Tales of Two Cities: Dot.Comers and the Rest of Us,
A Case Study of Jerry Brown’s Oakland
by Mike Pyatok

The Context
It seems that most major cities are experiencing profound shifts of population as a result of the global economy, and more specifically, of the overwhelmingly lopsided investment patterns of the investor class in the Internet and software companies. From New York to Seattle, from Minneapolis to Phoenix, from San Francisco to Boston, small businesses and traditional manufacturing industries are being rapidly displaced by capital-rich computer-related start-ups. Long time renters, stabile members of older neighborhoods, are also being quickly displaced from their neighborhoods by the staffs of these companies and anyone benefiting from their business orbit, because they are able to pay rents many times higher than existing tenants. Even The San Francisco Chronicle, long accustomed to outrageous costs, cannot believe the latest phenomenon, documenting how many very pricey restaurants have recently opened, catering not to the middle-aged at the peak of their careers, but to under-30’s at the start of their careers, who think nothing of dropping $75 a night for a gourmet dinner among friends after a long day at their computer screen.

The New York Times recently documented the rapid loss of manufacturing in lower Manhattan in the face of skyrocketing rents. The hunger for even more office space is now threatening long-time safe havens in Brooklyn and Queens who are also being eyed by the dot.comers. Weekly The San Francisco Chronicle and The Seattle Times document stories about wrenching displacements, heartbreaking losses of dance companies, theater groups, artists, musicians, printers, manufacturers, lamenting the loss of still another long-time business or whole neighborhoods, once known for their ethnic and racial diversity, rapidly homogenizing in race and age. The irony of this new generation of nouveau riche is that their exceptionally young age still attaches them to what they believe is a niche in the ‘counter-culture’ or the adventurous youth culture, seeking unconventional work and living spaces traditionally safe havens for artists, the working poor, blue collar industries and affordable family-friendly neighborhoods for their workers. The dot.comers, with their distaste to enter their offices through sleek revolving doors and with their passion for the ‘feel’ of still being on the fringe, prefer instead to enter through converted truck dock doors into their warren of cubicles. These recently converted buildings just yesterday provided work spaces for people baking bricks or breads, making envelopes or cardboard boxes, making auto parts or canning foods, or were rehearsing the latest cutting edge experimental drama.

In the face of these global shifts, mayors face a simple moral choice: embrace the new market as a source of income whose players have enormous quantities of disposable income and pretend there are no down sides to the changes, or accept the change with a sense of responsibility to all those who previously, and still do, make enormously important contributions to our society even if the investor class does not think so. The latter is a profoundly more difficult economic and social development task, and not one particularly tempting since those being displaced cannot come close to matching the campaign contributions of the newcomers. What is most peculiar about some mayors in the face of these changes, is that they believe they represent a new alchemy of the avant garde--and they themselves embody this new spirit. To others it is the same old capitalism only now in sheep’s clothing. Jerry Brown is one such ‘new age’ capitalist.

The Case of Oakland.
Across San Francisco Bay lies Oakland, which, ever since the end of World War II, was the heart of the Bay Area’s blue collar industries and neighborhoods for the working class, with all its complex racial and ethnic diversity. The investor class has persistently ignored Oakland for almost half a century, favoring San Francisco and its white suburbs to this gritty though culturally rich city. All that is changing now that San Francisco’s commercial rents for office space are reaching $5-10/sf/month, and average two-bedroom apartments rent for $2500/month. The fragile incomes of Oakland’s small businesses, industries and working class tenants cannot compete with the newly arriving San Franciscan refugees.

