This is just so wrong. From a fundamental point of principle Apple's job is to make phones. The government then taxes Apple and decides how to spend that money. This is a direct attack on democracy - Apple has successfully lobbied to remove the taxes that would provide basic provisions like affordable housing and is now stepping in to choose which parts of the state it wants and which bits it doesn't. Yet more power transferred to Apple, and 0 accountability.
It's a very dysfunctional society to arrive at such a crisis, only to realise that the state is incapable of solving it, enough that a private corporation feels that it is necessary and appropriate to step in.
It was the Californian governing body that isn't allowing developers to build new cheap homes and apartments, because of NIMBY.
And at the same time, everyone is talking about the evil tech giants, so they are trying to look good. If they would just be left alone, they might spend their resources on - oh, I dont know - making cheaper and better phones so that more people around them world could afford them?
I would argue that the Californian governing body that is obstructing new homes is a failure of democracy. Civic leadership has a responsibility to cultivate a sustainable community, not just appeal to populist ideas and short term or selfish interests.
If California allow Apple and other companies to step in, take control and solve the various crises, that is a vast step backward for democracy as you loose your ability to hold the those with power accountable. For now companies are aiming to fix housing, fairly benign but in the future will they attempt to tackle education? Crime? Even without jumping straight to private police forces run by companies without accountability, think about how a large donation of grant could influence the police force.
I have read stories of how Steve Jobs was an asshole and blocked handicap parking spaces because he wanted to and the reaction by the authorities was that he brings in jobs so it was acceptable. Even if the story is false it show the power the companies already wield in the area and it can be abused even further.
Not to get into a protracted argument, but I do not see this as democracy (or capitalism). I see this as socialist top-down elements in a mixed economy.
As a comparison, you have councils (or soviets) deciding for people, how they conduct their economic activity - in this case, not allowing them to build apartments on land they own.
If you are hoping for a top-down control AND it be enlightened for-the-people AND democratically given this control, then you are looking at the wrong governing model. Especially, if you don't believe that top-down won't benefit at some point tiny interest groups.
I agree – we're seeing a return to noblesse oblige, instead of viable social democracies with taxation that ensures a decent life for every person. We shouldn't feel grateful to philanthropists, whether individuals or corporations, we should expect them to pay their tax.
So people who are successful doing charity = bad. Entitled poor people with wealth transfer through wasteful beaurocracies = good. No doubt about it. You live in California.
A quick search shows they paid around $15 billions in 2017 on a $59 billion operating income. Not what I'd call noblesse oblige. OECD member states have an average statutory corporate tax rate of 24% which seems reasonable given that people still need to pay personal income tax, and sales tax, VAT, carbon tax etc.
1. Apple's 'job' is to do what it needs to do to ensure that its business prospers. If the housing 'crisis' in the Bay area is a risk to how it wants to conduct its business, isn't it reasonable that it invests to mitigate that risk? (This is barely different to Apple making large investments in manufacturers, to support them in turn being able to supply what Apple needs to buy from them.)
2. From what I read and see when I visit SF, and also more broadly in the US, the government (be that national, state, or city?) is doing a pretty poor job of tackling housing-related issues - from affordability to homelessness. Can you directly attribute this widespread failure to a lack of funding, due to insufficient taxation of Apple and others?
3. Isn't $2.5bn (+/- new approaches?) to try to combat these issues better than $0, irrespective of where it comes from?
The issue is that the 2.5 billion dollars are not given to the public to spend. It's just Apple using it's stupid amount of capital to do bank-like things as far as I can see. From where I'm sitting, they'll still have to deal with the existing home-owners and speculators who want to maintain the value of their assets. I don't think waterhosing them with money will necessarily help.
> $150 million Bay Area housing fund: In a public-private partnership, Apple is launching a new $150 million affordable housing fund with partners including Housing Trust Silicon Valley to support new affordable housing projects. The fund will consist of long-term forgivable loans and grants.
