Wednesday, February 1, 2017

Casa Del Maestro, Pt. 1. #teacherhousing #sonoma

"Casa Del Maestro"
3380 Lochinvar Ave, Santa Clara, California
image available at
On Monday, the Press Democrat’s editorial board described a “brewing fiscal crisis” for Santa Rosa's schools, who must, as of their first interim report for 2016-17, implement a ~2.2% budget cut going forward.  SRCS is confronting flat enrollment coupled with declining rates of return on pension funds, that will increase budget pressure over the next four years. At least one board member’s suggesting a parcel tax in response.  

The editorial describes a problem familiar to Sonoma Valley Unified. SVUSD will implement a ~5% budget cut in a similar fashion to SRCS. While Santa Rosa must deal with a 1.6% reserve reduction due to an accounting error, and Sonoma Valley's audits have consistently been clean, it is the medium-term funding squeeze, with costs rising substantially faster than revenues, and an increasing inability to make up the difference via one-time funds, that’s driving concerns. SRCS' potential pursuit of a parcel tax is one solution that certainly appears to be on the table, but it could cause voter confusion, if not outright fatigue, given Santa Rosa's successful $229 million bond in 2014. As Jenni Klose, president of the SRCS board noted in a letter to the editor today, "[SRCS], as with all California districts, is simply wrestling with how best to meet its increased pension obligation while continuing to fairly compensate staff[.]" 

Sonoma Valley, grappling with the same situation, should investigate creating structural, long-term advantages to ensure our teachers and staff aren’t crushed between stagnant funding and our ever-rising cost of living. Housing remains the single largest expense for many teachers and staff, whether laterals or new graduates. Meanwhile, those further up the step-column need salaries that can pay for mid-life expenses, such as children starting college. Addressing one issue means more’s available to deal with the other. Much as our schools confronted rising power prices by getting on the supply side of the equation with solar panels, so too should our district pursue construction of high quality, reasonably priced teacher and staff housing, an advantage in recruiting and retention independent of state funding.

2.83 acre Sonoma Valley Health Care District Property
432 W MacArthur, Sonoma, California
image available at
Serendipitously, Sonoma Valley’s health care district must make a decision regarding 2.83 acres on West MacArthur in the next 18 months. The land is four houses from Sassarini Elementary, and down the street from the SVHS/Adele/Prestwood campus.  Due to some (very) recent changes in the law, SVUSD has an opportunity to pursue a teacher housing project there, before the main front of the financial storm hits our budget.

The model for such housing is Santa Clara Unified’s Casa Del Maestro. Commenced in 2002 on a previously closed middle school, the project utilized certificates of participation to fund construction of 70 units, subsequently rented out to teachers and staff via a functionally integrated public charity. Construction was done at market rates. No subsidy was involved. One bedroom apartments rent for ~$900, and a large two bedroom for ~$1,450 (typically $2,390 for one in Santa Clara, $2,930 for two).

The cost advantage has four parts. First, the District owns the land, and thus land costs are not included in the cost of ownership or operations. Second, the capital structure allows for tax-exempt finance. Third, the land and construction are both property tax-exempt. Finally, there is no profit -- rents are set at a level sufficient to pay back costs of construction, financing, maintenance and operations, and to fund a long-term reserve.

Former Cal. State Sen. Mark Leno
image available at
Despite such success, few K-12 housing projects have gone forward since, due to an aura of legal uncertainty. Is restricting residency to teachers and staff consistent with California’s Unruh Civil Rights Act? Can land held in educational trust be used for teacher and staff housing? Can Certificates of Participation be used to fund construction? Can schools cooperate with other agencies on projects? Are there legislative findings that the housing crisis is hitting teachers and staff?