For Oakland, it is the best of times and it is the worst of times. Compared to the rest of the Bay Area, up to recently housing was still relatively affordable. About seventy percent minority, Oakland has a great diversity, although residents have mostly modest incomes. To all who knew her, Oakland has a genuine soul, while Berkeley struts a self-righteous, if not somewhat pretentious, progressivism and San Francisco boasts the largest concentration of yuppies. The overwhelming majority of Oakland’s few well-heeled people live in its hills or a neighborhood bordering Berkeley not far from the University of California. But the flatlands, where 80% of Oaklanders live, is the heart of the Bay Area’s best Blues, Jazz, art, gospel music, ethnic foods, hundreds of storefront churches and all forms of self-help entrepreneurial activities, both legal and otherwise.

The White Knight.
Riding the winds of change in the early 1990s was a career politician, adrift without portfolio. A former California governor and unsuccessful presidential aspirant, flew in on his silver spoon, thinking himself chic enough, and knowing he was wealthy enough, to build his own loft building in the up-and-coming SoHo of Oakland, called the Jack London (may he rest in peace) Square Neighborhood, near Oakland’s port and a brief walk from its downtown. It should be noted that his developer evicted several artists from an existing building on the site before demolishing it to build Brown’s home. There went not only that neighborhood--- there went Oakland.

Jerry Brown had the audacity to claim he could save Oakland from itself. With a mere four years of residency in an anomalous loft district least like the rest of struggling Oakland, he ran for mayor against a field of 12 minority candidates. Mesmerized my his media savvy, the citizens of Oakland thought that the change brought by this rootless newcomer might bring national attention and a flow of fresh capital. It should be noted that the previous two African-American mayors not only held Oakland together for two previous decades as private capital systematically discriminated against the minority city in favor of the suburbs and San Francisco, they actually succeeded in rebuilding much of its downtown core with several million square feet of offices after a previous white administration had leveled it under urban renewal displacing thousands of lower incomes households.

The Turncoat.
Before Brown became mayor in 1998, the dot.com economy had already begun to impact Oakland. He simply embraced it, encouraged it and welcomed with open arms all developers and businesses to rush into Oakland’s less expensive land at the same time promising a less regulated development environment. No sooner had he become Mayor when he began to wage war against the non-profit community of housing and service providers who had long assisted Oakland’s working poor. Publicly assailing them for the ‘slumification’ of Oakland, he accused them of making Oakland the ‘affordable housing capital’ of the region. While other mayor’s struggle to hold onto residential opportunities for its working backbones, Mayor Brown claimed that Oakland had done more than its fair share of housing ‘those’ people and they needed to leave town for greener, or more likely, less green, pastures elsewhere.

To his credit he launched a major push to develop more housing to add ten thousand new residents to the eleven thousand already living in the downtown. Unfortunately, his code words to describe this effort, ‘elegant density’, did little to hide his embrace of gentrification as the vehicle to rescue Oakland from itself. He had no plans to assist the residents who were already living in the downtown and who had stayed with Oakland through its more lean and difficult times. His plan was just the opposite: turn off the spigot that funded the non-profit sector. California allows tax increment districts, requiring that a redevelopment area’s taxes be directed back into that area from which they are collected, requiring that 20% be set aside for affordable housing. Brown connected with his political friends in the State capitol to see if Oakland could be exempted from the affordable housing set-aside. Fortunately it could not. At the same time, he directed the city’s housing staff to quietly assemble an analysis of what it would cost to buy up all of the SRO’s in the downtown so they could be shut down or converted to higher income uses, basically completing the urban removal task started by the previous white administration three decades earlier. Fortunately, that cost was too prohibitive.

Brown’s Ersatz Morality.
On the surface he touts his Jesuit training and dabblings in alternative spiritual philosophies, making a point at times to reference his ancient Latin and Greek studies to set himself apart from the hoi polloi or his interest in Buddhism. This author also received several years of rigorous intellectual training from the Jesuits along with four years translating ancient Latin and Greek literature and I will be the first to admit that such educational exposure has little to do with the life-long and ever-evolving quest to seek moral grounding for one’s earthly actions. While using such fig leaves as cover, this naked emperor has quietly, behind the scenes, encouraged a private developer who owns land on which sits the downtown County-run homeless shelter, to not renew the lease so that its removal will make the area appear more desirable to developers and investors. He has ordered City staff to not renew financing for an SRO and homeless service center owned by the City. He cavalierly rebuffed the community of artists and musicians who rallied to his door for help in the face of unheralded evictions. When Oakland’s tenants organized to gather signatures and pass a ‘just cause eviction’ ordinance, he not only turned his back on them, he actively campaigned against their interests among city council members.