I still don't understand, I feel you are making elusive claims requiring some inside-knowledge to fully understand. Im not American so maybe I'm missing why loans are "just so wrong"
imagine your government neck deep in debts with privately owned companies. ok ok you got me... , now imagine that's not banks :'D ... ok not much changes :D, government giving out their powers and money to some companies. its what they do i guess
Inefficient spending by democratically-elected bodies is still better than inefficient spending by corporations. Do you really want to live in a society that only receives public works when a corporation decides it's good for business?
There's this fantasy that corporations are somehow much more efficient than government, and I haven't found that to be the case. The major difference is that corporate spending isn't transparent to the public, so it's subject to decreased criticism.
> San francisco spent 2 bill on a bus station alone.
I assume you're referring to Salesforces Transit Center[1]. "Bus station" is a misleading way to describe it. It's huge (~235,000 sqft), includes a large public park, and will connect to high-speed rail.
There are public benefits to having a large transit station with green space in a central urban location.
Yes I don't see how making more money available is gonna cause prices to go down. Isn't it simple supply and demand? Now there is more money that housing investors and realtors can grab.
That the public would have that 2.5B is a false assumption even if it is a complete tax write off for Apple. The money was already theirs for better or worse.
3. I see what you mean but I can't help but think "isn't Facebook's internet better than no internet?" The corporate social responsibility of companies isn't all that great IMO. And even if it is, when you have a new king, oh I mean CEO, that can change. Well, at least the CEO position is based on merit, some of the time, sort of, hopefully.
Why is this wrong? If you want to argue for higher corporate taxes then fight for them and make an argument that wins in the majority of people's minds. The tax cuts from last year encouraged companies to repatriate money from overseas though some of that is still sitting abroad.
I think Corporate "Tithing" is a good thing and should be encouraged. The Government of California has repeatedly shown that they are slow to develop housing so why should we think this time should be any different?
It’s wrong when the same entity doing the “tithing” is also paying to lobby for lower taxes. I don’t know if Apple is or isn’t, but it’s frequently the case.
Similar to someone that votes to decrease assistance programs from the government available to everyone in order to “donate” to their personal causes (or tribes).
> If you want to argue for higher corporate taxes then fight for them and make an argument that wins in the majority of people's minds.
Do you think that's an accurate description of how tax rates get set?
> The tax cuts from last year
You mean the set of tax cuts that have never had a positive approval rating[1]. Wouldn't they be a perfect example that actually no, you can't get higher taxes by convincing the majority of people?
The problem isn't taxes. No amount of money given to the government is going to help with the housing crisis unless new homes are built and unless density is encouraged.
You don't need money for that. Rather, you may even get more bang for your buck since higher density should be more efficient.
Housing is generally expensive everywhere in California. I know the Bay Area is even more expensive still, but pricing is a major concern beyond the local economy.
If their first-time home buyer assistance eliminates all down payments it would be helpful. This is what got me into my house as an owner, but then the total value of my house where I live is the equivalent to half a garage in San Jose.
I’m conflicted about zero down payment programs. Obviously, it lets more people qualify to buy, but I’m not sure that having a lot of people with zero skin in the game and no demonstrated track record of accumulating savings is a good thing. What happens when a $5K recurring maintenance item comes up? What happens when a $20K repair comes up?
You still have to qualify for the home loan just the same as somebody who does have a down payment. The only difference is a higher monthly rate in the term amount since 100% of the principle is remaining. A bank's risk calculations don't change simply because the borrower has fewer liabilities.
To assume home loans are simply given away to everybody because the down payment is absent is ignoring how the process actually works.
I don’t assume that loans are given away to everybody without qualification and I’m unclear where you got that idea from my text.
There are other differences in zero down payment situations. Having (or wanting) to sell the house in a few years makes it more likely the seller will need to bring cash to closing (as the lack of down payment makes it likely that the sales proceeds after commission won’t cover the loan balance). This can “trap” people in their home, desiring to sell to improve their life in some other way but forced to choose between doing that with the 7 year short-sale black mark on their credit report or staying put.
This same phenomenon makes a zero down loan more risky to the note holder, making it more likely that the effective interest rate will be higher.
Again, that isn't how the mortgage industry works. The increased risk that you speak of does exist and is an additional charge on the note called Private Mortgage Insurance (PMI). It is a percentage fee the note holder pays to the mortgage company for an insecure transaction, such as low down payment. It is automatic and at set rates and the note holder doesn't get a voice. Either way the mortgage holder is financially secured.