We got our answer January 1. Mark Leno’s SB 1413, known as the “Teacher Housing Act of 2016,” codified at Health & Safety Code § 53570 et seq., provides the express authority to proceed. The law’s factual findings and statutory language gives the same type of guidance for K-12 districts long available at the junior college, CSU, and UC levels. Doubts regarding limiting the rentals to teachers and staff, about the use of lands held in educational trust, and the availability of innovative financing and intergovernmental cooperation were all addressed.

2.83 acre Sonoma Valley Health Care District Property
432 W MacArthur, Sonoma, California

image available at
And this brings us back to the 2.83 acre parcel. Ideally located, the site is nearly identical in size to the Casa Del Maestro. It’s within walking distance of supermarkets and the Sonoma Square. The neighborhood already has several master planned facilities (Village Green, Sonoma Hills, Pueblo Serena, Moon Valley). Further, the school district has broad powers available to support the project, given the financial flexibility of the authority granted by Health & Safety Code § 53573.

What of the hospital, the current owner? Hospital sites must be “multi-decade,” allowing new buildings to be constructed as others pass from use, like a wave traversing the property over decades. For now, the MacArthur parcel is surplus to requirements. But the two districts could allow for a future exchange of land with fair compensation. The Andrieux site could become housing and MacArthur a hospital, when contemporary structures reach their end of life.

There are any number of problems that could interfere with teacher housing at this site (or another), but the rough contours are clear.  Making sure teachers and staff can afford to live in our community was the first item I discussed when walking Sonoma door to door this past fall. There are few more effective proofs of the power of small-town cooperation, especially in the face of discord we now witness washing over our small valley.  Let’s get our government agencies talking about working together, and let's set an example, by having our health care and school districts discuss how they might make this land continue to serve the public interest for decades to come.

Friday, July 15, 2016

@SVHSDragons @SVUSD1 #SonomaValley College Readiness Going Up.

It's a day of sorrow, and for the acknowledgment of tragedy for Sonoma Valley's school district. But it's important to remember that great work is being done overall in our public schools.
Per Person Income vs. College Readiness, California Counties.
Sources and methods available here.

PDF version available here.

In particular, this year has been a strong one for SVUSD, because both governmental and commercial measures indicate our schools are having increasing levels of success.  For instance, US News & World Report found that Sonoma Valley's College Readiness Index, at 36.7, is now exceeded by only three Napa-Sonoma area schools: Maria Carrillo, Casa Grande, and Roseland University Prep.

This result is confirmed by State measures of performance, as the graph on the right shows. In general, Sonoma County rates poorly given what's expected for a county of its wealth. It is one of the clearest and worst under performers.

But Sonoma Valley is different.  SVUSD does 40% better on preparing students for college than the rest of Sonoma County. Sonoma Valley now outperforms Napa as well. SVUSD deserves a lot of credit for turning in such a strong result.

One of the best things about working for the past couple of years with the District's trustees, our very strong Superintendent, and so many dedicated principals and teachers, is that it gives some context concerning the regular and sustained progress being made.

Friday, July 1, 2016

@eloisanews, nice article on #Sonoma grad rates ...

Eloísa Ruano González
image available at @eloisanews
So, I don't personally know Eloísa Ruano González. I do read her articles via the Press Democrat from time to time, though.  Her writing caught my eye earlier this year regarding Cloverdale High; recently it was a piece about graduation rates in Sonoma County overall. I'm typically favorably disposed towards education writers, particularly those that focus on the interplay between education and economics, and so I'm very supportive of Eloísa for focusing on statistics for the different parts of Sonoma County.

Of course, a well researched article on an important subject often makes people want more of the same, and I thus wonder whether an article on the County's A-G graduation rate might now be a good idea, too. For those who find education jargon impenetrable, that's the difference between whether a graduate has or has not met the college entry requirements for the University of California ("UC") or for the California State University ("CSU"). The technical requirements of A-G completion are complicated, but can (very roughly) be boiled down to passing the second semester of Algebra II with a C- or better.

