. It is like comparing apples and bananas with apples and oranges.

No closely comparable projects could be found because Bayview Village is so different from the market. However, many market factors seem relevant and have many interesting detail about the latest things that are selling. For example, young urbanites with limited means and limited housing needs are a strong market in New York City. They will rent very small spaces like 350 square foot mini-apartments, compared to the 441 square foot Bayview studio. Essentially a sleeping/media pad, the mini's main room has a wall for a big TV and enough room for Wii and eating, there's a nook for the dog bed in the laundry, and the bathroom needs a big shower. The rest is considerably down-sized. "Gen Y," born 1980-2000, spend most time of their time elsewhere, at a park with a picnic table, fire pit and grill, at a fitness center, at a club, at the movies, eating out, or traveling.

There is a 10 percent price increase for the "New Construction Price Premium," a well-documented preference to buy a new home versus a used home. The percentage increase from the "New Construction Price Premium" varies by location. It increases: (1) with the limited availability of new homes in the area, (2) if the existing housing stock is older, and (3) if demand for housing in the area is strong. In Seattle, the new construction premium has been documented as 30 percent or more. ("New Construction Price Premium Nearly Vanishes" by The Tim, _Seattle Bubble_ , August 26, 2010, p. 1  http://seattlebubble.com/blog/2010/08/26/new-construction-price-premium-nearly-vanishes/)

Housing prices are likely to rise with inflation in the region. For real estate development, price inflation improves profits more than labor and material cost inflation lowers them. Bayview pro formas do not consider inflation and thus have a conservative bent.

Hayward area real estate brokers and the Meyers Group, a regional expert market research firm in residential studies, provided important information. These experts compiled listings of recently sold comparable properties in Hayward. Additional pricing data was obtained from websites like Zillow. The most relevant semi-comparables I could find in Hayward are two high-quality rental complexes and the Taylor Morrison project.

Given the lack of comparability, pricing of units in Bayview is based on cost plus a markup to achieve industry-preferred internal rates of return (IRR). Prices in the main pro forma are based on costs, a moderate absorption rate of 32 units per quarter, equity share of 30% of investment, and an IRR on equity investment of 30 percent over 12 years.

The table below is frequently adjusted; here are the numbers from August, 2012:

To compare these prices to the market, we will look at rental equivalents for the smaller units and home prices for the larger ones. To increase comparability, we will add the parking cost into the Bayview prices. The two rental complexes of interest are City View and City Centre. City View is on Bee Blvd., just uphill from the Bayview project and the PG&E easement. City View is about 24 years old with well-designed three-story buildings and good landscaping. It commands the second highest rents in Hayward, and is the kind of project the market would support today, especially with rents high relative to home prices.

Bayview seems unlikely to be price competitive with second tier, older complexes in Hayward, but generally competitive with the two top-ranked complexes, City View Apartments and City Centre Apartments (<http://www.essexapartmenthomes.com/apartment/city-view-apartment-homes-hayward-ca-5uo7x4382386>,  http://www.breproperties.com/california/hayward-apartments/city-centre/sfo1161#/Community-Overview). Buyers can own for about the same cost as renting in those complexes. Bayview is also competitive with houses in the Hayward Hills, zip code 94542.

Bayview Village prices would come down if costs for HOA transportation were removed where they duplicate car costs, so the comparison above is rough. Bayview and the rental have different sets of amenities. City Centre has a locational advantage by BART, while City View is adjacent to the project. City Centre is about 200 yards from the entrance to the Hayward BART station, and the Lucky Store shopping area, City Hall, and B St are just past that. It is three stories high with well-designed interiors but average exteriors, little landscaping, and lots of pavement. It commands the highest rent in Hayward due to good design and proximity to BART and downtown.

See BV Pro Forma 12 Years 1,024 units.xlsm at Trans. Parking

The Bayview rental prices include amortization of the sales price, insurance, property taxes, and parking space cost.

Another interesting comparable is the Taylor Morrison project, The Grove at Cannery Park, eight tenths of a mile from the Hayward BART station. From the Taylor Morrison Project, the travel time to BART by car is similar to that from Bayview to BART by Village Bus. Taylor Morrison and KB Homes are redeveloping the old Hunts Cannery area; a new school is already complete. The original developers were caught up in the mortgage/financial bubble, with land costs too high to support a saleable product in today's market. Now, in 2012, land values have been greatly written down and townhouses are moving gradually. The project has 191 three story townhouses on concrete slabs with living space and parking underneath, sometime in tandem spaces. TM does not have green energy/net zero, community center, full HOA management, community center, store, café, parks, trails, and transit service.

1 Taylor Morrison in Hayward

I visited the Taylor Morrison project Oct 24, 2010 and Dec 3, 2011, and was very impressed with the sales office, the brochures, the model home and its furnishings, the floor plans, and the competitive prices. The exteriors were pleasant but uninteresting. In 2010, the plan 2 townhouse with 1,239 square feet, 2 bedrooms and 2.5 bathrooms was priced at $354,085. By late 2011 the price had dropped to $286,612, and by July 2012, the price was back up to 312,490.

At the moment, here are the prices:

 (http://www.taylormorrison.com/624,14-new-homes-US-94541-CA-Hayward-The-Grove-at-Cannery-Park-Community.aspx; 4 Marketing/Prices, comparables, projects/Taylor Morrison prices.xlsx)

## Ownership Options

It does not matter philosophically whether Bayview is all owner-occupied or all rental, or rentals are by one big firm or many smaller owners. Unfortunately, a few tenants give a bad name to renters in general, when most renters are very responsible, and bad owners are also a problem, but somehow ownership does not have the same prejudice. It does matter that problem owners or tenants be removed by some due process of the HOA. How to do this is unresolved, given the slowness of existing legal processes. A system would include compensating an owner for the market value of their unit. Bayview is not some fantasy or utopia; it serves people as they are, and a few people are likely to be big problem. Due process does not provide perfection, just a means of doing something that is better than doing nothing.

The Bayview philosophy is to support, and have, social interaction by all residents of all kinds of households and ownerships, with no units having some special status which gets in the way of social cohesion of the neighborhood as a whole. There will always be issues of inclusion and exclusion, so an explicit commitment is needed to become aware of such problems early and manage them. The goal of community means that the HOA management and Board of Directors do not just manage a physical facility; they need to listen to the feelings people have and find constructive ways to deal with inevitable problems. It is my passionate belief that most residents will have fantastic enthusiasm for their special neighborhood, and be more than willing to reach out where needed. Removal should be needed only rarely.

Bayview needs to be profitable. The price balance between rental and equity markets is dynamic. The housing bubble of the 2000s ran up equity prices and drove down rentals; the bust reversed the process. In 2012, rents are high enough to encourage limited new construction in a few high-demand markets; in a few places, there are new buildings for sale. The rental research firm, RealFacts, provides well-researched, national overviews on larger apartment complexes and sends free email updates. Their update provided some of the information used here.

One owner, all rentals

Selling the whole Bayview Village project to one firm for rentals is unlikely to be profitable because the extra costs make the rental rates too high. Management, economic vacancy rate, and other costs run about 40 to 55 percent of total revenues. The rental costs for maintenance should be lower for new construction for several years. Many rental costs are also costs covered by the HOA fee. However, I am advised that the costs would still be too high for one owner. Beta version comment: the cost increases for rentals by one big owner over a single unit owner have not been calculated.

Owner occupied

The Bayview plan, at present, is to sell all the units to individual buyers for owner-occupancy. Units will be marketed and sold in three connected pieces: the house, the green energy package, and the typical upgrade options. A buyer may also lease carport parking, off-site parking, transitional parking, or no parking.

HOA managed rentals by owners

Condo projects suffer declines in value when too many renters and too many absentee owners leads to deterioration; it has happened frequently. The problem is not all renters or owners, but some, making it desirable for the HOA to manage rentals by owners. However, the HOA legally may not be able to manage who the renter is because the Condo law limits the ability of the HOA to prevent rentals by condo owners. The HOA, however, may limit the number of rentals in a project. Also, owners could be encouraged to use the HOA managers as their rental managers to ensure that tenants fit into the community.

The economics of renting one unit by one owner are different from renting all units by one large ownership firm. Single unit owners may decide that operating costs would be lower than usual assumptions, that costs may mostly be covered in the HOA fee, and that they would have no vacancies or short vacancies. Such owners may want to rent to family members; to sell in the future; to invest based on anticipated prices increases; to hold the property to live in at some future date; or to have the prestige of owning part of a paradigm-changing, sustainable project.

Rentals by housing agency

Ownership of a number of units by a housing agency rented as affordable housing is desirable to serve lower income households, if the HOA management could be the agent for the housing agency. Almost all housing agencies bundle and subsidize parking, so Bayview would need to find an agency that would unbundle the cost, or, more likely, not include parking costs in its basis, pro forma, and application for tax credit financing.

Cohousing

Cohousing involves a cooperative where members own their own homes and some common facilities, such as a group living-dining-kitchen space and common grounds. They pay dues and also typically have a group dinner with responsibilities rotated among members. Cohousing groups are generally small, from ten to twenty households, and composed of educated, affluent people committed to community. A cohousing group wanting to be isolated from the rest of the project would not work, but such groups by their very nature are committed to community and could help the project make it work.

Lease to buy

The recent housing bust and foreclosure crisis has spawned a new business of buying foreclosed homes and renting them, sometimes to the former owners. Some owners offer tenants a lease with an option to buy at a fixed price while tenants recover income, repair credit ratings, and save for a down payment. The lease to buy option also gives the tenants hope for ownership and a stake in maintaining the property. In Bayview Village, the lease to buy option would be restricted to those with adequate income, an interest in buying, a trip pattern supported by alternative mobility, and supportive attitudes. Some of their rent would go into a down-payment fund, which goes to the owner if the option to buy is not exercised.

The lease to buy option gives renters the chance to find out if Bayview can work for them—get the stuff they need, make other trips, try out the Village Bus, see if they like the place. They can reduce use of a car, perhaps giving up one car, or living car-free altogether for maximum savings. The renter would have nothing to lose and everything to gain either way.

Given the challenge of selling a new kind of mobility, rent to own could help absorption by greatly reducing the cost and risk of Bayview. Since the profile would indicate a longer term renter and possible buyer, the rental management overhead would be less and the rent should be lower, another incentive to rent to buy. It is also logical that buying would reduce household costs a little more, as the household would probably pay amortization on a loan of 80% of the asset value, while the renter has to pay rent based on 100% of the asset value. The new owner is out the down payment, but the monthly payment is less, which is a big incentive to buy.

A new company, Waypoint Homes, buys homes and rents them with the Waypoints program, which includes several benefits, including, after a time, redemption for cash. Bayview might use a similar concept. From the website:

In addition to enjoying a renovated, professionally managed home, you can now take advantage of our exclusive Lease Plus Rewards® program and earn Waypoints™ while you rent. Lease Plus Rewards enables you to follow a path of achievements and earn Waypoints each step of the way. **The path is simple:**

The program is structured as a 24 month lease. Over the course of the lease term, you can earn Waypoints for paying rent on time, taking care of your home and participating in our free Financial Fitness Plan. At the end of the lease term, residents may receive an offer to extend their leases and continue earning Waypoints. If you're interested in pursuing homeownership, Waypoints can be put to use at the end of your lease as a home purchase credit - or simply redeem your Waypoints for cash back. <http://www.waypointhomes.com/lease_plus_rewards?lang=en>

Transitional Parking

Clearly, the most challenging aspect of selling Bayview homes is the physical separation of the living space from the personal vehicle, especially off-site, but even on-site. Many prospects may be unwilling to buy without trying out the system and having a car handy while they do it.

Transitional parking would be an option for Lease to buy and purchase which allow the owner to lease the space on monthly basis for an indefinite period of time. The owner would have time to figure out, with help from the HOA, how to make trips work without leasing the transitional parking. The hope would be that the owner would be able in time to give up the lease and saving money in the process. The cost of the lease is an incentive to give it up. Depending on the economics of the time, it could be profitable to offer to buy the lease.

There is, however, a risk of not completing the project as planned.. The buyer might want to keep the space indefinitely. Sales could be affected if transitional parking were not available. If units could not be built, the profitability of the project would be reduced. The pro forma for 880 units looks at this scenario as a risk. The pro forma assuming 880 units shows reduced profitability, 26% IRR, compared to 30% for the full project.