When the Oakland Catholic Archdiocese announced its plans to build a new cathedral in Oakland’s downtown to replace the one destroyed by the quake in 1989, he immediately encouraged the Catholic Church to hire Frank Gehry to be its architect. His motive was to create another eye-catching Disney-esque spectacle like the museum in Seattle for Paul Allen’s Experiencing Music Project or Bilbao’s tourist-luring museum to attract media attention to Oakland, and, in turn, to himself. While it can be argued that fusing this kind of consumer advertising with religion has often been the tendency of large institutionalized religions, it is one further indication of just how mainstream, and skin-deep, is Mr. Brown’s sense of ‘alternative’ spirituality. To help the education of children from lower income households, this so-called champion of spiritual and cultural enrichment is advocating the formation of a military charter school. It has been vociferously voted down by both the City and County school boards as insulting to racial minorities, but he has garnered enthusiastic support from the military, whose new recruits are at their lowest in decades.

His latest media-savvy effort to disguise his real intentions in Oakland has been to use his ironically labeled organization "We the People" to host at his loft a series of discussions called ‘The Oakland Table’. He has invited people from great distances who would be least likely to know what he has actually been doing and saying in Oakland, but by association, he hopes he can bask in the glow of their presumably progressive reputations. He has invited Ivan Illich and self-help advocate/architect John Turner, among others, as a fig leaf to disguise the consequences of his real everyday actions. It is not clear who in Oakland would be so na?ve as to attend these sessions. The attached graphics are examples of many political cartoons produced by the artists of Oakland as part of their campaign to expose him for who he really is.

Now the African American community not only no longer supports him, it distrusts him and openly criticizes him. Oakland Tribune columnist, Brenda Payton, takes every opportunity to acerbically expose his missteps. The black author, poet and long time Oakland resident Ishmael Reed, who warmly welcomed Brown at the opening ceremonies for Oakland’s new City Hall Plaza, has recently publicly castigated him in an op ed column in the Oakland Tribune for dissing the African-American community of artists and intellectuals. Gus Newport, the former black progressive Mayor of Berkeley, who was an initial advisor and backer of Jerry Brown’s campaign for mayor, has not only abandoned him, but openly criticizes him for his hypocrisies.

The Lessons of ‘Corrective Capitalism’.
Oddly enough, Brown seems to be espousing the virtues of old-fashioned free-market logic while some of the best business minds in the region differ with his position on the importance of producing affordable housing. In mid-September, U.C. Berkeley’s Haas Business School hosted a day-long conference focussed on the Bay Area’s affordable housing crises. The keynote speaker, State Treasurer Phil Angelides, desperately urged the business community and all elected officials to heed the cry of those advocating the production of affordable housing. Borrowing from a phrase of the New Left from 30 years ago, he basically said that we cannot have political democracy unless we achieve economic democracy. This author had been invited by the conference organizers to be one of three commentators on the Treasurer’s remarks and I could not pass up noting the similarity of his remarks to the New Left, much to the delight of the over-50 members of the audience. In short, Angelides pointed out that the future economic stability of the state depends on a massive increase in affordable housing for these reasons: a) more affordable housing lowers the pressure on employers who are forced to raise wages only to meet the needs of a hyper-inflated housing market, rendering those businesses uncompetitive in the global economy, forcing them to leave the region and the state; b) workers relocating to the far edges of our metropolitan regions in search of more affordable housing now face total gridlock, wasting millions of unproductive hours each year, incurring major losses to the business community; c) lowering the expense of housing to workers releases more of their disposable income to fuel other sectors of their local economy.