Most parents and voters think that a graduate's a graduate, and that anyone receiving their diploma is ready for college, but that's not necessarily the case.  And that's where Sonoma County seems to have trouble, because while the statewide rate for A-G is 43.4%, in Sonoma County it's only 33.7% (for my friends and neighbors reading this post, Sonoma Valley High's rate is 47.2%).  I feel like I'd really like to see our educators explain the overall rate of preparation for college being achieved by Sonoma County's high school graduates to a reporter like Eloísa ...

Tuesday, May 24, 2016

What Do Bubbles Look Like, Pt. 3.

Today, I'm revisiting a post from last November, and a followup from March of this year. I had blogged about a property for sale on Austin Avenue, in the Prestwood neighborhood of Sonoma. The asking price was $2,295,000; the house was a little under 1,900 square feet. There was some disbelief at the listing, given the property had sold in November of 2010 for $407,500. But it duly sold for $2 million. 

Zillow advertisement, May 24, 2016.
image available at 
I'd speculated that this market could continue for another summer, and perhaps even two. Today is just a small update; I was browsing Zillow for unrelated reasons and saw the image at the right. 348 Patten, which had sold for $725,000 in November of 2013, is now at $2.8 million; Zillow estimates the house is for sale for about $994 per square foot.  To put that in perspective, the most expensive zip code in the USA (10007, also know as Tribeca, New York) has prices per square foot of about $2,829 (yes, the source is Business Insider, but bear with me).  Atherton, at #2, is $1,669 per square foot, and there are four more above $1,000 (33109, Fisher Island in Miami, $1,586; 92662, Balboa Island in Orange County, $1,443; 90401, Downtown Santa Monica, $1,304; and 02108, Beacon Hill in Boston, $1,290). The next on the list is actually below 348 Patten, and that 92118, Coronado, in San Diego, at a mere $866 per square foot. 

Board of Governors of the Federal Reserve System (US)
Multiple Series
retrieved from Federal Reserve Bank of St. Louis [FRED]
May 23, 2016, available at
The one thing that all those locations have in common is access to an extraordinary job market; whether it's downtown Manhattan, Palo Alto, Miami Metro, The OC, LA's Westside, or Greater Boston, there is a nexus of price and productivity evident in each instance. Sonoma, though, is much different; the economy is orders of magnitude less intense.  Perhaps the most striking contrast is the property Zillow listed immediately below; a George Ranch home, 4,500 square feet, on 8 acres, with 5 bathrooms, for (only?) $2.3 million. 

I've turned from time to time to the graph on the right as an illustration of where markets have been moving since June of 2009. Since I first posted this graph, the situation has actually gotten more extreme. I continue to think that prices may hold up through the summer, but expecting real estate to continue to appreciate along this trend line increasingly strains credulity.

Friday, March 18, 2016

Regarding Roundabouts.

A brief post today, about what can be a surprisingly vigorous debate.  Speaking with Ron Willis on Thursday, we discussed Sonoma Valley's issues with affordable housing, which turned into a conversation about traffic congestion.  The two are more closely linked than they may at first appear. As many are aware, the traffic problems Sonoma experiences are exacerbated by so many employees of local businesses who cannot afford to reside in the community they serve, and must commute 90 minutes or more (a topic that has come up on this blog before) to find affordable housing for their families.  Reform of local housing policy could help unlock the consequent roadway snarls.

Ron and I also touched on the physical layout of Sonoma's roadways, noting that increasing capacity isn't really consistent with the previously expressed preferences of local voters, but that roadway improvements have made a difference in mitigating congestion. We agreed that a nice example was the construction of a roundabout by the County of Sonoma on Arnold Drive, a project that was, at times, controversial.

The intersection had been a notorious problem for years.  One of the nice features of Google Maps is that it contains a time series of photographs of the roadway. The earliest images (from 2007) actually show two CHP officers trying (in vain) to clear the traffic backup -- Google's Maps service allows users to see just how bad the situation was prior to the County's efforts.