The (hopefully) temporary parking would be in the last three phases 9, 10, and 11 on the west side of Overlook, and could be gradually reduced as each phase becomes ready for building. When an owner gave up a lease, the space would be available for the next new buyer until needed for unit construction. By that time, the project should be mostly built and should have proven the viability of alternative mobility. The last phases consist of sixplexes of two bed flats. Each flat has land for 2.71 parking spaces.

The lease rate would include the opportunity cost for the land, neutralizing most of the cost to the project and making the rate close to the economic cost. Most infrastructure costs would serve the eventual units and are part of the opportunity cost, so the net cost of additional work for the temporary parking itself is limited. These paving costs are about $1,830 per space for 200 square feet for a compact car, which includes the space plus an allocated aisle area. These dimensions are based on city policy for space dimensions, aisle width, and back up space for 90 degree turn-ins. The Transitional Parking Site Plan, below, shows several rectangles of 26 temporary parking spaces, with access from Overlook. From Bee to Palisade there is room for five of these little lots, and above Palisade is room for 10 more lots, for a total of 390 spaces.

The opportunity cost is $243 per square foot, or $48,611 for a space. Adding in the paving costs, plus a five percent markup, makes a total capital cost of $50,441. Amortized over 30 years at 8% interest yields a lease rate of $389 per month. While this may seem high, it does reflect the real cost, and, when added to the mortgage, is still competitive with bundled rentals and prices. I know of no other quantitative economic analyses of unbundling.

The Green Mortgage

Banks use debt to income ratios to determine how much a buyer can borrow. These ratios are based on suburban norms, which have a high cost for car transportation and energy, and also consider amortization, other debt (student, car, credit card), property taxes, homeowner insurance, and HOA fees. Total payments for a house and other debt should not exceed 36 percent of income. Bayview lends itself, strongly, to the location efficient mortgage (LEM, see Transportation Pricing Reforms) because it is location efficient: centrally located, transit served, higher density neighborhood. With less expense for a car, a buyer has more income available to the mortgage. If fossil fuel prices rise to reflect their true costs, the energy savings increase.

Buying Energy

An Energy Efficient Mortgage (EEM), first developed under the Carter administration, would allow a home buyer to have a separate mortgage for green energy costs. Just like the LEM, the buyer, with less to spend on a regular utility bill, can afford an Energy Efficient Mortgage. Fannie Mae and Freddie Mac recognize the EEM. The Federal Housing Administration allows an increase in the borrowing limit by $4,000 or 5 percent of appraised value, up to $8,000, with no increase in down payment.

The current rules exclude many buyers and require an energy audit and a Home Energy Rating System (HERS) report. The HERS report is already part of the specs for Bayview Village, and the cost per unit should be lower than the typical $500 to $800, and less than having it done one at a time by buyers. The specs meet or exceed HERS requirements, so it is unlikely the reports would indicate any need for improvements. Because the HERS report is automatic, it overcomes the resistance of buyers to spending money on a report which they think could affect their purchase. The buyer can see measured benefits relative to the price of the unit. Some banks reduce closing costs by $1,000 for a high HERS score.

The EPA has a parallel process: its Energy Star rating applied to houses. A house needs to be 15 percent more efficient than one that meets the 2004 International Residential Code. So far, a few million houses quality. The Bank of America uses the EPA rating for its EEM program.

The Bayview plan is to apply the LEM to the house and the EEM to green energy separately. Having two mortgages makes the house mortgage smaller and allows the energy mortgage amortization to be compared with a regular utility bill.

The capital cost of green energy is high, but the operating cost is close to zero. Including energy costs in the base housing cost would make Bayview units appear uncompetitive, but creative financing––leasing, energy mortgages––is becoming available, allowing energy systems to be financed separately from the base mortgage. Having two prices––one for the house itself and one for energy systems––allows homebuyers to compare the cost of the house to other houses, and compare the amortization of green energy to their PG&E bill. An energy mortgage and a base house mortgage would also clarify things for the banks, which are familiar with considering energy costs in qualifying buyers for loans, but not knowledgeable about energy-efficient mortgages.

The Bayview sales office would help buyers analyze their utility costs, showing that green energy is affordable and is protected against future price increases. The pro forma is based on current prices, not expectation of less expensive PV panels.

## Marketing

Advertising and Buyer Education

Bayview's affordability will probably be the most important initial feature of the project for marketing, not concern for climate change and neighborhood systems. Affordability will draw the mainstream to the site, who will then have to study how their mobility pattern could work—or not. Education could unlock the potential, the latent demand where information is the missing ingredient. People are so used to depending on their cars that they lack conscious knowledge of costs and alternatives. They haven't thought about how those trips could be made in Bayview. Once they "get it," it is a practical decision in which changing mode of travel is unimportant compared to getting more value for the money and the ability to make trips in an acceptable travel time.

Salespersons need to be trained in how to work with clients to review the trips they make and even keep a home travel diary and list special trips. Buyer education could have people list all the trips they make and how they would be made in Bayview. Oddly enough, infrequent special trips are least changed; it is the everyday pattern that is affected the most. MTC has a well-tested form for a diary. HAPA has done extensive analyses of kinds of trips, travel time budgets, and reachable destinations. The work trip is the most important but also the easiest to analyze. Shopping and recreational trips are quite varied but generally doable. Trips that are both special and routine are likely to be the most difficult, such as the need to see a relative in a car-accessed location, or a frequent health trip to a car-accessed location more than taxi vouchers should cover.

Bayview sales should start with minimal conventional advertising. The initial absorption is likely to be strong but misleading. Given an expected eight-year sales period, absorption of pent-up demand, and a slump in the housing market, sales would fall below those expected in the pro formas. At that point, innovative advertising and consumer education is needed. The following ideas are intended to be used to deal with a sales slowdown, not when things are going well.

Ideas for creative marketing include:

1. **Inexpensive YouTube videos**. YouTube videos could have skits with humorous comparisons of Bayview and suburbia. A few could go viral. I have a number of script ideas. Victoria Foster of Voyage Media in Santa Monica likes the idea and offered to help. The marketing will educate viewers about how things work when you come out your front door, how to get from A to B, and how much it costs. Buyers need to know how to do in Bayview what they do now. A video would, for example, act out travel times for a trip to the coffee shop in the morning, show more amenities for the same cost, use of savings possible from car-free living, something fun that is easy in Bayview and hard in suburbia, a comparison shopping trip, getting to work faster, easy retirement living, or a flex space use that zooms in from a suburban setting then zooms out to the Bayview setting.

2. **Creative ad agency**. Using an ad firm that has been very successful in selling some other product––milk, cars, whatever––to bring some creativity to home sales. Dial House, for example, sells to geeks and educated people (<http://vimeo.com/17680669>). Bayview needs to counter the anti-Hayward, pro-Berkeley and "City" (San Francisco), bias of lifestylers.

3. **Bayview residents**. Ads would use ideas from residents about why they like living there, inviting neighbors in. Once some units are occupied, residents could help sell the project. A poster might feature a small group of residents who allow their names and photo to be used with a brief quote like "It works for us." People could suggest their own quotes.

4. **Paid site visits**. Market development would screen people to find probable buyers based on desire to buy a house in the East Bay, an accessible work location, retirement, or home office situation, and probable income. Prospects would be paid $50 for an hour to tour Bayview and a model home and to see if their travel needs can be met in Bayview. The visit should start from Hayward BART on the rapid shuttle. This strategy would have the advantage or providing specific information to likely buyers.

5. **Ads responding to news**. The project would advertise energy savings when peak oil makes energy prices shoot up, or similar concerns peak in the news.

6. **News coverage.** Bayview should get, on the merits, a lot of initial news coverage. There has already been a story in the SF Chronicle and mentions in an article by Elizabeth Rosenthal in the New York Times. Real Estate pages would probably cover newly available units.

7. **CSUEB Hayward**. The CSUEB Hayward market can be reached using the campus newspaper, The Pioneer, bulletin boards, office mailboxes, and email.

8. **Retired, work at home, disabled**. Retired and work-at-home people can be reached by bulk mailings into adjacent zip codes. Seniors can also be reached at senior centers, cable TV, AARP, and Mobile Home Parks. Disabled people can be reached at independent living centers.

9. **Advertising ideas**. Here's a bunch: Change your "carprint"... Walkability: WALK a BIL I ty, the quality of a local neighborhood for walking. e.g., Bayview Village... Separation Anxiety: How far away from your car do you sleep? Most people keep their car within 150 feet. How far away could you sleep before you would be anxious?... Kick the carbon habit? Bayview!

10. **Reaching underrepresented buyers**. The project would not assume the promotion program was correct, but monitor sales relative to expected buyers. If some group were not showing up, a selling campaign would be developed to reach it.

11. **Celebrity endorsements and promotional events**. I would hope to get Al Gore, Bill McKibben, Lester Brown, Amory Lovins, Paul Hawken, Todd Litman, Donald Shoup, Greenbelt Alliance, Transform, Sierra Club, and many more. Publicity is unlikely to make the sale but may help get people to pay attention, especially outside of Hayward.

12. **Short rentals**. If slack sales meant units were unoccupied longer than normal, a program of short rentals could let potential buyers to try out the system.

13. **Advertising on BART**. Many people in the corridor south of Oakland take BART to work. An excellent way to reach them is with advertising on BART using posters in stations and cards in the trains. Bayview needs the ads only on service to Fremont, but BART only sells through one vendor and for the whole system. In 2009, sixty BART interior car cards cost $4,500 per month. A station platform poster cost $250 per month per poster. Sales reps could leaflet exiting riders at key BART stations in late afternoon, passing out business reply post cards that interested people could fill out.

14. **Consistent thematic framing, changing detailed content**. All advertising would have a consistent design for the outside frame using consistent images and key words, with a middle block of changing text. The ads could be in a series, with a first set of ads on global warming and other goals, saying you might have to make a sacrifice. Then the follow up "sacrifice" poster would actually cover the benefits, presenting the benefits of car-free housing in an entertaining way. Other posters could explain why benefits are possible. One or two ads could show details of the site plan and floor plans; one or two would give examples of how people would get around. Ads could have an invitation to take an on-line "challenge" survey ("Are you ready?"). Interested parties could register on the web site. The same content would be reformatted for different media, such as BART posters, BART cards, and quarter page newspaper ads.

15. **Advocacy group support.** Organizations that have some commitment to the goals of Bayview Village could inform their members. Environmental groups include Sierra Club, Greenbelt Alliance, Transform, Urban Habitat, Urban Ecology, Ohlone Audubon, RAFT, and TRANSDEF. Civic groups include the Eden Area League of Women Voters, local AAUW, Hayward Demos Democratic Club, Hayward Arts Council, Sun Gallery, homeowner associations, and Chamber of Commerce.