Interest rate, on the other hand, is determined by all manners of risk factors, but not so much the down payment. Typically the bank assesses the risk of the applying borrower using things like employment history, financial factors, credit history, and other factors allowed by law.
Fortunately, my 0 down situation comes with no PMI and a low interest rate.
PMI, though often split out as a separate line item and sometimes paid to a different party, serves to increase the effective interest rate on the loan.
That is how the mortgage industry works.
> The increased risk that you speak of does exist and is an additional charge on the note called Private Mortgage Insurance (PMI). It is a percentage fee the note holder pays to the mortgage company for an insecure transaction, such as low down payment. It is automatic and at set rates and the note holder doesn't get a voice. Either way the mortgage holder is financially secured.
PS: The mortgage "note holder" is the lender, not the borrower. In the quoted paragraph, you should replace the first two uses of "note holder" with "borrower". That "percentage fee" is exactly what makes the effective interest rate higher.
If prices are too high, then supply must be increased and/or demand decreased.
If prices are too low, then supply must be decreased, and/or demand increased.
Any other attempt at manipulating prices will result in distorting the market and price obfuscation will lead to a suboptimal allocation of resources (usually to the benefit of sellers).
For examples of problems with manipulating prices outside of supply/demand, see higher education costs, home costs, taxi medallions, and traffic jams.
The economics of supply and demand work very differently when supply is fixed. You cannot create more land regardless of the demand. More buildings upon that land means more space and thus a longer commute with increased traffic.
The supply of areas with sufficient economic opportunities to make them desirable can be increased, at least within the US, in my opinion.
Also, the supply of dwellings in a given land area can be increased by building up. However, you are correct that the supply of land for single family homes with garages, driveways, and yards, within commuting distance to a major city is supply constrained.
But the solution is still to shift supply and demand curves.
This is a distraction. The bay area's problem is not demand and not so much supply. Seattle area has much greater supply limitations with far less of a housing crisis.
The largest problem is pricing. This is true even in economically depressed areas of California. The state of taxes in California encourage price inflation: high income taxes and low property taxes. That is a property owner's and land lords dream.
On the contrary if income taxes were sacrificed for increase in property taxes real estate holdings and value both become cost prohibitive. In this case increase value only benefits an owner when selling, but otherwise is prohibitive. This causes people to seek lower value properties, without regard for selling price, and for people to petition the tax assessor for value depletion of their property holdings. Without realistic pricing controls it only makes sense for a property owner to continuously increase the value of their property.
How can supply and demand curves be a distraction to a discussion about price, when supply and demand curves determine the price?
Yes, some of CA's tax laws helps contribute to higher prices, but at the end of the day, the low supply of available houses is compared to the large number of prospective buyer is what makes it so high. Nebraska could adopt all the same taxes as CA, and prices might barely budge, because there's lots of supply compared to demand.
Tackling CAs idiotic property tax restrictions is important, but the elephant in the room is the widening gap in economic opportunity in a handful of urban areas (globally) versus non urban areas.
One can help lower price by increasing the supply of regions with more economic opportunity, and one can increase the supply of dwellings in regions with economic opportunity. Other solutions will just paper over the problem temporarily.
Natural pricing is determined by supply/demand, but prices can be artificially adjusted without regard for economic considerations. Housing is more open to artificial adjustments in price, because of its fixed nature. There is only one given property at a given address and the owner can set any price they want until somebody pays irrespective of currently available demand. Everything in the housing industry is a commission rate based upon property value percentage so everybody in that business will push for the highest price possible. The only motivators to reducing pricing are timeliness and government interference.
As a vaguely related example the 2008 housing crash was the result of artificially adjusted supply without regard for demand or prices.
Pricing is also directly adjusted when the FED changes interest rates.
Nearly 30,000 people left San Francisco between April and June of this year1 and homeownership in the Bay Area is at a seven-year low.2
This is how things should work, as people leave and/or are not willing to live in California, employers will start opening offices in other parts of the US.
If cities in California find that they can’t hire enough qualified teachers, policemen, firefighters, etc., they will have to pay more.