While the cost of the project surprised some (~$2 million), and was considered larger than expected, it eliminated the daily backup of twenty to thirty cars turning right onto Agua Caliente Boulevard that frustrated so many drivers, and that disjointedly interrupted the otherwise rural tenor of Sonoma Valley with a mess of cars more reminiscent of the MacArthur Maze. The improvement has since received wide acclaim. Advancing the map from Google to 2015 illustrates the complete transformation of the intersection and the restoration of the pastoral character of the area.

Arnold Drive Roundabout, 2015.
Image available at
The takeaway, for me, is that persistent efforts to improve the quality of Sonoma Valley's infrastructure is a key part of the strategy necessary to address Sonoma's affordable housing crisis. The evidence shows that the situation continues to worsen, and indeed to become more extreme as the months pass. Perhaps the roundabout solution points the way to other ideas that might help resolve the situation, with Sonoma borrowing even more ideas from the Garden City movement than just Ebenezer Howard's traffic innovations.

Wednesday, August 12, 2015

What Do Bubbles Look Like, Pt. 2.

Today, I'm revisiting a post from last November. I had blogged about a property for sale on Austin Avenue, in the Prestwood neighborhood of Sonoma. The asking price was $2,295,000; the house was a little under 1,900 square feet. There was some disbelief at the listing, given the property had sold in November of 2010 for $407,500.

As was expected, the property didn't sell, and was reduced in price in January of 2015, but only to slightly less than $2 million. And that's where it sold, on March 12th of 2015, for $907 per square foot. That amounts to about a 200% return on the investment, given the 14 months and three weeks the property was held. The turn of events produced a certain amount of amazement and head shaking; talk of a bubble would frequently follow.

Board of Governors of the Federal Reserve System (US)
Multiple Series
retrieved from Federal Reserve Bank of St. Louis [FRED]
August 11, 2015, available at 
I kind of fell into a trap of presuming that rapid appreciation automatically meant a bubble exists.  However, I wanted to get an idea of what asset prices in Sonoma look like contrasted with other assets.  And once again, I turned to the St. Louis Federal Reserve Bank's excellent data analysis tool, FRED, to give me some perspective. 

The electric blue line through the center of the graphic is the Case-Shiller Home Price Index for the San Francisco Bay Area. I indexed it on the trough of the last US recession, June of 2009.  I also put in the same index for Cleveland (the dark blue dashed line) and Las Vegas (light blue dashed line). 

I chose Cleveland as a comparison because its residential real property prices were basically increasing at a modest fixed rate for years, which is what you'd (more or less) expect of a heavily regulated market dominated by government lenders.  Las Vegas, in contrast, is one of the more heinous examples of the real estate bubble; the pronounced rapid rise around 2006 is clear.  Prices in Cleveland have now been declining-to-flat for nearly a decade, and while Las Vegas has seen a recent increase, the change is nothing like 2004-06. But in San Francisco prices have nearly returned to their peak.

There's something of an obvious culprit, of course.  While the increase in house prices is remarkable, the increase in stock market prices is even more striking.  White the sharp rise in gold-and-oil prices (the yellow and black lines, respectively) during Obama's first term are clear, those markets have gone through serious corrections in the last 24 months.  But the NASDAQ's rise (solid green line) continues unabated, and unlike the dot-com era, the broader markets have followed (the dashed green lines are the S&P 500 and the Wilshire 5000).  

Sticking the label "bubble" on this situation, though, requires clearing one more hurdle. Bubbles aren't just mispricing, where people think something's valuable and, after time, it becomes clear they were wrong. Instead, bubbles, as Noah Smith nicely explained in a column back in March, depend on greater fool speculation–that someone else will pay an even higher price for the same asset tomorrow.