16. **Religious groups**. Given the commitment to creation care in Bayview Village, marketing to progressive religious should be done. A large number of mainline Protestant, Jewish, liberal, and Islamic churches and seminaries with environmental concerns in the East Bay that are part of California Interfaith Power and Light:

Alameda

Christ Episcopal Church, Alameda

First Congregational Church of Alameda

Sufi Order International – Bay Area

Temple Israel

Albany

St. Alban's Episcopal Church

Strawberry Creek Meeting, Religious Society of Friends

Antioch

St. George's Episcopal Church

Benicia

St. Paul's Episcopal Church

Berkeley

All Souls Episcopal Parish

Berkeley Fellowship of Unitarian Universalists

Berkeley Zen Center

Berkeley Society of Friends

Calvary Presbyterian Church

Church of Divine Man

Congregation Beth El

Congregation Netivot Shalom

Epworth United Methodist Church

First Congregational Church of Berkeley

Franciscan School of Theology

Good Shepherd Episcopal Church

Northbrae Community Church

St. Clement's Episcopal Church

St. John's Presbyterian Church

St. Mark's Episcopal Church

South Berkeley Community Church, UCC

St. Joseph the Worker Church

T.R.E.E.S. at the GTU

Unitarian Universalist Church of Berkeley

University Lutheran Chapel

Brentwood

St. Alban's Episcopal Church

Clayton

St. John's Episcopal Church

Concord

St. Bonaventure Catholic Community

St. Francis of Assisi Catholic Church

St. Michael and All Angels

Crockett

St. Mark's Episcopal Church Danville

Danville

Congregational Church

Peace Lutheran Church

San Damiano Retreat Center

St. Timothy's Episcopal Church

El Cerrito

El Cerrito United Methodist Church

Hillside Community Church

Mira Vista UCC

St. John the Baptist Catholic Church

El Sobrante

El Sobrante United Methodist Church

Fremont

Niles Discovery Church

St. Anne's Episcopal Church

Hayward

Eden UCC

NCNC Earth Stewards

Shiloh Baptist Church

United Church of Hayward, UCC

Kensington

Arlington Community Church

Lafayette

Lafayette Christian Church

Our Savior Lutheran Church

St. Anselm's Episcopal Church

Temple Isaiah

Martinez

Martinez United Methodist Church

Livermore

First Presbyterian Church of Livermore

Oakland

Beth Eden Baptist Church

Cathedral of Christ the Light

Church by Side of the Road

Downs Memorial UMC

Elmhurst Methodist Church

Episcopal Church of Our Saviour

Fellowship of Humanity

First AME Church of Oakland

First Baptist Church of Oakland

First Presbyterian Church

First Unitarian Church of Oakland

Good Samaritan Christian Fellowship

High Street Presbyterian Church

Islamic Cultural Center of N. California

JPIC Office, Franciscan Friars

Lakeshore Avenue Baptist Church

Montclair Presbyterian Church

Plymouth United Church Of Christ

Resurrection Lutheran Church

Resurrection Concord Christian Church

Sisters of the Holy Names Northern California

Skyline Community Church, UCC

St. Augustine's Episcopal Church

St. Augustine's Roman Catholic Church

St. Cuthbert's Episcopal Church

St. James Episcopal Church

St. John's Episcopal Church

St. Paul's Episcopal Church

Skyline Community Church

Taylor Memorial UMC

Temple Sinai

United Lutheran Church of Oakland

Word Assembly Baptist Church

Orinda

Orinda Community Church

St. Stephen's Episcopal Church

Pinole

Christ the Lord

Pinole United Methodist Church

Pittsburg

Community Presbyterian Church of Pittsburg

Pittsburg United Methodist Church

Pleasant Hill

Episcopal Church of the Resurrection

Hillcrest Congregational Church, UCC

St. Andrew's Presbyterian Church

Pleasanton

St. Clare's Episcopal Church

Richmond

Easter Hill United Methodist

Holy Trinity Episcopal

San Leandro

Bethel Community Presbyterian Church

Maryknoll Fathers & Brothers

Temple Beth Sholom

San Lorenzo

St. Christopher's Episcopal Church

St. John the Baptist Catholic Parish

San Lorenzo Community Church

Walnut Creek

Congregation B'nai Tikvah

Ik Onkar Peace Foundation

Interfaith Council of Contra Costa County

Mt. Diablo Unitarian Universalist

Shell Ridge Community Church

St. Paul's Episcopal Church

Walnut Avenue United Methodist Church

**Supporting files** : /Bayview Village/4 Marketing/1 Susan State Market Study 7.19.11.pdf and 2 Profiles of Interested Parties.pdf

/Articles of interest/: 44 interesting articles on a wide range of issues

/Comparables, prices, projects: files on new housing in Hayward, rent comparison, Tom Silva [owner of a number of well-run apartment complexes in Hayward] on rentals, pricing, floor plans, Panasonic new solar town, Sonoma Mountain Village, Joe Braun [Harbor Square development, Bainbridge Island] and related developments, Attached Housing Stats for Alameda County

/CSU student surveys: reports of surveys of CSUEB students in 2003-2005

/Interested party profiles: more files

/Marketing: Advertising ideas, Alameda County Employment, Mkt segments and BV features outline, groups to market to, MTC files on Choosing Where to Live (new mover survey), comments on Susan State report drafts.

# Bayview Village

Get Global Warming?

• heat-absorbing gases are increasing

• temperatures are rising

• most ice caps and glaciers are melting

• ocean levels are rising

• spring is earlier, fall later, winter shorter

• plants and animals moving pole ward and upward

• crops are endangered

• disease vectors are moving pole ward

• more precipitation more extreme weather

• forest fires are increasing

You've got global warming, but do you get it? Some people are ready to make a life style choice — even live without a car in Hayward.

A project of the Hayward Area Planning Association www.bayviewvillage.us

# Bayview Village

Energy! Using less, living more?

Would you consider a life style change to reduce your fossil fuel energy consumption by 70 percent?

• Live with an easy walk to transit, café, and grocery store

• Rapid bus to Hayward BART and Cal State Hayward

• Ecopass– ride bus for free

• Energy efficiency + solar: save on gas, electrical bills

• Save on car ownership–walk, bus, car rental, car share, taxi vouchers, guaranteed ride home may work for you

Save money on x, have more for y.

A project of the Hayward Area Planning Association www.bayviewvillage.us

Pre-sales

Buyers may reserve units upon approval of a preliminary Public Report, the pink report, by the California Department of Real Estate. Units can be sold after the Department approves a Conditional Public Report, the yellow report (DRE, Subdivision Public Report Application Guide [SPRAG]). The project would generate enough interest for some pre-sales, which should be encouraged but not stressed. To the extent possible, the emphasis should be on pioneers who are likely to be patient with a possible long build-out and who can help sell the project to others.

Model homes

The initial model homes would be one beds and studios in the Mixed Use Building and two beds and three beds in phase 2. Really nice model homes are major selling points and are backed up by high quality literature in the sales office. Many life-style buyers are sufficiently committed to buy pre-sales, but the bulk of the market will be ordinary buyers trying to figure out how Bayview will work for their day to day life. A model home helps them envision the choice.

Point of Sale Choices

Point of sale choices can improve sales. Buyers may see several homes that meet their needs objectively, but the sale of a particular home is often due to some special feature that really appeals to the buyer and closes the sale. They fall in love with the house. Bayview Village would have, in addition to the look and feel options mentioned above, displays, brochures, a sales office, and the upgrade options typical of the industry. Model homes would also help buyers visualize their preferences. The project would offer many choices to buyers: unit types, room uses, options, floor plan flexibility, decoratives, and color. Buyers would get the ability to pick carpet colors and countertops; maintenance-free living for the first few years; the latest thinking in architectural flair, features, and functionality; and a consistent, pleasant look of the surrounding neighborhood.

Bayview would also provide initial buyers with a structured choice of decorative elements and of color schemes. For example, there might be several choices for a blank wall, for window trim, or for an entry area. A salesperson would work with a client using computerized visualization to display upgrades, floor plans, and decorative ideas to the buyer. The display would show changes and compute costs to respond to buyer preferences and budget.

In the sales office, the choices shown on the computer screen could support production of documents for sale, financing, and construction. "Confirmation tool" software can handle the process from choices, customization, pricing, commitment, loan approval documents, money transfers, escrow documents, factory specifications, and probable time line, executed electronically. Hard copy would be used only when necessary.

The sales office would be in a module of the Mixed Use Bldg., the first to be built. It would have the usual displays, color brochures, floor plans and prices, features and options, loan qualification, warranty summary, site map, and community information, plus special information about cars and trip making in Bayview to educate buyers about how the Bayview system works. The module would convert to other uses when the project was complete and any remaining functions would transfer across the street to the HOA. Model homes would also be built, initially studios and one beds in the MU Bldg, then, in phase 2, two bed flats in sixplexes and the three bed townhouses. Once 100 units were sold, a thermometer of sales for the project would go up on Bee Blvd.

See also floor plan flexibility below.

Unit type mix

The floor plans and site plan have been designed in a modular fashion that allows changes in unit type in the same building footprint. The proposed mix seems good, but what people want to buy is better. As sales progress, unit types would be adjusted to market preferences, building fewer of low demand types, and more of what people want.

Room uses

The floor plans for the townhouses are referred to in terms of number of bedrooms to convey size, but the "bedrooms" can serve many other uses: guest room, storage, work room, office, den, game room, and family room. The flex space of the three bed townhouse has already been described. In my case, a two person household needs five bedrooms for a bedroom, a guest room, two studies, and a storage room.

Bayview seeks to test the market for larger units not usually part of condo and townhouse developments. Larger units, in fact, may be crucial for attracting higher income people who want and can afford the space. Households like mine would get the other features we want without sacrificing interior space. The usual reason for small in central areas, however, is that high land values and high locational advantages trump unit size. Nevertheless, older, affluent central areas also have many large units, some built before 1930 and sprawl, and some more recently (and very expensively). Bayview is based on a belief that people should not have to give up interior space to live in a sustainable neighborhood.

Floor plan flexibility

Bayview would also provide some flexibility in floor plans. Floor planning helped scope out the land use plan and see how sizes of units related to row housing, rectangles, and building types. Trial and error, for example, lead to the idea of the hallway buildings around a park for studios and one bedrooms. The need for efficient use of stairways influenced the sixplexes for two bedrooms. The townhouses for 3, 4 and 5 bedroom units were premised on vertical units next to each other, rather than flats on top of each other, which led to the three bedroom unit having flex space in the back. More planning remains to be done.

The shell of exterior walls, front door, and plumbing core would be fixed, but the modular external framing would allow for windows and interior walls to be moved around. For example, a buyer might prefer a big walk-in closet, a closet–bath combo, or a bigger bathroom instead of a larger master bedroom,. The buyer might want a separate toilet room, a kitchen island, a downstairs room sized for a home office by reducing the living room. They buyer could get a small nursery off a bedroom, large storage area instead of a bedroom, or a study nook, or mud room. A mud room is a large vestibule for changing between inside and outside clothes, and keeping outside gear. Some units may allow for a front porch. The Taylor Morrison floor plans, referred to above, have many interesting ideas that could be incorporated into Bayview floor plans. Some of these options could have the same price, while others would be upgrades. Some choices would be worked out in advance; others could be created by the buyer.

Options, Decoratives and Color

Buyers would be offered options typical of the industry, such as granite countertops, upgraded cabinets, molding package, technology wiring package, and upgraded floor coverings. They could pick carpet colors, lighting, plumbing fixtures, garbage disposal, appliances (magnetic induction stove top; bigger fridge), waste water heat recovery (bigger units) and interior colors.

More unusual, Bayview would also provide initial buyers with a structured choice of decorative elements and of color schemes for implementing the neo-Victorian design. For example, there might be several choices for a blank wall, for window trim, or for an entry area.

Computer-assisted sales

In the sales office, buyers would have a chance to talk to an agent about how to make the trips they need to make. They could keep a trip diary and confer on how those trips would work in Bayview. A salesperson would work with a client using computerized visualization to display options, floor plans, decoratives, and colors to the buyer. The display would show changes and compute costs to respond to buyer preferences and budget. The computer program would support production of documents for sale, financing, and construction going to the buyer, the seller, the bank, and the builder.

## Initial Services Implementation

The next section concerns financing and stages by the developer; this section considers financing and stages by the HOA management, which initially involves dues and management by the developer and initial buyers.

What can easily be done for services at build-out is impossible at the start of sales. The HOA assets and services require capital acquisition financed by sales and operational income financed by HOA dues. On the other hand, the amenities should not be implemented all at once toward the end, and so some scheme for providing early services from early HOA dues is important, perhaps essential, in making early buyers happy, working out kinks, and getting their help in selling the project to others. Such services would expand as sales and HOA dues support them.

Some service leading to the Village Bus seems most important. A contract passenger van costs about $45 per hour. The monthly dues from the first 100 units on average for phase 1 and 2 units totals $13,724, enough to support 9 hours per day of van service. The service would carry residents by pre-arrangement and on-call when not scheduled. It would probably have to be off duty for part of the day during low demand, with the schedule based on resident needs. TransMETRO, a contract paratransit company, operates a small Ford F-350 model shuttle bus which carries 16 to 25 passengers. They use a bus with an F-150 V-8 engine which can climb Bee Blvd. at 40 MPH, and is the kind of equipment that would be fast and maneuverable enough to provide good service on an interim basis. Their buses use CNG and bio-diesel. (http://www.transmetro.org/shuttle.html)

The van drivers would also be trained in helping residents get some approximation of the services possible in the full development. That might involve an office where the café is planned that would have some simple breakfast and lunch service, even self-service, and grocery items requested by residents, held in the office or delivered.