Fire fighters make 200k, police can make 400k a year.
The one that is getting a relatively bad deal is the foreign population, that has higher tax rates, lower benefits, no political power and comprise 25% of Cali pop.
Whenever public sector salaries are discussed in the news, the outliers are highlighted, never the median or the mean, giving readers a warped sense of what cops and firefighters make. Sure, some workers put in a lot of overtime hours and make gobs of money, but the typical salaries are not enough to live comfortably in the cities that they serve. For example, Glassdoor says the mean LAPD cop makes $76k --https://www.glassdoor.com/Salary/LAPD-Police-Officer-Salarie... and the mean SFPD cop makes about $100k -- https://www.glassdoor.com/Salaries/san-francisco-police-offi...
I believe NYPD cops make similar amounts, but that's without overtime. They often get x 1.5 for OT and they can easiyl double their annual salary to $150k - $189k after 4-5 years in service.
$400k sounds a bit high, though it's not unheard of.
In NYC, there are thousands of public employees at MTA and NYPD collecting over $150K annually just a few years in service and I'm not talking managerial or chief positions. Some corrupt safety inspectors were reportedly collecting over $400K at the Long Island Railway years back and the governor promised to fix that (didn't), but those are still outliers.
If only there was a trivially simple policy that is nearly guaranteed to work, that has worked everywhere it was tried, like removing zoning restrictions ... If only the most obvious things were possible ...
They don't really need that so much as flexible zoning in a "we don't give a shit if you build an office building, an apartment block, or a blend but you need to pay to upgrade your sewer and water component to be able to go higher".
Not without downsides but frankly the current situation is untenable.
But also, I doubt you wouldn't want to sell your chicken farm to someone who wants to build a set of 12-story condo buildings. I bet they'll pay wonderful money for your chicken farm, and you could build a far far bigger chicken farm outside of the city.
The whole point of this is to allocate resources effectively.
The alternative to zoning isn’t to let anyone do whatever they want, it’s a planning permission process. Where I am, if you own a building that has permission to be a cafe, you can convert it to a shop easily but you can’t convert it to a pub without getting further planning permission.
The trick is there’s nothing in particular stopping someone obtaining planning permission to open a cafe or shop or pub or barber or gambling establishment near people’s homes, as long as there’s an argument it’s good for the community.
The result of this is that I live within 10 minutes’ walk of nearly everything I need, from a supermarket to my doctor.
I find it so ironic how much convergence US enterprises got with Chinese business models now.
In China, all and every large company is a real estate company. Baidu has real estate, Tencent has real estate, Ping An has real estate. Pretty much any large conglomerate is.
It is almost scary to see how much businesses in China are, in reality, just front covers for their real estate investments operation.
It remind me a bit the situation in mid-200X America, when every big company was a bank in disguise
I wonder if the real incentive here (for Google and Apple) isn't "civic duty", but more of an attempt to retain Silicon Valley's reputation as being some sort of "Mecca" for tech workers?
Apple, Facebook and Google should be investing in new office space in other regions. They created these problems by hiring more people than the Bay Area could support. Lots of great talent will move to other places if the jobs are there.
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[ 2.7 ms ] story [ 133 ms ] threadIt's a very dysfunctional society to arrive at such a crisis, only to realise that the state is incapable of solving it, enough that a private corporation feels that it is necessary and appropriate to step in.
What are you talking about?
It was the Californian governing body that isn't allowing developers to build new cheap homes and apartments, because of NIMBY.
And at the same time, everyone is talking about the evil tech giants, so they are trying to look good. If they would just be left alone, they might spend their resources on - oh, I dont know - making cheaper and better phones so that more people around them world could afford them?
If California allow Apple and other companies to step in, take control and solve the various crises, that is a vast step backward for democracy as you loose your ability to hold the those with power accountable. For now companies are aiming to fix housing, fairly benign but in the future will they attempt to tackle education? Crime? Even without jumping straight to private police forces run by companies without accountability, think about how a large donation of grant could influence the police force.