To summarize the reasons for including affordable housing in any city:

1. Makes good business sense.
It was the business community in other major cities like San Francisco and Seattle who welcomed the development of affordable workforce housing. These are cities where I also happen to serve both for-profit and non-profit developers so I have hands-on experience with both of them. In the 1980’s the private sector of both cities, along with foundation support, helped launch non-profit housing development corporations CBRIDGE in SF and the Housing Resources Group in Seattle both of whom have gone on to develop thousands of housing units for lower income working people who would not have otherwise been able to afford to live in such pricey downtown locations. The business communities of both cities recognized the valuable contribution that working people make to downtown businesses, yet whose incomes are 50-60% of their areas= median incomes ($30,000-$40,000. for an Alameda County family of four). As I noted above, these are the bank clerks, word processors, entry level teachers, hospital orderlies, restaurant and hotel workers, entry level architects, entry level programmers and accountants, government clerical employees, etc.

In those two cities, such housing was considered by their business communities to be in their best interest. It helped relieve the pressure on them to pay higher wages to meet their workers’ escalating housing costs. Higher wages were being wasted on their workers= longer commutes to and from cheaper housing in the suburbs or to pay ever-escalating rents within the city. As primary employers with high labor costs, they know that high housing costs for their workers, necessitating higher wages, would make them, as businesses, less competitive in the national and global arenas where they must operate. They clearly saw subsidized housing as being in their best interests an indirect subsidy to the business community which helps keep their labor costs more within reason. They also recognized that by holding people’s housing costs to less than 30% of their wages, subsidized workforce housing also frees up their workers’ disposable income to spend in other sectors of the local economy, so very important for a lively downtown.

2. Affordable Housing helps private developers.
Also, in both of these cities, the experienced private developers know that the non-profit housing sector was, and is, producing stunning, award-winning designs for their constituents. They often function as pioneers who help stabilize risky neighborhoods with handsome architecture and well-managed properties, allowing market-rate developers to follow in behind with higher-priced market-rate housing under less risky conditionsCa kind of symbiotic relationship. These enlightened developers see well-managed affordable workforce housing by the non-profit developers as the necessary first step to prove to the higher-end buying public that a neighborhood is worth moving into. As an architect who serves all spectrums of the market place, I can tell you that there are plenty of private developers in this region who welcome and encourage non-profit developers to help them rebuild neighborhoods and see no conflict in mixing incomes in the same neighborhood. In fact, many are experienced in producing both market-driven and subsidized housing.

Affordable housing is good for marketing and cash flow of the private developers.
The better for-profit developers also know that it pays for them to include a certain percentage of >affordable= units in their for-sale projects in the less marketable locations of their developments because those units are quickly sold and reduce the risk of their overall investment. Also, when producing market-rate rental housing, if some units are subsidized by the government, this assures the private developer that their future vacancy rates will always be lower than the norm usually experienced by wholly market-rate projects. Hence, the better for-profit developers will not be frightened away.

Everyone wants wealthier people like the Mayor Brown’s of the country to move into their downtowns and also to share the cultural riches that those of us who have lived in the heart of our cities for decades have always known about. But we also want opportunities for the many of us who stayed within cities like Oakland when no one else would think of living here, and we want our offspring with their modest entry-level wages to take roots there and we want our parents on their fixed incomes to be able to remain there with their memories. We too want higher density in downtown Oakland, but we would like you to transform your quest for ‘elegant density’ to ‘elegantly diverse density’. This is not ‘slumification’, but an integration of all people who are working to build our cities-- and the nation, for that matter-- from janitors to executives, from nurses to doctors, from mechanics to artists, from day care workers to professors, and from mayors to others who may also suffer emotionally from identity crises.