When it comes to home prices in the San Francisco Bay Area real property market, no less an authority than Robert Shiller himself argues such extravagant expectations (and market inefficiencies) are indeed what's driving prices, creating the potential for a Minsky moment. His point (distilled) is that the lack of short selling and the difficulties associated with increasing supply are behind the problem:
"In San Francisco, for example, we found that while the median expectation for annual home price increases over the next 10 years was only 5 percent, a quarter of the respondents said they thought prices would increase each year by 10 percent or more. That would mean a net 150 percent increase in a decade. These people are apparently not thinking about the supply response that so big a price increase would generate. People like this could bid prices in some places so high that eventually the local market will collapse. Yet the smart money can’t find a profitable way to correct such errors today ... [t]he bottom line is that there is no reason to assume that the real estate market is even close to efficient. You may want to buy a house if you love it and can afford it. But remember that you cannot safely rely on 'comparable sales' to judge that the price is fair. The market isn’t efficient enough for that."
Presuming that we are in a bubble, the hard question is, when do we expect it to end? For a way to think about how to answer that question, I point to the Economist.  In an article from last year, the newspaper noted that this particular economic cycle is already running long at 74 months; if it continues through May 2017 it will pass the average of the last three. Prices may very well hold in Sonoma so long as the expansion continues. Thus we may see a seller's market in the Valley of the Moon for another summer, and perhaps even for two.

It always seems odd to me, however, that given the regularity of booms and busts, that we all still struggle to remind ourselves that this time isn't any different, and these conditions will end as all such expansions do.  It is a truth Stanford economist Bob Hall (chairman of the academic panel that dates American business cycles) reminds us of when he points out that, economic syncopation being what it is, “[t]he next recession will come out of the blue ... just like all of its predecessors.” Perhaps we can take some comfort from our pattern of failing to constrain our expectations, even after three and a half thousand years of this stuff, and recognize it as a part of the human condition.

Knowledge of the problem, though, doesn't mean we should be sanguine about the consequences for individuals exposed to the volatility.  The family home is the primary asset of the vast majority of households. It is worth remembering that during each of the last three recessions, as the graph above shows, prices for San Francisco residential real estate have fallen. Sometimes, the collapse has been rather spectacular. It's food for thought, I imagine, for those in the Bay Area who are expecting ten percent appreciation per year for the next decade or more ...

Saturday, June 27, 2015

About Arnold Field ...

On Tuesday, Sonoma Valley's school board heard from some City residents with concerns that construction at the combined SVHS/Adele Harrison/Prestwood Elementary campus would hurt their property values. This is (of course) a common situation whenever a school district builds the regular improvements and expansions that their educational mission requires.  I think most everyone has sympathy for the neighbors' concerns. But empirical research shows that their fears aren't backed by the facts. Chris Neilson and Seth Zimmerman demonstrated (in their increasingly-widely cited research) that neighborhood school construction actually improves property values. "[B]y six years after building occupancy, school construction increases reading scores by 0.15 standard deviations relative to the year before building occupancy ... school construction raised home prices in affected neighborhoods by roughly 10%, and led to increased public school enrollment."

The proposed sports complex, in particular, has alarmed some nearby homeowners, who focused their concerns on the stadium. But the research, again, supports the District. Larissa Davies, a United Kingdom based researcher into the subject, conducted a thorough review of the US and UK literature on the impact of football and soccer stadia. Her internationally recognized study found that "proposals to locate stadia in urban areas often prompt a negative reaction from local communities, fearing a decline in property prices ... in contrast to this widely held belief, sports stadia can actually enhance the value of residential property ... stadia also contribute indirectly to property value through the creation of pride, confidence and enhanced image of an area."