I have read stories of how Steve Jobs was an asshole and blocked handicap parking spaces because he wanted to and the reaction by the authorities was that he brings in jobs so it was acceptable. Even if the story is false it show the power the companies already wield in the area and it can be abused even further.
I for one do NOT welcome corporate overlords.
As a comparison, you have councils (or soviets) deciding for people, how they conduct their economic activity - in this case, not allowing them to build apartments on land they own.
If you are hoping for a top-down control AND it be enlightened for-the-people AND democratically given this control, then you are looking at the wrong governing model. Especially, if you don't believe that top-down won't benefit at some point tiny interest groups.
1. Apple's 'job' is to do what it needs to do to ensure that its business prospers. If the housing 'crisis' in the Bay area is a risk to how it wants to conduct its business, isn't it reasonable that it invests to mitigate that risk? (This is barely different to Apple making large investments in manufacturers, to support them in turn being able to supply what Apple needs to buy from them.)
2. From what I read and see when I visit SF, and also more broadly in the US, the government (be that national, state, or city?) is doing a pretty poor job of tackling housing-related issues - from affordability to homelessness. Can you directly attribute this widespread failure to a lack of funding, due to insufficient taxation of Apple and others?
3. Isn't $2.5bn (+/- new approaches?) to try to combat these issues better than $0, irrespective of where it comes from?
Could you specify what you are implying here?
The keyword here is _loans_.
There's this fantasy that corporations are somehow much more efficient than government, and I haven't found that to be the case. The major difference is that corporate spending isn't transparent to the public, so it's subject to decreased criticism.
> San francisco spent 2 bill on a bus station alone.
I assume you're referring to Salesforces Transit Center[1]. "Bus station" is a misleading way to describe it. It's huge (~235,000 sqft), includes a large public park, and will connect to high-speed rail.
There are public benefits to having a large transit station with green space in a central urban location.
1. https://en.wikipedia.org/wiki/Transbay_Transit_Center
1. Agree
2. Good question
3. I see what you mean but I can't help but think "isn't Facebook's internet better than no internet?" The corporate social responsibility of companies isn't all that great IMO. And even if it is, when you have a new king, oh I mean CEO, that can change. Well, at least the CEO position is based on merit, some of the time, sort of, hopefully.
I think Corporate "Tithing" is a good thing and should be encouraged. The Government of California has repeatedly shown that they are slow to develop housing so why should we think this time should be any different?
Similar to someone that votes to decrease assistance programs from the government available to everyone in order to “donate” to their personal causes (or tribes).
Do you think that's an accurate description of how tax rates get set?
> The tax cuts from last year
You mean the set of tax cuts that have never had a positive approval rating[1]. Wouldn't they be a perfect example that actually no, you can't get higher taxes by convincing the majority of people?
[1]:https://www.realclearpolitics.com/epolls/other/trump_republi...
1) are they getting tax breaks because they are giving money towards affordable housing; or
2) are they getting tax breaks anyway and then choosing to give this money towards affordable housing?
You don't need money for that. Rather, you may even get more bang for your buck since higher density should be more efficient.
If their first-time home buyer assistance eliminates all down payments it would be helpful. This is what got me into my house as an owner, but then the total value of my house where I live is the equivalent to half a garage in San Jose.
It’s a nice way to keep people treading water for their whole lives.
To assume home loans are simply given away to everybody because the down payment is absent is ignoring how the process actually works.
There are other differences in zero down payment situations. Having (or wanting) to sell the house in a few years makes it more likely the seller will need to bring cash to closing (as the lack of down payment makes it likely that the sales proceeds after commission won’t cover the loan balance). This can “trap” people in their home, desiring to sell to improve their life in some other way but forced to choose between doing that with the 7 year short-sale black mark on their credit report or staying put.
This same phenomenon makes a zero down loan more risky to the note holder, making it more likely that the effective interest rate will be higher.
Interest rate, on the other hand, is determined by all manners of risk factors, but not so much the down payment. Typically the bank assesses the risk of the applying borrower using things like employment history, financial factors, credit history, and other factors allowed by law.
Fortunately, my 0 down situation comes with no PMI and a low interest rate.
That is how the mortgage industry works.