Planning for initial services should include many possibilities, and implement those which residents need. The services should be based on conferring with residents individually and collectively, informally and by schedule. The balance of needs might require a small van running a few hours with many other services, or a large van running many hours with few other services. As more residents move in, the system can be expanded and rebalanced. The HOA would establish some priorities to provide a framework for development of the system.

Sales contribute capital to a fund which accumulates to be enough establish the bus service and then build the community center. The dues then shift from a contract van to a longer term, more structured bus operator, but with the same level of extra communication and flexible service above just driving a bus. Similarly, the community center is designed to have HOA staff offices and two staff apartments, and, by the time it is done, the cash flow from dues should be enough to make it work.

The store and café have a chicken and egg dynamic with initial services and marketing. Initially, there would be no store or café; they may not get underway until half build out, and then at a minimal level, so early buyers have to go for a time without an important amenity. Early implementation could include sales of a few grocery items residents agree to buy in a temporary, unfinished space in the MU Building. That space could also include a coffee bar and lunch items for construction workers. As unit sales and commercial viability increase, the commerce should become an important selling point, but how much commerce is viable, how soon, is unknown. Previous master-planned projects have over-sold the potential commerce, but Seaside, for example, has been very successful. Bayview residents have the purchasing power to make a small store work, but it would have to compete with downtown shopping, which is fairly easy to reach. While the details are not clear, it is clear that residents can easily meet their routine shopping needs.

Full community center operations are not as critical as the bus, store, and café, but there are some easy, low cost initial services that should work. Initially, the HOA functions would locate in a temporary office in the MU Building. The office could have the initial mail boxes and an ATM, as well as support ongoing discussions with residents about continually evolving HOA services.

In general, the schedule has to have some sensible, steady, understood, transparent introduction of HOA assets and services. Buyers deserve to know where their investment is going and see the results.

# Chapter 17 -- Financing

## Financing Overview

Several financial analyses of Bayview Village covering hard costs, revenues, equity and financing requirements and anticipated returns are in the Dropbox and on the website. The pro formas have 18 pages: Transitional Parking, Inputs, Sales, Summary, GMA (Gross Margin Analysis) by Construction Phase, GMA by Unit Type, Cash Flow, Timing, Land, Project Team, Project Fees, Site Improvements, Site Improvements by Phase, Building Team, Building Fees, Residential Buildings, Energy, and HOA Assets. The HOA Assets are the Community Center, store, café, and Village Bus. (The pro formas are far more elaborate than usual, largely because we could not figure out how to get investors, but we could work some more on the pro forma.)

The pro forma allows "what if" testing of key inputs that then automatically ripple through the pages to estimate return on the asset and on the investment. The most important assumption is the absorption rate at the assumed prices. The cost of the land, timing of land purchase, and hard rock grading also are variable and have major impacts. Changing absorption rates in the pro formas can serve act as a proxy for other factors that could speed up or slow down the project.

The analyses are frequently adjusted, most recently to include transitional parking. They provide projections given varying absorption rates: aggressive 9 years, reasonable 12 years, and conservative 15 years. The reasonable project pro forma (BV Pro Forma 12 Years 1,024 units.xlsm) shows a medium absorption rate of 32 sales per quarter (2.5 per week), and a 30 percent return on investment using Excel goal seek. Equity is planned at 25% of the investment, totaling $7.08 million. The pro forma shows that the project would have a maximum debt exposure of $21.7 million and use an Acquisition and Development Loan. Payouts to the developer would start at the end of year five. Hard costs and financing total $274.9 million and total revenue equals $325.9 million, for a gross pretax profit margin of 15.6 percent. Pretax profit margin and gross margin analysis provide an impression of profitability, but are not as useful as goal seek, which considers the value of time.

Equity investment must usually pay for all costs through design. Land purchase can be financed in two ways. One is with a down payment and an option payment to buying the rest during the design phase. Buying the rest would probably be financed by equity investors and a loan. The other, more desirable, way would be a joint venture with the State of California, in which case no early land purchase is needed. The State would still be paid the market value for the land, but in payments accruing as each home is sold.

The A and D loan finances site improvements and is repaid from home sales.

Building loans finance residential building construction. As homes are sold, loans and land are paid for, and reserves accumulate and are invested in the HOA assets, first the store and café, which are part of the first building phase, then the bus system, and, finally, the community center, minivan, and electrocart.

The return to equity is delayed by loan repayments, but then all the earnings go to investors. Despite the delay, there is a high return, unless problems occur, in which case the lenders bear little risk and investors, almost all the risk.

## Financing Details

This discussion goes through the pro forma page by page. It has more details than the discussion above, and much less than the pro forma itself, which is also available. It discusses some issues not in the pro forma, which focuses on the numbers. A pro forma cannot be better than the numbers that go into it. For Bayview, we have consulted extensively on all the input numbers with experts.

We will start with the cost pages, then the sales and inputs pages, then the timing and cash flow, and finally the gross margin analyses and summary page. We will not consider the investor's cost of due diligence, which includes the investor's time checking out HAPA's research, an appraisal of the land, legal costs to create an LLC, and possibly other consultants, like an engineer and an architect, to verify cost estimates.

Land Purchase

Estimating the cost of land is one of the most difficult and important parts of the pro forma. The law requires Caltrans to sell the land at public auction. Caltrans has sold very few properties as big as the site plan area. I made a public records request to the Sacramento office for sales over $5 million, state wide, since 2000. Caltrans found only eight sales, of which only three were under the rules that apply to the Bayview area and all were in southern California. Current Caltrans rules require holding an auction.

The officials in charge of disposition are in Caltrans District 4, with offices in Oakland. They are Mark Weaver, Deputy District Director for Right of Way, Mark Shindler, Director of Appraisals/Estimates and Property Management, and Robert Bachtold, Excess Lands.

In 2012, Caltrans sold 18 houses to qualified tenants along the 238 ROW

**Current ownership**. See property maps below. The larger map above is the old quarry, the smaller map is an old subdivision. The maps overlap by sliding the lower one up so that Palisade and Overlook overlap. The area next to the quarry was subdivided prior to Caltrans ownership. On the west side of Overlook are three lots and four houses of the old subdivision and are zoned single family. One house was sold to a Caltrans tenant and the other three houses were sold in January 2013. On the east side of Overlook are four houses and five vacant lots and are zoned for Sustainable Mixed Use (SMU). Three houses have been sold. The large Palisade parcel south of Bee and Palisade has 1.21 acres according to Caltrans and has four old vacant lots and one lot with a house. Caltrans will auction the Palisade parcel on March 13, 2013. All the houses have been fixer uppers, "contractor specials."

The remaining land, four vacant lots and the old quarry, which is most of the site, is still owned by Caltrans.

**Single family house values**. The value of the houses has been determined by auction, shown in the table below.

**Raw land values** based on recent sales of raw land are not useful because there have been no comparable large parcel sales for years and because raw land values are at historic lows. The housing bust has caused an even more severe down market for raw land, creating an opportunity for a low land cost, but Caltrans, owner of most of land, probably won't sell the land until values rise.

Raw land value can be estimated from income produced by development of the kind the market would support. The market for the Bayview project is speculative, and developers are more likely to support two stories over parking for rentals or condos. The value of the land can be based on the residual after costs of development. We can estimate the total revenue from development, subtract for various operating costs, and estimate the capital value based on the net cash flow. The cost of building can be subtracted from capital value, leaving land value as a residual. The land value can be divided by the number of units to establish the value per unit at a given density. We can estimate the number of units at that density for the acreage of raw land of the site and multiply the residual value per unit times the number of possible units. Using that method in 2013 assumes that rents will continue relatively high.

Adjacent land values are mostly not useful for estimating raw land; on most sides of the site the land is undevelopable, in a utility easement, or composed of vacant lots. City View Apartments, east of the easement, is a high quality rental apartment complex mentioned above a comparable. Its residual land value is relevant and can be estimated at about $29,000 per buildable unit.

The land cost for the whole site would combine the estimate for the houses, the Palisade lot, the vacant lots, and the old quarry can be based on recent sales and the estimate for raw land. The current estimate for the land is about $14.5 million, which is soft but at least a starting point.

Land cost also includes buyer closing costs, legal purchase agreements, and real estate broker, all calculated as a lump sum or as a percent of purchase, and with about $600,000 added in cost.

A developer who buys the land for what the market is likely to favor, two stories over parking, is going to have a problem with the unusual SMU zoning. Changing the zoning to medium density will be risky and costly. If the City holds firm to the SMU zoning, based on market research, pro formas, and political will, developers will have a hard time bamboozling the City into a conventional project. If Council is supportive of a change, developers would still have to get a major General Plan Land Use Designation and zone change, and probably have to write an EIR, since a non-SMU project would not be covered under the existing Program EIR supportive of a reduced parking project. The SMU zoning is likely to reduce interest by investors who want a normal project and reduce their bids accordingly. In any event, even though Bayview might support a higher land value, a buyer should not offer more for the land than its value for a conventional project, so that if Bayview fails, the owner could still build an alternative project.

For larger parcels, Caltrans can allow option purchase by the winning bidder, with 10 percent down and two years to find financing. While the Palisade parcel seems too small to qualify, the quarry seems big enough, and would help project feasibility and financing cost but putting off most of the cost and providing time to find the loan. Using this method of sale, the bulk of the purchase would have to be paid one to two quarters before breaking ground. The financing could have financing common in the industry, with 30 percent from equity investors and 70 percent from an Acquisition and Development Loan. The proforma assumes this method. If an A&D loan were less, investors would have to come up with more. Land purchase is the most costly item prior to ground breaking, and, because it is big and comes early, it has a big effect on the internal rate of return.

Project Team

This pro forma page and the next three cover site improvements. The Project Team is the consultants necessary to get entitlement to develop, design the details, and oversee the improvements on the ground. The page is divided into these three phases. Their work has to be done before we can go in for applications and permits and pay fees, which in turn has to be done before site improvements. Eighteen consultants are involved in entitlement, several of whom carry over to the next phases. Ten consultants are needed for site design, and a dozen are needed for site improvements. The specializations include management, various engineers and architects, dry utilities, planners, lawyers, finance, biologists, contractors, haz mat, site security, and a DRE Consultant. DRE is the California Department of Real Estate, which has extensive requirements for reports to the DRE, which must be approved before any property can be sold. Many consultants have a low cost, but overall they add up to about $4 million.

Project Fees

The City of Hayward, Alameda County Flood Control, Alameda County Recorder, and State Water Board have fees, again relating to entitlement, design, and site improvements. The City oversees most of the project and collects most of the fees, charging for various meetings, general plan changes, zoning changes, environmental assessments, site plan reviews, vesting and final subdivision maps, on-site inspections, access to water for construction, and bonds. The city departments involved are Planning, Public Works, Utilities, and Fire. The cost for all three phases is about $1.1 million.

Site Improvements

Site improvements are very expensive but relatively predictable and well-defined. The pro forma estimates were prepared by a Hayward civil engineering firm and reviewed by a real estate development financial consultant. The major phases are site preparation and field expense, grading, concrete and asphalt, storm drains, sewers, water, dry utilities, and landscaping, plus 20% for contingencies. Each major phase contains about five to thirteen specific items.

The biggest single item is grading, for which two auto CAD estimates of cut and fill were made. The site needs a two percent slope to drain, requiring the middle and knoll areas to be lowered in order to raise the middle of the large, flat quarry floor. The floor area would drain north to the creek and south to Bee Blvd. The expensive part of grading is about 102,000 cubic yards of hard rock. Still, the cost of the four utilities adds up to considerably more than the grading. The total including contingencies is about $29 million.

Site improvements are often called horizontal construction, in contrast to the vertical construction of buildings. Site improvements prepare finished pads on which building can occur.

Site Improvements by Phase

Ordinarily, a pro forma would spread out the site improvements for the whole project with some major expenses up front and the rest spread evenly along with buildings. In this case, however, we did some extra work to link site improvements to just what was needed for each of eleven building phases, delaying costs as much as reasonable.