Arnold Field
180 1st St. West, Sonoma, CA 95476
Image courtesy Google Pedometer

service available at
The neighbors did have an alternative proposal.  In listening to the different speakers, I noted that they brought up more than once the argument that Arnold Field was a fine alternative to a high school stadium.  On the surface, that argument looks good, but as a person who's been involved with the nonprofit that administers the field, and having played on it quite a bit myself, I know that the (generally undiscussed) truth is that Arnold Field isn't long enough to play football on safely, and it isn't in compliance with the law. A football field must be 360 feet long, surrounded by a further safety buffer of 15 feet. As the attached picture (created using Google Pedometer) shows, the length from fence-to-fence at Arnold Field is 116.3 meters, which amounts to ten feet short of the required space for the safety buffer.  The cramped quarters leave no space for accessible routes alongside the playing surface, a DSA requirement for California school facilities.

Spaulding Field
309 Westwood Plaza, Los Angeles, CA 90095
Image courtesy Google Pedometer

service available at
The safe and legal way to deal with that situation is a non-regulation size field; UCLA's practice field is a good example.  Rather than unsafely stretch the playing surface to a fence, the UCLA Athletics Department shortened the football practice field adjacent to Pauley Pavilion by 20 yards (a careful observer of the Google Pedometer image on the right will note there are no 40 yard lines).  By doing so, the University preserved the buffers and accessible routes required by statute. It would be great if Sonoma had the kind of alternative UCLA has to playing on their practice field, but the Dragons can't simply decamp like the Bruins to the Rose Bowl on Game Day.

But length isn't the only problem posed by Arnold Field. The baseball locker rooms at Arnold are probably too small for baseball; they're clearly inadequate for football. The beautiful, pristine baseball outfield often gets churned into a mudscape during football season, and to be back at its best for spring, it needs rest from December until mid-March, preventing women's soccer from relying on it for winter practice. Arnold Field has no track, and doesn't have space for one to be installed. And the location itself, which might have been helpful in Sonoma's railroad days, when adjacency to a Depot could have aided traveling teams, is a hindrance today, when 1st St W jams with traffic after home football games, adding to the already-unmanageable traffic congestion around the Plaza.

Meanwhile, SVUSD has specific requirements for a variety of sports that are consistent with its mission to ensure healthy minds in healthy bodies. California (and the nation) faces a physical education crisis.  Sonoma High's track is in such dilapidated condition that home meets had to be held at away locations this past spring. Women's soccer, whose schedule is planned to be moved to winter, will require a lighted field for play purposes, one that, practically, must be field turf given the sloppy, unplayable condition of grass fields in January and February.  Sonoma High's football team, meanwhile, still needs a safe and statutorily-compliant home field.

There have been some suggestions that SVUSD could "take over" Arnold Field and improve the facilities. That presents a lot of problems.  California educational facilities have higher than normal construction standards, just like hospitals and police stations.  State regulations prescribe that particular elements (things as mundane as the layout and size of walkways) conform to those standards. Bringing the facility into compliance would be far more expensive than moving a fence or building locker rooms, even if the baseball constituency would agree to replace the grass field with turf. And all that presupposes the property could be taken into trust as an educational facility in cooperation with the County.

The truth is that Arnold Field is a great baseball field. Mario Alioto, and all of the baseball supporters and boosters, have maintained it as a labor of love. Their hard work has caused the community to over-rely on the facility, and sometimes to over-use it. Arnold Field should be dedicated to baseball–a move that would be in keeping with the long term trend away from multipurpose civic stadiums to those dedicated to a specific use, from the San Jose Earthquakes amazing new Avaya Stadium, to the jewel that AT&T Park has become along the waterfront in San Francisco.

Arnold Field is a historical facility, steeped in the memories made there.  But physically, it is a product of another time. Easing the pressure on the facility will allow site-specific baseball improvements to be made, enhancing the experience for Sonoma's high school baseball team, as well as the Little League, Babe Ruth, and now the Stompers that call it home.  It will avoid the potentially serious legal liability the District, the County, and even the City could all face by allowing use to continue at a field we know doesn't meet contemporary safety guidelines.  It will mitigate traffic on and around the Square, and will ensure the women's soccer team will play in the appropriate facilities our Lady Dragons deserve.