Editorial: Bubbles Come and Go, But Builders Thrive Regardless

By Becky O'Malley
Tuesday March 18, 2008

On Oxford Street these days a massive pile of concrete and steel is starting to take shape. It’s already impossible to look past it to see the hills above to the east or a slice of ocean to the west. It comes right up to the sidewalk on the corner, leaving no room for a patch of green to refresh pedestrians. When the two buildings on the site are completed to the planned heights, that stretch of Oxford will become a canyon. 

There will be open space all right, but in a north-facing interior courtyard which will be dark almost all year long. And there might be play space for the family housing units on the roof—on the ROOF? Good luck, Mom and Dad, keeping the kids from going over the edge. Alternatively, they could cross six lanes of Oxford Street traffic to play on UC’s lawn.  

Oh, yes, these will be “green” buildings. Whatever that means to you. Green building expert Sandra Mendler was quoted in these pages last week as saying that the best way to build green is not to build at all, but to re-use existing buildings. 

That’s a hard concept for most Americans to get hold of, especially Westerners. Our longstanding tradition is that newer is always better. We’ve been gripped, since the first settlers showed up here, by what cynics call an “edifice complex.”  

Our politics is driven by the building industry. A cursory glance at the early campaign contributions gleaned by Loni Hancock, now looking to cap her eight years in the legislature with more in the state senate, shows that a sizeable percentage of the take came either from developers or from construction unions, and that’s almost always the case. There’s big money in big buildings, and builders are willing to share with their friends. 

The current flap over AC Transit’s Bus Rapid Transit proposal is another example of how the edifice complex works. There have been almost no objections to most of the plan to speed up bus trips on the route which goes roughly from San Leandro to Sather Gate. Computerized scheduling, changing lights to let busses go through, and other good ideas are already being implemented.  

But many observers have questioned the wisdom of a multi-million dollar capital investment in hardscape—dividers, islands, bus stations etc.—which will be hard to dismantle if the system doesn’t function as planned. The catch is that there’s a big pile of federal money which can only be allocated for capital improvements: building projects, that is. And which industry’s Washington lobbyists were responsible for getting transit funds earmarked that way, instead of for buses and drivers? Take a wild guess.  

But nothing deters true believers. Just to prove that no good deed goes unpunished, one long-time Berkeley transportation commissioner sent a venomous letter denouncing the councilmember who appointed him as “Kriss Worthless” for “playing political games with BRT” which the writer supports. Of course, there’s also a group of opponents denouncing Worthington for being too soft on BRT. You can’t win. 

Even benign-seeming concepts like building housing in cities near transit nodes aren’t exactly what they seem to be. Ever since the railroads went West speculators have known that it’s profitable to buy up land before the train gets there. The streetcar suburbs of the early twentieth century (e.g. Berkeley’s Claremont District) worked the same way. Do we think that the avid promoters of transit-oriented development don’t have similar financial interests, that they aren’t silent partners in the limited-equity real estate trusts which own big swaths of cities like Berkeley these days? Think again.  

And there’s absolutely no proof that building near transit nodes gets people out of their cars. Planning Commissioner Gene Poschman is fond of citing (for all the good it does) a study that shows that people who live in developments with parking garages just commute by car like everyone else, even if transit’s nearby. A recent Chronicle story by Carl Nolte, interviews with tenants of the brand-new One Rincon skyscraper, confirmed this. He quoted one guy who said that he liked living in his new tower condo because it’s so close to 280, making his Silicon Valley car commute even easier.  

Or consider culture. Jesse Green had a good piece in the New York Times entertainment section last week calling attention to the grandiose buildings being constructed, with big donor bucks, for regional theaters all over the country. He pointed out that little thought is given to how the companies are supposed to come up with operating expenses to actually put on plays. One of the theaters pictured was the Berkeley Repertory Theater.  

Then there’s the Broad Museum of Contemporary Art at the Los Angeles County Museum of Art. According to Martin Filler in the current New York Review of Books, “this redundant nomenclature was adopted at the behest of the $56 million project’s mastermind and principal patron, Eli Broad, who has prospered by building tract houses and providing investment services to retirees.” There’s a good bit of tongue-clicking going on now about the project, Filler reports, because Broad has decided not to give his art collection to L.A. County, but just to lend it. The writer notes tartly that “the Los Angeles County Museum of Art receives substantial public funds and many of its staff members are civil service employees of Los Angeles County. Thus the parties who acceded to Broad’s de facto privatization of a big chunk of LACMA—the cultural equivalent of a leveraged buyout, or taking a public company private—have done a grave disservice to the taxpayers of the county, who, whether they like it or not, will be footing the bill for much of Broad’s monument to himself.” But the architect and the builders will make out like bandits on the deal.  

The latest example of the edifice complex at work in Berkeley is the sudden push to re-zone West Berkeley to build more retail, offices and condos, which has everything to do with who already owns the property there. It again reflects the American economic reality that there’s a lot more profit to be made building new stuff, needed or not, than in maintaining artists’ studios and small enterprises which provide green jobs in already-existing old warehouses and factories. West Berkeley offers what builders really like, something much better than transit access: easy on and off the freeway.  

The collapse of the sub-prime mortgage market might change some of this. Despite Berkeley’s ritual genuflection to the idea of building affordable rental housing, what we’ve actually been getting is market rate condos-in-waiting from builders who never had any intention of cultivating long-term relationships with tenants. But selling condos in the sky to gullible first time homebuyers doesn’t seem so attractive any more now that financing is tight. And if the consumer economy continues to nosedive, retail will start looking dicey too.  

What about the much-touted “green corridor” which East Bay mayors hope will bail them out of all their budget woes? Might it be a good idea to re-zone to permit alternative energy companies to build along the bay?  

The February Harper’s magazine cover story by Eric Janszen was “The Next Bubble: Priming the Markets for Tomorrow’s Big Crash.” Concisely summarized: just as the sub-prime mortgage industry was the new dot.com bubble, the alternative energy boom is the new sub-prime mortgage bubble, inflating toward yet another big bust. Read it and worry.