Building Team

The building team is the consultants needed for "vertical," and the costs are estimated in the same sequence, entitlement, design, and construction. Fewer specializations are needed, mainly architects and structural engineers, and the same Project Manager as for site improvements. A new specialization is the certifier for the Build-It Green requirements. The building team does renderings for buildings, prepares construction documents, and oversees building construction. The total cost for all three stages is about $1.3 million, much less than the project team.

Building Fees

Building fees are far more complex and expensive than project fees. They don't kick in until you are ready to go vertical. The major categories are utility fees, park in-lieu fee, and school fees. The utility fees are for water and sewer. Water sewer fees add up to over $15,000 per unit. Parks get $9,700 per unit, and school fees, based on size of unit, run about $2,500 per unit on average. The park and school fees go to other agencies. The fees cover review of building plans and inspections of building on site. Where a building type is repeated, the plan inspection cost is much lower than for the master plan first review. The Fire Dept. also reviews plans and inspects buildings. For modular factory construction the state does the inspection and has a fee. In addition to buildings, there are some little fees for carports, trellises, retaining walls, signs, and storm water inspections. The fees for all the residential buildings add up to $30.7 million.

Residential buildings

By far the biggest item in the pro forma is the cost of building the units. The cost estimate was based on a very detailed estimate from Zeta Communities for the 2 bed 2 bath unit and the 4 bed unit, pro-rated to the other unit types. The specs have already been shown above. The estimate was further reviewed by a real estate investment financial consultant. Ten percent for contingencies was added to the estimate. The core costs of a basic building, bathroom, and kitchen make smaller units more expensive than larger ones, which mostly add bedroom space. The cost runs from $117 per square foot for a studio to $93 for a five bed unit. The project proposes 1,161,000 square feet of residential space with a total cost of $123, million.

Energy

A few years ago, it became very clear that the extra costs for sustainable energy had to be separated from building costs. The energy costs need to be financed and sold separately from the basic house to allow comparisons, house to house, and green energy to utility bill. Further, the passive energy costs are critical for lowering the costs of active energy; that is, the insulation makes it much easier to meet energy needs with solar panels. The energy package consists of extra insulation, moisture barrier, lighting, door and window upgrades, solar water tank, hydronic space heater, heated towel racks, and the Echo Solar System. Insulation requirements already part of Title 24 are not included, only the extra costs to get to net zero on the grid. The solar system costs for a two bed flat and for a four bed townhouse are pro-rated to the other units. The total costs are substantial, $35.5 million for the whole project, including ten percent for contingency. Green energy, for example, costs about $32,000 for a two bedroom two bath unit, or $44 per square foot. If added to building costs, it would create the appearance of an overly costly building.

These estimates, however, are soft, as discussed under Green Energy Cost.

HOA Assets

Over time, it became clear that HOA assets should be consolidated onto one page. The HOA assets page now has the two managerial units on the top of the community center, the rest of the community center, the store and café, and the Village Bus. It was too difficult to separate out small HOA asset-related costs on all the pages, but they were taken out for building fees because the commercial and community buildings had their own columns. The building fees for HOA assets add up to about $300,000. Total HOA assets came to $5.4 million.

The unusual asset here is the Village Bus; most subdivisions don't buy buses to sell houses. The bus can work because the service distance is short, making it possible for two buses to have ten minute headways and an eight minute run time: "Frequent." "Fast" means as fast as a car uphill, and faster through intersections based on preemption. "Free" means Bayview residents ride without paying a fare (ecopass). The high tech bus and rapid bus features, explained above, provide a much higher level of service than Americans are used to, which requires a higher level of capital investment, about $2.7 million, almost half the cost of the HOA assets, but only $2,600 per unit.

The ten pages above are the "hard costs" of the project. The "soft cost" is the interest to be paid on the A&D loan, but before that can be calculated a number of other pages need to be presented.

Sales and Transitional Parking

The sales page reports the unit types, number of each, square feet of each and total of that type, the costs of building the unit, a markup, unit price, and unit price per square foot. So far the markup has been 5 percent, but it can be varied for different scenarios. Since energy is sold separately, the same items are reported for green energy. The page includes rows to calculate revenue from sales of options, specifically listing granite countertops, upgraded cabinets, molding package, technology wiring package, and upgraded floor coverings. The options rows have not been implemented to keep already complicated estimates a little simpler.

Much of this data has already been presented under Marketing. The total revenues for units come to $296 million.

The transitional parking pages analyze this concept and report revenue from transitional parking, with a range of possible outcomes, from all of it being built on, to all of it remaining in parking, as discussed above. Transitional parking at the end of the project becomes owned by the HOA like the carports. Assuming all transitional parking is built on, transitional parking leases provide about $9.4 million in revenue.

Inputs

The inputs page is unusual in a pro forma. It allows a user to change key parameters that then flow through the other pages to show financial results. For Bayview, the inputs page has been set up to show the cost of the Echo Solar System for the 2 bed flat and the 4 bed townhouse. There are inputs for key site improvement unit costs and quantities: earthwork, hard rock excavation, perimeter retaining walls, storm drain pipe, c3 storage drain pipe, general site landscaping, contingency, and developer overhead.

The inputs page also considers critical timing issues: the number of quarters needed to build a unit, the quarterly absorption rate, the percent of a building phase that is achieved before triggering the next phase of site improvements, the year and quarter in which sales start, and the year and quarter for obtaining entitlement.

The page has inputs relating to selling expenses for advertising, model operations, sales commission, and fees to independent brokers representing buyers. Finally, there are inputs for property tax rate and loan interest rate.

In practice, the main input varied has been the absorption rate. An investor could change all the inputs to test various outcomes.

The inputs page also has 17 notes explaining definitions and assumptions.

Timing

The timing tab takes values from the Inputs page and other pages. Let's take the example of the first data row in timing, row 15, housing starts, first pass, and at the cell in column O, cell O15, for year 4 quarter 2. The cell shows a result of "32" based on the formula =IF(AND(($B9*4+$C9)<=O14,SUM($B15:N15)<total),$B6,0)O15

$ means "don't change the item when copied." $B9 means don't change B to another column when copied across to other columns, and the lack of a $ in front of the 9 means it can change to other row numbers if copied down the rows.

$B9 and $C9 refer to year and quarter of start of sales, in this case year 3 quarter 1, from the inputs page. $B9*4+$C9 converts the term into the number of the quarter in which sales start, in this case quarter number 13.

$O14 refers to the number of the quarter in the column, in this case 14.

SUM($B15:N15) refers to the sum of the values from B15, which does not change, to N15, which keeps changing as the formula is copied to the right. In this cell, the sum stops at N, just before this cell in column O, so it equals the number of housing starts prior to this cell. Since N keeps changing, it keeps reporting a larger sum. In this cell, the sum has reached only 32

"Total" refers to the total number of units, in this case 1,024.

$B6 refers to the absorption rate, in this case, **32** units per quarter, from the inputs page.

This discussion can get very tedious very fast, so, cutting to the chase, the formula in English says if the start of sales (13) is less than the number of the current quarter (14) and total housing starts so far (32) are less than the total, 1,024, then enter a number for housing starts equal to the absorption rate, in this case **32**. If either of these terms is false, put zero. As a result, a string of 32's is entered from the start of sales to the total units of the projects, with zeros before and after. This information on the timing page is used by formulas on the Cash Flow page to enter revenues and costs in the correct quarters. If the timing were fixed, all this would be a big waste of time, but given the need to estimate various scenarios, timing provides powerful tool to test assumptions and have them ripple through all the pages of the proforma. In the end, only two figures need to be entered by hand on the Cash Flow page, one to zero out the cash reserve and the to run the goal seek macro for an accurate calculation of IRR (Internal Rate of Return). This is so cool I will explain it again below.

**Rows 16 and 17** calculate the units remaining, and make sure that the last entry for housing starts in row 17 does not cause the project to exceed the total unit count for the project.

The Timing page has similar and even more complicated formulas for determining work in progress by quarter, housing completions, quarter in which entitlements are obtained, phase improvement starts, and HOA assets starts and completions. I was not up to the task of writing timing formulas for HOA asset construction triggers, so I entered them manually.

Cash Flow

The Cash Flow page is the largest of all, having columns for all quarters and rows for kinds of actions. Columns for quarters in timing correspond to the same columns for cash flow for 52 quarters, although not all columns are needed towards the end. The Cash F

low page looks at the timing page to calculate its amounts. If the cash flow formula looks at timing and sees a zero, it enters zero. In the example above, cash flow for quarter number 14 is also in column O. Cash flow has five rows for housing cost—building team, building permit fees, residential buildings, green energy, and, not yet implemented, options. The formulas in these five cells reference cell O17 in timing, where they see "32." For building team costs in cash flow, the cell finds the building team page cell which has the building team cost per unit for the construction consultants. This cost time 32 is entered in the cell. A similar process fills the other housing cost cells for that quarter.

The housing costs come part way down the Cash Flow page, which has several sets of major rows. The first data rows deal with revenues, typical of all pro formas. In this case, housing sales and transitional parking lease revenues are added for total revenue.

Next come rows for land acquisition, entitlement, and design, followed by 11 rows for phases of site improvements. These rows are subtotaled for land development costs. Then come the rows for housing costs and HOA assets, also subtotaled. Next come ten rows for selling and other expenses, again subtotaled. All the hard costs in each column are totaled.

We come to a very important row, net cash flow from operations. The hard costs are subtracted from the revenues. In the early quarters, there is huge disbursement for hard costs with no revenue. Revenue then begins to trickle in and finally turns positive at the end of year 4 in the main pro forma we are using.

The remaining rows of the pro forma cash flow deal with equity investment and loans. The equity investment is partially automated but requires four hand entries to start the development loan and to attain the target of 30 percent of the financing costs. Equity has to cover all costs and cash on hand until ground is broken on the project, and the development loan starts. The pro forma assumes that 30 percent of financing costs come from equity and 70 percent from the loan. The loan kicks in in year 3 quarter 1 when site improvements start and also the equity contribution falls below that needed to cover costs and cash on hand.

Then, after the first loan draw, things get more complicated. The Cash Flow page uses 11 lines to track the development loan status. Five lines for the interest account track previous quarter accrued interest, current quarter accrued interest, current quarter interest paid, and current quarter accrued interest. These amounts are needed to track how interest is added, accrued, added to principal, and paid off. Five lines for principal amount cover previous quarter principal, the current quarter draw, the paydown after paying off interest owed, and the current principal balance. Combined principal and interest reveal the loan balance. This balance rises to a high in year 4 quarter 3 and then is gradually paid down to zero by year 7 quarter 2.

These lines in the pro forma fully automate a process that is tedious and difficult to do by hand.

The bottom rows of cash flow report on the loan, equity, and financing. The loan interest rate from the calculations should be the same as the assumed rate; this is a check to make sure the sheet is working properly. Maximum loan exposure and total interest paid are also reported.

The lines on equity report total equity investment, IRR, present value of equity cash flows, the sum of all these values, and years of discount. When IRR is set to zero, the line for the present value of equity cash flows is wrong; it does not discount to present value. The sum of the present values shows a large amount of money. What is missing is a value for the exponent needed to reduce the sum of the values to zero. The term is in the cells, but takes its value from the IRR cell, initially zero. The value of the IRR, and the exponent, is calculated in a special process by Excel at Data | What-If Analysis | Goal Seek. A macro can be written to execute goal seek easily. The process seeks the rate for the exponent which will reduce the sum of the present values to zero, which is the IRR. Math whizzes may be disappointed at the brevity of this explanation, and others may be happy it isn't longer. IRR is essential, because it tells us our estimated profit.

The Cash Flow page, however, should be used to test assumptions, not reach certainty. Cash flow and the sheet in general provide a good way to get a good plan, but not a way to avoid inaccurate assumptions or get reality to obey the assumptions.

Gross Margin Analysis by Building Phase and by Unit Type

Gross Margin Analysis (GMA) is commonly used in the industry for a rough impression of viability of a project. However, GMA does not consider the value of time, which is why IRR is a much better analysis. Nevertheless GMA for phases and unit types can help find problems in the estimates using check sums, and show problems in discrepancies among phases or unit types. The current pro forma has some discrepancies for pretax profit margin between the two beds and the other units. At some point, I need to figure out why. There may also be too much variation of pretax margins by building phase, even though the page as a whole adds up.