> The increased risk that you speak of does exist and is an additional charge on the note called Private Mortgage Insurance (PMI). It is a percentage fee the note holder pays to the mortgage company for an insecure transaction, such as low down payment. It is automatic and at set rates and the note holder doesn't get a voice. Either way the mortgage holder is financially secured.
PS: The mortgage "note holder" is the lender, not the borrower. In the quoted paragraph, you should replace the first two uses of "note holder" with "borrower". That "percentage fee" is exactly what makes the effective interest rate higher.
If prices are too low, then supply must be decreased, and/or demand increased.
Any other attempt at manipulating prices will result in distorting the market and price obfuscation will lead to a suboptimal allocation of resources (usually to the benefit of sellers).
For examples of problems with manipulating prices outside of supply/demand, see higher education costs, home costs, taxi medallions, and traffic jams.
Also, the supply of dwellings in a given land area can be increased by building up. However, you are correct that the supply of land for single family homes with garages, driveways, and yards, within commuting distance to a major city is supply constrained.
But the solution is still to shift supply and demand curves.
The largest problem is pricing. This is true even in economically depressed areas of California. The state of taxes in California encourage price inflation: high income taxes and low property taxes. That is a property owner's and land lords dream.
On the contrary if income taxes were sacrificed for increase in property taxes real estate holdings and value both become cost prohibitive. In this case increase value only benefits an owner when selling, but otherwise is prohibitive. This causes people to seek lower value properties, without regard for selling price, and for people to petition the tax assessor for value depletion of their property holdings. Without realistic pricing controls it only makes sense for a property owner to continuously increase the value of their property.
Yes, some of CA's tax laws helps contribute to higher prices, but at the end of the day, the low supply of available houses is compared to the large number of prospective buyer is what makes it so high. Nebraska could adopt all the same taxes as CA, and prices might barely budge, because there's lots of supply compared to demand.
Tackling CAs idiotic property tax restrictions is important, but the elephant in the room is the widening gap in economic opportunity in a handful of urban areas (globally) versus non urban areas.
One can help lower price by increasing the supply of regions with more economic opportunity, and one can increase the supply of dwellings in regions with economic opportunity. Other solutions will just paper over the problem temporarily.
As a vaguely related example the 2008 housing crash was the result of artificially adjusted supply without regard for demand or prices.
Pricing is also directly adjusted when the FED changes interest rates.
Additional supply of housing would not?
This is how things should work, as people leave and/or are not willing to live in California, employers will start opening offices in other parts of the US.
If cities in California find that they can’t hire enough qualified teachers, policemen, firefighters, etc., they will have to pay more.
The one that is getting a relatively bad deal is the foreign population, that has higher tax rates, lower benefits, no political power and comprise 25% of Cali pop.
[0]https://www.bizjournals.com/bizjournals/news/2018/11/21/publ...
Also Glassdoor doesn't count benefits which are almost half the salary.
In NYC, there are thousands of public employees at MTA and NYPD collecting over $150K annually just a few years in service and I'm not talking managerial or chief positions. Some corrupt safety inspectors were reportedly collecting over $400K at the Long Island Railway years back and the governor promised to fix that (didn't), but those are still outliers.
Not without downsides but frankly the current situation is untenable.
But also, I doubt you wouldn't want to sell your chicken farm to someone who wants to build a set of 12-story condo buildings. I bet they'll pay wonderful money for your chicken farm, and you could build a far far bigger chicken farm outside of the city.
The whole point of this is to allocate resources effectively.
The trick is there’s nothing in particular stopping someone obtaining planning permission to open a cafe or shop or pub or barber or gambling establishment near people’s homes, as long as there’s an argument it’s good for the community.
The result of this is that I live within 10 minutes’ walk of nearly everything I need, from a supermarket to my doctor.
When you have demand and you legislate to prevent supply from meeting that demand, prices inflate and potential buyers get priced out of the market.
Let them build!
In China, all and every large company is a real estate company. Baidu has real estate, Tencent has real estate, Ping An has real estate. Pretty much any large conglomerate is.
It is almost scary to see how much businesses in China are, in reality, just front covers for their real estate investments operation.
It remind me a bit the situation in mid-200X America, when every big company was a bank in disguise