The Joint Venture Silicon Valley (JVSV) 2016 State of the Valley Conference painted a picture of an extremely prosperous region, as shown by its high median income of $98,535 and housing prices with a median price of $830,000. As is common knowledge in Silicon Valley, this prosperity causes an “affordability” issue for the significant number of people on the lower end of the income or home ownership ladder. The JVSV data suggests that almost 30% of households in the 3+ million population region are below the self-sufficiency standard, meaning, although they may be above the national poverty level in terms of income, they need help to live in this very expensive area.
It also means people are getting creative in how they live, as approximately 5.1% of Silicon Valley citizens live in homes that include at least three generations of family members (see page 67 of this report – PDF), compared to less than 4% for the rest of the United States. Overall, the average household size has increased (from 2.98 in 2005 to 3.09 in 2014 – page 60 PDF), which is another indicator that people are moving in together to afford housing. This “shared” living stresses parking and roadways designed for the single family residences that would have one or two cars and now may have three or four to accommodate multiple adults living in a household.
Addressing the long-term challenges is what JVSV does. Their 2016 State of the Valley Conference provided a venue to discuss the challenges, look into the future and present possible ways to move the valley forward.
Moving forward is exactly what the keynote speaker Stefan Heck – CEO and Co-Founder, NAUTO, and Consulting Professor, Precourt Institute for Energy, Stanford University – presented in his overview of the past and future of mobility. Heck made it clear that, although Silicon Valley is a fount of innovation in multiple disciplines, it is not on the forefront when it comes to implementing new mobility solutions.
He pointed out that Beijing and Santa Clara County’s Valley Transit System had some striking similarities and divergence. Surprisingly, these cities aren’t that different in terms of density (the Beijing Municipality is less dense than San Jose with approximately 2,000 people/square mile compared to San Jose’s 5,700/square mile). The Beijing system carries more than 9M passengers per day, while VTA carries about 35k passengers per day. Heck indicates that frequency is the most important determinant of usage and that Beijing’s trains run every 2 minutes 5 seconds versus 15 minutes for VTA.
As part of his critique, he compared farebox recovery for multiple cities worldwide. He pointed out that public transit systems in Hong Kong and Taipei are profitable, proving that public transit doesn’t have to mean subsidized. Nor does it mean that public transit needs to be managed by a public agency, as Hong Kong’s operator, MRT, is an independent corporation with the government as its largest investor. It finds ways to monetize more than just trips on its subways and has created an integrated real estate arm that ties together transit with the built-environment.
Farebox recovery doesn’t only measure public transit, but can be a metric for determining the efficiency of public roads as well. Heck suggested that the recovery ratio for roads is only in the 45% range; implying that fees need to increase if vehicles are to pay the costs associated with maintaining the roads. His research indicates that infrastructure for bikes provide an excellent return on investment, as compared to a car. The potential of E-bikes excites Heck, as they typically have shorter commute times for journeys up to seven miles from home during peak traffic periods.
The big game changer for mobility, however, is the convergence of four different concepts, which Heck summarizes by the acronym, ACES; Autonomous, Connected, Electrified and Shared. The technologies behind ACES are becoming both technically and economically feasible and it is their combination that has the potential to shift mobility from car-centric to people-centric. Heck estimates ACES could lead to a 15x improvement in efficiency, reducing the cost of mobility to approximately 8 cents/mile while providing car-like quality (or even better, since one would effectively have an autonomous chauffeur.
ACES is also necessary if California is to achieve its goal of 80% CO2 reduction from 1990 levels by 2050. Along these lines, speaking on a panel about the internal combustion engine’s future in Silicon Valley, John Boesel, President and CEO of CALSTART, echoed former Treasury Secretary George Schultz and deceased Noble Prize winning economist Gary Becker’s call for policymakers to enact a carbon fee and dividend to provide a price signal for efficiently meeting AB32’s 2050 CO2 reduction goal.
More than mobility, ACES will force planners to reconsider the built-environment. As people use other modes of transportation, such as e-bikes and autonomous ridesharing services, parking requirements will decrease and the size of roads will also shrink. Similarly, the need for retail space will be significantly impacted as autonomy will facilitate even more e commerce, as new forms of autonomous vehicles will blur the lines of delivery and retail.
Former HUD secretary, Henry Cisneros suggested that cities need to be intentional about creating housing that is affordable. The JVSV’s index indicates that Silicon Valley is falling short in this category, as, since 2007, an additional 25,000 housing units needed to be built to keep up with demand (page 59). Cisneros suggested that Silicon Valley needs to look at its public lands, as well as underutilized commercial and retail space to find new places for affordable housing. He also suggested creative ways of financing, such as investing portions of local public pension trust funds into affordable housing.
Finally, former Speaker of the House of Representatives, Newt Gingrich, offered advice for the Silicon Valley leaders in attendance when he suggested that they look at two or three geographic areas and focus on making them models for the rest of the country. These would be models not only for applying technology associated with Silicon Valley, but models in terms of creating more efficient governance. This seems like a challenge worthy of Joint Venture Silicon Valley and its 39 city members..