Summary

The summary does just that. An experienced analyst will typically look at the per unit values to see if they make sense. If they do, the rest of the data has some credibility, but would still require a lot of checking, or due diligence, which can take as much time as is available. Having avoided numbers up to here, I will now present the whole summary for five pro formas, with column E as the main pro forma, followed by an absorption time table and the summary page from the main pro forma:

## Other Financial Analyses

HAPA has prepared other financial analyses for the Homeowners Association, the grocery store, and the Village Bus.

HOA Fee

The California Department of Real Estate (DRE) has lengthy and detailed requirements for HOA dues based on operating costs and deprecation reserves. Various reports must be approved for a new HOA, and budget updates have to be submitted after that. Firms specializing in HOA budgets know how to fill out the forms and make reasonable estimates. HAPA went to Brenda Ohm, RS, PRA, of the Golden Consulting Group in San Ramon CA and got excellent help. The spreadsheet has a page for each building type, and each page has major categories of building characteristics, fixed costs, operating costs, reserves, administration, contingency, reserves worksheets for painting and roof, utility worksheets for electrical, gas, water, and sewer, and a worksheet for pro-rationing variable costs. The studios and one beds in the MU block have higher dues because of the cost of halls and elevators and other common areas. It all makes more sense after you've studied it awhile.

There is also a similar worksheet for costs common to all units. All the pages come together in a summary, shown below. It shows the thoroughness of the DRE.

The Bayview Village Store

According to a retail real estate investment consultant, it would be difficult to make a small store work, but the data I could find indicated otherwise. The reason for difficulty is that Bayview can only support a small store, and the vast majority of grocery sales are in bigger stores. The grocery market is diverse and changing, historically to larger and larger markets with bigger and bigger parking lots. The trend is culminating in the Superstore, a huge area of groceries, department store, and services, and in the warehouse sized-discounter.

The reasons for hope are that Bayview still has substantial purchasing power and an easily-accessed store. A small format store, Trader Joe's, is booming; and smaller convenience stores and express markets thrive on busy street city corners, at gas stations, and in rural areas. Information on the web is not consistent and has little systematic information on smaller stores, but it is clear that despite the Wal-Martification of groceries, many smaller stores are doing well.

(Interesting websites: Food Marketing Institute,  http://www.fmi.org/research-resources/supermarket-facts and also use search box;  http://www.edsuite.com/proposals/proposals_169/88_1_intel_-_grocery_stores.pdf 2005;  http://hightechbizdev.com/2010/09/01/ira-feldman-high-technology-business-development-beware-the-cost-of-complexity/; National Association of Convenience Stores NACS http://www.nacsonline.com/NACS/Pages/default.aspx;  http://valuation.cushwake.com/Documents/50905.pdf 2006; (http://sales.dalecarnegie.com/general/files/industry/Grocery%20Retail.pdf;  http://www.edsuite.com/proposals/proposals_169/88_1_intel_-_grocery_stores.pdf;  http://www.commerce.state.il.us/NR/rdonlyres/8D0B90B6-C149-437C-9C16-131E0D62CB9E/0/GroceryConvenienceStore.pdf))

Grocery stores are high volume, low mark up, narrow margin businesses. Typically, 29 to 33 percent of gross sales is gross profit, and less than 3 percent of gross sales is net profit. The Food Marketing Institute reports net profit after taxes in 2011 at 1.09 percent. (<http://www.fmi.org/research-resources/supermarket-facts>)

Grocery stores sell three major types of products: **perishables** (about 50 percent of revenue); **nonperishable foods** (30 percent); and **non-food items** (20 percent). Perishables are mainly bakery, meats, poultry, fish, produce, eggs, dairy, frozen foods, plants and flowers, and deli items. Nonperishable foods include most processed food, such as cereal, canned goods, snacks, coffee, and soft drinks. Nonfood items include pet food, personal hygiene, household cleaners, vitamins, health and beauty care (HBC) products, over the counter (OTC) medications, and general merchandise (GM). For 7-Eleven, a large chain of convenience stores, the mix is 30 percent perishables, 50 percent non-perishables, and 20 percent nonfood.

The Goal

The concept for systemic change is that the walkable store needs to meet at least weekly and preferably monthly needs of the residents, requiring enough shoppers within walking distance with enough purchasing power.

SKUs, SF, etc.

Items for sale are called SKUs, for Stock Keeping Units. Store size is measure in square feet (SF), including back areas, not just selling area. SKUs/SF indicates the density of items for sale, which varies a lot, from .4 to 1.4, without much relevance for profitability. Sales per SF per week is important metric but hard to find.

Typical grocery stores carry 50,000 SKUs, much more than needed for monthly needs. Still, given some diversity of weekly to monthly needs, a large number of SKUs are needed. I assume about 3,500 SKUs would meet the need. The Village Store would occupy four modules in the Mixed Use Bldg on the busway level. The floor plan has 2 **,688 square feet** , so with 1.3 SKUs/SF, can stock about **3,500 SKUs.** The high stocking density is feasible given less space needed for the low stocking levels (a small number of an item) of many SKUs. This number is about 1,000 SKUs more than a 7-Eleven, and about 500 less than a Trader Joe's.

The Village Store would start off as an express market, not as a convenience store. It would have fewer drink, alcohol, tobacco, and snack items and more items related to quality, discussed below. The product mix would be closer to Trader Joe's and to Fresh & Easy, which also has 3,500 SKUs, but in much bigger stores. It would be similar to Tesco Express, which has 2,500 SKUs in up to 3,000 sq. feet, sells fresh produce, wine, and in-house baked goods.

Purchasing Power

Economic analysis considers how much more business of a given type can be developed within a planning area. The analysis looks at existing spending and store types, how much population and purchasing power will grow, and how much each type of business can grow several years into the future. AECOM did such a study for the City of Hayward, limited to the southern Mission Blvd. area below the Bayview site.

The gain in sales in the Mission area is the increase over 2010 due to increase in income and population. This table shows that if the ratios used for a nearby section of Mission Blvd. were applied to the Bayview Village population, the store would have to capture only 31% of the market of Bayview itself.

Viability threshold: prices, hours, selection, employment

In general, as population in a neighborhood increases, the support for grocery SKUs in a local store would initially go up slowly, starting below a level for viability. It would then go up steadily and at some point cross a line for viability. As more growth occurs, the demand for grocery SKUs taper offs, as increasing demand does not increase the number of basic SKUs, but would just increase their volume and justify non-essential SKUs. In fact, in Bayview a larger store size might not be optimal because of the difficulty of non-residents reaching the store.

The store has to be large enough for enough SKUs and be open enough hours at competitive prices to appeal to residents enough to produce a volume of sales large enough to support the owner and one or more employees. Below that threshold, viability falls off sharply in a downward spiral.

The chart below is a theoretical construct of these ideas, in search of more information.

For planning purposes, population above 2,500 in the "walk shed" does not help grocery viability much, but population below 2,100 causes a sharp drop off in viability.

Secondary market

In principle, the Village Store should have no secondary marketing area due to the lack of convenient free parking. However, an unpredictable possibility is people riding the bus and stopping off for food or shopping. Fresh-baked Danish pastries and donuts and good Fair Exchange coffee could pull people in on their way to the campus in the morning; it would be as convenient as doing it on campus, which has no bakery. They could also as easily stop for dinner in the café and pick up some items in the store on their way home. Since most transit in the U.S. is slow, infrequent, and not free, U.S. investors don't have opportunities for transit-accessed demand of this kind.

Store Quality

The success of the Village Store will also depend on the quality of the store. Smaller stores are succeeding with locally popular items that bigger stores often overlook: Ethnic, gourmet, local farm fresh produce, locavore, natural and organic, vegetarian, unusual frozen foods, imports, preferred local brews and local vintages, in-house baked goods, ready-to eat prepared foods at dinner time, delis and salad bars, and party catering. The store should have local farmers market on Saturday morning.

A small store allows faster shopping than in a supermarket; short-list shoppers can be in and out in four minutes.

The café may be able to integrate its operations with the store for things like bakery, food sources, and take-out and bag lunches.

Store quality depends on having the right items for sale. Smaller stores like Tesco's Fresh & Easy and Trader Joe's are growing based on offering new product lines and meeting new customer needs. Fresh & Easy Neighborhood Market has 3,000 square feet and 2,700 SKUs, of which about half are store brands. The web site at <http://www.freshandeasy.com/> gives an idea of what this store could look like in Bayview. It looks like a Trader Joe's without the special personality.

Trader Joe's approach allows it to do more with 4,000 SKUs than other grocers do with 10,000 SKUs. Trader Joe's has a large proportion of store brands, great research on new items, and an efficient supply chain that Bayview can't have. However, if you can't beat them, join them: The Village Store could have shopping services at Trader Joe's, Whole Foods, and Costco and for a small markup deliver resident-ordered items at the store or to a lock box at their unit.

In other ways, the store can imitate Trader Joe's: Reduce proliferation of similar items in any product category, have 4 kinds of peanut butter, not 57. A focus on what items sell the most reduces the amount of shelf space needed, simplifies the supply chain and shelf stocking, sells more units per SKU, and supports volume discounts from distributors. The Village Store can also have super customer service and innovative products to meet developing consumer tastes.

Prices are likely to be a little higher than large off-site markets, especially for smaller purchases, but will be competitive because of convenience. However, the extra cost can deter larger purchases, so the store might have a system for discounting larger purchases to maintain competitiveness.

The Bayview Village Store has a unique situation helping make the store work. The store is paid for by the home owners, and they own it through the HOA. The home owners' store income is, then, their own money. They have an incentive to make the store profitable without over-charging themselves. If they don't shop there, their HOA fees go up. More profits lower their fee, giving them more money to shop at their store. What they do for one goal might hurt the other, but both ends are served by success. It is not a perpetual motion machine, but it creates a strong incentive for excellent management responsive to owner needs. Working with their store manager and HOA manager, they can find the balance of all the possible qualities that meet their needs and thus benefit themselves as shoppers and as owners.

Market Share Capture

Is 30 percent realistic? Some estimate has to be made about how much of the market the Village Store can capture. The competition would be the downtown Lucky store and the more distant Safeway, Smart & Final, and Costco. Some people may want to shop elsewhere despite the cost in time and convenience, but the store is much easier to reach. Walk time would be a few seconds to five minutes. The nearest competing large grocery, Lucky, is about 14 minutes away by Village Bus. The Village Store should be able to get a 30 percent capture rate, based on local purchasing power, easy walking access, the inconvenience of going off-site to shop, large enough selection, low enough prices, long enough hours, and the quality factors discussed above.

Expansion

If Bayview needs more commercial space, the store and cafe can expand into adjacent modules in the MU Bldg, and ground floor units facing on the Village Square can be converted to retail, regulated by the HOA.

Financials

The capital cost of retail in planned communities has to be subsidized; like a public park but less so. As with shopping centers, a low base rent for the store is combined with HOA participation in gross receipts, reducing the base cost to the lessee without affecting the profit incentive.

Trader Joe's is far and away the market leader in sales per square foot per week, $25, while the industry average is $10. If the Village Store could make $15 per square foot and capture 30 percent of the market, its annual revenues would be about $2,100,000 per year. If the net surplus revenue is one percent, the HAO would get about $210,000 per year. The assumptions used below are much lower, pending expert review of these estimates.

## Village Bus

The pro forma for the bus was to estimate ridership, not profitability. Would enough people ride the bus to make it worthwhile? Would too many try to ride?

The first problem was too much data. Just one table on trip generation rates shows trips on three sub-tables for weekdays, Saturdays, and Sundays. The rows show trip rates for all modes by all households, households with no car available, single family houses, duplexes, apartments, condos and townhomes, Alameda County, and Urban Core. For each of these the columns show households rates for all trips, non-home based trips, and home-based trips and per person trips for total, non-home based, and home-based. All in all, the table has 144 data. For example, on weekdays in Alameda County households make 6.665 home-based trips and persons make 2.463 trips.

I looked at six scenarios for Bayview residents, CSU students, and the public. The Bayview estimate using now questionable assumptions showed, for example, that the cost per ride would be only 54 cents, but the 30 seat buses would be carrying 44 passengers all the time. The assumptions needed to be improved or the project needs to buy another bus. The model seems good, but the values for the variables need work.

