Mayor Matt Mahan embraces markets and metrics in comprehensive Biz Jrnl interview
Local business publication the Silicon Valley Business Journal scored the first major interview with SJ's new mayor, and it's a comprehensive tour of Matt Mahan's philosophies and near-term priorities. Of special note is how Mahan explicitly calls for a more market-based, supply-side approach to the area's housing woes, and (as befits an ex-tech CEO) a heavy dose of managerial discipline and accountability at 4th and E. Santa Clara. Key excerpts below.
On markets' primary role in solving the housing crisis
Well, my view being a more market-oriented person philosophically is I don't think that we should just set a target for market and a target for affordable and say... "Oh, we've hit our targets, so we're good. Check." That's not really how markets work. If there's demand and financing available for market-rate housing and it's in a location that makes sense, such as our urban core where we're putting $10 billion of public money into bringing BART, we should overbuild market rate.
Because the reality is the vast majority of affordable housing in our state was not publicly subsidized. It was built as market-rate development that aged into affordability. Ninety-seven percent of the housing stock in the state of California was built by market rate developers over time. What we do through publicly subsidized housing is at the margins. And so we need supply, period. {Editors' note: see Scott Beyer's Supply-Side housing recommendations for SJ's new council, nearby.}
On rejecting calls for new business taxes
I certainly don't think this is a good time for us to explore tax increases on business or anyone else. San Jose has had a jobs deficit, basically, in the modern era. And so I think the last thing we want to do is give employers another reason to leave or to not invest here. The core thing we need to do is build a lot more housing. That will relieve some of the pressure that our community's facing around the high cost of living.
It will actually make our companies more competitive because there'll be less cost pressure on labor costs for them. If we do it in the right way, such as getting residential density in downtown, it'll make the transit system start to work. I mean, that's the linchpin issue. We just need to build a heck of a lot more housing.
On being a centrist & the purported Labor/Business divide
For those of us who follow what happens at City Hall on a daily basis, the number of times that a policy decision directly pits business and labor against one another is actually fairly rare.
I can only think of a couple of votes in my first two years on the Council, so I think we can overstate the divide. I do think it's fair to say that there's a spectrum of political opinion in San Jose as there is nationally from those who believe in a more limited government and more market-oriented approaches. And that ultimately government's primary role is necessary regulation and infrastructure and core services. But beyond that, the market has got to respond and figure out the rest.
Personally, I tend to locate myself toward what I view to be the center of that spectrum in a lot of ways. I think that the dynamic in this race had a lot more to do with establishment versus outsider and status quo versus change.
On affordable housing: Supply and demand writ large
I think we're better off when we have communities that are mixed income and putting the fee, which is a fraction of the cost of the unit, into a fund and then having that lag time where it then takes a couple of years to ultimately pull together that money and then deploy it in a project. And then because costs go up every year, now you're getting even fewer units, I think does not serve the community real well.
The flip side is this though. At the end of the day, what I care most about is that we can get housing development where we want it to pencil so that we get units. Ultimately, this is more about supply and demand writ large and the gap between the number of people who need housing and the number of units available. So while I'd much prefer to see the units built on site, we have to work with developers and financiers to figure out the model that allows for these projects to still pencil.
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Image by Alan O’Rourke