A service plan for two buses considered the start and end times, hours per day, stops, dwell times, run time, layover time, distances, speed, and round trips. A two bus system would have 11,000 revenue service hours per year and go 158,600 miles per year serving a 2.42 mile distance with buses every ten minutes.

The capital cost, estimated at $2,860,000, is included in the cost of units and in the main pro forma. The HOA fee includes $63 per month per unit to pay for the bus and for taxi vouchers for special trips and when the bus is not running. The bus operating cost is hours times cost per hour, which is estimated at $50 per hour.

Cost per ride and ridership are sensitive to the percent of bus mode share. The cost per ride of $.86 may seem low, but it excludes capital cost. The critical operating cost is cost per revenue operating hour, which in turn is sensitive to labor costs. The project will use a contract operator, whose currents costs run about $45 per hour because their labor costs, though unionized, are far below public bus agencies. The bus occupancy of 25 seems high, but with a low cost per ride, there should be financial capacity to add another bus. These estimates are a sound basis for starting service, but will require management by the HOA to optimize the hours of service and other modes.

# Chapter 18 -- Stages

The Bayview Village project would have several stages. Pre-sale years are those for preliminary organization, control of the land, securing financing, entitlement, design, and initial land improvements. Sale years start with building construction and go to close out at the end of the project. Pre-sale years plus sale years equal project years. Slow, moderate, and fast refer to the rate at which units are sold.

## Presale years

1. **Preliminary organization**. The developer performs extensive due diligence and reviews project documentation. The developer determines what to develop and whether and how to work with me. The work should include some land appraisal and some assessment of the geomorphic break, and might include some legal and organizational developments.

2. **Control of the land**. See the chapter above for details on land purchase cost estimates and current ownerships. The issue here is timing––when will sale of the land occur? The timing of the sale and the combining or separating of properties is up to Caltrans. Selling the lots one at a time will make the Bayview project more difficult; combining them into one sale will make it easier.

The court stipulation for sales of houses to tenants influences timing less and less as these sales are almost concluded. However, the Bayview site is not the only thing on Caltrans plate. It a has large number of parcels in the old 238 ROW to sell, and has been focusing on auctioning single family houses and vacant lots.

One factor which could influence timing is the need to fund certain highway projects. Caltrans is required by the statute for the Local Agency Transportation Improvement Program (LATIP) to sell the entire surplus 238 right of way and use the proceeds for a specific list of highway projects in central Alameda County over the next several years, the LATIP. The funds need to be there when the bills come in. If LATIP bills do not compel sales, Caltrans could wait for more recovery of raw land values.

An offer from a potential buyer could persuade Caltrans to auction some combination of parcels, sooner rather than later.

The City of Hayward and Caltrans could work together. They are already talking about issuing a Request for Interest (RFI) to developers to see if there is support for developing a combination of properties owned by the City and Caltrans below the project area north and south of Bee Blvd. They could agree to sell all Caltrans properties in the Site Plan as one parcel, thus avoiding assemblage problems. They could agree on an RFI which will inform investors about the availability of the land and see what investors might be willing to offer for it. They could agree to auction the land in 2013. The RFI and scheduling of an auction will get a lot of attention, hopefully attracting the green patient investors the project needs.

**Assemblage** is required to achieve the full site plan. Eight percent of the site area has been sold by Caltrans, raising two issues. The sale of the Palisade parcel is essential for the first phases, so the new owner will have the choice pursuing the Bayview idea, something like it, or something else. Without support from that owner, the reduced economies of scale for the HOA assets on the remaining old quarry make the pro forma unworkable.

The second issue is the houses already sold on Overlook, and possible sale of the four vacant lots on Overlook. These parcels come in the end stages, in phases 9, 10, and 11 of an 11 phase project. Therefore, purchases can take place years after start of the project There is time to negotiate, influenced by the rise of three story building next to the houses. Owners would be offered a fair price and assistance in buying and moving into a comparable house. The area is too small to affect economies of scale and if necessary the project could be adjusted to fit around the hold outs. There are numerous vacant lots below Overlook that provide comparable locations and views, which could play some role..

3. **Securing financing**. The developer is likely to get some source for the acquisition and development loan during due diligence, but will need to nail it down. CalPERS would be a good source, as well as some other retirement fund, a big bank, insurance company, co-mingled real estate fund, or green patient investors. Co-op housing and an affordable housing agency could also supply part. Bayview is much larger than most projects. Securing financing is likely to be the biggest challenge after finding a developer who controls the land.

4. **Entitlement**. Entitlement requires several consultants to work with the City on a large and complex application. Transparency about the pro forma, economies of scale of the store and bus, and cost-based pricing will be important to help city staff understand the project and avoid nickel and diming it to death, especially concerning the store. The project has solid political support with the City Council, but there are likely to be some specific bumps on details, specifically, how to signal the intersection of Bee Blvd. with Overlook and the busway, and how to meet the overlay zoning requirement for the 238 regional trail. Entitlement should take about a year, and if the risk of being late to market is there, some pressure should be maintained on city staff to not sit on the paperwork.

Entitlement includes environmental review under CEQA, a site plan application, Development Agreement, Vesting Tract Map, and a General Plan change and Zoning change for properties west of Overlook.

5. **Design**. Design involves consultants preparing detailed plans and documents to meet City and State requirements, but is relatively predictable.

Geotechnical engineers use a drill rig mounted on a truck to drill several borings 20 to 30 feet deep and probably dig two trenches across the fault to look for movement. Seismic refraction—making a big noise and measuring the sound waves through the ground—establishes the rippability—the ability of graders to cut into the rock—of the bedrock. They do lab tests and make many recommendations, which are the basis for structural engineers to design foundations for the weight of the buildings, as well as for grading and pavement. Architects and engineers plan the details necessary for contractors and for recording of property deeds.

Even though entitlement provides the major approval, design phase documents are more technically demanding: the Final Tract Map, Precise Plans, documents needed for transfer of property, and applications to the California Department of Real Estate.

Sales and marketing consultants and managers would determine the mix of housing types and design to appeal to the targeted homebuyer segments. Focus groups sampling major markets would help define the designs and choices people want and provide ideas about how to sell more walking and less car use.

Preliminary construction management begins, to get ready for ground breaking.

In the third or fourth quarter of design, the developer would buy the land, with 30 percent coming from equity and 70 percent from an Acquisition and Development Loan.

The developer pays all costs through design. At the end of design, all elements have to be in place for the next stage, which requires large cash outlays.

6. **Land Improvements.** Only at this time do significant outlays begin. The developer posts performance bonds with the city and pulls permits for site improvements. Construction management operations increase to run many contracts for improvements and coordinate with city inspectors. Land improvements in five grading phases support building phases. The pro forma delays grading to be close to building in order to delay expenditures as long as possible, thus saving on the interest charged on loans. The first phase requires little grading at the south end and an early start on the Mixed Use Building. Grading operations are planned to be separate from occupied units to avoid bothering residents.

## Sale Years and phase areas

7. **Building construction**. Five grading phases support 11 building phases; grading and building overlap in time. Both grading and building are designed to respond to sales, thus reducing time between outlay and revenue.

Phase one at the south end requires a minimum of grading and utility work. First built is the Mixed Use Building for studios and one bedrooms, with temporary space for the construction office, a sales office, and an HOA. Phase Two, just north, requires extensive grading and would have two bedroom sixplex condo and three bedroom townhouses. The condos and townhouses include model homes and units for sale.

Building phase one has studios and one bedroom units. The Mixed Use Building is one of five surrounding a park. When its units are sold, the next building begins. Phase two includes two types of two bedroom condo flats and three story townhouses, so that five building types come early to market. The mix of home types should depend on market demand.

The grading and building are planned to minimize interference between construction activities and residents. Initial residents would be on the south east part of the site with construction access from Overlook on the southwest. Occupancy moves counterclockwise following construction, which closes out on lower Overlook at the end of building phase 11.

As units are sold, the Acquisition and Development Loan is paid off. Each unit has a "release price," referring to releasing the lien the lender has on the property. The rate of payment pays off the loan, typically when about 80 percent of the units have been sold. The release price at that rate is "20 percent over par," that is, 20 percent above the pro rata value of what the bank has in the unit. The loan is paid off faster than the bank's share of the cost, so at the end of the project all the surplus goes to the investors.

11. **Close-out.** As units are sold and an HOA established, the developer gets a final pay out and control of the property fully shifts to the homeowners and the HOA, which is owned collectively by the homeowners.

**Supporting files** : /Bayview Village/5 Financing and Phases xlsms: BV Pro Forma 9 years, 12 years, 16 years, and summary, BV HOA Budgets; Village Center Commercial.pdf

# Chapter 19 -- Risk Factors

On any project this large, some things go wrong. Bayview Village has two main risks: land price and absorption rate. Land prices for raw land are very low at the moment (spring 2012). The Bayview land value estimate is based on rents at City View, a nearby high-quality apartment complex which is the most likely type of conventional development for the project area. City View rents are high, so the estimate of land value might be high. There is a risk that bidding at auction could rise higher than a developer is willing to pay. There is a risk that one to four properties on Overlook owned by others would be difficult to acquire, creating problems of assemblage. The site plan might have to be revised or there might be some expense to buy the properties.

Land value plays a dynamic role in the pro formas. The land purchase is the biggest cost for the developer, comes early in the project, has a delayed return, and is highly leveraged, so it has a big impact on return on investment.

The other big risk is the absorption rate. It is so important that the pro formas have three different rates: fast, moderate, and slow. Prices based on cost are unlikely to go below competing projects with comparable home sizes. A fast absorption––selling units faster than expected, at the planned price—would be very profitable, while selling units more slowly below the planned price would reduce returns. It is not just a question of Bayview versus other housing, but also the whole economy, the recovery of the real estate market when the project comes on line, and the potential for buyer education—all impossible to predict closely.

For these reasons, Bayview should be funded by a patient, green developer committed to the values of the project, willing to wait for a return, and confident that an imaginative buyer education program can recover sales during some slumps through a five year selling period.

If this book were a prospectus for an LLC, this section would be much longer and in legalese following SEC Regulation D requirements. However, HAPA is not selling anything.

**Supporting files** : /Bayview Village/6 Risk Factors/Green Ratings/Green Ratings/: files on CCAP emissions calculator, LEED compared to ACWMA, LEED for ND latest guidance and spreadsheet (2009 08 2011; ND Docs6407.xls).

/Caltrans files on CTC procedure for sale of excess property, email with Robert Macpherson, and Overlook tenant purchase problem.

/Geotechnical files on preliminary hazards evaluation, cost proposals, site geological features

# Chapter 20 -- The LLC Option

There are two types of developer: an LLC formed by investors which retains a management team, or by a development firm, with investors and management team already in one company. This section applies to the investor option, not the development firm option. Some topics are not discussed here: the employee retirement fund law called ERISA; legal liability; and expenses reimbursable to the management team.

A word of caution: To experienced investors, the following will look like a Private Placement Memorandum (PPM), and indeed it is a draft that could become part of a PPM. A real PPM has a legal significance which this discussion does not have. If you are an investor, you would probably write your own PPM or work with HAPA to develop a PPM. If you are not an investor, the following provides a good education on how investing works with investors, an LLC, a Board of Directors, and a management team. An alternative form of investment is by a development firm, where one company already has substantial funds and manages the project.

## Investor accreditation.

Purchase of shares in a possible Bayview Village LLC would be restricted to "accredited investors" as defined in Regulation D, Rule 501 of the Securities and Exchange Commission. Investors would sign a "Subscription Agreement," which basically states that the signing party understands the criteria for accreditation and affirms himself or herself to be an "accredited investor":

The federal law defines the accredited investor in Rule 501 of Regulation D as:

1. a bank, insurance company, registered investment company, business development company, or small business investment company;

2. an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million;

3. a charitable organization, corporation, or partnership with assets exceeding $5 million;

4. a director, executive officer, or general partner of the company selling the securities;

5. a business in which all the equity owners are accredited investors;

6. a natural person who has individual net worth, or joint net worth with the person's spouse, that exceeds $1 million at the time of the purchase;

7. a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or

8. A trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes.

For more information about the SEC's registration requirements and common exemptions, read the SEC brochure, Q&A: Small Business & the SEC.

## Investors and the LLC.

Investors would invest in shares in a Limited Liability Corporation (LLC) controlled by a Board of Directors, which employs a management team to execute the project. Investors would relate to the management team through the Board of Directors. An annual investors' meeting, similar to a shareholders' meeting, would provide investors with an opportunity to hear from the management team and Board of Directors directly as to the progress, schedule, and budget of the project. This annual meeting would provide a forum for questions and answers as well as exchange of ideas. For the convenience of investors, participation may be in person, by conference call, or by video conferencing.

Investors would elect the Board of Directors. As the situation warrants, they would increase equity pledges to the project. Investors would be kept informed of activities and exchange ideas by a monthly summary email and by access as needed to the Board of Directors, and the Board would have free access to project managers, to assure a transparent and open flow of information with them.

Prior to the inception of the LLC, each investor would be required to commit a specific amount of capital towards funding the early stages of the project, based on that investor's financial wherewithal and preferences. In exchange, investors would receive stock certificates reflecting a pro rata percentage interest in the investor equity returns. The minimum investment would be $100,000. Stock shares would be priced at $10,000 per share. Since this company would be privately held, stocks would not be revalued through a market maker or an exchange; they would retain their notional value.

Investors would be required to contribute some money based on the pledge at the inception of the LLC. The money would go into an independent interest-bearing escrow account.

Periodically, the management team would submit a funding request to the investor group, specifying the use of funds for the upcoming period, and allocating the funding request to each investor based on their pro rata pledge. The investors would be required to review the funding request and file any questions or disputes within 30 days. Otherwise, the escrow officer would distribute requested funds from the escrow account and place them into the LLC working capital account. The management team would provide investors with actual expenditure accounts for each prior funding period.

Investors would agree to recognize that this type of investment is illiquid. They would be prepared to receive no dividend distributions over a period of several years. Their positions could be sold or transferred by their own marketing efforts, subject to review and approval of the management team.

Other investor rights and responsibilities would be specified in the LLC formation documents. For income tax purposes, the Bayview Village LLC would be a pass-through entity, where each investor would be responsible for filing a tax return and incorporating an accurate reflection of gains and losses from his or her participation in this investment.

Investors would agree that their investment in the Bayview Village LLC would have rights and responsibilities similar to typical private equity investments. For example, claims to proceeds from the sale of houses are secondary to claims by lenders, suppliers, contractors, consultants, tax obligations, and management fees.

## The Board of Directors

To represent the interests of the investors and other parties-in-interest, a three-member Board of Directors would be elected annually, except for the first year, where the initial Board members would be appointed members, as described below. The Board of Directors would be responsible for setting business strategies for the project, for frequently reviewing the accounting reports prepared by the management team, and for confirming funding requests. Additionally, the Board would make termination and hiring decisions of the management team, set performance objectives for each team member, and establish annual bonus amounts. The Board would not be responsible for or have any direct control of day-to-day operating decisions of the management team, but would be involved in strategy discussions leading to those decisions.

In one scenario, I, Sherman Lewis, would be Chairman of the Board, serving without compensation. There have been some rumors that I would benefit financially from this project. This is not true. I have spent over $100,000 in developing plans for Bayview Village, but all of my spending has been tax-deductible donations. My donations go to the San Francisco Study Center, the fiscal sponsor for the Hayward Area Planning Association (HAPA). The Center is a 501(c)(3). Since March, 2006, HAPA has been incorporated in California as a 501(c)(3) non-profit corporation. The Center, as fiscal sponsor, manages all income and expenses, and does all the accounting and required reporting to the state of California on HAPA. Other HAPA supporters have also contributed to the Center.

No member of the HAPA Board or HAPA itself can make any profit from Bayview Village. Any money for HAPA has to go to the San Francisco Study Center and to be spent consistent with the 501(c)(3) law. I fervently hope to pass all future expenses from HAPA to a developer. The tax law not only prevents me from profiting, but also requires that HAPA serve a public interest purpose like education and research. HAPA interprets that to mean that the results of our work should be made available to the public to the extent that SEC Regulation D allows, and not kept secret. Bayview Village research has value even if investors are not found. In particular, the financial analyses, called pro formas, which usually kept highly confidential, are on the web available to the public.

As President of the Hayward Area Planning Association, I have advocated comprehensive market-based solutions for Hayward's urban development since 1978. I have actively participated in many other organizations to address traffic, open space, and other issues in Hayward. I promoted of this project since its earliest conceptual stages dating back to 2003.

I am a Professor Emeritus of Political Science at the California State University, East Bay where I taught from 1967 through 2010. I graduated with a BA, magna cum laude, from Harvard College and have a PhD in Political Science from Columbia University. My academic research has emphasized urban planning, integrated modeling, and pricing reforms as mechanisms for increasing sustainability while improving quality of life. Planners have traditionally viewed "transportation" and "housing" as distinct disciplines, while my work recognizes that the integration of transportation and pricing solutions into the residential land use plan is the key to encouraging homeowners to reduce their dependency on cars in favor of an equally mobile but healthier, carbon-minimizing lifestyle

If not as Chair of the Board of an LLC, I hope to be involved in any way possible in helping develop Bayview Village.

In the LLC option, two board positions could remain for representatives from the investor group that holds the majority interest in the company. Probably, these investors would have experience in managing large-scale residential projects and offer strategic guidance to the management team on cash flow, sourcing debt, pricing and absorption, and so forth.

## Management

The LLC would be professionally managed by a team of experienced real estate development executives. A possible team was developed in 2011 to execute the project. Thumbnail sketches of the team are below and their resumes are found in Bayview Village/3 Management Plan/Resumes.docx. The individuals proposed have extensive backgrounds functioning in various senior management positions for homebuilders in Northern California. As of 2011, they worked as independent consultants and at that time were flexible about start date and weekly time commitment.

The management team would manage operations, such as (1) working with government agencies, (2) hiring subcontractors, (3) managing cash flow, (4) overseeing marketing and sales, and (5) managing product quality. Each member of the management team would be compensated starting at an hourly rate in the $150 to $200 per hour range, which allows participation on a part-time, as-needed basis. Additional allowance would be made for necessary overhead expenses. Management should also receive a performance bonus specified earlier by the Board of Directors when milestones for control of the property, entitlement, and the securing of the A and D loan.

The team would be activated sequentially as needed.

President: David Dolter. Dave Dolter has over 30 years of experience in both the public and private sector in relation to real estate development. Highlights from his work history include positions as co-owner of a large-scale regional homebuilding company, as an executive in charge of entitlements obtaining approvals for over 8500 units during his tenure, and as City Manager of Redondo Beach and Redevelopment Director of Santa Monica. Dave is a guest lecturer at UC-Berkeley's College of Environmental Design. A more detailed work history, including a listing of projects Dave has worked on, is provided in Appendix C.

Vice President, Sales & Marketing: Owen Poole. Owen Poole brings 30 years of experience to this project as a real estate professional with expertise in the areas of sales/marketing management, land acquisitions, and project management. His background includes land acquisitions for a number of large-scale projects in Northern California. Owen is a former division President to Morrison Homes. He also brings a broad perspective from overseas projects he has managed in Australia, Canada, and Iran. A more detailed work history, including a listing of Owen's projects, is provided in Appendix C.

Vice President, Operations: David Jacobson. David Jacobson has 25 years of diverse experiences in engineering, finance, and project management. Dave is a former civil engineer, a general management consultant with emphasis in financial/operational controls, and for the past 13 years, an independent real estate development consultant.

David holds a Bachelor of Arts, cum laude, and a Masters in Systems Engineering from the University of Arizona. He holds an MBA from Stanford Graduate School of Business with an emphasis in finance and a Chartered Financial Analyst (CFA) designation. A more detailed work history, including a listing of projects he has consulted on, is provided in Appendix C.

Controller: To be determined.

## Accounting/Reporting

The management team, primarily the Controller, would be responsible for maintaining accounting records that are accurate and provide full transparency into the financial activity of the LLC. Accounting records would be available to any investor upon request, subject to a one business day notice.

Accounting. The management team would maintain conventional financial and cost accounting records using accounting software specialized for real estate development and construction, such as J.D. Edwards or Timberline. All cash flows would be posted to a ledger. On a quarterly basis, a trial balance sheet would be prepared and adjusted journal entries made. Financial statements would be prepared quarterly: balance sheet, income statement, and cash flow statement, plus any footnotes. The LLC fiscal year would correspond to the calendar year, so that fourth quarter statements could be used in preparing income tax documentation for the investor group.

Regarding cost accounting, a detailed budget would be prepared just prior to LLC inception. It would be continuously updated as new information becomes available; any changes to the budget would go through a formal management approval procedure, so that an audit trail would be created for the investors. As contracts and demand-payment invoices were received, they would be entered into the cost accounting system and compared to their budget line items. On an ongoing basis, the cost accounting system would provide information on how much the project is over or under budget with respect to committed line items.

In addition to accounting for the LLC, the Controller would maintain an independent accounting of the escrow account used to manage equity capital. This accounting would be reconciled to the title company's own escrow accounting.

Reporting. The management team would furnish to the Board of Directors on a quarterly basis the financial statements for the LLC, a statement of asset position for the escrow account, and a funding request for the upcoming quarter. The funding request would make a projection on cash needed to continue operations for the company. It is anticipated that by the construction phase, the escrow account would be depleted, and the company would then be drawing upon an A and D loan credit line until such time as sales exceeded operating expenses. During this phase, management would continue to provide the Board of Directors with a quarterly projection of expenses.

Tax Reporting. Consistent with IRS requirements, at the beginning of each calendar year, the Controller would distribute to the investors Schedule K-1 statements allocating the company's profits and losses for the year based on the investor's equity position in the company. Similar state income tax statements would be provided to those individual investors as dictated by their residency.

Statement of Distributions. When the company reaches a level of operations such that positive cash flow is derived from sales net of operating expenses, and the A and D loan is paid down, excess cash would be distributed back to the investors on an annual basis. Accompanying the payment would be a Statement of Distributions summarizing uses of cash for the year and providing an allocation breakdown of proceeds, as well as a summary projection of cash flows anticipated for the upcoming year.

## LLC Definitions

Affiliate: A person or entity controlled by another person or entity.

Available Cash: Cash Flow from Operations and/or Sale or Refinancing Proceeds and liquid.

Board of Directors: The group of project proponents that represent the interests of the investors for this Company, taking into consideration the project's impacts on the community, the environment, and on the Company's fiscal performance.

Cash Flow from Operations: The amount of cash from any source other than Sale or Refinancing Proceeds that the President of the LLC deems available for distribution after taking into account Company debts, liabilities and obligations, and provision for adequate reserves.

Company: Bayview Village LLC, a California limited liability company.

Management Team: The group of real estate development professionals selected by the Board of Directors to provide operating management of the Company.

Member: An investor who subscribes for and, upon acceptance by the Board of Directors, purchases a Membership Interest in the Company.

Membership Interest: A Member's entire interest in the Company, including without limitation any and all rights, benefits, and privileges pertaining thereto.

Memorandum: This Private Placement Memorandum dated February 28, 2006.

Offering: The offering of Membership Interests in the Company to accredited investors pursuant to this Memorandum.

Operating Agreement: The Operating Agreement of the Company to be prepared by the Management Team and approved by the Board of Directors.

Percentage Interest: As of any given date with respect to a particular Member, the fraction, expressed as a percentage, obtained by dividing (1) the total capital contributed by such Member by (2) all capital contributed by all Members.

Property: The parcels to be assembled to form the project site, the description of which is provided in Appendix E.

Sale or Refinancing Proceeds: Net proceeds received directly or indirectly by the Company from the sale or other disposition of Company capital assets or from borrowings by the Company.

Subscription Agreement: A Subscription Agreement is part of a PPM, and has terms which investors agree to, e.g. the amounts they will invest, called a subscription to purchase unit shares in the Company, and also a summary of facts about the investment, and an affirmation of being an accredited investor.

# End Note

This book is about what I hope will happen. Projects like this needs to happen, to inch civilization forward a bit, in a policy area that seems huge when viewed close up, but easily fades to smallness in the larger context of society. Hopefully, Bayview Village could influence neighborhood evolution in many ways, not by simple imitation, but by understanding the larger ideas behind it. Bayview Village can happen if enough people want to make it happen.

